Seven Thoughts for 2022
Dec 1, 2021
By John Kerr
I am not big on predictions so I would rather present instead a few thoughts on what I sense for the future of Canada’s electrical industry. Having the luxury of speaking to all segments of the industry every day provides a unique perspective, so I hope what follows will provide food for thought when looking ahead to next year.
1. Evolution of high-tech distribution. There is no doubt high-tech distribution will evolve and grow, evidenced by the increasing complexity of products coming forward. More product suppliers alone will drive this as they seek channel partners, but the driver will be end users who need support, expertise, and immediate access to information. This won’t have much of an impact per se on the full-line model we are used to, save for and except that full-line players will be adding these types of firms to their acquisition target lists moving forward.
2. Continued consolidation. The past 20 months evidenced a clear path forward. A watershed year for mergers and acquisitions and more will follow for sure. But don’t just look at the channel as the centre of activity. We sense there are a few key opportunities for key manufacturers to make some moves. And don’t forget the agents as well. In the US it’s happening is Canada on that path too?
3. A move by several for a mirror of the “Amazon experience” in electrical wholesaling. The amount of investment alone into the current outward facing web sites and buying sites by many wholesalers can have been totally justified on converting existing customers to an online experience to buy alone. Recent announcements for larger investment in buildings and warehousing might be code for distribution/fulfillment centres in the near future.
4. The light will go on soon that, to cast a wider net with your website, who you don’t know will take hold sooner than later. Key competitors have long realized that bolting a strong fulfillment centre behind the power of a robust site offers a competitive edge.
5. Inventory spend will increase. As we exit the past two years, there is a strong precedent that those who had inventory, invested in it early, and continued to invest in it have gained share and grown well beyond the market.
6. More electrical equipment manufacturing domestically. Supply chain issues have forced conversations on discussing making products locally. Companies with domestic manufacturing and value-added manufacturing have gained in distribution support and grown share. New plants could come our way again.
7. A move away from single supplier in distribution and control products. Canada is an anomaly in the make-up and structure of the distribution and control markets. Here in Canada electrical distributors have a single source supplier understanding, but can this mindset stand up moving into the future? Consolidation of suppliers and channel might alone challenge the status quo.
John Kerr is Publisher of CEW; johnkerr@kerrwil.com
