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ElectricalTrends is a communications vehicle offered to the electrical distribution industry by Allen Ray Associates and Channel Marketing Group. The purpose of ElectricalTrends is to share Allen Ray Associates' and Channel Marketing Group's insights on industry trends, observations on industry activities and issues and offer ideas that may benefit industry participants in their endeavor to improve their businesses in the areas of growth and profitability.

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Monday, April 6, 2009

The Times They Are A Changin'

Much has occurred over the past couple of months and many manufacturers and distributors have cut to the bone in an effort to preserve profitability. These cuts have focused on people, programs (in the case of manufacturers) and products (in the case of distributors).

We've noticed:
  • Distributors cutting people, branches and inventory.
  • As distributors lean their inventories, their commitment to C & D items are waning.
  • More distributors are "waiting" for the order, with some being more aggressive and sensing opportunities to take share from more complacent competitors.
  • Margins are being squeezed as distributors respond to those who are struggling to maintain cash flow through capturing any sales.
  • Manufacturers have cut personnel, changed sales strategies and are editing their marketing strategies to be more end-user focused while changing their co-op marketing funds and questioning their rebate strategies.
  • Some manufacturers have spoken about reviewing their distribution portfolios and better understanding their selling propositions. At the same time they are questioning distribution's commitment to helping create demand for products.
  • And everyone anticipates accelerated consolidation as well as possibly distribution closings. As a distributor, what are you positioned for? As a manufacturer, how could this affect you?
Given this, we were thinking of the upcoming NAED Leadership Summit. While it looks like attendance will be down, possibly comparable to a regional meeting, it appears that the conference will have many senior managers from manufacturers and leading distributors. For this reason, we've decided to attend as scarcity may create opportunities!

In the words of one executive, "this is the time for bold moves." Additionally, research from prior recessions has shown that sales and marketing investments made during downturns enable companies to grow at faster rates than competition and accelerate growth during recoveries. Today's Wall Street Journal article on R&D shows that investing for the future does payoff.

So what does this mean?

We see opportunities for companies to:
  • Better understand their unique selling proposition and their perception within the marketplace to enable them to better position themselves to take share.
  • Gain end-user / customer insight.
  • Re-evaluate their distribution strategies to strengthen themselves within their marketplaces.
  • Identify and develop opportunities within niche markets.
  • Look forward and develop their plans for growth for today and tomorrow.
Yes, this requires resources. Time and cash is needed, however, if you plan to prosper in the coming years (and are able to look 3-5 years out), now is the time to position yourself to take advantage of opportunities.

As mentioned, we will be at the NAED meeting in May, and yes, this is a solicitation! If you, or your company, is attending the conference, perhaps we should talk?

Give us a call or email David or Allen.

Additionally, if you are a manufacturer interested in the LED market, we have some new distributor and end-user research we can share.

Channel Marketing Group | Allen Ray Associates