2011 NAED Eastern Conference Observations

As many know, the NAED Eastern was held last week in Orlando, at the Omni Championsgate.  There were 65 distributor entities registered (excluding Bell and Hunzicker – which are on NAED’s BOD – and IESC (parent of Rexel / Gexpro) and Sonepar as their entities are included in the count.  57 distributors had one-on-one booth.  To NAED’s credit, this is more than last year (yes, last year was the worst) and hopefully the number will continue to grow (especially since there were 106 manufacturer entities).

Unfortunately I was so busy with CMG meetings that I didn’t get to spend any time in NAED seminars, but didn’t hear any comments from attendees that may have attended them.  A few people lamented that the conferences have become so driven around manufacturers that they don’t have time to either network in the lobby or attend sessions.  I did sit in on Charlie Cook’s observations of the recent election – some liked, others didn’t and some wondered what the change would mean (which he didn’t really address).

Some meeting insights:

• Many distributors and manufacturers were optimistic about their 2010 results. After a dismal Q1, it has come back for most.  Distributors who are industrially-oriented and/or have good energy efficiency initiatives are 10%+, with some reporting in the 20’s.  Contractor-oriented houses are essentially flat / up a little (especially if they have an energy efficiency initiative).  Industrially-oriented manufacturers reported 20-30% increases.  Lighting was 8-12% increase; commercial products were low single digits.
• Many are uneasy in looking towards 2011, especially construction-oriented distributors.  Most see a repeat of 2010 until at least the end of Q3.  Industrial distributors expect continued growth, albeit at a slower rate.  The overall consensus was 3-5% increase for the industry with the industrial segment leading the way with 8-10% growth.
• Some concern about some manufacturers maintaining loyalty at some distributors when key personnel leave / gain higher roles and are less engaged at the account level. For a number of distributors, there are lines that they do business with because of the person. When the person leaves, they say they’ll be more open to considering others / spreading the business around.  This is the aging of the industry coupled with manufacturers, and distributors, being challenged with understanding “why does my customer buy from me.”
• Heard from distributors that Allied Tube is going through some changes and reps are concerned. Changes revolve around the company being spun off from Tyco as part of an IPO.
• I spoke to a number of distributors and manufacturers who comment about the need to “reconnect” with their customers, and end-markets, as they see change in the market and the need to focus their message.
• A couple of national chains we met with expressed that one of the reasons that their business has down well this year is that the are taking share from Rexel.
• A number of distributors expressed interest, and efforts, in trying to diversify their business and get into the industrial space.  The challenge is, 1) doing it based upon one / a few people is very difficult, 2) why should an industrial line support that distributor and 3) why should customers do business with them?
• Heard of a few distributors looking to expand and wondering if they should do through acquisition or by opening branches and recruiting key people (and moving some of their people to maintain their corporate culture).
• Everyone asked out the consolidation outlook for 2011.  All expect it to be active and that there will be a number of smaller distributors close / go bankrupt.  Many expect contractor-oriented distributors to re-examine some of their branch locations.
• Spoke to a number of distributors and manufacturers who are looking to take “growth” into their own hands.  They’ve improved operations but now realize that to achieve their growth objectives, they need to either take share or drive demand (in the case of energy efficiency).

Some closing thoughts…

• The conference attracts the “better” distributors, who can afford an expensive registration fee and over $225/night for a hotel.  “Better” distributors will have better years and be more optimistic, hence 65 distributor entities do not necessarily project the regional perspective (this is less than 33% of the region attending.)
• In trying to set up meetings, I spoke to a number of manufacturers, and some distributors, who mentioned that they had people coming to the conference, for all or only selected days,  but not registering for the conference due to the registration fee.  Some stayed at the hotel, outside of the block, most stayed off property.  Recognizing that NAED is contracted with hotels for longer term (the Western is $266 + $25 resort fee + taxes!), perhaps a significantly lower registration fee would help attract more distributors.  When the registration fee is more than the hotel cost (for manufacturers and service providers) …

If you attended, what were your thoughts regarding the meeting?  Would a reduced registration fee drive more attendance?