Commentary: The World is Shrinking - Modern Distribution Management

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Commentary: The World is Shrinking


The annual meeting of
the European Power Transmission
Distributors Association
, with members in 26 countries, yielded some insight
into the changing market landscape there. Here are a few observations:

Even with an increasing
pace of consolidation, distribution markets remain highly fragmented. Language
and cultural barriers continue to support local, independent distributors that
have built close relationships with customers, and offer a highly customized
solution to specific customer needs and problems. Sound familiar?

Some European
distributors have learned how to profitably serve a range of “micro-markets” and
niches. As European economies have opened in recent years, distributors have
expanded into other countries through acquisition, joint venture or by targeting
specific customer opportunities.

While manufacturers are
moving to Eastern Europe, reliable distribution networks don’t exist there yet.
Most distributors we spoke with expect Eastern European markets to develop
slowly. The current migration of manufacturing eastward has been primarily
focused on labor-intensive basic industries, rather than high-precision, skilled
discreet manufacturing. That phase will take much longer to develop.

Until a few years ago, the European
landscape was largely ignored in the U.S. While Home Depot Supply has made some
of the most dramatic growth moves in the past 12-18 months in North American
distribution channels, ownership of large segments of certain U.S. distribution
sectors has shifted to the Europeans, such as Wolseley, Wurth, Rexel, Sonepar
and Hagemeyer. The world is getting smaller.

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