Signs of Sales Stabilizing?

Channel Marketing Group and DISC CORP released the results of our third COVID-19 Electrical Market Sentiment Report. With feedback from almost 500 electrical distributors, manufacturers and manufacturer representatives, it appears that the electrical market, nationally, shows signs of stabilizing.

Being deemed “essential” has enabled most in the electrical industry to minimize the potential economic damage. While revenue may have decreased precipitously (some down 50+%), some revenue is still generated (unlike some other industries). In most areas, construction has continued.  With states opening and those with closed construction markets “restarting”, barring COVID-19 spikes in local markets, the business has stabilized and hopefully will slowly recover.

Respondents shared their performance and concerns. Distributors and reps also shared their end-customer / contractor observations.

Key Sales Insights

• Depending upon the audience (distributor, manufacturer or manufacturer representative) sales are down 17-21%.
  • Note, this is the average performance, not overall sales performance. For example, if Graybar responded -10% and John’s Electrical Supply in Waco, TX responded -30%, the average is -20%
• The market is bicoastal.  Significant declines on the East and West coasts.
• Metropolitan markets, as expected, are more impacted.
• Quotation activity is down for many, but there is some going on
• Some have reduced inventory
• DSO’s from customers are increasing and yes, some distributors are asking for terms (although national chains and buying groups that are asking for “blanket” extended terms have been viewed negatively by manufacturers).
• The outlook is uncertain given project delays and cancellations but it is hoped that state reopenings will generate opportunities, especially renovation opportunities

Operationally

• The business has “gone virtual”.
• Distributors have stabilized their workforces, making changes to either meet PPP forgiveness guidelines and/or adjusted for the current business environment.
• Interestingly, the research shows that only a small percent expect to bring back furloughed staff but some are also looking to hire for new roles and/or as replacements.
• With states reopening, many are looking to reopen their counters and offices. Most distributor warehouses have been open and there has been some office activity.
• Manufacturers are wondering when they can visit (and some are aching to get on planes again!)
• Curbside pickup is part of the new norm, with counters closed. Will this continue as counters open?
• Text ordering is a new “channel”.
• 85% experienced some type of supplier disruption in April.
• Many have questions regarding safety protocols

These findings follow the results from our first report conducted at the end of March which highlighted the initial impact of COVID-19 and our second report which may have been the height of the decline and when distributors were in crisis mode.

Mid-March to mid-April represented crisis management mode for most. As companies adjusted and developed their financial and operational plans, the business seems to have stabilized. Companies that are “strong”, calm and financially stable are looking to take share as they transition from survivability to thriveability. Some are already there.

The survey was sent to Channel Marketing Group and DISC CORP’s marketing lists and clients, IMARK Group members and manufacturers, NEMRA members and manufacturers and shared via ElectricalTrends and Electrical Wholesaling.  Members of IMARK and NEMRA received a complimentary copy of the report as do CMG and DISC clients and survey respondents.

The report is available for $50 ($25 to Gary Sinise Foundation).

Early feedback has included:

• “Fascinating or surprising!
• If we can see a leveling off at -20…
• Thanks very much David
• Thank you!   Great insights
• Thank you for adding value to the channel!”

The complete report, with more information, including customer insights and the verbatim Appendix that shares best practices is available for $50, of which $25 goes to the Gary Sinise Foundation.

What are you seeing in your market? Share below (even anonymously) or give us a call … we’ve had people call and share information on contractor activity, distributor sales and openings as well as marketplace performance … all confidential.