Distributors Rank 2009 Sales & Profit Drivers

As seen in today’s Electrical Marketing, and with expanded information and insights …

David Gordon, president, Channel Marketing Group, Raleigh, N.C., and Allen Ray, president, Allen Ray Associates, Kennedale, Texas, recently conducted their annual ElectroIndustry survey. Almost 400 distributors, manufacturers and reps responded. The survey found that 2009 has started with a thud for most distributors. However, some see this as an opportunity to streamline operations, prune underperforming personnel, right-size inventory and implement strategies that will pay future dividends.

Some distributors are looking at the year as two seasons. In the first season (which we are currently in) they are focusing on training, customer relationships, new product introductions and other pre-sales activities. The second phase, expected later this year and possibly as soon as June in some areas, is the opportunity to grow the business and take share. Ray and Gordon believe if credit markets thaw this is feasible.

The chart below offers some insight into distributors’ business priorities. Respondents were asked to rank on a scale of 1 to 10 (10 being high), the most important issues to help achieve 2009 sales and profit objectives.

The priorities, and their ranking, are:

As you can see, the focus is on:

• Profitability
• Operational Improvement
• Pursuing sales niches, and
• Training

A couple of areas that may become more important as the year progresses, credit thaws anf companies seek to take market share include:

• Acquistions and new branch openings, which probably scored low due to the economic environment at the time. As credit thawas, acquirers who have cash become more comfortable with their future outlook adn sellers become more concerned, acquisitions will accelerate.
• As existing home sales increase (i.e. foreclosed homes are sold), remodeling / renovation opportunities should become available.
• Hiring more salespeople will increase as companies seek to take market share. Some will hire new salespeople to upgrade their own staff or as a means to put more bodies on the street and penetrate new markets.

Recently we’ve noticed some companies talking about taking market share. Many of the above strategies will be used to change local marketplaces.

What are you doing to stem losses? Are you at the point of considering how to take market share?

(and if you want a copy of the ranking, let us know)