AD Becomes THE Independent Electrical Distributor in Canada
David Gordon
Posted On November 20, 2012
3
0 As many know, the scope, and business dynamics, of the Canadian electrical marketplace is different than here in the States. A couple of key benchmarks:
- The Canadian market is “ballparked” at about 10% of the electrical spend in the US (maybe a little higher now given the growth in the oil sands areas).
- Most of the Canadian spend is within 90 miles of the border.
- The market is chain driven with chains thought to have 75% (maybe more) of the market.
Years ago there were 3 marketing groups in Canada – Copel (which became AD), Translec (don’t know if they are still in existence) and IED, which had EECOL (recently acquired by WESCO) as it’s general partner.
EECOL represented 50-60% of IED’s aggregated revenues.
With EECOL no longer in the group effective January 1, 2013, it made sense for IED’s membership to review its options to remain a strong channel for manufacturers and to preserve their rebates. We presume IED considered both IMARK and AD (personally, I know that IMARK, a little more than a decade ago, talked to IED about a “joining of forces” as I was involved in a meeting with IED’s general partner and Steve Cunningham.) We do not know how / why IED made the decision it did – either one would have benefited the IED membership.
With IED combining forces with AD Canada, the group now has 52 members and $1.5 billion in revenue (a reported 23% of the market.) Most of the remainder of the market is national chains, some of whom have also acquired independents over the past few years with acquisitions by WESCO, Sonepar, Rexel, Graybar and maybe others.)
The combined AD entity becomes THE independent channel for manufacturers whom now are best served marketing/communicating their offerings through the chains and AD. Why do we say “THE”? There are probably less than 50 unaffiliated independent distributors in Canada and most of them are probably real small companies. Other independent distributors, if they can / qualify, should consider joining AD Canada for “strength in numbers”.
From a manufacturer viewpoint, does this merger benefit you or would you have preferred IED remain independent?
As a US distributor, does the Canadian experience portend the future (albeit longer-term) of US distribution … 80% chains, the groups having to combine to survive or perhaps chains being 50% and independents (and the groups) fighting for a % of the other 50% (recognizing that not all distributors will join (or qualify) to participate in a group?
Canadian distributors / manufacturers … with 52 distributors now in 1 group and much of the remainder of the business in national chains, what could / should this mean for the industry association (Electro-Fed)? Is the AD NAM enough?
3 Comments
January 22, 2013 at 12:02 pm
the next step for these independents is to create a national alliance to compete on MRO blankets with major Canadian customer
May 11, 2015 at 2:13 pm
Can you tell me what “COPEL” stood for
David Gordon
May 11, 2015 at 2:36 pm
Unfortunately don’t know, and couldn’t find on the web. Perhaps someone from AD or a distributor in Canada could answer this
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