The 2020 Mid-Year Economic Update_long

Move Beyond Reaction to Remain Relevant

New competition, changing markets drive need for innovation in distribution and manufacturing.
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A central driver of the distribution industry has been reaction – a need to adapt to things that have already changed. But if distributors want to remain relevant for the long term, they need to start thinking beyond "three, four, even 10 years from now," according to participants in the Industry Leaders panel at the Association for Hose and Accessories Distribution annual convention in Colorado Springs earlier this month. They need to become proactive.

The markets industrial distributors sell into have fundamentally changed. Steel is no longer a primary industry for many hose distributors, for example, said Don Fritzinger, president, RW Connection Inc., Landiville, PA. "Things cycle."

Are you actively looking for new applications for your products? Are you developing new services in order to make it easier for your customers to do business (and in turn, making yourself more invaluable to them)?

Your competitors have also changed.

"We've been in a solution-based space for quite some time," said Jeffrey Scheininger, president, Flexline, Kenilworth, NJ. "But now we're competing with web-based sellers who can operate in an extended 'profit-free' space."

And it's not just big players nibbling at the market share of traditional distributors, according to Tom Paff, president, Campbell Fittings Inc., Boyertown, PA.

"Scale does not deter the entrepreneurs from going after markets," he said, pointing to the impact Tesla and Uber have had on the automotive industry.

Technology – especially the web – has "given power to the customer and opened the door for smaller organizations," said Andreas Gerstenberger, head of BU Industrial Fluid System at Continental Contitech, Fairlawn, OH. "…We need to be willing to assess and adjust – and to give up some things" that are ingrained in our current thought processes and operations.

"If we don't diversify, we have a problem," he said.

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