2018 Top 10 & End of Year Observations

\"2018As we close the year it’s time to look back and reflect a little as we get ready to turn the page to new and exciting endeavors to support clients.
This past year ElectricalTrends has received almost 100,000 pageviews from you … thank you.  Seventeen of the postings received over 1,000 views each.
Our top 10 postings were:

  1. What’s up with Schneider, Legrand, Rexel and Sonepar?
  2. Mayer goes Premier
  3. National distributors report Q2 2018 results
  4. Mayer moves forward
  5. Lighting News: Cree, Philips, Hubbell Lighting, Eaton Lighting
  6. Lighting Agents
  7. ABB completes GE deal, now work begins
  8. Distributor Q1 2018 quarterly performance – WESCO, Rexel, Graybar, AD and Anixter
  9. Feedback heard from LightFair
  10. March Came in Like a Lion and Western PA Distributors Were Acquired

And some observations from the year:

  • Overall, a decent year from a macro viewpoint and nation-wide. Revenue is projected up 5-6% nationally … pretty good.  However, it seems to have been front-half of the year loaded.
  • Industrial market is exhibiting growth with companies investing into new equipment as well as technology / connected manufacturing environments.
  • Lighting market continues to grow although the market is more skewed to the renovation / remodeling sector. Competition is stronger than ever with many competitors, difficulty in ascertaining product differentiation, price competition and new modes of getting to market ….be they NEMRA reps increasing the number of lighting lines that they have, companies selling direct or alternative channels of distribution. Oh, and yes, the tariff issue which occupied much time for manufacturers and distributors and is having an unknown impact on the marketplace. Some implemented increases; some didn’t.
    • Speaking of NEMRA, early in the year IMARK endorsed the NEMRA minimum reporting POS standards and now 40+ manufacturers / brands have adopted and some national chains are supporting. NEMRA is also spearheading an initiative for a POS portal to support its members and manufacturers (and others are invited). The system will provide distributors a \”one-stop destination\” to send POS information in a consistent format that manufacturers can download and reps can access (except for customer information) to validate earned commissionable sales.  Launch is at the NAED Western.)
  • Distributors continue to invest in technology be it commerce-enabled websites (now the definition of a website for distributors), some considering CRM systems, distributors adopting marketing automation tools as well as doing more e-Marketing and all having a need for quality, attributed product content. New eCommerce players to the electrical industry like ES Tech (through their EvolutionX platform), Insite and Kyklo (currently in the automation distributor space), to name a few, are bringing choice to the market. A relatively new content provider, Distributor Data Solutions (DDS), is being adopted by a number of distributors who are seeking robust content that is updated. Choice is coming to the marketplace.
  • Contractor labor continues to be an issue, and will remain an issue for a number of years. Larger contractors are seeking productivity enhancements. Sometimes pre-fab is a solution, at times they respond to product enhancements. Distributors are offering services (and sometimes charging for them) and contractors are also seeking technological platforms to reduce their “paperwork”. eOrdering hasn’t grown much but they are seeking information, availability and pricing online.
  • Lot’s of talk continuing regarding Amazon. Most of the impact has been as a pricing tool for contractors … little sales loss. Amazon Business’ emphasis appears to be on the MRO side of the business with Amazon defining MRO as institutional environments and then the elusive “tail spend” which they are defining as purchases placed on procurement cards. The threat of Amazon, however, has stimulated distributors to invest in technology.
  • Margins remain steady, and in some cases erode a little. The goal of “margin improvement”, while admirable, may not be achievable for many given the competitive environment. Additionally, personnel, healthcare and technology costs continue to rise for all companies.
  • Manufacturer performance, in aggregate, is “challenged” as there appears to be little reason for many conversions and customers “purchase what they are used to”. Few have significant, sustained, accelerated growth rates with the pack growing at market rate (excluding lighting and commodity-driven product categories.)
  • Freight was a big issue this year. No end in site for this issue due to regulations and the number of truck drivers on the road.
  • Appeared to be fewer acquisitions this year, but there are many distributors and manufacturers looking to make acquisitions (if you are thinking of selling, we may know some buyers.)
  • The infamous personnel issue remains. Everyone is looking for “qualified” personnel. The “plug and play” people are few and far between. This year we saw more “new” people rise in companies. These companies recognized that they need to change their mindset, consider how to reset their expectations and develop people to their potential. With a new mindset and the investments that are being made in technology, roles are changing. Companies that are adapting will outperform longer-term.
  • Seeing more companies investing in marketing staff, recognizing that they need to communicate their differentiation. This is also leading to customer segmentation and communicating different messages to different customers … and different levels within a customer. The marketing organization is also supporting sales efforts to a broader customer base.

Lot’s went on in 2018 and many of the same issues will roll into 2019. Reacting and envisioning how you differentiate will be the keys to capture above market growth in the coming year. Companies that enter the year with a plan for differentiation, who reach out to customers to solicit their feedback (which also helps embrace them), who make targeted investments that have adoption plans and who want to “break through the competitive clutter” will excel.
\"BestThank you for the opportunity to serve you through our communiques throughout the year.
Best wishes for a happy and healthy New Year.

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5 thoughts on “2018 Top 10 & End of Year Observations”

  1. David, This article is an excellent piece. Thank you for sharing with me all of your insight during the past year.
    Best for a happy and healthy new year to you and your family.
    Herm

  2. Just some feedback … I always feel that I am better informed about the issues, challenges or opportunities in our markets. I did not attend the NAED Eastern meeting however after reading your update, it feels like I did attend. If that is your goal, then I would say well done. Sometimes I feel like I don’t have to attend the event, I will get updated from your article.
    Anyway……..well done.

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