NAED 2014 Eastern Observations (Nov 2013)

Just before Thanksgiving we attended the NAED Eastern which was held in Orlando.  Approximately 560 individuals registered for the conference.  According to the registration list, only 62 distributors were listed and this included elements of some companies being listed multiple times (i.e. Sonepar corporate and Sonepar operating companies and multiple companies that comprise US Electrical Services Inc).  Suffice it to say many were asking “where are the distributors” or “the number of distributors in the East has significantly declined”?

Some observations and what we heard:

• Due to the turnout there was increased discussion about changing the NAED meeting schedule.  Ideas such as
• reducing the number of regionals to an East / West format was mentioned
• keeping the three meetings but moving the Eastern to January to provide more spacing from the AD, IMARK, national chain and AutomationFair meetings
• having NEMRA in the fall and the Eastern to the winter (think about the planning benefits if manufacturers could roll-out their plans to their sales organizations before the new year)
• having only 2 meetings but holding them essentially “back to back” so manufacturers could stay in the same location for a week

The challenge, according to some, is NAEDs commitment to hotel contracts over an extended time period (but this could be addressed by renegotiated agreements and/or paying cancellation fees which shouldn’t be too extensive given the decline in attendance.  We also heard that the amount of meeting space for manufacturers may be an issue … here’s an idea … if there was less suites / meeting rooms for manufacturers perhaps there would be more interaction / hallway meetings!

• 2013 performance was all over the board. Many said they were essentially flat / up a little.  Some were up significantly.  The commonality of those who were up is that they have positioned themselves to pursuing the energy market and/or other niches, with some having LED specialists.  And frequently these companies were also in urban areas or areas growing for a specific reason (i.e. shale opportunities). Most are focused on trying to take market share.
• Conversations with manufacturers and distributors revealed that there is little discussion regarding growth. More of the conversations seem to be centered around operational issues and purchasing / pricing issues. Some of this may be due to a change in attendee responsibility.  Principals / ownership / senior sales management is attending, however, other attendees are operations, purchasing and finance. We heard the comment that most manufacturers are very product focused and that those who are more vertical or application-oriented are gaining greater interest. According to distributors, most manufacturers appear interested in gaining market share / obtaining conversation vs trying to grow the business.  Both distributors and manufacturers are concerned about the others’ ability to execute in the fielf.
• We heard positive regarding the general session speaker who talked about identifying and adapting to change.  We have no idea how the educational sessions were as we did not talk to anyone who attended one.
• Feedback regarding 2014 is for 4-5% growth with uneasy sentiment for Q1 due to uncertainty about what Washington will do regarding the budget and debt ceiling.
• During the General Session, NAED mentioned a “Talent Management & Review Toolkit” and made the comment, based upon some research, that 21% of distributors expect to lose between 25-50% of their sales force in the next 5-10 years due to age (which may be low for some companies!) They then mentioned the above toolkit at www.naed.org/employeelifecycle which may be of interest to many. The need to recruit new talent vs. “retreads” was a common theme in discussions.
• We spoke to a number of people who inquired regarded our opinions on e-commerce and e-marketing – both manufacturers and distributors.  Much is happening in this area and companies are actively trying to determine how to collect email addresses and what / how to use the information to market to customers / prospects.
• ElectricSmarts unveiled a new iPad application that is pretty neat.  It can be branded for a distributor and is a complete resource center and currently includes about 100 manufacturer catalogs.  It integrates with IDW data, can provide list pricing if the distributor is integrated with NetPricer, has many calculators, videos, customers can build product lists among multiple manufacturers and more. Distributors can choose which manufacturers to activate.  For manufacturers, which can have their own app, the system can be up and running in 4-6 weeks.  And for both manufacturers and distributors this also can be a great tool for sales organizations.  Currently only available for iPads, in Q1 it will also be on the Android platform.  Distributors who already have ElectricSmarts integrated into their websites should definitely look into this (and no, we’re not paid for an endorsement!)
• There was some conversation about IMARK gaining access to about 15 security and A/V oriented lines from EDGE, a marketing group in the security, broadcast, datacomm and a/v industry.  We’ve never heard of most, if not all, of the companies.  It appears that IMARK members will essentially purchase from these companies with the rebate being paid from EDGE to IMARK to its members as EDGE has the deals with these manufacturers.  We spoke to a few IMARK distributors who said that the relationship didn’t have much interest to them as they didn’t participate in these product categories.
• LEDs remain a big topic with a growing percentage of lighting fixture sales moving this way.  Estimates, and they vary by distributor, is that 10-40% of lighting fixture sales are LEDs!

Unfortunately we heard many generalities as we were involved in many of our own meetings.  With the new format of 1/2 day Wednesday, full-day Thursday (inclusive of 1/2 day one-on-ones) and 1/2 day Friday for one-on-ones, there isn’t much time for “hallway” meetings as there is little time to get much done.

What did you hear?  And if you attended an educational session, what and how was it?