The coronavirus didn’t come with a blueprint that showed companies how to navigate this once-in-a-century global pandemic. Though deemed “essential” and therefore able to remain open, distributors were on their own when it came to keeping their employees safe and their businesses running smoothly. Many distributors are finding ways to make the most of operational constraints during this crisis. For this year’s Market Trends survey, we spoke with companies about the pivots they made — with their workforce, their product mix, their technology and more. These are their stories of resilience.
1. Remember the Importance of Messaging
As the vice president of marketing for The Cook & Boardman Group LLC, Greensboro, North Carolina, Bob Settle has devoted much of his time during the pandemic to honing the company’s messaging efforts.
As he knows all too well, the importance of marketing and communications is heightened during a crisis of any kind. Since the beginning of COVID-19 rocking the business world, the longtime distributor of commercial doors, frames and hardware, electronic access control equipment, and specialty products ensured that whatever was happening in the states where the company has a presence — e.g., certain business activities construction projects were shut down temporarily in Pennsylvania — Cook & Boardman made sure it was over-communicating with customers. “It’s been very important,” Settle says. “Initially, the focus was on our response to COVID-19 and how we were, No. 1, ensuring customers that we were still in business and that our branch locations were open for service. As we got a little more into the crisis, it was more of a shift to how we were attempting to serve the customers.”
That meant letting them know about curbside service and will-call pickup. It also meant tailoring the company’s messaging based on the company’s different geographies. It even meant targeting certain end markets with the company’s new categories of products, from private label hand sanitizer to plexiglass barriers that have become popular with a number of customers, including school districts. “We’re trying to reach specific customer groups because they have different needs and different approaches to business,” he says.
The end results of this focus? Not only has Cook & Boardman uncovered customers’ unique needs, but the company has also grown closer to its base and created some added stickiness. “I would say that the communications between us and the customers are probably at a higher level than they normally would be,” Settle says. “Just because we can’t go visit, in person, I think it trains people to be a little more proactive about staying in touch.”
2. Rethink a Salesperson’s Value
About six years ago, Brian Tuohey, CEO of East Windsor, Connecticut-based PVF distributor The Collins Cos., agreed to let one of his inside salespeople continue to work for the company from her new home in Nashville, Tennessee, even though her sales territory was Connecticut. “I thought, ‘Well, they have computers and phones in Nashville, so let’s give it a try,” Tuohey says.
Six years later, that example — the salesperson still lives in Tennessee and still handles her Connecticut sales territory virtually — proved to be beneficial when the coronavirus crisis hit. It was, in fact, a template for how other Collins employees could handle their accounts while working from home. “We pivoted very quickly, almost seamlessly, to remote,” Tuohey says. “We had already sort of moved in that direction. We had tried to be as malleable as we could with our people.”
That doesn’t mean everything has come easily for Tuohey and his company, especially for his outside sales team. But he has seen the COVID-19 crisis as a way to speed up what had been coming for the traditional salesperson’s day-to-day schedule. “They were very disjointed in the early going, but honestly, we were already moving that way [toward virtual] anyway,” he says. “The day of the ‘rocket roadster’ was going away. This obviously accelerated the pace, but I think we’re so much more efficient today and valuable to our customers because we’re not talking about the Patriots and what happened on Sunday. If you’re going to contact your customer, you need to know specifically what you want to accomplish and what value that has for your customer — not for us, but for him. The salespeople’s value is greater at this point in time than it was when they drove around and saw our customers.”
3. This is a Time to Be Opportunistic
Devon Harbord, vice president of operations, EGW Utilities Inc. — a Carrollton, Texas-based distributor whose two divisions include utility solutions and water and plumbing — says the company was fortunate in that one of its businesses didn’t feel the impact of the pandemic the way others did. The waterworks and plumbing business remained steady, he says. “We never saw a downtick in the number of orders, the dollar per order, things like that. It was consistent, and that was fantastic.”
The utility sector was another story. Business slowed down in May and June but has begun to ramp up in the last couple of months. “We’ve seen it slow, but it only slowed for a brief period,” Harbord says.
COVID-19 changed a lot of the ways that EGW approached business, of course, from execs and salespeople no longer traveling to visit customers but instead connecting with them over the phone or video chat. It’s given the company a new outlook on how it views the opportunities that might emerge during this crisis.
