People are always asking: Will independent wholesalers survive? Or will they be acquired by big national chains? Bill Weisberg, chairman and CEO of Affiliated Distributors, King of Prussia, PA, a buying and marketing group for wholesale distributors in North America, addressed this topic in his presentation at the North Central Wholesalers Association’s annual convention June 14 in Maumee Bay, OH.
This past year was A-D’s 25th anniversary, so the group did some research on how independent distributors in the electrical industry are doing. It seems that could be a good barometer for measuring the health of independent PHCP wholesalers as well.
According to a 1981 issue of Electrical Wholesale magazine, the top 10 chains in electrical distribution represented 21% of the total market at that time and the top 240 independents represented 17% of total market share. In 2006, half of the companies listed in 1981 were gone, but that also included half of the top 10 chains, Weisberg pointed out.
“How did chains come into the market, buy all these independents, and yet so much market share went to the independents?” Weisberg asked. “This happens in every industry we are in. Chains buy companies and a few years later they start leaking market share. Some of the best people [at the acquired companies] are not comfortable working with a bureaucracy.
“Independents that did not sell grew at a more dramatic rate than those that were sold,” Weisberg continued. “Some have grown to 10 times the size they were. Independents who don’t sell are getting stronger and continuing to pick up share.”
“Customers are local - local market relationships count,” he said. The local independent distributor has been in the market and knows what the market needs.
“I am bullish about what the future holds for independent distributors,” Weisberg said.
Every buying group faces the same challenges, he noted. They include: consolidation, funding new services, remaining price competitive, overseeing increasingly complex operations and attracting and retaining quality staff, he noted.
Affiliated Distributors has about 60 distributors in its Plumbing Division, 30 distributors in its HVAC Division and about 60 distributors in its PVF Division, which combined represent about $8 billion in sales.
Torrington Supply's Growth StrategyJoel Becker, CEO of Torrington Supply, Waterbury, CT, and current president of the American Supply Association, was also a featured speaker at the NCWA convention.
He shared information about Torrington Supply’s outside sales and branch compensation plans. He recommended a book by Mike Marks and Mike Emerson of Indian River Consulting Group: “What’s Your Plan? Smart Salesforce Compensation in Wholesale Distribution,” (visit www.naw.org and click on publications) that suggests questions distributors can ask themselves about their business.
“We targeted growth based on the size of the customer,” he said. “Each salesperson has his or her own plan. Focused selling yields focused results.”
Mueller's Balanced ScorecardWilliam D. O’Hagan, president, CEO and a director of Mueller Industries, shared his company’s philosophy: “What gets measured gets done.”
The company has created a balanced scorecard to achieve its goals and measure performance. The scorecard covers strategies that target financial goals, customer service goals, internal business practices, and learning and growth for its employees. For each area - financial, customer, internal business, and learning and growth - Mueller Industries has specified a desired outcome, a strategic objective and a measurement. For example, in the learning and growth area, the desired outcome is speed, flexibility and adaptability to change; the strategic objective is to create an atmosphere of action, risk-taking, self-improvement and leadership; and the measurement is employee ranking and reviews.
O’Hagan stressed the importance of being flexible and receptive to change.
NCWA Officers InstalledAlso at the convention, NCWA installed new officers:
President: Jim Wilson of Wayne Pipe & Supply, Fort Wayne, IN
Vice President: Patrick Hughes of JABO Supply, Huntington, WV
Treasurer: Kevin MacDonald of MacDonald Supply, Findlay, OH
Directors: Jeff New of Mid-City Supply, Elkhart, IN; Jay Hults of Progressive Plumbing Supply, Warren, MI; Gary Glanzman of Eastway Supplies, Columbus, OH; John Strong of Economy Plumbing Supply, Philadelphia; and Gary Tag