AD North American Meeting is #ADSTRONG

This week’s AD North American Meeting was attended by over 1100 people from distributor members, manufacturers and service providers who came from throughout the US, Canada and Mexico.  There was a buzz in Grapevine, TX at the Gaylord Texan as members talked about their year, continued growth in the lighting business, opportunity and frustration regarding eCommerce and more.

Some highlights:

• The theme of the meeting was AD Strong.  Bill Weisberg, Chairman and CEO of AD, shared the attributes of AD members as
  • Smart
    • Factor in others’ opinion, have (and solicit) wisdom, are grounded in the industry to make “wise” decisions … they are street smart, people smart, industry smart and financially smart
  • Driven
    • Have passion and a desire to succeed and will overcome challenges
  • Unwavering
    • In their core beliefs

And that these attributes lead to the success of AD’s members and are the hallmarks of their resilience and continued growth.  In the face of industry challenges (and opportunities) they come together to win by making group investments that enable “the group” of members to succeed. This can be seen through the group’s national account (now SupplyForce), Field Marketing Summits (FMS), Rewards program (distributor spiff initiative), eCommerce / eContent initiative and its HR Services.  AD’s tagline of “Together, We Win” was also repeatedly mention

• Across AD’s multiple industries, members purchased $9.6B worth of material and generated $614M in rebate income for independent distributors which is a 6.4% rate of return. This is for seven industries (some industries have higher rebate structures than electrical for price structure reasons.)  AD also shared that more than 100% of earned rebate income goes to members as interest income exceeds operational costs. It was mentioned that in AD’s 37 years it has generated over $6.5 billion for independent distributors.
• From a growth perspective, through this summer, AD’s US electrical group was up 10%.  Canada was also up significantly and had also increased its market share by 50% over the past 5 years.
• The eCommerce initiative was emphasized.  eCommerce should be considered as two elements:
  • Content (product) where 2.4 million total SKUs have been attributed across multiple industries. Most of the testimonials related to the plumbing and industrial supply industries where AD started.  171 member companies have subscribed to receive the data and $6M are invested annually into this initiative.
    • There were comments regarding some of the “quality” of the electrical data as well as that members are still requested to evaluate some data for accuracy.  (Still can’t get the definition of “good” data and data may always be an issue.  The content AD is providing is “enriched” data … some information appended to IDEA data.)  Members commented that they would like to see the process accelerated.  It was mentioned that AD has “140 dedicated staff” in this area although don’t know how many are AD employees versus Unilog staff.
  • The second part of eCommerce is the website development. Universally members expressed frustration in the time it takes to get a site up and running.  Admittedly some of the issue is the unfamiliarity with the process and the need for members to improve some of their systems (i.e. price management, inventory management, considering tax liability, etc) but they commented on process issues and that it is frequently 12+ months for a site to go live (and closer to 24 months!) No one knew of a launched site although some mentioned that they were in beta. Part of the issue may be that there is currently only one endorsed supplier. Some members commented that they are reviewing other solutions.
• AD launched AD Disaster Relief Foundation. This initiative, started earlier this year, is designed to legally allow members, and others, to target donations to individuals and other entities.  It was inspired by a foundation that The Reynolds Company has. The foundation is a 501(c)3 from an IRS viewpoint. Additionally, Bill Weisberg announced that he, personally, is going to fund the operating costs so that 100% of donations will be used for charitable purposes. It was purely coincidence that the foundation was launched right after the recent hurricanes and earthquakes.
• Over the past 18 months 5 former IMARK members changed affiliation and joined AD.
• AD now has 22 members in Mexico whose revenues represent 20% of the market.
• Award Winners
  • US Member with greatest % growth < $10M
    • Honorable Mention: LB Electric and Baynes Electric.  Winner: B & S Electric
  • US Member with greatest % growth over $10M
    • Honorable Mention: Revere Electric and Main Electric.  Winner: Eckhart Wholesale
  • Canadian Member with greatest % growth <$5M
    • Honorable Mention: Gray Electric Supplies, Harwell Electric.  Winner: Gimpel Electric Supply
  • Canadian Member with greatest % growth over $5M
    • Honorable Mention: Eddy Group and Electrozad.  Winner: Electrimat
  • Mexico Member Commitment Award
    • Honorable Mention: Risoul and Absa.  Winner: Bricos
  • US Supplier with greatest % growth <$10M
    • Honorable Mention: ProBuilt Professional Lighting and Reed Manufacturing.  Winner: Hammond Manufacturing
  • US Supplier with greatest % growth over $10M
    • Wheatland Tube and Dialight.  Winner Calpipe Industries
  • Canadian Supplier with greatest % growth <$5M
    • Honorable Mention: Generac Power Systems and Burndy. Winner: Dimplex
  • Canadian Supplier with greatest % growth over $5M
    • Honorable Mention: RC Lighting and Electro Cables.  Winner: Kidde Safety
  • Mexico Supplier of the Year
    • Honorable Mention” Hoffman and Intermatic.  Winner: General Cable
  • Best Annual Planning Process (defined as most effective Field Marketing Summit (FMS))
    • Honorable Mention: Central Supply and ConneXion.  Winner: Border States
  • Supplier of the Year for Marketing Excellence
    • Honorable Mention: Rittal and WattStopper.  Winner: Progress Lighting
  • Best Conversion
    • Honorable Mention: Horizon Solution (# of conversions they did) and VP Supply / Hubbell Lighting.  Winner: Billows and Acuity
  • Best Workplace (based upon employee engagement as measured by a 3rd party survey)
    • Honorable Mentions: Bricos, Electric Supply & Equipment, Schaedler YESCO, Standard Electric, Van Meter.  Winner: Werner Electric (MN)
  • AD MVP
    • Jeff Cronin from Independent Electric Supply in Boston
  • Giving Back Award
    • Honorable Mention: Green Mountain Supply and Standard Products. Winner: Stanion Wholesale for their work with the Special Olympics.

