This is a part of the 2013 Distribution Trends Report. The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.

2013 Distribution Trends Report

This article is a part of MDM’s 2013 Distribution Trends Report. The article analyzes the impact of the generational shift on the wholesale distribution industry, including technology and customer expectations.

The median age of companies’ sales forces is getting older, says Brent Grover of Evergreen Consulting, as many Baby Boomers were not able to retire in the wake of the recession. At the same time a new generation of management is coming up through the ranks, as more distributor owner-operators prepare to hand the reins to the next generation.

That dynamic has shifted everything from technology investments to customer service expectations.

“What’s interesting to me is that we now have four generations at work together, and that’s unusual,” says Julia Klein, CEO of C.H. Briggs Company, Reading, PA.

With younger workers comes a new set of expectations, says Mike Rowlett, CEO of fluid power distributor Womack Machine Supply, Farmers Branch, TX. “If we treated young folks new to the business today the same way that I was treated 35 years ago, then we wouldn’t be able to keep any of them.”

Mike Gassmann, chief growth officer for Van Meter Inc. in Cedar Rapids, IA, says in general, the younger generation places higher importance on things like flexible working hours and access to health and safety programs. The ability to give back to the community is also very attractive, he says. “The ability to do things holistically is a lot more attractive to the younger generation,” Gassmann says.

Lillian White, president of Treen Safety (Worksafe) Inc. in Vancouver, BC, agrees. “I think the generation today is often concerned about what the company’s purpose is and whether they are committed to social, environmental and community values, so we work really hard on that.” Treen has incorporated programs that support these ideals, such as a program that measures the company’s carbon footprint called Climate Smart.

Millennials’ expectations around career advancement are also different, many say. “The expectations of students coming out of the university are pretty high in terms of what jobs they’ll get and what wage they’ll get,” White says. “So finding that balance between great employees and great compensation is tough.” Doug Adams, owner and president of fasteners distributor EFC International, says he thinks universities are partly to blame for workers’ higher expectations, as they overpromise in an attempt to justify tuition rates.

Meg Hulme, director of application development and e-commerce for building materials distributors BlueLinx, says younger workers coming into the company also have different expectations around technology. “They’re more experienced in the just-in-times, the Googles, the Tweets, the texting,” she says. BlueLinx has adapted its capabilities to offer a social environment by adding instant-messaging, screen-sharing and video conferencing capabilities through Microsoft Lync.

The generational shift may also be driving distributors’ increased focus on data and analytics, according to industry expert Mike Workman, professor emeritus of Industrial Distribution at Texas A&M University. While the older generation can sometimes see investments in new analytics and other technology as not critical, younger leaders often view such upgrades as a necessity.

Still, Grover says, as the median age of the sales force increases, the ability of distributors to make new technology investments work may be more difficult. “They’re the people who make it happen,” Grover says. “… They are not as adaptable. They’re the ones not as excited about CRM and about strategic pricing, and they’re not as excited about customer profitability analysis.”

But many distributors are welcoming the technology-related pressures coming from new workers because the buyer has also become younger. In the construction industry, for example, younger remodelers are more likely to use email or visit a company’s website when they need something, says Craig Webb, editor of ProSales Magazine. As a result, more dealers have begun to set up online platforms.

Rich Pratt Jr., vice president of Prospect Fasteners in Wauconda, IL, says distributors need to be prepared to communicate with customers in as many ways as possible. “That’s the only way you really have a chance to keep all of your opportunities for growth available,” he says.

But some companies are ill-prepared. “We are seeing a shift toward the Internet, but it’s late, and it’s going to be still later for some distributors that are not in line with where the customers are,” says Jonathan Bein of Real Results Marketing.

As the younger generation moves into the industry and more experienced workers move out, the transfer of knowledge is important to many companies who are ready to pass the baton to the next generation, Bein says. Workman says the gap between the incoming and outgoing leadership team is wider than any gap he’s seen in his 45 years in distribution.

Several distributors say the industry has yet to see the full effect of the generational shift, a trend David Parks, executive vice president of Hydradyne, Fort Worth, TX, says is one of the biggest challenges facing his company today.

“We haven’t hit the full impact of that, and America hasn’t hit the full impact of that,” Parks says.