Distributors discuss the state of their sales activity in the first half of 2019 and what may lie in store for the remainder of the year.
Back in January 2019, amid a business landscape mired in political dissent, economic volatility, and the threat of continued tariffs on Chinese-made goods, distributors shared a cautiously optimistic view of what the year ahead might hold. Six months later, tEDmag.com surveyed several distributors nationwide for their assessment of actual sales activity in the first half of 2019 as well as any challenges and opportunities they foresee for the rest of the year and beyond.
“Our first half was flat to soft growth, so despite very conservative growth projections for 2019, we’re slightly behind our budgeted growth,” shared Jim Dunn, executive vice president at Warshauer Electric Supply in Tinton Falls, NJ. “It was universally soft across all of our business segments, including supplies, gear, lighting, generators, and our Lighting Design Center.”
By contrast, “we saw very strong sales across the board in the first half of 2019 and are on track to achieve our sales goals for the year,” said John Hammer, vice president of marketing at East Dubuque, IL-based Crescent Electric Company. “Geographically, our sales were well-balanced; electrical contractor business was strong and industrial sales are up, though showing signs of slowing.” Hammer attributed their first-half performance to strong investments Crescent made in growth markets and its alignment of sales activities with supplier priorities. “Shoulder-to-shoulder selling with strategic suppliers works,” Hammer said.
According to Ryan Kuchenmeister, sales representative at K/E Electric Supply in Mount Clemens, MI, “sales activity was strong for the first half of 2019, but it wasn’t ‘crazy’ like it was for the last couple of years. The pressure and stress levels of staff and customers have lessened ever so slightly to what we would historically consider to be ‘normal busy.’” As for whether they’re on track to achieve their sales goals for the year, “the business term I’d use to answer that is ‘kind of,’” Kuchenmeister said. “Success is ultimately revealed when compared to the market, the economy, or your peers and the end game shouldn’t necessarily always be a hard dollar amount or percentage number. The goal in business is to make enough money for your company to thrive and hence provide an environment of success for your staff. Are we on track in that regard?” he asked. “We think so.”
Specifically, Kuchenmeister noted that stock sales are typically strong for K/E in the first half of the year based on the firm’s diligence in managing inventory and ensuring that they’ve got the “right-selling” products on the shelf. “We know our customers appreciate that,” he said. On the flip side, he noted, “direct sales were okay, but not as juicy as last year. The presence of large projects was abundant last year and there simply aren’t as many of those this year.”
Our experts expressed mixed but hopeful prospects for the remainder of the year.
“While we’re somewhat optimistic that the second half will be stronger than the first half, we’re up against some decent numbers in Q3 and Q4 of 2018, so we remain optimistic but cautiously so,” Warshauer Electric’s Dunn said. “All of the pieces are in place for us to capture some growth as the year progresses as long as panic doesn’t set in outside our company and everyone just stays the course. I think that if the political landscape settles in and the implementation or fear of implementation of all of these tariffs dies down, confidence will build and things will improve as projected at the start of the year.”
“We’re optimistic about achieving our sales goals for the year,” Crescent Electric’s Hammer shared. “However, with so much uncertainty on Wall Street and a geo-political situation that could challenge the industry supply chain, we’re cautious in our investment portfolio right now and think many investors feel the same way.”
“We feel that the rest of our year will still be strong, but compared to what?” Kuchenmeister contended. “There’s a sense that change is coming in the market, but nobody knows when that might be, so we’re just staying focused on what we do best and trying to steal market share just like every year.”
Among challenges or opportunities on the horizon, Kuchenmeister sees two things materializing. “First, contractors are still in a position to pick and choose the work they take,” he said. “There are only so many people available to staff projects and many local contractors are only taking the amount of work they’re comfortable with and/or just doing what they can to satisfy their strongest customers.” As such, he said, “if we’re to grow the industry (and trade) as a whole, we need millennials to realize that they can make a career in the electrical industry, or any skilled trade for that matter. The skills gap is real and the entire country has bought into the idea that a college degree is a requirement to be successful. It certainly helps sometimes, but many students end up graduating with a pile of unforgivable debt, living at home, and working as a barista because their degree doesn’t translate very well to the needs of the market,” Kuchenmeister said. “Meanwhile, skilled trades are dying for people and distributors can’t sell what contractors can’t/don’t install.”
Tune in tomorrow (July 25) for Part 2 of this tEDmag.com series, when industry experts/consultants share their top tips to help distributors stay (or get back on) track to meet their goals this year.
Industry experts discuss the state of the distribution industry in the first half of 2019 and offer top strategies to help distributors stay on track for the rest of the year.
First Half 2019 Recap, Part 2
Industry experts discuss the state of the distribution industry in the first half of 2019 and offer top strategies to help distributors stay on track for the rest of the year.Read more
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