Summer is upon us, and while MDM’s Premium content in May focused on gaudy first-quarter sales and profit numbers from major distributors, one can’t help notice a tinge of concern in the economic air. After enjoying a solid year of high growth — partly due to lapping weak 2020 and 2021 quarters — publicly-traded distributors noted in April and May earnings reports they expect profits to level off in the second half of 2022 and tougher business conditions in 2023.  MRO giant Grainger said 1Q likely was a “high water mark” for current growth.

In early May, the Fed raised U.S. interest rates by half a percentage point as a means to curb inflation, and policymakers have voiced their expectations that rates may climb to an average of 2% by the end of 2022 and 3% by the end of next year. That looks to throw cold water on the hot streak the distribution sector has seen for the past year, though 2Q figures to be another big growth quarter before that happens. Still, rising interest rates are yet another hurdle distributors will have to combat alongside ongoing pricing strategy, lengthy supply chain backlogs and a challenging labor pool.

One of the most interesting pieces from May was the collection of distribution commentary we shared from respondents in our recent 2022 1Q Baird/MDM Industrial Distribution Survey when asked how the “Great Resignation” is impacting their current staff. Most of the commentary was expectedly negative, but some respondents apparently have found positive impacts from the situation, even if they’ve lost talent from it.

Labor & talent acquisition/retention was one of the key themes at NAHAD’s 2022 Convention in Miami Beach, which MDM attended May 14-17. It was great to hear association member distributors explain first-hand how they’ve dealt with labor challenges, which I covered in a blog late in the month. Also out of NAHAD came my piece focusing on how distributors should “Embrace the Suck,” a central message from one of the keynote speakers about acknowledging the challenges and hardships that must be overcome to achieve a goal.

SHIFT Coming in September

Last but certainly not least, at the end of May we announced our SHIFT | The Future of Distribution in-person industry summit, to be held Sept. 25-27 near Denver. This event will address topics of sales and digital transformation, analytics and the future of work in a unified conference where distribution leaders can gain critical insights and change management tools. Bring your team!

Download and read MDM’s May 2022 Premium Monthly issue here.