One, the company has spent this time working on how it can better leverage technology, Harbord says. “I’ve been pushing our company to adopt technologies like document sharing from the cloud, chatting versus getting up and walking over to someone’s desk” and other platforms like Voice-over-Internet Protocol (VoIP). “From our customer service people who went remote, it allowed us to see what they really need to do in their jobs,” Harbord says. “And every one of them has said, ‘I am so much more efficient at my day-to-day and I feel like I can do a better job than I was able to do before I got distracted in the office.’”
Another is how EGW approaches M&A. The company is now targeting those opportunities that might not have existed prior to COVID-19. “It increased our aggression,” Harbord says. “The vision that the owners have is that we would make three to five acquisitions in the next 10 years. We’ve definitely gotten more aggressive on that front because we’ve seen some businesses become available through all this.”
4. Look for ‘Riches in Niches’
The roots of Elyria Ohio-based fastener distributor Royal Supply Co. date back to 1883. With nearly 140 years in business, the company has found ways to adapt to changing market conditions. That’s certainly true of Royal’s current president and owner, Don Chargin, who acquired the company in 2004 and within a few years was faced with the Great Recession. But he quickly pivoted the company’s sales mix to 50% brick-and-mortar and 50% e-commerce and found success with that omnichannel approach.
“That’s been our model to this point,” he says. “Fast forward to 2018 and 2019, which were great years for us, just like for everybody else. We did a lot of investment, expanded our product portfolios, invested more in training and developing people and things like that. We were looking forward to a great 2020 up until the coronavirus hit. That’s when the game changed.”
With businesses shuttered and customers no longer buying at the same clip as before, Chargin knew something had to be done. So he implemented a sweeping change — just as he had done more than a decade earlier. “I decided that this was another transformational change for us, we need to do something different. We have a philosophy here that we don’t want to be Grainger, we don’t want to be a national chain. I’ve done all that. We don’t want to be driving large volume, small profits. So we’ve focused our business model on ‘niches.’”
Recently, Chargin announced the creation of his new bearings distribution company, Specialty Bearings, which distributes bearings and services to all industry segments, including OEM and MRO markets. Its niche is providing customers with difficult-to-find bearings (i.e., bearings that require modification) and services. The platform allows Royal Supply to bring added value to its customer base — and helps the company weather COVID-19 by broadening its marketplace without building new branches. “You’ve got to look at niches,” Chargin says. “We believe there are riches in niches.”
5. Social Distancing Products, FTW
A 70% drop-off in business early in the pandemic wasn’t surprising to James Teat, president of Axcess Technology Source, a Carrollton, Texas-based master distributor of Motorola radios.
After all, Axcess Technology’s end markets include companies that serve the restaurant, retail and hospitality industries — all of whom were decimated by COVID-19 as shelter-in-place orders around the country shuttered most non-essential businesses.
“You can imagine with all of that just absolutely shutting down, April business fell off the face of the world,” Teat says. “It just dried up.”
Sales will be down for the year for Axcess Technology, with Teat likening the loss of revenue during the first few months of the pandemic to “hearing a toilet bowl flush,” but there is a silver lining for the company.
The company also services schools, health care facilities and industrial accounts, all of whom remained in business and, in some cases, saw growth during this period. And during the time when much of the company was working from home, employees were actively calling customers to see how they could help during this difficult economic time. “We got really aggressive in calling our customers,” Teat says.
The company also offered a reseller promotion — for example, customers would get a free radio with the purchase of six at regular price — which brought in some much-needed cash and reduced inventory.
More than anything, however, time has proven that Axcess Technology’s primary product — two-way radios — could be one of the winners in the new normal of social distancing and curbside ordering.
“I think technology is going to enable a lot of people to do more with fewer people, to do more at a greater distance,” Teat says. “We have been in contact with our customers more and some are seeing the benefit of using radios to social distance and fulfill takeout orders. We’ve seen that in other industries, too. On the retail side, we’re seeing stores like Michael’s adapt to this new normal. They want to be able to sit back at a distance and take care of their customers without having inner-personal encounters inside the stores. Two-way radios help facilitate that. Technology helps facilitate that.”
6. Some Changes Will Become Permanent
The pandemic has changed the way many businesses operate day-to-day, but the question now is which of these changes become permanent once a vaccine becomes available.
Julia Klein, chairwoman and CEO of Reading, Pennsylvania-based building materials distributor, C.H. Briggs Co., sees a few practices that emerged over the last six months becoming regular fixtures for her own business and the industry as a whole.
