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
After seeing violent swings in many markets, power transmission/bearings distributors are focusing on more stable sectors, such as food & beverage. Food & beverage markets are generally less affected overall by wild swings in commodity prices or economic conditions. As a result, respondents to the 2017 MDM market trends survey said they are focusing on that market to drive growth in 2017 and 2018. "(We're) looking to diversify from primary metals, and we have new products focused on this market segment," noted one respondent.
As the installed base for wind energy continues to grow, distributors in certain geographies are increasing their focus on serving this end market. Even though most of the energy market remains on oil, natural gas and coal, adoption of wind energy as an alternative is gaining popularity. Excel Energy noted that in some markets, including Colorado, wind energy is already one of the cheapest sources of new power, and the company plans to continue investing in development. As a result, distributors who are equipped to service customers in this area expect to see growth.
Customer demand for e-commerce channels increased dramatically over the last year, with end users expecting a robust experience that includes options for buying and accessing technical information. But there's also increased competition from Amazon Business in this product category. Distributors will need to be keenly focused on the value they deliver beyond just the purchases if they don't want to lose market share to Amazon Business and risk commoditizing their own product offerings. This includes providing deeper technical and application information and offering services through this channel.
The Amazon age is driving demand for quicker delivery, but higher value. Customers want distributors to prove their value and clearly delineate how what you're doing is helping them reduce overall costs. If this data isn't provided, end users may be willing to consider cutting out that step in the supply chain. If they perceive you as just a product broker, they may shift their attention elsewhere, including to Amazon, which can promise them quick delivery even on smaller orders.
Merger & acquisition highlights in 2016:
Applied Industrial Technologies, Cleveland, OH, completed four acquisitions in 2016: Atlantic Fasteners, S. G. Morris Co., HUB Industrial Supply and Seals Unlimited.
Motion Industries completed several acquisition in 2016, including Epperson and Co., Missouri Power Transmission, Colmar Belting Group, OBBCO Safety and Supply and Braas Co.
Average growth for companies on the Power Transmission/Bearing Market Leaders list: -5.8%