Graybar, Grainger, LEDs, Residential Leads and Vending Machines

We’ve been quiet for a couple of weeks, unfortunately, as have been busy with client activity and extensive travel, but this week we’ll share our observations from the NAED Annual, talk about a new phenom (new branch openings) and a few other things.

But, in the interim, thought we’d share some recent Reading Round-ups:

• Graybar
• Graybar reported their Q1 sales, which were up .2%, but net profit was down 51% possibly due to increased branch investments or possibly due to increased price competition.  Not as good as Rexel, surprisingly, but better than WESCO (actually in between the two).  AD’s members had the best growth in Q1 (4%).  Could be that independents are taking share or are they positioned better (and stronger) in the markets that are growing, or could it be that customer diversity (size and market focus) is the difference?
• While the federal government supposedly is reducing its expenses (or at least high profile ones like FAA controllers, White House tours and Blue Angel air shows), Graybar has a tool, in addition to its GSA contract, to pursue municipality business, which should strengthen as local economies improve and sales tax revenue increases.  Click here for an overview of the program.
• Grainger
• Sales were up 8%, however, 3% was volume and 2% was price.  Which begs a couple of questions:
• Given the sales increases from Rexel, Graybar and AD or the decrease from WESCO, how much of the increase was helped by price increases or how much worse would WESCO’s decrease have been?
• Many industrially-oriented distributors comment about Grainger being “a competitor” within their accounts, however, from conversations, no one seems to understand what percentage of the business Grainger gains, and hence the overall 8% increase, comes from their electrical business.  Are they as much of a competitor as their aura projects? Should distributor salespeople ask additional questions to better understand their competition?
• LEDs
• Think electrical distributors are losing sales.  Consider signing up for this LED seminar from Professional Builder magazine.  CEU credits are being offered and is going to discuss how LEDs can help “aging eyes, health and behavior.”  And one of the sponsors is Kichler Lighting as well as some other lighting companies we haven’t heard of.  Wonder who Professional Builder’s audience is … the home channel (DIY’s), the building wholesale industry and more of a residential, light commercial and institutional audience. In other words, electrical distributors’ competition.
• Residential Market
• We’ve all heard how the residential market is growing, which is great for the country and can have some spillover for electrical distributors and more so for selected manufacturers (not too many distributors pursue this market anymore as it is geographically fragmented). But it helps to know whom the players are.  Here’s a list of the top 100 builders in the country.
• Vending Machines
• Industrially-oriented distributors have been talking about vending machines lately. A topic that has revisited the industry as Fastenal uses vending machines as a way to gain share within customers.  Recently AD conducted a webinar for its affiliates overviewing their options.  Here’s a link to a press release from a company called AutoCrib highlighting their Premier Distributors … of which at least one is an electrical distributor (Border States).
• The question regarding vending machines is “what is the business case?” This comes from “who pays for the equipment”, “what inventory to load it with”, “what type of machine to recommend”, “the refilling schedule”, “how many turns to expect per ‘slot'”, and more.  A trend to be watched (and that could be extended to contractors in on-site trailers, or if there were smaller, mobile machines that could go into vans, or possibly in contractor locations … or consider in an institutional facility … But how does it make financial sense or is part of the rationale a sales decision (offensive or defensive approach) or a marketing expense?

Thoughts? What are you seeing in the market?