One, rethinking talent acquisition. Klein says she is now more “open-minded in bringing in new talent — especially around digital initiatives — that does not live in the area.” Not only does it broaden C.H. Briggs’ reach and talent pool, but it fits in with the newfound acceptance of remote working. “We’re immediately hiring in the marketing area, in digital content, and we absolutely have an open mind about that,” she says. “Before, I would have said that that would have been a struggle. That is absolutely a silver lining to the pandemic.”
Two (and a continuation of the first one), creating a flexible work environment. The goal now is to combine working in the office with working virtually.
Three, implementing touchless deliveries. While Klein laments that her company might lose some of the connectedness that’s created when a team member helps customers load an item into their truck, she understands that curbside, contactless ordering is likely here to stay. That means C.H. Briggs (and all other distributors in this predicament) will need to find other ways to enhance customer service.
“We’ve always seen our delivery at the back door as an important part of our customer experience,” she says. “If we take that away or minimize it, what are other ways we can reinforce our brand — being warm and friendly and helpful — if we don’t lift that box together?”
And, four, a pivot for the outside sales model, which requires a new approach to everything from calling on customers to compensation. “Lots of our customers are not yet ready to have us call on them,” Klein says. “This is accelerating the hybrid sales model of outside/inside/digital.”
7. Never Forget: ‘Everybody’s in Sales’
The pandemic presented a unique opportunity for Tony Picciano, VP of strategic sales and professional development for the building materials manufacturer and distributor Kaycan Ltd. It allowed him to rethink and reconfigure the company’s sales model.
With the sales process upended since no one could visit customers in person, Picciano experimented with a revised short-term, current-term and long-term plan for how his sales force would navigate this crisis. For the short term, Picciano asked his inside sales team to take on outside sales duties. “We took customer lists and divided them based upon the size of the customers and their potential,” he says. “Every week, I assigned, say, 50 calls for the inside salespeople to make and then asked them to report back with the results. The next week I would say, ‘Here are 50 more calls to make.’”
The new model worked. The inside sales team successfully connected with customers to gauge their needs and close sales as the business environment reopened in most states.
During the next phase — the current term — “everybody went back to their traditional roles, with the outside sales team focused on outside sales and the inside team focused on order fulfillment,” Picciano says.
Next comes his long-term plan, which is to create a hybrid sales model that will assign certain customer lists to inside salespeople and then move a customer along to the outside sales responsibility once they get to a certain size.
As Picciano has been able to discover during what has otherwise been an economic crisis, this new model taps into the primary goal of any distributor, in any end market. “Everybody’s in sales at a distributor. It’s a sales and service organization,” Picciano says. “But I think that this is the tipping point that will formalize that for many organizations permanently that their inside team will be engaged in outbound calls.”
8. There’s Always Room to Give
The last six months have “been a pretty wild ride” for Amerisafe, Inc., a midsize distributor out of Aurora, Illinois, that primarily services construction contractors, OEMs, other wholesalers and distributors with insulation, safety and PPE products, says President Andrew Dun.
The 17-employee business was tracking well before its March 31 fiscal year end, and ended the month of March with a record finish, thanks to rising demand that started as early as January when customers started to see supply chain disruptions out of China. In fact, Amerisafe sold out of most of its inventory in March and had a difficult time getting its own resupply.
Still, that didn’t stop the small business from prioritizing needs in its community. Amerisafe gave away several cases of N95 masks to area hospitals. Expecting the first quarter of fiscal 2020, April, May and June, to be down versus the prior year, Amerisafe actually finished on the positive side of its projections, but Dun sees the current headwinds as an indication of an uncertain and slow recovery.
“There’s a lot of money sitting on the sidelines. There’s a lot of construction project projects that are now on hold pending a little more certainty in the marketplace,” he says. “That’s creating lower market demand. And then, we’re still impacted by a lack of consistent supply of critical PPE items, as well.
Operating in a hybrid remote/in-office work environment since March, Amerisafe never closed due to its position serving essential businesses such as construction and utility contractors. Dun expects to continue the hybrid operating model — sales remote and management/customer service in two-three days a week — for the foreseeable future.
It’s part of the reason he indicated in his response to MDM’s Trends survey that the company will be exploring new technologies in the coming year. He is looking to move Amerisafe’s existing CRM, ERP and e-commerce capabilities to the cloud, upgrading them “to create better efficiency and be better suited to remote working,” Dun says.
Expecting a bumpy ride well into 2021, Amerisafe’s growth strategy nonetheless remains the same, Dun adds. “It’s just a matter of continuing to work on what we’re doing and it puts certainly a new sense of urgency in what we’re looking to do,” he says. “It’s not changing our strategy. If anything, it’s confirming it and putting new urgency behind it.”
