When distribution leaders look back at the second quarter of 2022, it could serve as a major benchmark for where the industry was headed. Following the worst of the COVID-19 pandemic, companies not only survived, but thrived, with some distributors continuing to report record or near-record sales and profits. But with looming inflation and continued changes in customer behavior, companies may have to evolve and embrace new strategies to keep revenues growing at a pace deemed successful by management and shareholders alike. During 2Q 2022, MDM podcast guests shared their thoughts on where the industry is now and where it could be headed — and much of it comes down to sales strategies, effective communication and leadership that can stem the tide in an increasingly digital environment and times of uncertainty.
This is a recap of the major thoughts and points guests offered during MDM podcasts in 2Q 2022. Click on the headlines to read more — or listen to each episode in the embedded players included below.
- (Technically, this was just before 2Q, but we feel it’s close enough to include.) Chester Collier has been labeled a “distributor guy” — and that’s good thing, writes MDM CEO Tom Gale. “We need more ‘distributor guys’ strengthening supplier relationships and the value proposition of distribution,” writes Gale. Among other relevant topics, Collier and Gale discuss the state of sales in distribution, as well as the changing roles of marketing groups and sellers in the face of rapid change the past few years.
- Tom Fournier offers his thoughts on Canadian JanSan markets, including unique sales coverage characteristics and recent shifts as the sector has “commoditized and been targeted by Amazon Business and other nontraditional competitors,” MDM CEO Tom Gale writes. Fournier goes in-depth on fragmentation and M&A activity, as well as how geography dictates how specialized or general distributors can become. “There’s a lot of regionalization and diversity that makes national distribution challenging,” he says.
- Evolving leadership dynamics are changing the distribution industry. That was one main point that sprung up during MDM CEO Tom Gale’s conversation with Dirk Beveridge, who eschewed the analytical and clinical dissecting of the industry to discuss the importance of leadership. “The dignity of the jobs that these distribution businesses provide, there’s real value in the work of every job, there’s dignity in what they do,” Beveridge says. The two explore what the definition of leadership looks like in 2022, including how values and purpose might be key drivers for success, even in the digital age.
April 27: Dan Florness, CEO of Fastenal
- During a one-on-one interview at Fastenal’s annual expo, MDM Executive Editor Mike Hockett and Fastenal CEO Dan Florness discuss how the company continues to growth closer to its customers while having market success primarily through internal investment — all while in a fragmented setting rife with consolidation. Hockett and Florness discuss lessons learned from the COVID -19 pandemic, as well as how Fastenal’s growth during the past two years has boosted its confidence that it can handle anything that the market or supply chains throw at it.
- Maria Boulden, Mike Marks and MDM’s CEO Tom Gale acknowledge the buzz around the word “transformation” (digital, sales, etc.) but get to the heart of what’s impacting the distribution industry. The trio discuss shifts in customer buying behavior, digital-first go-to-market strategies, supplier partnerships, and the new sales skills needed to compete. There is a widening gap in how customers want to engage with their suppliers, Gale summarizes, and the degree that sellers are keeping up. “That doesn’t mean field sales is dead,” Boulden says. “But is it a very carefully deployed tool that is almost human-embedded in digital, so that you know your customer well enough to know when they’re going to need engagement with a person.”
- Doug Savage is no stranger to overcoming challenges. He took over his business in the late ‘70s when his father passed suddenly. By the 1990s, Savage implemented Bearing Service’s Entrepreneurial Operating System (EOS) amid challenges the company faced from the changing automotive industry. Having sales staffers focus on a “primary vendor strategy” helped deepen relationships with suppliers of the company’s top-selling product lines, which enabled it to earn added margin in return for higher rebates to the vendors, Savage says. “We needed to differentiate the compensation for our salespeople to sell the products that our strategy team wanted,” he says. “And that strategy was great.”
- Compared with other verticals, electrical distribution has been relatively slow to evolve, Sheila Hernandez. But as sectors are transitioning to more digital, data-driven operations, electrical distributors have “come a long way,” she says. Successful companies are learning how to transform in an analytics-driven environment, as well as learning how much they can change — and how quickly. “You hear all over about, you know, the buzzword of digital transformation,” Hernandez says. “And I think the challenge is really figuring out what that means for your company and what that means for your customers.”
- NAHAD EVP Molly Mullins and MDM Executive Mike Hockett chat during NAHAD’s annual conference in Miami Beach. The two talk about how the in-person conference bucked lingering COVID trends and welcomed more than 900 attendees this year. NAHAD’s 2022 program included 47 confirmed company meeting time slots, where distributors and suppliers could meet with customers in a private room and give presentations. “And that’s how they’re going to close more sales,” Mullins says. In the podcast, she also discusses how distributor and supplier members are faring with communicating all the industry-wide price increases.
June 3, 17, 27: Mike Marks, founding partner of Indian River Consulting Group
- In a series of MDM Quicktake podcasts, Mike Marks and MDM’s Tom Gale attempt to cut through the noise and offer views on what really matters in creating value for customers — in the second half of 2022 and beyond. Marks also provides perspective amid all the volatility, uncertainty, chaos and ambiguity (a.k.a. VUCA) that have escalated following pessimistic economic reports. Lastly, Marks and Dale focus on what transparency really means for distribution leaders, including differentiating between a company’s official communication and its daily, face-to-face/digital communication between executives, managers and frontline employees.
SHIFT | The Future of Distribution
Many of the topics discussed in our 2Q podcasts will also be addressed in a unified industry summit MDM is hosting Sept. 25-27 in Broomfield, Colorado. SHIFT | The Future of Distribution will help distributors navigate business model transformation across sales structure, digital and data analytics. Learn more about SHIFT here.