Canadian Electrical Wholesaler

 

Sept 17, 2018

David GordonBy David Gordon

For many, corporate success is typically defined as sales success, as sales revenue is an easily identifiable and discussed/shared metric. But in a quest to grow sales, and due to competitive pressures, gross margins for many distributors have eroded, making gross profit dollars more scarce for investment back into the business. And with operating costs increasing and investment requests accelerating, finding ways to increase your gross margin to impact net profitability is critical for long-term success.

Recently I participated in an interview with Tony Corley from Epicor and Jim Lucy from Electrical Wholesaling. The topic was “8 Habits of High Gross Margin Distributors.” Tony has written a white paper highlighting his observations of strategies that help distributors in their quest to improve profitability… essentially a roadmap. Tony’s eight habits include:   

• establishing a pricing committee   
• defining a profit margin goal   
• use “list less” pricing whenever possible   
• understand that not all customers and products are created equal   
• establish thresholds and approval processes   
• understanding value-added services – and how to charge for them   
• understand how to monetize customer service   
• walk away from unprofitable business

Tony came at the issue from an ERP company observational trend viewpoint. Not “how” they are using their ERP systems but more from the processes that top performing distributors utilize. (Watch for more on Tony’s eight habits in the next issue of CEW.) 

I shared observations from a strategic and practical viewpoint from what we’ve seen, recognizing that (admittedly) I’m not a pricing guru… not close. From a corporate strategy, sales and marketing viewpoint, we look at pricing strategy through a different lenses and I shared complementary perspectives which are highlighted in this document titled Channel Marketing Group – Improving Distributor Profitability (www.electricaltrends.com/wp-content/uploads/2018/08/Channel-Marketing-Group-Improving-Distributor-Profitability-1.pdf). Topics here included:   

• 8 causes of lack of high profitability   
• the pricing challenge includes “plugging the leaks”   
• the “whack a mole” approach and why it isn’t a viable business strategy but is needed (sales is creative!)   
• too many cooks can water down the pricing strategy. Sometimes a benevolent dictatorship is needed… and is needed to force selling vs. order acceptance and mediocre profitability   
• the need to identify root cause problems with your margin issues   
• the power of decimals and how they can improve gross and net margins by .25-.46% bps   
• overrides and how they cost distributors net profit   
• contract and SPA pricing maintenance   
• the current, and future impact of eCommerce on pricing strategies… and the need for consistency across your ordering channels

Listen to interview   

• If you signed up for the webinar and want to re-hear, click here

• If you missed the session, register for the webinar and then listen to it here

Let us know your feedback. Our goal is to add to your internal discussions and share some “thought nuggets.

”What are your biggest pricing challenges (or what you see as the industry’s biggest challenges) and/or inhibitors to improving margins?

David Gordon is President of Channel Marketing Group. Channel Marketing Group develops market share and growth strategies for manufacturers and distributors and develops market research. CMG’s specialty is the electrical industry. He also authors an electrical industry blog, www.electricaltrends.com. He can be reached at 919-488-8635 or This email address is being protected from spambots. You need JavaScript enabled to view it..

CEW market research 400By John Kerr

The past nine weeks have been to say the least a challenge across the electrical industry. From agents to suppliers, from end users to the electrical channel, all have been affected, all have been forced to think differently and all have begun the journey to retooling the way we operate.

This is the third report in our series quantifying and exploring how electrical wholesalers have had to adapt and how they are looking to find a way forward. For this we have taken a different approach from our previous reports in that we have incorporated the results from our recent survey alongside personal interviews and discussions with electrical distributor teams across Canada

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arkest Before the Dawn, Part 2

CEW 9 JK Figure 1 700By John Kerr

I spoke in my previous article about my father’s quote darkest before the dawn. Well, he had another saying clearly brought forward by his growing up in the depression. He would say, “Money is not everything. It just helps,” and at a time like this when there are so many storylines of effort above and beyond the call, and so many initiatives underway by electrical distributors, there will be a rallying right across the country. The electrical distributors are moving, reacting, and more adaptable than ever before. 

The current situation we find ourselves in is to say the least fluid, dynamic and somewhat disconcerting for many, but underlying it is a focused, disciplined approach to addressing the new norm and new reality. Some branches remain closed, some open with minimal staff, and others rotating staff and working differently than ever before.

