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Commentary: Different Definitions of Market Leaders

Different Definitions of Market Leaders The release of our first annual MDM Market Leaders and Distribution Landscape Report last week was the result of several months of research. Throughout, we noticed some recurring themes. Last year changed every distribution company’s paradigms, which historically have been about size and sales revenue growth.

Our 2010 Market Leaders research indicates that the average declines in sector revenues for distributors on our lists (for 2009) were:

    Industrial -15% average decline
    PT/Bearing -16%
    Bldg. Materials/Const. -26%
    HVAC/Plumbing -16%
    Electrical -18%

Anecdotally, very few distributors grew revenues last year. (For a more comprehensive analysis of actual and real revenue performance across 18 individual U.S. wholesale distribution sectors, be sure to see the 2010 Wholesale Distribution Economic Reports, compiled by Dr. Adam J. Fein, at www.mdm.com/wder.)

I will never suggest that the downturn was positive, but it did act as an important catalyst for many distributors to find ways make their companies healthier. Companies are much more focused today on profitability and making smarter decisions about the real cost of revenue in terms of resource consumption.

One of the lessons we came away with from our research is just how many distributors we know who did not make the revenue ranking in any of the five sectors we analyzed, but who came through the downturn in a strong position relative to competitors because they were strategic and innovative in addressing the severe market shifts.

I think we’ll see an increasing focus on efficiency and strategic potential, not just revenue size, for both large and small distributors. I expect some dramatic shifts to our list of the top 40 distributors by revenue size next year as some on the list don’t adapt as well, and some off the list reap the rewards for finding and exploiting some of the emerging opportunities right now.

Market Leading Industry Analysis
I’d like to acknowledge our Associate Editor Jenel Stelton-Holtmeier as she was recognized nationally this week by our trade association for an article she wrote in 2009 about demographic shifts in distribution (www.mdm.com/demographics.) She was up against some top analytical reporting nationally, and has been a great contributor as we continue to strengthen our coverage of wholesale distribution trends.

© 2019 Gale Media, Inc.

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