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The key takeaway from yesterdays Economic Update Webcast with Adam Fein is that the economic recovery is being supported across a number of economic indicators important to distributors. That was reinforced this morning when the Commerce Department reported U.S. GDP grew at a 3.2-percent rate in the first quarter, partly helped by the lowest core rate of inflation number in 51 years.
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But distributors have to recalibrate expectations for growth. Fein reviewed the data on the damage that took place to revenues in each of the 19 wholesale distribution product sectors covered in the just-released 2010 Wholesale Distribution Economic Reports, the fifth year he has produced this industry benchmark series. Last year was the worst year on record for distributors. "We have a long slow way to go," Fein said.
This recovery has a "long, hard tail" to it that will mean several years of slow growth – nothing like the years leading up to this recession. By the end of the Webcast, it became clear to me that distributors that merely downsized in response to the downturn and now are ramping up the same distribution model with the same cost structures in place may face tough conditions. Fein emphasized that distribution has always been about innovation and improving productivity. Clearly the new economy calls for rethinking new distribution models.
And inflation could become a factor, as well. Fein also cautioned it is difficult to measure how much excess capacity there still is after this downturn. Are there too many distributors based on how much the economy has shrunk? That led into some great analysis of the potential for consolidation this year.
Thanks to Infor and IBM for sponsoring this free event. It was a pleasure for MDM to host this event.
You can still access this event on MDM's Downloadable Webcasts page. Register and download the Economic Update with Adam Fein.
Infor and IBM will be sponsoring the next two MDM Webcasts, as well, a two-part series on strategic pricing from Brent Grover. Learn more about that series here; registration and more details will be available shortly.
To order the 2010 Wholesale Distribution Economic Reports, visit www.mdm.com/wder to choose the sector report you'd like or to order all 18 sectors in the Economic Factbook.
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