The 2020 Mid-Year Economic Update_long

Commentary: The New Era in Wholesale Distribution

Oliver H. Van Horn Company, New Orleans, LA, saw its headquarters wiped out with Hurricane Katrina in 2005. The 100-year-old fourth-generation family company's traditional market literally disappeared that day. The company reshaped itself to deal with the reality of its circumstances, and found new ways to add value in the wake of disaster. They have been rebuilding since, only to encounter a financial hurricane a few short years later. This publication has worked consistently to avoid hyperbole since its founding 1967. But this has been a hyperbolic year.

Oliver H. Van Horn Company, New Orleans, LA, saw its headquarters wiped out with Hurricane Katrina in 2005. The 100-year-old fourth-generation family company’s traditional market literally disappeared that day. The company reshaped itself to deal with the reality of its circumstances, and found new ways to add value in the wake of disaster. They have been rebuilding since, only to encounter a financial hurricane a few short years later.

This publication has worked consistently to avoid hyperbole since its founding 1967. But this has been a hyperbolic year. We are in a remarkable time – a turning point for every company in wholesale distribution. Most companies faced the reality or the possibility of disaster in 2009. They look different today as a result. In the aftermath of 2009, this industry will strengthen in 2010 as individual companies rebuild on new and stronger foundations.

As our lead article outlines, we are moving from one bubble to another. This time the government is creating an unprecedented bubble fueled by debt to drive growth. On one hand, distributors are benefiting from that investment and will continue to over the next few years. But many small businesses are still handcuffed thanks to tight credit markets. Many larger businesses are gridlocked due to the uncertainty of where growth will be found in 2010. We all need confidence that growth won’t be stifled by the government’s current medicine.

Every market has shifted, and to adapt to lower demand, many distributors have downsized and changed the structure of their companies. It’s no surprise that more distribution companies have started to focus on pricing more strategically, optimizing inventory levels, changing roles and compensation models for their sales force, leaning operations, and fine-tuning business development with laser-like segmentation and market analysis. These are tools that increase value with fewer resources.

This economy continues to be the most stable, fluid and flexible economy in the world – one that rewards value and innovation. Distributors have always played a critical role as the backbone, facilitator and the “hidden grease” for an optimally functioning economy. North American independent distribution networks are a key differentiator in the way that distributors provide and will continue to provide a distinct and high value to the U.S. economy.

This resilience and creative capacity to add value – qualities that companies like Oliver H. Van Horn bring to suppliers and customers – is a perspective worth thinking about as we move into what we all hope to be a more positive year.

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