Yesterday morning when I logged on, I ran across Christian Sokoll’s Monday Market Share posting on LinkedIn (and if you are not following him, you should.) The headline was “Navigating Uncertain Times for 2024 and Beyond.” So, I clicked on the link, went to his blog, and lo and behold, 2024 is running at about the industry long-term average. Which isn’t bad as long as you don’t compare it to the past few years.
But then the kicker … early projections for 2025 is for a decelerating growth rate! To less than 2%! And without projected price inflation, always a “crapshoot” given commodity pricing, the market is flat!
More disturbingly, consider …
- If we didn’t have datacenters popping up on every corner.
- Or large semiconductor chip factories
- Or declining interest rates that supposedly will improve the economy (but probably won’t kick in till Q3 for the construction industry)
- And southern states outperforming northern areas
- Plus industrial re-shoring
- And infrastructure investment and utility spend.
So, are you getting depressed yet? If so, blame it on Chris as an economic forecaster (but then again, economic forecasting is sometimes like meteorology!) But it’s not his fault.
2025 Strategy
This means that to win in 2025, assuming all of the above occurs, the growth will come from:
- taking market share
- being intentional about where to invest, what accounts and projects to pursue, identifying niches that are growing, and you are qualified to pursue (defined as “have a value proposition.”)
The strong will survive and thrive.
It then got me thinking about a few things which we’ll share over the next few weeks in our 2025 Random Strategy Thoughts Ideas series (I know, strange name, but some will be “unusual” and some will be “expected.”
Dual Trade Contractors
Recently I reviewed Ferguson’s quarterly report. Yes, the plumbing distributor. They are a $30+ billion company. Doing about a $1 billion in electrical. One of their major growth strategies in 2025 is focusing on “dual trade contractors.” For now, for them, they are focusing on HVAC contractors. They’ve identified that many of their plumbing customers also are licensed for HVAC work. To capitalize on this, they are bringing HVAC parts and supplies to 400 plumbing locations. They won’t sell HVAC equipment, but they will pursue the parts side of the business … which is relatively easy for a contractor to move to Ferguson.
Why mention this? Do you know which of your customers are licensed for dual trades? More and more contractors are electrical and plumbing, or electrical and HVAC. Is this an opportunity for you? Perhaps you cannot gain line representation, but could you acquire a small HVAC or plumbing distributor? Or better yet, a small electrical distributor that already has plumbing or HVAC?
Think it’s crazy? Did you know that both Rexel and Sonepar own HVAC distributors in Europe? And that Rexel Energy Solutions has a broad HVAC solutions offering?
Take Away
Most electrical distributors stay as purists and focus on the electrical industry, however, have you noticed that market leaders have diversified:
- Sonepar – electrical, utility
- Wesco – electrical, communications / data, utility
- CED – electrical, solar
- Graybar – electrical, datacom, utility and then they doubled down on electrical but through a diversification move by acquiring non-Schneider distributors AND they have acquired non-electrical distributors
- Border States – electrical, utility, engineering service
- City – electrical, solar
- Win Supply – electrical, plumbing, industrial supplies, air, HVAC and others
To name a few (and yes, I’m probably missing a few divisions in the companies above.)
If you have a longer-term horizon, diversification may create another pathway to growth. The diversification could be a growth element of electrical, it could be a complementary offering for your customers that enables you to leverage existing assets and systems.
What other ways could you diversify? It takes a special type of leadership and vision to grow a company with multiple divisions.
Thoughts?
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