NAED Eastern Region – The Comeback Succeeds

NAED should be congratulated for its valiant effort to hold the NAED Eastern last week in Austin, TX. By no means did anyone expect the turnout to equal prior conferences from almost two years ago … especially when similar conferences in other industries and some in the electrical industry have drawn 40-50% of their typical attendance.

Approximately 270 individuals registered for the conference … about 50-60% of a typical regional conference as we regrouped at the last locale of an industry regional conference.

According to many that I spoke with, the meeting was a success for them. While many wished that they had more meetings, the 26 distribution companies were, for the most part, completely booked (that’s what happens when you are the prettiest person at the dance!) and many manufacturers commented that, even though they would have liked more, the had high quality meetings and achieved an acceptable ROI.

And the one-on-one booths were, for the most part, well-staffed and full most of the time.

While a number commented that NAED could have done better from a communications viewpoint and there was no educational element (although typically few attend), it harkened back to a comment that someone at IMARK mentioned years ago when I worked there … and I paraphrase … “Call a meeting at a hotel and then get out of the way. The people who come will network and find value.”

While there were few distributor attendees, hopefully distributors recognize that for there to be a distributor association they need to support its conferences and send at least one person from their company. If they don’t, the decline in conference revenue, which is the primary source of income for the association, will decline which could result in a decline in services and possibly staff and perhaps an increase in dues. If conference rates increase much more, manufacturers will bring less people, and, hence hurting the conference. While consolidation will make its mark, distributors should consider if they want a distributor association … and support its events.

And yes, there were a few manufacturers that were visible by their absence.

So, what did we hear?

In talking to distributors and manufacturers, we heard

• As expected, revenues are strong for all and everyone said, “business is great.”
• Some distributors have also been able to improve their margins this year, passing along price increases and adding a little more.
• Lots of interest in acquisitions. Not only from the national chains but some of the medium-large distributors are also looking for deals.
• Manufacturers are also looking to make acquisitions but there are not many privately-held companies that are willing to sell at “reasonable” multiples (so, no “good buys”). There was talk about the GE Current / Hubbell Lighting deal and what Hubbell may do with its $350 million. Also, some discussion about a reasonable size deal that is expected to be announced within the next few weeks.
• Conversation about eCommerce. Many trying to benchmark their performance to understand if they are under / outperforming as a percent of sales. A number recognizing, perhaps lamenting, that the traction that they are seeing is in more search (omni-service) than in actual purchasing. Manufacturers also commented that distributors are asking them for data as those with an eCommerce commitment are not satisfied with their current solutions – they want more data an in customized / individualized formats.
• The Mayer / Rexel deal was finalized (closed) during the conference.
• When asked about product shortages / supply chain issues, all expect them to continue well into 2022, at least mid-year, if not all year.
• The success of ETIM North America over the past 18 months captured the interest of some manufacturers I spoke with, and a number asked for more information as they can see how a stronger product classification model can help them in a number of ways.
• Companies that manufacture, versus being dependent on Asian manufacturing (sourcing or contract manufacturing), seem to be taking share.
• Some distributors are proactively considering diversifying their business into other product categories as well as seeking to increase their distributor-led services revenue (which also then means some sales “reeducation” to sell the company’s value proposition.
• Many discussed the challenge of “selling” in the new environment of remote workers … either full-time or part-time as companies go to a hybrid model. Some also feel that the “no visit” is also an excuse not to meet with a distributor / manufacturer. Selling will get harder which could affect new product introductions. Buyers are becoming more selective, and it could help brand incumbents.

2022

• It appears to be a little cloudy for many. Growth is expected. Had some share they expect low to medium single digit, some at double digit. Those with double digit are not impacted significantly by commodity price increases and are not heavily dependent upon Asian imports and have new product introductions. Lighting expects more of a rebound … if they can get product.
  • Picking an industry number for 2022 may be like having a few too many drinks and throwing a dart. Tough to predict where it will go.
•  The passage of the infrastructure bill is not expected to have much impact in 2022, maybe a little in Q4.

The keynote speaker was “fair”. The first part of his presentation was a recap of supply chain and COVID challenges with “this will eventually change” but the ending got better with sharing the thought of “what is your tomorrow’s business?” and the need to stop protecting yesterday to create tomorrow.

The upcoming NAED Women In Industry meeting is, from all accounting, “over-sold” (over 400 registrants) which is shocking considering it is a mid-December meeting. Further, the NAED LEAD conference, also in mid-December, has about 100 attendees. Congratulations to both conferences for strong attendance in the face of COVID and Christmas! (And here’s to hoping that American Airlines doesn’t have another meltdown!)

Overall, the NAED Eastern was a good start to the industry conference season, especially in a time of uncertainty. There are things NAED needs to do to enhance the conference, but the part that distributors need to do is show up. They need to decide if they want a distributor association and want to network with others … and manufacturers. Yes there are the marketing group meetings that are designed to strengthen distributor / manufacturer interaction but 1) typically only 30-50% of distributor sales are within a marketing group, 2) other manufacturers deserve some time with distributors to strengthen and build relationships and 3) distributors can always use the opportunity to network with others in the industry / other distributors.

There was good discussion throughout the conference, even without educational sessions, enabling everyone to achieve their conference ROI.

Lighting Opportunity

Oh, and by the way, Channel Marketing Group introduced a new initiative to support lighting manufacturers to those we met with. To learn more, email me.