9. Stick to What You Know Best
COVID-19 dropped sales 40%-50% for Minneapolis-based American Chemical, but the small industrial adhesives distributor is not alone. Its customers and peers are in a similar boat, says President and Owner Dennis Werneke.
With a lot of customers closed or working from home and difficult to reach, Werneke decided to try a targeted marketing campaign to reach unique niche markets. It has helped a bit — business was up in July — but it remains difficult to get ahold of people, Werneke reports. At one customer, all six contacts American Chemical has worked with for years are no longer employed there. “You have to rebuild new connections. That’s the hard part, that you’ve got to start all over. You’ve gotta keep touching the customers,” he says. “I’m a firm believer that one needs to touch their customers at least every 90 days. And you got to keep touching him because 80% of your sales were made on the 5th to 12th contact.”
Most of American Chemical’s customers are within about a 500-mile radius — North Dakota, South Dakota, Iowa, Minnesota and Wisconsin. But the company’s web business, although a small percentage of sales, originates everywhere outside of the five-state region.
The company is working to place more products on its website but is hesitant to work with outside platforms like Amazon for fear of being undercut and/or circumvented.
At the beginning of the pandemic, when some of American Chemical’s customers pivoted to making face shields and masks and the like, American Chemical also pivoted to support them. But only so far. Many asked them to provide the raw materials for making hand sanitizers, which Werneke dismissed as a flash-in-the-pan opportunity. “Now, you go to Costco or any drugstore, they’ve got hand sanitizers up the wazoo. So I didn’t go down that path,” he says.
Being in a business where products have a definitive shelf life, an ongoing focus for Werneke is to improve inventory control and demand planning. He expects to end 2020 down roughly 10%, but is “very optimistic” next year will be positive.
10. Look for the Cost Reductions
Don Nowak, former owner and now adviser to family-owned Falcon Fastening Solutions, Inc., in Charlotte, North Carolina, expects 2020 sales to end up about flat. Right now, Falcon has the same number of accounts up as those that are down. The company is in a decent place, thanks in part to a fortunate customer/product mix where a couple of key clients are up on the year, but also due to successful negotiations on the vendor side that will put gross margins up about 1% for the year, Nowak estimates.
The majority of Falcon’s product has a metal base — carbon, stainless steel or copper. Until recently, copper demand was down due to lower Chinese consumption. Stainless and carbon have also had periods of depressed demand. “We we’re able to go back to the vendors and say, ‘We know your cost of raw material is down. Let’s talk about what the implications of that are in terms of the final goods,’” Nowak says. “We have also seen a significant reduction in non-payroll expense for advertising and travel/entertainment.”
A niche company that does inventory management focused on OEM class C production components, Falcon has a mix of customers who have been considered essential businesses, allowing them to remain operating without disruption as an essential business as well. That said, they typically work onsite with customers, and that avenue has been largely unavailable since COVID-19 hit, with the exception of three employees who work full-time directly in customer plants. The result is a lot of Zoom calls.
Although they can’t have face-to-face sales meetings or conduct new business surveys and cost/benefit analyses for prospective customers, Falcon representatives are still allowed to go into their plants to conduct inventory replenishment processes. “The first thing they do is replenish inventory that they identified was needed at the previous cycle. And then, they’ll scan the bins for the next cycle. We’ve had those people look around and see if they can identify other opportunities for us,” says Nowak.
11. Be Proactive with Safety Measures
“It’s great to be essential,” says Jeff Corken, president of Corken Steel, an HVACR, plumbing and roofing distributor. Not discounting COVID-19 safety measures that have altered the work environment a bit — 10% of employees working from home, curbside customer pickup, masks, sanitizing, etc. — it’s been largely business as usual at the Cincinnati-based company.
Business was “a bit bumpy” in April and May, but picked up significantly with a major stretch of heat come June and July.
Leadership meets weekly to discuss health status of Corken’s 300 employees, two of whom have been infected and since recovered from the coronavirus. The infection of one was particularly nerve-wracking, since the warehouse worker who contracted COVID-19 is in close proximity to about 40 other employees at Corken’s distribution center that serves its 15 locations. The positive test hit right at the beginning of July, during a very busy season. “To have to shut it down would have been a problem, even for just a couple days,” says Corken.
He sent most employees to a local urgent care facility for testing (some were tested elsewhere) and fortunately, all came back negative. The company has a policy where anyone who has been exposed to someone with COVID-19 — about 12 employees so far — must quarantine and be tested before they can return to work.
