How Was Your First Half?

After the first half of the year, you may be ready to sit back and make paper airplanes.  The market is confusing.

It’s been a unique first half. Some are up, some are down, some are flat. No rhyme or reason. Huge swings in performance with no clear reason. And now we’re hearing marketplace concerns, except from those involved in lighting / LED / energy efficiency. Everyone else is sweating (and we’re hearing of some “right sizing”.  To help, we’re conducting a survey and trying to get a sense of the range of performance from manufacturers and distributors (and at the end of the survey you can see the results to date.  Neither your name nor company is not requested in the survey.)

Consider

1. First we started with 2-3 months of very bad weather in much of the country, some of which had distributors closed for two weeks of time. Many distributors, and manufacturers, started the year deep in the hole. The only good thing was that the winter of 2014 was bad, so comps weren’t horrendous (but many had budgeted for an uptick).
2. And then this was compounded by the West Coast port strike, which hurt a number of manufacturers (a separate topic of extended supply chain lines for later!)
3. Compounded by a strong dollar which hurts exports and the OEM market
4. And a drop in the price of copper of 40-60 cents (and maybe more depending upon comparison dates).  For a distributor this could account for 2-4% drop in sales. At the same time this could help manufacturers who have copper in their products, enabling some to use the cost savings as a price weapon to capture, or retain, share.
5. Should we mention the oil and gas market? And the ripple effect is has to other industries? Or the fact that it impacts a broader swath of the country than ever before?
6. And that the agriculture market isn’t too far behind the oil / gas / mining market. Foodstuff commodities are down so farmers can’t afford equipment, hence impacting manufacturers? And delays in repairs?
7. Or that any market growth that occurred in the first half is market specific? We’ve seen a trend that major cities are frequently seeing commercial construction growth while suburbia sees nominal growth (in most areas) and rural is hurting.
8. A bright spot, however, in general, is the energy efficiency market. And some markets are seeing resi growth (Boston, Florida, Dallas, etc) and a number of major cities do have cranes.
9. But now we’re hearing from manufacturers and distributors that the “pipeline” seems to be drying up with projects (industrial and construction) in a number of markets being put on hold.
10. and we all know that there are other contributing factors.

Could some of this be economic concerns? A cloudy, uncomfortable, outlook? Concern about an interest rate increase? A slow Chinese economy and concern it could be an indication of more? The lack of the consumer “rebound” that has been talked about?

All we know is that the marketplace is very uneven.  For some who can be agile this represents opportunity; for others that believe in a “one size / strategy approach and treating all distributors equally”, perhaps a challenge.

To gain a sense of the first half we’ve talked to over 30 distributors and manufacturers so far, soliciting their confidential input and seeking trends. We’ve also learned that the marketing groups are not meeting their expectations with IMARK essentially flat and AD about 3x IMARK’s growth YTD (says something about the broader memberships). Some chains are down mid single digits.

And, to give everyone a sense of the first half, we’re running a confidential survey to quantify the impact and give everyone a sense of variance.  Click here to see the results so far and then Take the 3 question survey and see where the market has been.  We’ll publish the results in a couple of weeks.

How’s your market? (and there are growth opportunities as well as strategies to control your destiny. We both have clients that are prospering in this market!)