Industry Outlook … Decent for Distributors, Middling for Manufacturers

New large projects are just not here in my market place. So my growth is basically going to be single digit.
Something must be up at Rexel, my sales person just disappeared. Kinda like my ERP support just disappeared at Epicor, now my Rexel sales person is gone.

Thank you for your post David. I appreciate the research and thought you put into your articles.

As a part of one of the manufacturers in our industry I paused when I read this comment on manufacturers “..it’s easier to grow sales and take share by converting a distributor or opening new ones than to work with existing ones…” I found this disturbing Dave. The reason I had an issue with this is because I have not signed up a new distributor in over a decade and I cover a pretty wide chunk of real estate with a positive history of above market growth.

After reflecting on this a bit, I decided we may have different definitions. Today, many manufacturers have many brands. Adding a brand to an existing distributor makes us stronger partners. It brings operational efficiency buy lowering transactional costs and makes marketing efforts more productive. It helps our mutual customers by allowing joint calls to cover a wider selection of products, helps them strengthen their vendor support, allows SPA’s to be broader in scope. It does not add the number of over-all distributors for the manufacturer.

When I hear a distributor say manufactures have too many distributors I ask them why they have so many manufacturers.

All opinions are my own and not necessarily those of my employer. Feel free to join my network by going here http://bit.ly/link2doug

Keep up the the great, thought provoking work Dave!

Doug – thanks for your comments and feedback … and for being a disciplined manager in your territory and for your manufacturer. Unfortunately, not all salespeople / sales managers are as disciplined as you. And while adding brands under the umbrella can strengthen a partnership, frequently there is much “pressure” to support a line vs continue with the line that the distributor originally had (whom they decided to “partner” with for various reasons.) Frequently distributors feel that converting to the “new” line is inevitable but that the manufacturer won’t cut off another distributor who isn’t supporting the entire package.

And frequently distributors do have too many manufacturers and I’d encourage you to ask your distributors why they do (ask about a product category where you don’t compete.) In some instances it is brand preference from key customers; sometimes it is that they need a “price” line; sometimes it is to ensure availability; perhaps there is product specialization and yes, sometimes it is “keeping the key manufacturer ‘honest'”. Lot’s of reasons, which ones are real can only be determined through open dialogue.

There could be two scenarios in play with these numbers.
1) Distributors are projecting higher numbers because they are poor forecasters of business. Many devote almost no time and have a marginal handle on what’s going to happen more than 30 days out.
2) Manufacturer salespeople have learned a lesson on forecasting for their bosses. It’s the old “sand bagger” or “looser” syndrome.

The biggest issue facing distributors and manufacturers in the Bay Area is hiring. There is no talent, anywhere. Especially outside sales. Hubbell has had an opening for 6 months and so has all of our competitors. He has to import an outside sales person from Sacramento. We still have one opening for outside, inside, projects, quotations. Sad!