tED magazine works exclusively with the Robert W. Baird & Co. research group for quarterly results on the economy and trends that are currently happening in the supply chain. tED publishes the results four times a year in tED magazine, in January, April, July and October.
Along with the economic results, Baird Research also allows tED magazine to offer one “rotating” question about a current issue impacting distribution. In April, we asked “How is consolidation impacting your business in 2015?”
Of the 91 responses we received from distributors and manufacturers from across the United States, nearly half said they are seeing little to no impact from consolidations. Many of the anonymous comments were, “Little to no impact” or “No noticeable change at this time. Our market has remained very stable with the same players for many years.”
Approximately 15% or the responses to consolidation were positive. Some of the comments from the people who took the survey include:
“It continues to represent a positive impact referencing the consolidation of distributors.”
“We are always looking at potential acquisitions.”
“We have been on the acquisition trail.”
“We aren’t experiencing much consolidation. I feel, however, that the little we are witnessing is just refocusing us.”
“Probably positive when addressing day to day business.”
“It has been a bonus for us. We have gained access to lines we did not have before, therefore generating revenue.”
“Consolidation allows a smaller location to make better purchasing. I can decrease my shipping costs by consolidating vendors.”
“Making us stronger with vendors.”
The remaining respondents, approximately 35%, saw some negative impact as a result of consolidation. Many commented that they are still taking a “wait and see” approach to what will happen next. But those who did have specific concerns told our researchers:
“Lower margins.”
“Deliveries from vendors are slower.”
“Unlike the past, consolidation has driven price levels in the market even lower.”
“We continue to see customer and vendor consolidation in our space. We believe (as a distributor) this is a factor that has created pricing pressure for us from both sides.”
“Manufacturer consolidation causing disruption in service levels and more leveraging of multiple line vendors.”
“Vendor relations becoming more complex.”
“Making it harder and harder to keep partners happy, ultimately will lead to difficult choices being made.”
“Harder to niche sell.”
“Fewer local decision-makers, reducing the ability to complete projects.”
“More top-down forced changes – not what always works in the local territory. Alliances moved.”
“More decisions are made outside of our market area today, making it harder to drive local demand on our products.”
You can only find more about our tED magazine/Baird research in the July issue of tED magazine. We will recap the second quarter revenue, along with give you an outlook for revenue and inventory for both electrical and datacomm for the rest of 2015. Plus, look at some of the key themes for the remainder of the calendar year, including the construction outlook, the LED lighting market and capital spending for the rest of the year.
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