Master distributors queried for this year’s master-distribution trends story agree there is one big piece to the puzzle in play in their space that requires extra attention.
Meeting increasing customer demands.
And PHCP-PVF master distributors aren’t shying away from meeting those expectations and then some. “Our customers are increasing their expectations from us in regards to digital content and web capabilities,” says Paul Neustadt, president of Downers Grove, Illinois-based HVAC master distributor Neuco. “These have been and will continue to be tops among Neuco’s priorities. Customers are depending on us increasingly due to shortfalls such as longer lead times, limited availability, etc., from manufacturers.”
Steve Saunders, general manager of plumbing and lighting master distributor The Stock Market, also sees a rise in expectations, particularly from an ordering standpoint. “As technology continues to advance, we are seeing a rise in customer expectations,” he says. “They want a simple and seamless approach to order taking, purchasing and delivery. In the master-distribution space, excellent customer service as well as complete and accurate fulfillment with damage-free delivery no longer is a value-added offer. It has become the expected norm. Customers are much more concerned with speed of delivery and expect same-day and next-day shipping.”
Saunders continues by noting “customers are becoming increasingly more sophisticated because there is an inherent demand to keep up with constant technological advances to stay competitive.”
“Therefore, we continue developing and expanding our e-commerce solutions to exceed our customers’ expectations,” he says. “Over the last year, we’ve focused on providing a seamless integrated click-to-delivery experience. This provides our customers with full data visibility of their order status throughout the lifecycle of the order.”
Greg Leidner, president and CEO of Ipswich, Massachusetts industrial PVF master distributor United Pipe & Steel, is of the same thinking when it comes to customer expectations. “I would continue to look for top master distributors to invest in technology that benefits customers, whether it’s self-service portals or real-time shipment tracking,” he says.
Rob Raban, president of Rancho Dominguez-based industrial PVF distributor Industrial Valco, notes his company is pulling out all the stops on the customer-service front, starting with its Speedability concept. “Speedability is the trade word we’ve developed to capture our brand promise of having material ‘in stock, error-free and ready in two hours or less,’” he explains. “We think Speedability is the next big thing and we are working very hard deliver on that brand promise.”
To that front, Industrial Valco also has put a spotlight on its talent roster. “We have invested heavily in personnel the past year and have added a COO and CIO to our executive ranks,” Raban says. “We have made several other internal changes as well to make sure we have the right people in the right seats with clear goals and accountabilities. Investing in people isn’t new or revolutionary, but it’s a fundamental we think will pay dividends in both the short and long term.”
What else is causing master distributors to take notice in the industry? Leidner echoes similar industry sentiment when it comes to the topic of transportation. “The shortage of Class A drivers has changed, as more and more baby boomers are retiring from these positions,” he says. “Master distributors, particularly those with in-house trucking capabilities, are in higher demand today than they were a year ago. I would look for the shortage of Class A drivers to continue to accelerate, creating even more reliance on master distributors of pipe products.”
Saunders says internet retailers are putting higher pressure on logistics and inventory requirements across the master-distribution industry. “I think you’ll see increased utilization of parcel-ready packaging and custom fulfillment solutions such as packing slips and shipping labels, as well as rapidly changing transportation solutions adapting to consumers’ expectations,” he says.
Business across the three main master-distribution disciplines in this space (PHCP, HVAC and PVF) has been strong over the last 12 months, but caution is in the wind this year.
“Neuco had a great year in 2018 with very healthy growth,” notes Neustadt, whose company is in the midst of moving into a new 145,000-square-foot location 11 miles from its current facility in the Chicago suburbs. “There were some product outages, which we have been told were directly related to the worldwide shortage of circuit boards. Without this challenge, our results would have been healthier.”
Saunders classifies The Stock Market’s 2018 as strong. “It reflects the diversity of the master distribution industry,” he says. “Distributors are increasingly leveraging the value of the full assortment of manufacturers’ catalogs, and The Stock Market is uniquely positioned to support this through data-driven assortment consultation and the best supply chain in the country. From direct-ship on behalf of the wholesaler or retailer to commercial jobs to bulk orders into reseller warehouses, The Stock Market is well-positioned to partner with all customer segments. Our goal is to help them take full advantage of the diverse opportunities available, as well as additional distribution channels they open.”
Raban notes Industrial Valco grew its business 50% in 2018, but provides a cautionary tale that started late last year. “Business conditions grew along with the economy for most of 2018 right up until about Thanksgiving then sprinted toward giving it all back,” he says. “There’s so much fear in the stock market/economy despite record earnings, wage and job growth. Oil inexplicably dropped 20% in December and then rose 20% in early January. Why? I don’t know, but assuming the U.S. and China work out their trade differences, my crystal ball for 2019 has oil averaging $55 a barrel and business flat with 2018.”
Leidner also has a slightly cautious outlook for 2019. “Last year business conditions were supportive of the construction industry, residential and commercial,” he says. “We see more of the same for 2019, but there is a bit more of an overhang of political uncertainty, which is leading us to be slightly more cautious in our outlook for this coming year.”
United Pipe & Steel concluded its first year of operation in 2018 in its Stockton, California location. Leidner notes United Pipe & Steel is looking to continue bringing its business model to distributors across the country, while also looking at majorly broadening its portfolio of plastic and steel pipe products.
Going back to this year’s superior customer-service consensus, Saunders adds The Stock Market’s plan of attack will continue to center on finding the best solutions to help meet customers’ needs. “We are continually evolving so we can offer our customers the best solutions,” he says. “At the heart of our evolution is listening to our customers so that we can offer precisely what they need and nothing less.”
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