With commercial construction in the doldrums, distributors seeking revenue, and profit, opportunities are looking to diversify their business and asking the question “What percentage of my overall market do I have?” and then asking “What segments could I effectively, affordably and profitably diversify into?”
Diversification initiatives help companies weather storms as infrequently are all sectors down.
And size does support diversification. Witness …
- Graybar’s interest in the data center market and has won a maximum $74,000,000 firm-fixed-price contract to serve military facilities in the Southwest … only 7 companies submitted bids!
- Gexpro’s focus on the wind market as well as a turnkey energy efficiency initiative which is more than lighting and includes installation. They are also looking to grow their automation business via a training tour.
- Crescent’s desire to increase online revenues as well as capture some of the spend of the Federal government.
- Platt’s involvement with rural electrical co-ops (after all, utilities are a viable market and they provide incentives for energy efficiency initiatives.)
- Border States has personnel dedicated to the natural gas market
We also know mid-size independents who are focusing on selling LEDs to restaurants; targeting warehouses and offices that are <10,000 square feet; and some distributors focused on wastewater facilities.
The commonalities?
National chains and large regionals have the resources to invest in niches and can leverage the opportunity over a wide geographic area (after all, how many data centers are in your market?). Smaller companies (independents) have the ability to target selected niches in their geographic area or may need to redefine rural markets to capture an overall greater share of the spend vs. relying on the segment they have traditionally supported.
And interestingly, well diversified companies usually are more profitable!
What niches / segments are you finding represent opportunities?
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