Manufacturers Invest with Integrators

What do Arlington, Leviton, Thomas & Betts, Cerro Wire, Philips, Schneider Electric, Home Depot and Lutron have in common? (and three of them were sponsors of the Home Depot ad!)

They all were either advertisers, sponsors of others’ ads or had press releases printed in CEPro?  CEPro is the leading trade publication for professionals involved in the custom electronics business (frequently called integrators).

Reading the January issue revealed some interesting insights:

• While the industry was down 51%, it is expected to be up 8.5% in 2010, and will be becoming more competitive with electrical contractors in the coming years.
• 9.3% of an integrator’s revenue comes from electrical work
• 24.8% of their business is generated from commerical work … they are not only residential. This trend is expected to grow in 2010
• Only 8% of their material comes from electrical distributors whereas 38.4% comes from low-voltage distributors, 42% is direct from manufacturers, 6.6% is from electronics retailers and 4.9% is from DIY
• Future business opportunities include: energy management (84% of respondents plan to pursue), CCTV cameras (76 percent to pursue), high-voltage electrical devices (fixtures, outlets, etc (57% plan to pursue), central vacuum systems (27% to pursue) … in other words – they are diversifying their businesses and figuring what else to sell to their customers.  They also plan to learn more about smart grid opportunities.
• From a customer perspective, markets that integrators plan to diversify into include small office (80%), restaurants (64%), religious institutions (44%), educational facilities (38%) and health care (37%).
• Additionally, 75% of CE pros do residential remodeling work.

What does this mean?  For those involved in the residential market, with new construction nominal, integrators represent a customer base who is pursuing remodeling, which is expected to grow.  Additionally, if you sell datacom products, are you calling on integrators? Are you selling them datacom and electrical products? Additionally, do these prospects / customers also represent additional commercial opportunities (and they are getting involved in lighting controls and home automation)!

If 2009 was the year of trying to survive, 2010 will be the year of diversification and segmentation. With new construction (commercial and residential) being challenged due to credit markets, unemployment and valuations, remodeling (and retrofits) will represent opportunities. Looking at new markets who purchase your core products will be critical to achieving sales and profit growth.

And expanding / selling datacom, security, lighting controls, shades and home automation systems may not be bad ideas … especially if you can service existing and/or new customers.

Manufacturers know they need to diversify. They need to cover all audiences that purchase, and sell, their products. Perhaps distributors should be looking at more customer types who purchase the products that they carry.  If they don’t, manufacturers need to find other channels to support them.

And if distributors don’t pursue the residential remodeling market, they will be left holding solely resi new construction and its declining margins.

Do you sell to integrators?