Home Depot, Cooper, Private Labeling and Pricing … All in the Same Aisle

No manufacturer can enforce minimum pricing in HD or any electrical distributor…. profit margins are at the discretion of the seller.

while a manufacturer can’t set margins, they can provide guidelines. And either my purchasing guy is getting duped or they are buying much better than us. If I can buy the same stuff from HD cheaper than I can direct, there’s a problem. HD isn’t stupid – they don’t sell for 0 margin (or less). (and every manufacturer says they sell HD at the same price as a distributor – I have some swamp land to sell)

So manufacturer will be asking Cooper for a HD SPA….it won’t take long for other distributors to set up shop on the street selling the same product on a Home Depot SPA.
Distributors are so conditioned to sell on price, some manufacturers should actively look for other channels where they can get price support.
The problem is the market in some areas is still shrinking and price is the name of the game.
Distributors should wise up to price cutting and start selling value with other lines.

Could this be the dying act of a very sick segment of our industry? LED lighting is about to change our industry. In the not to distant future – customers will buy an LED-Fixture combination that will last for years.

When that happens, it will be a total game-changer. HD is probably scrambling to line up Chinese, Vietnamese (or Martian) companies willing to knock out their new low end LED/Fixture. Just check out the compact fluorescents they currently sell.

I believe national and regional distributors should be looking at no-name or private label brands for their most commoditized products.

No supplier can force them to sell at any price level unless it is part of their contract, i.e. Bose Speakers. The only action a supplier can take is to walk away from the business, and unfortunately that has only happened with one major supplier in our channel, or simply not sell into that market as a handful have as their policy. Suppliers could have stopped this in the past, and in the future perhaps, by competing at the lowest levels with net prices, rather than SPA’s, on their AAA items.

A National Distributor

Cooper is selling cans to Home Depot at a loss and in the hope that the consumer will also purchase a Cooper trim at an unreasonably inflated price, thereby making up the difference and producing a profit. The real point though, is that HD is “branding” their generic product as now being a premium, better product than the name brand. That is their model. Lowe’s is now doing a very good job of it with cordless power tools. Distributors are challenged to now figure out how to make money on wire, conduit and other products that the home centers don’t carry.

Hey this is no different than what happens at a grocery store…Private Label Product receive the same eye level space, mixed with Brand Name products.In fact sometimes it is hard to tell the difference between them…….
So long as everyone is focused on price…Private Labeled and No labeled product will take a portion of the market.
Distributors are caught in the middle and manufacturers are trying to sell more product……
Un claimed SPA’s are a true revenue source for manufacturers.