Advance, Maurice, Private Labeling, Credit and More in Reading Roundup

Cleaning out the office and the newsletters we receive and wanted to share some observations:

1. Tedmag.com and Bill Attardi’s EnergyWatch alluded to Philips changing the name of Advance Transformer to Philips Lighting Electronics. We asked a couple of distributors about it and they hadn’t heard, and the Advance Transformer website hasn’t changed either. Wonder what this will mean for the Sylvania and GE distributors who were Advance distributors. Makes sense to install a Philips ballast with a Sylvania or GE lamp? This must be driven by Somerset or The Netherlands as traditionally Advance wanted to maintain neutrality to have access to the broadest MRO market and enable OEMs to make a ballast selection and a lamp selection. Sounds like Philips is committed to the system sell in all aspects of its business.
2. Word from multiple sources is that Maurice Electric has sold to Electrical Wholesalers (which is run by Richard Worthy and is a sister company to CED). EW previously had 5 locations in the DC area. Maurice has always been a strong company in a city where construction is always going on (your tax dollars at work). Presumably the family was looking for an exit strategy. Makes one wonder 1) if capital tax issues might be at work given uncertainty of upcoming elections, 2) ownership looked out over the next couple of years and said “will it get any better” or 3) perhaps they analyzed the market and said “who could buy us since Rexel and Sonepar are already strong in the DC marketplace” or 4) a host of other issues. We’ll have more thoughts about consolidation in the coming week.
3. Fortune magazine had an interesting article entitled “Sailing through the Storm” in the September 15th section on Kroger’s (the supermarket company) and Baldor (the motor company). Two firms with growth expectations that are expected to be good investments. Essentially it highlighted differing strategies … Kroger has been growing its private label business to increase profits at a rate greater than sales while Baldor makes “the highest quality motors.” Since Kroger is essentially a distributor, does this say something about the potential for private label and generic products? Baldor, being a manufacturer, spotlights the value of quality, product differentiation, brand building and specifications.
4. Earlier this year, Adam Fein asked us to write a chapter for the upcoming Outlook 2009, which is being published in November by NAW. The book follows Adam’s Facing the Forces of Change: Lead the Way in the Supply Chain. Our topic was “Private Labeling: A Force for Tomorrow“. The research, and the article, emphasize a changing product sourcing marketplace be it for name brands, generics or private label products and we outline areas for distributors, manufacturers and reps to consider before exploring whether private labeling is right for them (as well as strategies to consider to compete against private labeling). Our 2007 research is used as a basis for much of the article.
5. The August issue of EC&M had two articles that should be of interest to distributors who do business with contractors. The first, “Secrets to Creating a Profit Machine” shares strategies on how contractors can generate 20%+ profit on net profits (and doesn’t mention “buy better from your distributors”!) Perhaps sharing this with some of your contractors could help … even if they only took one idea. The second article may be indicative of the times. “Credit Crunch” focuses on how contractors can improve their cash flow. In fact, the article states “cash flow is a leading indicator of bankruptcy for construction contractors (so if your contractor DSO are rising significantly, you may want to red flag selected customers!) The issue is the same for distributors … managing cash flow is critical (and is one of the reasons why many smaller distributors sell their businesses.) Our contractor eConnectivity survey is designed to better understand leading contractors’ interest in receiving invoices sooner so that can invoice their customers sooner (and 2007 research shows that they end up paying faster by up to a week). The question becomes “How can you help them before they hurt you?”
6. Some clients have asked us about developing blogs for themselves (essentially as ways to differentiate themselves). An article in BtoB magazine by Brian Muys, managing director of Strategic Communication Group, touched on this point. According to the article blogs can be effective in reinforcing a personal brand and emphasizing opinions. The most effective ones are often “platforms to discuss issues affecting an industry and it’s critical for anyone seeking mind share … to share creative, if not provocative, ideas.” Our advice to clients starts with a question … “What is the purpose?” On a different note, we hope that you find ElectricalTrends benefical.

Just some random thoughts to get your week started. Have a great one and let us know what you think.