MDM's Mid-Year Outlook Captures Current Snapshot, Improved 2024-2025 - Modern Distribution Management

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MDM’s Mid-Year Outlook Captures Current Snapshot, Improved 2024-2025

Find a synopsis of our Mid-Year Outlook webcast from June 27 and details on new economic reports MDM is set to roll out.
Warehouse worker walking with a forklift in a large warehouse full of shelves

The latest MDM Webcast aimed to sort out the continued mixed economic signals facing wholesale distribution today, and where things are headed over the next 6-18 months.

Streamed live on June 27, our 2024 Mid-year Economic Outlook webcast was at least the 16th iteration of the event, and it always serves as a timely snapshot of where the industry is at the mid-point of the calendar year, with highlights of its key trends and drivers alongside a look at relevant economic data and forecasts.

Our webcast featured economic data and forecasts presented by Brian Lewandowski, who leads the Business Research Division at the University of Colorado Boulder’s Leeds School of Business. He’s packaged the data used in the MDM Forecast for the past 15 years.

Taking a quick look back at 2023, the MDM Forecast puts U.S. wholesale distribution revenues totaled $7.887 trillion, down 1.7% vs. 2022 in nominal terms. Following two straight inflation-driven bumper years for distribution revenue, 2023 was broadly a correction year, as 13 of wholesale distribution’s 19 sectors posted annual declines. 

However, certain individual sectors outperformed. While Oil & Gas (-11.3%), Building Materials & Construction (-13.3%), Metals Service Centers (-10.5%) and Agricultural Products (-10.1%) each saw double-digit annual declines, sectors of Pharmaceutical (+12.8%), Motor Vehicles & Parts (8.1%) and Industrial Supplies (+5.7%) had solid growth years.

In terms of “Real” annual change — stripping out inflation impacts — 2023 revenues actually increased 1.1%, led by the industry’s largest two sectors — Oil & Gas and Pharmaceutical — posting gains of 7.7% and 11.0%, respectively.

MDM’s forecast model uses the U.S. Census Bureau’s revenue data, but strips out the broader inclusions of agents and brokers, manufacturer’s sales branches and offices, importers and exporters — focusing exclusively on wholesale distributors.

Looking ahead, the MDM Forecast projects 2024 nominal growth of 3.3%, with 4.8% growth in store for 2025. That would put 2024 U.S. wholesale trade revenues at $8.147 trillion and 2025’s at a new all-time-high of $8.538 trillion.

If inflation stays tamed, 2025 looks poised to be a strong growth year, and still good even if inflation stays level.

MDM Forecast: U.S. Wholesale Distribution Revenues by Year
2020 $5.561 trillion -4.5% vs. 2019
2021 $6.996 trillion +20.5% vs. 2020
2022 $8.031 trillion +14.8% vs. 2021
2023 $7.887 trillion -1.7% vs. 2022
2024 $8.147 trillion +3.3% vs. 2023
2025 $8.538 trillion +4.8% vs. 2024

See the MDM Forecast’s specific sector forecasts below:

New MDM Economic Outlook Reports

Our Mid-Year Outlook webcast perfectly segues into a series of new economic benchmark reports MDM is set to roll out starting later in July.

Many of our readers found great value in our 2022 Economic Benchmarks for Wholesale Distribution report, which packaged a wealth of U.S. economic data relevant to distribution at both a broad view and drilling specifically into 19 different industry sectors.

We are currently in the midst of rebranding our EBWD report as the MDM Economic Outlook with both a 2024 annual report set to publish later in July, followed by quarterly reports. These reports will provide a wealth of timely, relevant data that will equip you with all of the economic context needed to make informed decisions about your operations and how your company compares with industry averages.

Besides forecasting, these reports will provide a snapshot of what each industry sector looks like today — how much of the total wholesale distribution sector revenue it comprises; the number of companies it has; each sector’s average gross margin; how its employment size has changed year-to-year; and much more.

These reports will be available in the MDM Store, and Premium readers get them as part of their subscription, as do members of the National Association of Wholesaler-Distributors (NAW).

The data found within comes from the U.S. Census Bureau, but we’ve done the legwork to package it all in one place to save you the substantial time it would otherwise take to navigate to the data most relevant for your business.

Trends Analysis

Before Brian dove into the economic data, our webcast had Oracle NetSuite’s Ranga Bodla, MDM’s Tom Gale and myself discuss some of the key trends driving the industry forward:

Industry Consolidation & Diversification: At the mid-point of 2024, distribution M&A activity is more robust than ever. As detailed in our June M&A Roundup, MDM posted 169 total distribution M&A news items through the first six months of the year, or just over 28 per month. That’s a healthy clip ahead of 150 or 25/month in the first half of 2023. Meanwhile, distributors continue to diversify their product portfolio, which makes defining an industrial, electrical, safety, JanSan, etc. distributor all the more challenging, especially for our annual Top Distributors project. This year’s PDF feature addresses that at length in its methodology.

Pandemic Accelerated Maturity Cycle: Distributors have progressed from what’s in their rear-view mirror with a focus on the future, concentrating on the kinds of innovations and what they can do internally to accelerate their teams and position them for success, regardless of market conditions. This has a lot to do with changing market models and the increased use of data analytics. This is a big theme of MDM’s upcoming SHIFT Conference, to be held Sept. 11-13 in Denver. 

Confluence of Transformation Initiatives: This is the coming together of distribution pillars of sales process, technology, data analytics and talent — elements of each that are driving toward a common goal.

“If you boil it down to one thing, I think this is the year of customer experience,” Gale said on the webcast. It’s the year where people are trying to define — in spite of the tough, sloggy business conditions — how they can outperform the market and outperform competitors. “It comes down to how they can strengthen their relationships with customers and what that looks like. It’s a different equation for every single distributor out there.”

On the technology front, Bodla emphasized the importance of achieving harmony across these core pillars rather than view them each as separate elements.

“The important thing here is thinking about how all these work together and form a foundation, as opposed to, ‘You’ve got to get on AI today.’ ‘You’ve got to set up an eCommerce website today.’ ‘You’ve got to go buy an analytics tool,’” Bodla added. “Thinking of these things individually in a silo is what led to some of the issues that have happened with technology and it not delivering on the promise that it could have.”

If you missed the webcast live, it’s available here on-demand throughout the Summer.

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