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?

 

OlsonBy Katrina Olson

A recent CEW article by David Gordon caught my eye. The headline was, Are Your Sales and Marketing Teams Inhibiting Growth?

As a marketing consultant, writer, and trainer, I recognized the challenges and barriers that David was writing about. We agree on many issues (and their causes) facing electrical distributors and marketers. But I also hear from marketing people all the time that the C-Suite is hindering their efforts which, in turn, hinders the company’s growth.  

Read More

 

 

 

2018 Electrical North American MeetingOn October 29-31, 2018, the AD Electrical North American Meeting drew over 1,000 attendees. This event attracted 151 first time attendees and representatives from over 362 companies in the United States, Canada and Mexico.

Attendees benefited from a variety of agenda topics, including: Network Meetings, Emerging Leaders Session, and Country-specific Business Meetings. New to this year’s agenda was a SPA Optimization Workshop led by industry veteran Mo Barsema. In addition, members and suppliers also attended a panel discussion on managing and measuring your digital success.

Read More

 

 

Changing Scene

  • Prev
Mark your calendar for the Coalition event of the year! Come for an evening of networking, the ...
Recognized for her career as a business leader and innovator, passionate about people, technology ...
Michael Sudjian will move into the new role of Vice President of Logistics for Sonepar Canada ...
Hammond Power Solutions has appointed Jonathan Gorham as Business Development Manager – Western ...
Electrozad has enhanced its process solution capabilities by creating and launching a process ...
Luminaire Led will operate as a standalone division and maintain its operations in Edison, New ...
Effective January 1, 2019, Ramy Yousif assumes the position of Rexel Atlantic’s General Manager.
This past summer, from July 1 to September 15, AD Rewards ran the Redeem for a Dream promotion.
Electro-Federation Canada’s Marketing Awards program recognizes member organizations that ...
On October 29-31, 2018, the AD Electrical North American Meeting drew over 1,000 attendees. This ...

 

 EFC Announces 2018 Marketing Awards Winners

2018 Marketing Awards WinnersElectro-Federation Canada (EFC)’s Marketing Awards program recognizes member organizations that demonstrate marketing excellence and innovation within the Canadian electrical manufacturing and distribution industry. Winners of this year’s awards were recognized at EFC’s 8th Annual Future Forum, held earlier this month. (Shown in photo: EFC President and CEO Carole McGlogan with representatives from Bartle & Gibson, winners of the Integrated Marketing Award — distributor under $50 million.)Electro-Federation Canada (EFC)’s Marketing Awards program recognizes member organizations that demonstrate marketing excellence...

Read More

 

 

Peers & Profiles

  • Prev
On a regular basis, our publications profile members of our industry through their responses to a ...
First and foremost, sitting down with Susan Uthayakumar feels more like sitting down and conversing ...
Sales of electrical supplies from full-line electrical distributors capture the geographic ...
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 ...

 

 Young Leaders: Taylor Gerrie

Taylor GerrieOn a regular basis, our publications profile members of our industry through their responses to a Q&A. It’s a way of recognizing industry movers and shakers, and helping our readers get to know them better. 

Recently we launched an initiative with Electro-Federation Canada's Young Professionals Network to include profiles of up-and-coming leaders. We provided the list of questions below to Taylor Gerrie, Automation Account Specialist at Gerrie Electric Wholesale Ltd. in Burlington, Ontario. Here are Taylor’s responses.

Read More

 

 

 

 

Susan Uthayakumar, President of Schneider Electric Canada: Driving Success

Susan UthayakumarBy Owen Hurst

First and foremost, sitting down with Susan Uthayakumar feels more like sitting down and conversing with a friend than conducting an interview with the Canadian president of one of the world’s largest electrical manufacturers. Of course, she exudes the confidence and knowledge her position demands, but equally identifiable are an open and engaging nature.

In a recent sit-down, we learned a little about Susan’s history and what drives her to succeed.

Read More

 

 

 

 

Looking Back

  • Prev
The best memory I keep from CEDA is the way that they accepted me when I came into the business. ...
In the 1930s to 1940s, CEDA’s Western Canada membership was very stable with old line independent ...
Prior to the late 1950s there was little if any involvement in CEDA by the so-called “national ...
  As 2017 marks the 150th anniversary of Confederation, we take a look back at an aspect of ...

Looking BackThe best memory I keep from CEDA is the way that they accepted me when I came into the business. The welcome they gave to me, all of them men. (In those days there were not many women in business.) This welcome I will always remember. CEDA has played a very important role in my success.

One year our conference was in Hamilton, Ontario. Mr. Caouillette, our speaker, got lost and instead of going to Hamilton went to Toronto. I think that that was the longest cocktail hour that CEDA ever had… waiting for him to arrive. Certainly that night the head table and everyone were in good spirits.

Read More

 

 


Looking BackLooking BackIn the 1930s to 1940s, CEDA’s Western Canada membership was very stable with old line independent companies like Horsman, Ashdowns, Brettell, Marshall Wells, Electrical Supplies Ltd., etc.

Small electrical distributors just were not acceptable for membership as they did not carry the main-line manufacturers’ goods, publish a wiring device catalogue, or employ four to five salesmen as CEDA requested.

Read More

 

 

 

Copper $US Dollar price per pound

Kerrwil Publications

538 Elizabeth Street, Midland,Ontario, Canada L4R2A3 +1 705 527 7666
©2018 All rights reserved

Use of this Site constitutes acceptance of our Privacy Policy (effective 1.1.2016)
The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Kerrwil