Where Have the Small Contractors Gone?

Looking for verification that the small contractor is being hurt the most in this recession, consider this:

• Home Depot, which derives 30% of its revenues from “pro” customers says that these customer sales are down low single digits now and last year where down double digits.  Much of their business is residential (new construction and remodeling) and light commercial.  Years ago Home Depot converting many small contractors from distribution to the Orange box.  While no one knows how much business was transferred, in retrospect many distributors recognized that they were challenged to cost-effectively handle these customers.  And, as contractor-oriented distributors know, small contractors make up the majority of counter business and are usually more profitable. So, resi is better, but could it have gotten much worse?
• Graybar announced its Q1 results.  While profit improved, it was interesting to read that sales had a slight decline (5%).  This puts them on a par with WESCO (3% decline), and significantly ahead of Rexel.  This says a couple of things …
• Graybars customer mix is probably more comparable to WESCOs, with industrial business leading the way.
• Graybar and WESCO are focused on larger customers (contractors and industrials), hence the demise of the small contractor isn’t affecting them.

And our informal polling of a number of independents at the NAED Annual a couple of weeks ago in Chicago revealed that a number of industrially-oriented / well-diversified independents, hence comparable in business mix to the above companies, were up, ranging from 3-10% (and one company reported up 22%).  Perhaps independents are taking share locally while the larger companies are focused on bigger opportunities (which there are less of)?

What are you seeing from your small contractors? Do you think this customer segment represents opportunity in the future? If so, why?