This is a part of the 2013 Distribution Trends Report. This annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors and manufacturers, as well as industry experts. MDM also conducted a survey of its readers to uncover the trends outlined in this report.
2013 Distribution Trends Report
As much as we’ve tried to escape the implications of the word “uncertainty” since the end of the recession, distributors in many sectors are still reporting bumpy business conditions. This is due in part to both natural and man-made emergencies, including Superstorm Sandy and government inaction which could have led to a fiscal cliff (which didn’t occur) and sequestration (which did).
“I think everybody had the view that once we got the election over, it would get sorted out one way or the other. … Everybody’s just sort of running around in circles doing laps, and we still have this high level of uncertainty,” says Mike Marks of Indian River Consulting Group.
“Some of the distributors that I talk to are seeing their backlog is down a bit, and they are worried it is a harbinger that things aren’t as robust as a year ago at this time,” says Brent Grover of Evergreen Consulting Group. “But it’s important to note that a year ago at this time, things were really up.” In 2012, distributors reported a big increase in sales relative to the year before. But because the word recession – however mild – is being uttered in conjunction with 2014, people are “spooked,” Grover says.
Distributors are reporting mixed conditions in the middle of 2013. “Business has been a little off,” says Rob Stern, vice president of sales and marketing for Werner Electric Supply Company, Neenah, WI. “It’s been a tough year to figure out because there are certain markets that are doing really, really well, and then there are others that are doing the complete opposite.”
These ups and downs are driving many of the trends we outline in the 2013 Distribution Trends Report, featured in this special double issue of Modern Distribution Management. Distributors are incentivized to make their companies as healthy as possible so they can be better positioned to face the next few years. This includes a greater focus on inventory management; the use of data to find opportunities to grow sales and increase profits; and investing in new product lines and geographies in an ongoing effort to diversify.
They are recognizing energy is best spent on what’s in front of them. “We can’t control the weather or the fiscal cliff or sequestration or changes in the industry, so we worry about the things we can control on a day-to-day basis,” says Dave Myers, promotions and communications supervisor for industrial distributor Kimball Midwest, Columbus, OH.
Stern is optimistic about the rest of the year. “There’s a lot of money pent-up, and I think that once it goes, it’s going to go,” he says. “We think we’re going to have a positive second half of this year, and that’s going to take us into a really strong 2014.”