Canadian Electrical Wholesaler

David Gordon

December 18, 2017

By: David Gordon

Over the past few months as we’ve sat in strategy development meetings with distributors, reviewed distributor purchasing information, and talked to manufacturers’ reps and contractors, we’ve seen a purchasing trend that is roiling the industry. The trend, which mirrors what is happening in lighting with “unfamiliar brands,” is accelerated growth and acceptance of less familiar brands for infrastructure type products (electrician supplies, boxes, fittings, etc … consumables and products that go within the wall). This then begs the questions, “What is the value of a manufacturer’s brand,” and “What are the implications for manufacturers and distributors?”

Many have seen this as driven by

  • the commoditization of product and the “need for price.” There are more companies pursuing a product category than ever before (the benefit of sourcing) and, in many instances, it is extremely difficult to determine if there is any product quality difference.
  • the fact that frequently contractors are focused on price and the belief that “as long as it lasts a year they don’t care,” or their customer doesn’t care about the brand.
  • contractors don’t see the incremental cost benefit of a product. With contractors purchasing more than 50% of the electrical material sold in the industry, if they don’t request a brand, then distributors are free to provide a suitable offering.
  • distributors seeking incremental gross margin as purchasing at a lower net cost can, if they have a disciplined pricing model, increase their profitability in excess of the branded company’s rebate (offered through the marketing group). Many of these “unfamiliar” companies do also offer a rebate, and some belong to a marketing group.
  • the ease with which some of these companies do business. They frequently are not demanding (some say “arrogant”), and are strong on delivery.
  • in some cases product innovation.
  • distributors preferring to have at least two tiers of products in many categories — a branded line and then a “price line” to help them compete in the marketplace as frequently there can be a 10-40% price differential… and which distributor salesperson is willing to pass on an order… and the average price of a contractor quotation request continues to decline.

We’ve seen this more on the construction / contractor side of the business. The industrial side of the business is more brand focused as manufacturers interact with the end-user via their sales and marketing organization, the buyer is perceptually more concerned about quality and standardization, and products frequently are more quality-oriented and performance-driven.

Why this is happening:

  • competition for contractor / customer dollars
  • less brand loyalty at the sales level, some of which is due to generational change and interaction
  • distributor need to compete in the marketplace to win the business
  • lack of manufacturer identification of its value proposition … for its products (if any) and for “why buy from them”
  • lack of manufacturer investment in building a brand, and a reason to purchase, at the contractor level
  • lack of discernible product differentiation
  • sales training issues at the manufacturer level as well as the distributor level (and in many cases, the distributor salesperson has too much to “learn” so therefore will default to providing to the customer what is acceptable).
  • a generational issue (and here’s an interesting take from Jim Cramer on Millennials being less brand loyal. Will / is the same mentality flowing into the electrical industry as there is personnel turnover?

The issue becomes

  • if you are a manufacturer whose product is not requested / known by contractors, what is the value of your brand at the distribution level? Why should they want to buy from you?
  • if you are a distributor typically you’ll have a relationship with a strong brand (after all, you want to be known by the company you keep and it gives you access to a broad product offering) but you also have at least one price-oriented line that lets you compete in the marketplace. Yes there is inventory overlap, but the cost of inventory is minimal compared to the cost of losing a sale. As an example, we know one company that identified that most types of strut could be handled by a “no-name” company that had good quality at a 33% discount from a branded line. If the customer doesn’t care, can you pass up the order? Pass up the opportunity for increased profitability if you can purchase for less and only pass on 1/3 of the savings to the contractor?

Identifying what “customers” (contractors, end-users, distributor management, distributor salespeople, purchasing, your reps) think of you / what they think your value proposition is” can determine your

  • channel strategy
  • sales messaging
  • product development
  • pricing model
  • distribution “program”
  • value-added services

It can also be the springboard to accelerating growth. Essentially, your company roadmap.

Consider the wire and cable segment. Years ago there were many companies in the space. How many today? What was the difference? Their strategy, execution and communication of their strategy and marketing of their business. They took an undifferentiated product offering, branded their companies based on some products and service differentiation, and then have taken their “perceived” differences to grow their companies. This was the essential roadmap for Southwire and Encore, two stalwarts in the wire / cable industry. Where are the others today?

If you are a distributor, using these “unfamiliar / undifferentiated” lines to capture sales and improve profitability makes sense. A little more work, a little duplicate inventory, but that’s the job — service the customer and sell.

If you are a manufacturer, what is your brand? Is it valued?

 

Hubbell

 

The University of Strathclyde in Glasgow, Scotland has named Hubbell Lighting executive licensee of a technology that can suppress bacteria in the air and on surfaces using a narrow spectrum of visible light. The high intensity narrow spectrum lighting technology has been shown to reduce bacterial pathogens in the environment at a far greater rate than cleaning and disinfection alone.

“Our agreement with Hubbell Lighting opens the door for the food and beverage industry and other sectors to benefit from our continuous disinfection technology, helping them keep consumers even safer,” says Scott MacGregor, vice-principal of the University of Strathclyde and leader of the research team that developed the technology.

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Study


A confirmation: the winds of change are now howling.

Several years ago, in a workshop at Electro-Federation Canada’s annual conference, a roundtable session described and debated the numerous disruptive technologies that are forcing us to think differently.

