The National Association of Wholesale-Distributors Executive Summit was held this week in Washington D.C. Jan 30- Feb 1. This event has a wide mix of distribution leaders from leading Industrial, MRO, Construction, Food, Packaging, Specialty, and two step distributors.
It is one to the few events where you can see Electrical channel leaders sitting next to MRO leaders watching presentations and talking to others more openly about the challenges they face and the opportunities to grow their business. It’s a unique event as distributors can share ideas and best practices more openly with non-competitors than you normally see at an industry event.
As a lifelong distributor veteran, I find it is different to go to an event and not have to meet with all the manufacturer partners and instead get to meet with other distributors who are not in my channel. That irrigation supply distributor has a lot more in common with an MRO distributor than you might think, and both probably have good ideas that they can share with each other that could be helpful.
This year NAW continued to evolve the content and add more value in different ways. NAW has always been an organization that supports all distribution with vital lobbying and distribution industry advocacy in Washington and at the state level. It is a crucial role for all distributors and they do that for all B2B distribution. In fact – HARDI Canada and HARDI US are involved with this crucial work in partnership with NAW to work on the HVACR Channels behalf.
This year there were many more educational sessions that ever before. As you may know NAW and MDM merged in January and now all that great content that did independently is under one banner. On a side note: if you are not signed up for the content updates from NAW Smartbrief and Modern Distribution Management (MDM) I would highly recommend you subscribe to their content.
I had a lot of fun at NAW catching up with old friends, partners, former bosses and mentors and was very interested in the main trends everyone was discussing. There were the usual conversations about what is the economy doing and what a distributor should do in 2024 to grow.
It’s still an uncertain time where you have tailwinds for the business with some economic headwinds on the horizon. Most all of the distributors agreed that economic market growth alone wasn’t going to help everyone make their 2024 plans.
I heard two major themes at NAW –
- Front of the Store excellence is not being maximized because of Back of the Store issues – If I had to paraphrase what I heard often this week it was – We have excellent field leaders at the branch level, but we don’t have a strong enough corporate office to serve them. That’s a very simplified statement to a bigger issue. I believe part of it is cultural for distributors because we all know how it worked for 100 years plus. Your best leaders and your brightest stars get promoted and put in the field as close to the customers as possible. When you get a good corporate support leader (HR, IT, and some OPS leader roles excluded) you normally promote them from the back of the store to the front of the store. Then in a year, you often wonder why the back of the store is suffering. What has changed is with automation, the ever changing end customer, tech stack needs, sales enablement, digital, labor shortages, and more the back of the store is becoming the “Game Changer” for distributors. Many distributors are struggling with back of the store issues and support which makes the front of the store less effective. In my opinion – the distributors who are investing and improving the back of the store are fighting with two hands against a lot of distributors who are frankly falling behind fast.
- AI, Digital, Automation, and Turning what used to be manual human tasks into automated tasks – These topics were covered in depth and at about every NAW session. I was thinking to myself often; I did not know that or I learned something new. As a lifelong distributor when I went to industry events 10-15 years ago, I personally remember having maybe 1-2 “AHA” moments per meeting (I am probably being generous in the number of “AHA” moments). Today, as a leader it is critical to keep up with the news. I could write a very poorly written book on what I heard and learned at NAW just this week. My brain was on overload with questions like what can AI do for this distributor partner, what is just the AI hype train versus something that we can use now, and on an on. The rate of change is at an all time high and how that will affect you will be unique to your business model and culture. I would recommend just one simple thing to consider – Learn from others, get informed, and stay informed. The best way to start is to make sure your team stays up to date on the information key leading associations like HARDI, NAW, MDM, ISA, buying group (if you have one), etc. are providing. These groups are all investing in delivering more educational programs and content to help you learn and make better business decisions today.
It was refreshing and energizing to hang out with a group of distributors who are on that learning journey and plan to use 2024 to take share. The distributors who are just planning on building walls will probably be hearing their outside salespeople complain – that their customers don’t value the relationship like they used to, and it’s so hard to get an appointments now, etc. When the build a wall distributors go back out to try and win back that lost share, I think they will find that their end customer is not willing to leave their new favorite distributor and return.
2024 might be shaping up a perfect storm for the Take Share distributor with strong sales programs (outside, inside, and marketing/digital, automation, back store investments, etc.) to take share at record levels. My prediction is those distributors tend to never give that newly gained share back to the competition.
As always, we would love to get your feedback, so please feel free to comment below or reach out to me directly at john.gunderson@dorngroup.com