Additionally, heard around the conference:

• Much talk about the GE and ABB deal (we commented on here). All positive. All felt it was the “right” deal. Should help GE as gives some direction to employees about the future and all recognized that nothing will be done for 6-9 months due to the regulatory approval processes, worldwide, to close the deal and then it will take some time to develop / integrate / execute on plans.  Some wondered about Rockwell’s reaction given ABB can be a significant competitor, however, Rockwell distributors did not view this as an issue (they are well invested with Rockwell and wouldn’t change.)
• Speaking of Rockwell, comments about the Rockwell 2020 authorization appointment as well as the need for continued investment into specialists.  Some commented that they believe Rockwell would “support” continued consolidation and eventually have less individual owners and larger distributorships.  Expect to see more consolidation here with the “big getting bigger” although it was felt that Rexel and WESCO are not “Rockwel desirable acquirers.”
• NAED is soliciting member and manufacturer input as part of a longer-term strategic planning … looking towards 2027.  A manufacturer meeting was conducted.  Begs the question of “what is the role of the association 10 years from now?”  How many members will there be? What is the value proposition given that about 1000 distributors belong to marketing groups but only about 400 to NAED? How do meetings differ? How do the industry’s 3 associations better collaborate … or aggregate? Who should be NAED members … what is the definition of a distributor (after all, Home Depot sells to contractors and commercial end-users. So does Amazon Business (and they are members in other industry associations). And how many people who are involved in the strategy development process will be active in the industry in 10 years? A “town hall” or crowd sourced initiative could be interesting to solicit input in this initiative.
• Some early talk about 2018 national projections for the industry.  Low single digits.
  • Essentially means, not much clarity regarding macro economic direction, commodity (copper) price changes and continued pricing pressure in the lighting space.
• More distributors are expanding their offerings with
  • Expanding into complementary product offerings (i.e. industrial supplies, fasteners, etc)
  • Expanding their services offerings and targeting them at selected customer profiles. They are more involved in material movement, pre-fab, kitting, staging, panel shops and other initiatives … and getting paid for it.
  • Adding lighting control specialists
• eCommerce ROI … what is it? How to think about it to justify the investment? What will be needed to support it?

From a CMG viewpoint, had a number of discussions regarding:

• Customer satisfaction initiatives as well as identifying what customers value
• Our upcoming State of eCommerce from a Distributor Perspective report
• Participation in our upcoming Electrical Buyer eCommerce Usage survey
• Development of account-based marketing / promotional efforts (for manufacturers) as well as performance marketing / incentive strategies that go beyond the standard trip / merchandise program to become marketing platforms and/or “clubs”
• Interest in learning more about the NEMRA POS / POT Standards that Channel Marketing Group helped develop.  36 manufacturers currently endorse as well as Graybar, Rexel and some independent distributors.
• Idea generation / 3rd party industry insights

(email or call for details on any of the above)

Overall, a busy 2 1/2 days where got to see many.

If you attended, what did you hear? What were your thoughts on the meeting?

And thank you for all of the feedback we received from readers about ElectricalTrends at the meeting.