2017 NAED South-Central … The Beginning of an Upturn?

Attendees at the 2017 NAED South-Central shared a sense of optimism as many expressed improving sales in January and February.  It was not unusual to speak with a distributor or manufacturer who was up 3-5% and there were some, non-lighting, manufacturers that were up high single to low double digits.  Few credited the improvement in the copper market for their growth. Those in the industrial segment expressed improvement and even those in the oil and gas segment were seeing progress with more oil rigs coming online. So, improvement is started and if Trump’s plans for infrastructure investment, tax changes and the emphasis on “bringing jobs back” occur, then 2018 could build upon this building momentum.

From an NAED viewpoint, the South-Central had about 625-650 attendees.  Distributor attendees came from 74 operating companies (defined as companies / divisions that registered for the conference.) It was probably about 55 distributor main houses  / unique companies.

Observations / “Heard Around the Marriott” at the 2017 NAED South-Central

• Generally there were positive remarks about they keynote speaker with the most relevant comment from an attendee being “salient”. Good reminder message to “think differently” … not with an expert mind (which can be fixed based upon “experience”) but with a beginner mind (questioning, trying, re-imagining).
• The first part of the session was essentially an NAED sales pitch which, given that attendees are typically more active members, is somewhat preaching to the choir but, if everyone participants in “one more activity”, the association will be stronger.  Darrell Smith, from IAC, who was the South-Central RVP, emphasized the need for distributors to consider their value-added services … expected and those that can be fee-based as points of differentiated that they need to train their sales organization on as well as better communicate to their customers. These differences could make the difference in addressing the headwinds of eCommerce, manufacturers not needing the channel and expressing a difference to one’s customers.
• Heard positive regarding Michael Marks’ session on manufacturer consolidation, what drives it and how to react. Heard no feedback regarding the using NAED session and the “Gig / Employment session.” The “Changing Sales Model” session from Frank Lynn was not commented on too favorably by a few people.
• An individual referenced they were asked “What has changed with NAED meetings over the past 20 years?” Which also begs the question of “What would attendees desire to be changed?” and “What would entice non-attendees to attend?”
• Eaton (gear) had a layoff last month and a round of involuntary mandatory day off
• Continued discussion with manufacturers regarding NEMRA’s Point of Sale / Point of Transfer initiative.  A few more committed and the list is now at 32 manufacturers who have endorsed.  Additionally, a couple of independent distributors expressed interest in endorsing as they like the concept of a common reporting standard. (For more information contact NEMRA or David Gordon who is the NEMRA POS / POT Project Facilitator.)
• A number of manufacturers commented about their desire to be further “heard” within the NAED structure to express manufacturer issues to move the industry forward rather than being viewed primarily as the financial engine (especially as viewed at the conferences with more attendees at a higher rate plus paying for sponsorships.)  The concept is akin to the Boston Tea Party … “no taxation without representation” as the NAED Board is comprised of 18 distributors and 1 manufacturer.
• Other issues from manufacturers were:
  • Inability for smaller manufacturers to get meetings with distributors due to distributors booked well in advance of the conference, and
  • A belief that the marketing groups have essentially inhibited non-manufacturers from calling on distributors (the groups are gaining more loyalty from their members) with some saying need to have a rebate program to offer even before calling on a purchasing manager.  This is turning many of these manufacturers to further supporting City Electric branches, CED profit centers and small distributors … all environments where branch level personnel can make decisions.
  • And this leads to the third issue of margins being compressed for everyone in the channel; increased pricing pressure due to customers bidding even $500 orders and manufacturers more regularly questioning the rebates through the groups. They recognize the expectation of rewarding for commitment / loyalty, however are not seeing significant growth differential and are considering reducing bases and increasing based upon growth albeit expressed concern of being “leader” and potential consequences initiated by a group’s management.  Time will tell if manufacturers renegotiate their bases (and remember, the rebates are supposed to be confidential, so would / should it make a difference?)
• Many distributors are getting ready to launch eCommerce sites.  Some manufacturers expressed surprise and a commonality that many of these distributors are AD distributors (who committed to create sites last year, hence timing is about right for launches).  AD recently had 230 attendees from multiple divisions at their eCommerce Summit and Unilog will have over 100 attendees at their upcoming users conference.
• Attended GE meeting where:
  • Briefly discussed sale of company which essentially was a non-discussion as nothing can be said about the process.
  • GE emphasized its commitment to some new product launches which is to be expected given that much of those investments have been made.  In reality, the company needs to consider executing as, when it sells, it needs to be able to continue to deliver sales and position for long-term growth to retain its value.
  • Highlighted a number of incentive programs all of which are based upon performance, hence variable costs.
  • Introduced a new take-off tool called GE PanelScan which is based upon machine learning.  The   The tool is in beta testing and appears to be able to reduce distributor take-off time and deliver a bill of materials with pricing. One distributor called it a “game changer.” Reportedly Siemens has developed something similar in concept and Square D has something albeit not as advanced.
  • GE has hired some sales personnel across the country and is seeking more.

The presumed goal of the session was to reassure distributors.  While a number said “heard many stories over the years of a change that hasn’t happened” and they’ll “wait and see”, none said that they were ready to jump ship and all expressed some level of support, a desire to see the division succeed (as they need it to succeed for themselves) and were “comforted” by familiar faces that they can express themselves to.

• From a CMG viewpoint, spoke to some distributors about customer segmentation and gathering customer input / satisfaction levels through our customer satisfaction assessment initiative and to manufacturers about strategies to drive growth and capture distributor input also.

Overall it was a productive meeting. There is optimism in the air, attendance was decent and sales growth cures all evils!