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This is a part of the 2017 Distribution Trends Special Issue. The annual feature was researched and written by MDM based on interviews with dozens of distributors, industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.
2017 Distribution Trends Special Issue
Competition looms in all directions. Big-box retailers like Staples and e-commerce players like Amazon continue to threaten jan-san distributors, but the sector is deflecting competition from medical suppliers and foodservice providers that are crossing over more into this space. "We're seeing a lot of them get into health care," says Ted Stark, president, Dalco Enterprises, New Brighton, MN. "That's obviously where there's big volume."
Though business is good and sales are up, there's continuous pressure on margins and distributors "need to figure out how to operate more efficiently," Stewart Strauss, president & CEO, Strauss Paper Co. Inc., Port Chester, NY. "We need to continue to improve service all the time, and much of that is technology-driven. We need to make it easier for the customer to do business with us and at the same time create an environment that has a little stickiness to it so they're happy with they're have and not easy to duplicate elsewhere."
Amazon, in particular, has been on the minds of jan-san distributors, who are working to compete with the online giant's pricing and delivery frequency. "In my last quarterly manager's meeting, it was the first time that we had felt some pressures from Amazon," says Rolly Dyck, vice president, general manager, Schilling Supply Co., La Crosse, WI. "They were in small accounts, where again it's, hey I can get in the next day versus waiting a week for you guys."
State budget issues take toll on jan-san distributors. Tightened budgets at the state levels – for schools, especially – have provided a drag on distributors in this space. "This year there was an abnormally high percentage of school bond referendums that failed," Stark says. "So, taxpayers are starting to say enough is enough, at least in some areas, and that's going to affect budgets," and, hence, the supplies that get ordered. And while "a lot of education facilities see cleaning and maintenance as just an expense, it really does affect their revenue," Stark says. Jan-san products promote health among students, which increases attendance, which is many times a measure for revenue allocation.
Distributors looking for new ways to recruit and retain talent. No longer able to restrict hiring to applicants with distribution experience, jan-san companies are looking for candidates with soft skills and then training them on the technical and product side of the business. "We look at ourselves as a customer-centric kind of company so, we want people that are helpful and want to help people," Stark says. "So, we've intentionally incorporated that into our hiring. Where there's technical abilities needed we look at that, as well, but culture and core values trump skills. We can teach or get them education on the skills. Once you get your personality set, that's a lot harder to change."
This approach was echoed by Dyck: "I would rather have the person with the interpersonal skills, with a desire to learn," he says. "Because, the other, even with sales people, you can have all the greatest technical skills, but you can't interact with other people, you can be a real downer on the business."