The exclusive tED magazine Baird Research Study for the 3rd quarter of 2014 shows both a solid increase in revenue over the same period of time in 2013 and a strong outlook for revenue increases in 2015.
The Baird Research Study for the 3rd quarter had nearly 100 respondents with nearly $14 billion in aggregate annual revenue.
Respondents indicated their revenue growth for the quarter was up 4.8% for electrical distributors from last year. It also shows a significant revenue growth from the 2nd quarter of 2014, although the 4.8% was also slightly below expectations for a 5.5% revenue increase. The increase was driven by stronger residential construction activity and improved industrial OEM trends.
Some of the quotes from the respondents include:
- “Non-residential construction activity has gotten healthy through the year. Not in every market, but in most markets, especially metro areas.”
- “Construction market experienced marked improvement late third quarter and expected to continue during 4th quarter.”
The growth also comes as pricing from year to year is nearly flat. Respondents to the Baird Research Study found only a 1.1% increase in pricing from year to year. The pricing change was also flat from the 2nd quarter of 2014.
Some of the comments on pricing include:
- “The challenges of keeping inventory based on customer demand and the constant pressures to decrease pricing to compete occurs daily.”
- “The sales cycle is half what it was five years ago, which puts more pressure on distribution to have the right products at the right time. We are working to maximize just in time while reducing dead inventory.”
- Distributors are also keeping an eye on the price of copper, which continues to impact profitability to some degree. “Despite the fact that the copper base has dropped over the past two months, we continue to see upward pressure on finished wire items.”
As a rotating question that tED magazine and Baird chose for this quarter’s survey, we asked distributors how have customers’ expectations changed and what adaptations are being made to meet them.
Some of the answers include:
- “Adding more resources like product specialists.”
- “Upgraded website and customer access to website to place orders.”
- “Showing added value and service to earn customer trusts and business.”
The next tED magazine/Baird Research Study will be available in late January or early February.
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