The 2020 Mid-Year Economic Update_long

Inside Every Threat There is Opportunity

Brand value is a huge asset for both manufacturers and distributors. With continued homogenization, investments made in developing ones brand starts to erode and price becomes the primary differentiator.
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What poses the greatest threat to the master distributor model? Ask two of the master distributors featured in this issue and they will share a similar response. Driven by factors such as increasing consolidation and the emergence of e-commerce marketplaces, homogenization and commoditization threaten to strip away the uniqueness of individual master distributors, disrupting their ability to invest in customer service and brand differentiation.  

In “What the Changing Role of the Master Distributor Means for the Industry,” Senior Editor Stacy Ward outlines not only the ways the market is shifting, but also what master distributors are doing to respond and how that response is impacting their relationships with distributors.  

“Brand value is a huge asset for both manufacturers and distributors. With continued homogenization, investments made in developing one’s brand starts to erode and price becomes the primary differentiator,” explains Mark Prox, COO of industrial and safety supplies master distributor ORS Nasco. “We will need to understand how our partners are evolving and disrupting their own business to react to a new flow of products and services. I feel the greatest challenge for a master distributor is not being adaptable to change and the willingness to investment in innovation.  Master distributors’ role will continue to provide flow within a friction environment. As these friction points transform, we will need to find new ways to provide value to our trade partners.” 

Travis Williams, president of specialty wire and cable master distributor DWC, says “industry consolidation among suppliers and distributors, along with drastic changes to how our customers do business,” are the greatest threats. 

“Gigantic online retailers have certainly changed the way consumers shop,” he adds. “If companies take a similar path and become huge faceless entities, the premium customer service that master distributors provide might have the potential to become de-emphasized, with products becoming further commoditized.” 

Of course, master distributors don’t operate in a vacuum. The same issues they face are felt by the distributors they serve. That theme is reflected throughout this issue. Our other two features provide insight on specific actions distributors are taking to keep up with the pace of overall industry transformation.    

In our Q&A with Cook & Boardman, CEO Darrin Anderson describes how he is bringing his vision of transforming the specialty distributor of commercial door entry solutions and systems integration services from a strong regional player to a nationwide industry leader. It starts with taking care of his people. “[I]f you think that you’re going to win in the marketplace without being the employer of choice, you’ve missed the boat. You absolutely have to be the best at talent retention, first and foremost, and then talent attraction,” he says. 

The type of talent distributors may want to attract is also changing. “5 Nontraditional Roles That Can Add Value to Your Team,” takes real-life examples from industry executives who are thinking beyond old-school business models to introduce new job titles into their businesses. The job requirements of these roles demonstrate a changing mindset about what it means to be successful in distribution.  

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