2015 Planning, Part 2 – Resi, Data Centers, Trends & Questions

Welcome to another installment of “Time to Plan” where we’re sharing industry indicators and potential planning questions.

Indicators

• The housing market is showing signs of continued growth, albeit this is marketplace specific.  It appears that the higher end of the market is the most robust which could create opportunities for lighting controls, home automation, more sophisticated lighting fixtures, layouts and more lighting (including LEDs).  Also the opportunity for security and outdoor / landscape lighting. If you play in this market, make sure your contractors know what you can help their builders with regarding upgrades! Here’s a link to an article.  This can be a lucrative market from a margin perspective. As an idea, helped a distributor develop a Residential Home Upgrade kit.
• Moody’s upgraded the North American Building Materials Industry from stable to positive. While they did this from an investment viewpoint, they pointed to “Higher volumes and prices, increased government spending and positive economic indicators should see operating income grow by more than 7 percent in the next 12 to 18 months.  All three of the building material industry’s end markets are showing signs of strength,” says Vice President — Senior Credit Officer, Karen Nickerson. “While private residential construction has been the main driver of growth over the past year, positive trends are developing in private nonresidential construction and public construction is stabilizing.”
• According to a recent survey of the 451 Global Digital Infrastructure Alliance by ChangeWave, “Datacenter Retrofits vs. New Construction. Just over half of recent datacenter facilities projects (54%) have been retrofits, while 46% have been new datacenter construction. But looking ahead, a far greater differential exists in terms of priority for datacenter operators: retrofitting beats new datacenter construction by nearly a 2-to-1 margin as a top project.” Which begs the questions of,

• “Where are there data centers in your market? and
• “are we calling on our customers data / IT departments, presuming they are large enough, to talk about retrofits, especially energy saving initiatives (data centers are looking to reduce energy costs and heat generation.)

If you’d like the executive summary of the results, email me.

Industry Trends?

While we want to say that our industry is “unique”, here’s some key trends that the electronic industry is experiencing.  Perhaps learning from others can create some ideas?

• Consolidation of suppliers with a need for more services: This continues to be a leading trend for the electronics customer. The desire to do more with less, and faster, is a scenario that is critical in the business world today. Customers want to get more accomplished with fewer distributor partners, which begs the questions: Can my distributor provide the technology breadth I need?
• Supply chain/materials logistics: One service that needs to be highlighted, and certainly one that has trended upward for years, is supply chain/materials logistics. 
• E-commerce: Whether you are from a large OEM or a small regional customer, your team relies on the ability to access a distributor’s e-commerce site for up-to-date information. This poses some questions:
  • Does your distributor have the resources to stay current?
  • Is it seamlessly connected to its franchised supplier sites?
  • Are its tools associated in making your engineers or purchasing team’s jobs easier and more efficient?
• Expanded product offerings: Customers are looking for expanded product offerings from a single distributor.

Electrical distributors with a strong platform are already executing on many of these. The challenge for most, however, is getting the message out to their customers, gaining the support (and training) their salespeople on how to support / sell these efforts and a willingness to invest in non-electrical sectors (personnel, acquisitions, etc). Each of these can help you differentiate yourself.

Planning Questions

Here’s some planning questions to consider asking your customers (be they end-users/contractors or distributors):

1. How do you evaluate the distributors/manufacturers you purchase from?
2. What is it that you feel that distributors/manufacturers do not understand about your business?
3. What type of training are you interested in?
4. What services and/or products are your customers asking for?  What are your customers’ challenges?
5. How are you trying to improve your productivity and what are the biggest drags on it?

Hope this helps and call for more ideas.  Remember, a plan today generates sales and profits for tomorrow!