Over the past few weeks we’ve been hearing of a number of the national chains closing small branches. In some instances these branches were set up to service specific customers, in other instances they are small branches in small towns, and in some cases they are small branches where there was never a plan to grow (possibly due to personnel, sometimes due to resources, others times due to no plan). A number of these branches experienced expense cut-backs last year.
In a continued effort to ensure every branch is profitable, these companies are facing the question “how small can a small branch be?” and “does a small branch have a role in the industry?”
While it is an admirable goal for every location to be profitable, sometimes markets change thereby dictating that strategies need to change. In other instances an account needs to be serviced in a small locale with a dedicated branch to retain the entire account. And in other scenarios, a small area can be serviced with an alternative product delivery system (from another location, via UPS, via lockboxes, etc).
This also represents an opportunity for independent distributors who may already be servicing these areas. National chains, sometimes beholden to public shareholders, need to make short-term, profit-driven, decisions. Independents can view opportunities with an eye to the longer-term future (presuming they have the cash and cash flow) to service an area or an account.
Are you seeing small branches close in your market? How should a small branch be evaluated? Be supported? Do all branches need to be profitable? Are small branches destined to be a casualty of the recession? Let us know your thoughts.
7 Comments
We’ve noticed a few WESCO and Graybar locations being closed in our region out West
speaking of death, what ever happened to city electric – the one that had many names. We used to sell alot to them and now they’ve disappeared from our radar screen. CED could be struggling with this issue also as they have many small locations. we focus on their larger markets. can’t get my reps to call on small branches
Employees at thinly staffed branches are happy to still have jobs, but morale is a factor.
Many we speak to report their sales dollar volume is off far more than the transaction volume, meaning there still a lot of work to do, but for less.
Staffing when there are sick days, vacations, lunch, off-site meetings, etc., is a challenge and may not be sustainable.
I believe the small branch closings will die with companies that use distribution centers, however I believe this will strngthen the likes of CED due to their autonomy and profit center business model and financial strength. So large chains will close small branches due to more sophisticated logistics, but heavy commodities such as wire and pipe and critical uptime items such as fuses and breakers will always need to serve smaller markets and CED covers these areas effectively. So in general yes we are seeing small branch closings leaving market coverage gaps where I would expect CED to expand small PC’s where those gaps propose an opportunity.
“Kelly Boyd said…”
Well stated.
Smaller independent distributors may also look at these market areas for possible branch locations.
I can speak from experience that Wesco has closed not only branches, but also shed entire groups. Example being the transportation group which included a number of 25+ year veterans. Most of their cuts happened last year and included many profitable locations, but were in anticipation of the downturn!
“Most of their cuts happened last year and included many profitable locations, but were in anticipation of the downturn!”
Same with Gexpro. They closed “non stategic” locations that were profitable in anticipation of the downturn. I don’t see any of these branches ever being reopened.
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