Corken gives kudos to his IT department, which enabled accounting and purchasing employees to leave one Friday in March, laptops in hand, and stay remote ever since. “It’s been seamless,” he says. “We never missed a beat.”
Corken feels pretty optimistic about the rest of the year, although with uncertainty surrounding the virus, he is making sure to conserve cash and watch inventory levels. Surprisingly, accounts receivable has not had any issues. “Our collection rate has never been better, ever. It’s incredible. We’ve collected more money each month as a percentage of what we can collect than we ever have,” he says. “It’s a great thing but that’s been a stunner.”
12. The More Communication the Better
For Auburn, Washington-based fluid power distributor AOP Technologies, the pandemic has presented some challenges but also created an opportunity to communicate more frequently and efficiently across the company. Even with many of its 33 employees working from home.
The company — which also operates in pneumatics, electronics and robotics — moved to a VoIP phone system that allows employees to work from home and still keep the communication lines open, says President Mike Touhy. He expects the business will be in at least a partial remote work mode through 2021.
Operating in a more spread out fashion has led to a lot more meetings. “That’s actually been a good thing,” says Touhy.
AOP has introduced a new weekly meeting and the effects of it are already paying off when it comes to company productivity. The company recently had its regular quarterly management team meeting where it has historically taken up to four hours to address every item on the agenda. But this quarter’s meeting was a quick 90 minutes. “That’s because we’re now a little more coordinated with these weekly sync meetings, which are only 20, 30 minutes,” Touhy explains. “That’s kind of a positive that’s coming out [of COVID-19]. We’re more in sync as a management team because of those weekly meetings than we have been in the past.”
Reps are making very few outside sales calls, instead holding more customer interactions over Microsoft Teams or webcasts. They have adjusted pretty well to this type of selling, says Touhy, and are also communicating more about their daily activities. In addition to recording activity in AOP’s CRM, they are also sending notes to the sales manager, who then summarizes sales activity for Touhy. “We are going to be more disciplined and making sure that they are being active,” he says.
Somewhat pessimistic about what the next year may hold, Touhy plans to keep up his internal focus on process improvement, including reconfiguring AOP’s production area and automating some processes. “I’m willing to take advantage of the slow time where we can implement some of these things and not impact the business,” he says, “and position ourselves to be to be better coming out of this.”
13. Leaner Can Be Better
After a flurry of panic-buying at the end of March put Auveco, a Northern Kentucky automotive aftermarket master distributor of specialty clips and fasteners, in a good place to end the first quarter, the company then saw a rough April and May where business dropped significantly, says CEO Jeff Gilkinson.
To compensate, they had to scale back on the size of their workforce and are now at about 25% of the company’s pre-COVID-19 level. Then, business unexpectedly “came roaring back” in June, leaving Auveco flat with prior year June, with July on pace for the same results.
Auveco had about 130 employees pre-COVID-19 and is now down to roughly 100. Although the company is currently scaling back up, it has been a challenge to bring back hourly workers, says Gilkinson. “You wouldn’t expect that in an economy with tens of millions of people out of work that it would be so hard to hire right now,” he says. “But that has been our biggest challenge, getting our workers back that we laid off and additionally, we’re actually trying to hire beyond what our prior levels were.”
Even so, Gilkinson has noticed some benefit to the leaner operations. “One of the things that we found in going through what we went through is, when you’re forced to operate with fewer people, sometimes you find that that you can do so,” he says. “It definitely revealed some places where we had some slack in the system and we were potentially overstaffed. And so even though our business is back to pre-COVID levels, a couple of our departments we’re looking at now as not necessarily needing to resource the way that they were. And we’re potentially looking at adding some roles to fill some gaps that we had in the organization with other scope.”
Employees are in the office two days a week and working remotely the other three. Schedules are rotated so that the maximum number of people present at the office is about 40% capacity at any given time. Gilkinson has noticed more productivity, with employees doing everything they can to help out the company. “As a result of that, we’re operating now with 20% less people and you really don’t even know it,” he says.
Employees appreciate the flexibility as well, and if COVID-19 were to disappear tomorrow, Gilkinson says, he would still keep remote work practices in place. “We’ve proven that we can do it. We can handle the workload and interact effectively with other team members,” he adds. “We may get back to the point where it’s three days in and two days out, or even four and one, but I do see remote work as being something that we keep in place, probably forever.”
MDM Senior Analyst Eric Smith is co-author of this report.
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