Recent public reports by Wesco and Rexel have indicated drops approaching 23% through mid April and clearly ones that demonstrated a slowdown from mid March. Our discussions with both distributors and end users/contractors alike confirm their buying and purchasing activity were curtailed more aggressively in early April.

Over 106 electrical distributors responded to our recent survey with 73% from corporate and branch management. 

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Gurvinder ChopraBy Gurvinder Chopra

This June, Canadians will commemorate Electrical Safety Month; June also marks the fourth month of the COVID-19 pandemic national lockdown. For many Canadians, working from home has become the new normal. As confinement continues, the demand for constant power feed to connect to the world we now live, work, and play in at home has grown substantially. Homes are being equipped with new technologies that offer plenty of benefits, but they also place high demand on electrical systems at home, potentially causing serious safety risks. 

Read More

David GordonBy David Gordon

In talking with distributors and manufacturers it is clear that many are actively in the planning and pivoting mode, moving from survivability to thriveability. They’ve stabilized their business financially, emotionally (from a staff viewpoint) and operationally. Now they are looking at “doing business,” and more financially secure ones are identifying ways to take share.

This doesn’t mean that others are not planning and pivoting. Some didn’t miss a beat; others typically don’t do much planning and live in the moment. 

Read More

Building Permits - MarchThe total value of building permits issued by Canadian municipalities decreased 13.2% to $7.4 billion in March, with declines reported in seven provinces and two territories. The $1.1 billion national decrease was the largest since August 2014. This reflected notable drops in Ontario (-12.9%), Quebec (-18.1%) and British Columbia (-19.4%), which coincided with efforts to slow the spread of COVID-19.

 Value of residential permits down

The total value of residential permits decreased 13.1% to $4.6 billion in March.

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Changing Scene

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EIN evolve 400As we continue to respond to the changing status with the COVID-19 outbreak, EFC is taking preventative measures to protect conference delegates from any further risks associated with this virus. After much consideration and consultation, the EFC Board has decided to cancel EFC’s Industry Conference in Banff which was rescheduled from late May to September 1 - 3, 2020. This decision was difficult but necessary for the safety of our members, employees, and the community.

One of EFC's key mandates, is to deliver a premier national thought-leadership conference for industry members, partners, and affiliates. 

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Sonepar's Gaurav SharmaA new video featuring Sonepar’s Vice President of eCommerce and Digitalization, Gaurav Sharma, answers COVID-19 related questions regarding Sonepar Canada’s digital solutions, his team, and the future of eCommerce in the electrical wholesale industry.

Among new solutions introduced by Sonepar: customers can now create an online account through a simple text message. Traffic on Sonepar’s website has tripled since the pandemic began, and the number of new accounts has doubled. Many Sonepar locations also feature curbside pick-up.

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Schneider ElectricThe Continental Automated Buildings Association (CABA) is pleased to announce the appointment of Hugo Lafontaine, Vice-President Digital Energy at Schneider Electric Canada. CABA is an international nonprofit industry association that provides information, education and networking to help promote advanced technologies for the automation of homes and buildings.

“We are delighted to welcome Hugo Lafontaine to CABA's Board,” said Ron Zimmer, CABA President & CEO “He brings a stellar background in building systems integration and the building automation market, and a wealth of insight into the digital platforms and solutions that will define smart-building innovations now and into the future.”

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Harold HayesHarold Hayes, a stalwart of the electrical industry, passed away peacefully in Scarborough, Ontario at the age of 90 on May 9, 2020.

Harold joined the industry as an apprentice at age 18, working first for his father’s business, Power Cable Installations, and then for Comstock. Among his later accomplishments, he formed Federal Pioneer Electric’s electric heating division, served as president of the Ontario Electric League in 1985, and while in his 80s consulted for Intellimeter Canada Inc.

 

 

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Sarah SilversteinBlake Marchand

Sarah Silverstein is a principal with Liteline along side her two brothers Mark and Daniel. Together, they lead the company founded by their father, Steve Silverstein, who retired in 2018.

Although she initially pursued a career in outdoor education, Sarah was instrumental in the company’s expansion into architectural lighting and the U.S. market. She joined Liteline as a project manager in between stints working in outdoor education. Now she leads Liteline’s U.S. distribution arm and marketing department.

 

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