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Michael Gentile, President and CEO of Philips Lighting Canada, has had a long and distinguished career in the electrical industry and more recently the lighting industry. None of this is by chance. Always in decision-making circles since beginning his career, Michael spends the first 10 years first at Siemens, and subsequently in lighting at Osram as Vice President Finance and Vice President Sales and Marketing. After that, he joins Philips Lighting.

Michael agreed to share a few moments with us to discuss his career trajectory, the industry, trends, worries, and wishes. A tour of his career is also a tour through a key period in the industry and a reflection of its adaptability to new technologies — from an expert's point of view.

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Changing Scene

  • Prev
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Electro-Federation Canada’s 6th Annual Future Forum, Thinking Smarter — Channel Products, Energy, ...
In partnership with Habitat for Humanity Québec, Convectair is donating two heating units ...
Do you know an industry member who has greatly contributed to the Canadian electrical industry and ...
Kendra Smith will be joining the company’s Nationals Accounts team as the Key Accounts ...
Blueway has been added as a division within Sonepar Ontario, reporting directly to Sonepar Ontario ...
Pilz Canada has added Marcus Graham to its family. Marcus is now serving a wide base of customers ...
Christopher Balleine has been appointed Stelpro’s Sales Representative, Maritimes, ...
Based in Ottawa, Lafontaine will be responsible for building on Schneider Electric’s ...
Bill Smith from Electrozad Supply Company Limited has been selected as this year’s recipient ...

Peers & Profiles

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Sales of electrical supplies from full-line electrical distributors capture the geographic ...
I've known John Sencich since CEW began publishing. He agreed from the outset to be part of the ...
Laura Dempsey has been working as an outside sales representative for E.B. Horsman & Son for ...
Michael Gentile, President and CEO of Philips Lighting Canada, has had a long and distinguished ...
Gordon MacDonald is a cheerful, driven individual who loves to be challenged, a trait that suits ...
  Jordan Prins is an account manager at Wesco Distribution in Abbotsford, British Columbia. ...
Mike Marsh, President and CEO of SaskPower, has been a leading figure in Saskatchewan’s electricity ...
I didn’t wake up one day and go, “I want to work for my dad!” Actually, it was ...
    Ouellet Canada is celebrating 50 years in the Electrical Heating ...
  On February 27th Lumen opened their 36th branch in Ottawa, Ontario. ...

Laura Dempsey

Owen Hurst

Laura Dempsey has been working as an outside sales representative for E.B. Horsman & Son for over 15 years, and is a member of the BCEA U40 network of young professionals. She lives in Langley, BC and is proud of her position and work with E.B. Horsman, particularly as she is the second Dempsey generation to work for the company.

Laura’s mother Shelly has worked at E.B. Horsman for over 25 years, and instilled in Laura a determination to succeed. Laura followed in her mother’s footsteps after witnessing how much her mother enjoyed her work and the people she works with at E.B. Horsman.

Read more: Laura Dempsey

Laura Dempsey

Line Goyette

I've known John Sencich since CEW began publishing. He agreed from the outset to be part of the newsletter’s Editorial Board. His contribution was regular and sustained. Always present to answer my technical questions, and refer me to the right person for additional information as needed. Always available despite his role as senior leader of an influential company.

Over the past five years, many industry insiders have cited John Sencich when I asked them to name someone who had made a difference in their lives or had inspired them as a leader.

Read more: John Sencich

Looking Back

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  As 2017 marks the 150th anniversary of Confederation, we take a look back at an aspect of ...
The resource-based industries of the Maritimes are looking to electronics to make their operations ...
  Electrical distributors must remain in both the electronic and electrical ends of the ...
  The public’s strong interest in energy-saving products should continue in the ...
  Even in a principally agricultural province like Saskatchewan, the impact of electronics ...
Electrical distribution companies operating in British Columbia will continue to get larger while ...
Golden anniversaries are celebrated by the mature, and our industry is allowed to celebrate ...
The last 50 years have been exciting ones for the electrical industry but they won’t compare to ...
The ceiling that had been placed on membership fees remained a point of contention among ...
The year 1982 started on a relatively good note for electrical distributors. Sales in the first ...

DIgitalDigitalization is set to take a strong hold of all business models, transforming how companies access, monitor, engage with and service customers. Today’s customers are not passive consumers; they rely on real-time digital access to information to make purchasing decisions. Businesses must consider how to apply digital technologies and digitized data to connect with customers to help reshape their paths to purchase. This digital lens provides improvements to business functions, operations and overall processes by creating stronger insight and knowledge so businesses can take action.

The path towards digitalization has put the electrical supply channel at an important crossroad: the entire electrical value chain (suppliers, manufacturers, distributors, customers) will need to strongly consider how to move from a traditional model that has served the market well for decades, towards a new model that is connected, smart and highly efficient. But how does the industry evolve from a traditional model to an integrated ecosystem?

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EFC 2018 Scholarship Program

This year Electro-Federation Canada (EFC) will award $156,250 across 62 scholarships supported by manufacturers, distributors and associations.

The annual EFC Scholarship Program reflects an industry that understands its responsibility to attract future talent. In the face of technological, demographic, and socio-economic evolution, the employment landscape is in constant transformation resulting in substantial challenges for companies as they work to define and redefine their recruitment practices. Furthermore, as competition for the brightest and the best of the next generation of business leaders intensifies, it’s more important than ever to engage young people. 

Read more...

 

Copper $US Dollar price per pound

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