This is a part of the 2014 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.
2014 Distribution Trends Report
“Professionalizing the sales force” is being emphasized more within the industry. Traditionally, sales management was a step up from being a salesperson; training to be management was not necessarily a priority. Just as training is becoming more important to other parts of the workforce, more companies are developing training programs for the sales force, including mentoring programs, analytics for territory planning and how managers can provide coaching for the rest of the sales team.
With that, electrical distributors are starting to move their sales forces away from being generalists, embracing end-market specialization, such as oil & gas, clean energy or OEM.
Specialists in electronics, particularly around LEDs, are growing more important than ever. Digital is more than a buzz words in most industries these days, and electrical distribution is no exception. More electrical equipment has electronic components driving or monitoring the usage, yet many distributors still lack that specialized knowledge. “The smart ones are moving more into electronics,” says Bob Smith, president and CEO of the IMARK Group – or at least learning more about them.
Sector convergence between electrical and power transmission builds with the influence of automation. In addition to electronic specializing, more electrical distributors are embracing high-tech automation products that may be used across sectors. Automation was one of the top areas identified as a target for growth in the next year by electrical distributors in the 2014 MDM Market Trends survey. Many of the products used in high-tech automation are the same ones used in electrical and datacomm – another area that continues to converge with electrical.
Electrical distributors are also expanding into other areas, such as safety and jan-san, to continue building the breadth of available product for customers looking to streamline their procurement process.
Energy efficiency and sustainability continue to be top priorities. Environmental issues are important for the end-users of electrical products. Green building initiatives and increased awareness of the cost of energy on the part of the consumer has helped to grow the drive for energy efficient products and efficiency services. Distributors say they are starting to hear more requests for less packaging on products, or for the use of more sustainable products in packaging.
In 2013, Rexel’s ownership saw some shifts, with private equity firm Eurazeo and Ray Investment SARL selling partial stakes in the electrical distributor. This was the third sale of Rexel shares conducted by Ray Investment since 2012.
International expansion continued to drive acquisitions for distributors, with WESCO acquiring LaPrairie in Canada, and Rexel making acquisitions in Thailand, Singapore and France.
Traditionally acquisitive Sonepar was relatively quiet in 2013, making acquisitions in Singapore and Australia.
Crescent Electric Supply expanded its national reach through two acquisitions in 2013: Interstate Electric Supply, Boise, ID; and Lake Electric Supply, Storm Lake, IA.
Graybar continued to expand organically rather than through acquisitions, adding 14 new locations in 2013.
Average growth for companies on the electrical Market Leaders list: 2.9%