A recent survey of purchasing habits by 157 PVF distributors found 73% of respondents reporting decreased sales during the first half of 2009, compared with only 10% who said sales had increased. The remaining 17% of respondents said their sales stayed about the same.

The PVF business slump in 2009 is unprecedented in severity, according to most observers. Of those companies reporting a decrease in sales, more than three-quarters said sales had dropped by more than 10% during the first half of last year, including 24% who said sales declined by more than 25%.

Decreases in construction and renovation projects were of course cited as the main reason for declining sales (88%), while lower prices (36%) ranked second when respondents were asked to name the two most important factors in the downturn.

A little less than half of those surveyed (47%) anticipate an increase in sales for 2010, compared with 44% who replied “stay the same” and 9% who predicted a further decrease. Those who predicted an increase generally foresaw modest gains, with 45% saying sales would increase 6-10%, and 14% seeing a growth rate of merely 1-5%.

One of the survey questions asked participants to name the “two most significant areas of sales growth” over the next few years. The largest aided responses were:
  • Diversification into new market segments and product lines, 48%;
  • Existing product lines, 46%;
  • Improved operational efficiency and personnel productivity, 35%;
  • Quality partnering with customers, 35%;
  • Development of business over the Internet, 13%;
  • More sales reps, 10%;
  • Branch openings and acquisitions, 9%;
  • Improved service via more sophisticated electronic technologies, 6%.

Domestic manufacturers accounted for 51% of distributor purchases, according to the survey, compared with 37% from foreign manufacturers and 11% from master distributors. Respondents claimed that 45% of customers would prefer a “Made in USA” product, though a subsequent query found that 39% of those respondents would not be willing to pay more than a 10% price differential for buying American.

A key question in the survey asked PVF distributors to rate the importance of various factors in purchasing decisions. In order of importance, these factors ranked:
1. Product quality.
2. Product availability.
3. Price.
4. Lead times.
5. Relationship with vendor.
6. Technical support.
7. Brand recognition/acceptance.
8. Quality partnering program.
9. Domestic vs. import.

Almost half of the respondents, 48%, said their company has an active program of vendor consolidation.

Another question asked how many were involved in vendor-managed inventory programs with customers, and 36% responded affirmatively. Also, 22% said they were involved with integrated-supply agreements in which they supplied non-PVF products to industrial customers.

Asked, “Do you currently have sole-source contracts with any of your customers?” 31% responded “yes.” Asked a related question about vendors, 59% of respondents said they perceived advantages in sole sourcing from a vendor.

The survey was conducted via email with Supply House Times subscribers between Oct. 20-Nov. 2, 2009, by the BNP Media Market Research Division.

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