As we emerge from a deep recession, demand shifts challenge distributors.
To access this page, you must purchase MDM Premium Subscription, MDM Premium Subscription – Monthly or MDM Premium Subscription – Annually.
As we emerge from a deep recession, demand shifts challenge distributors.
Nearly every distributor took a beating in 2009. A few are still getting kicked while they’re down. If you’re a competitor to Airgas or HD Supply, that turmoil couldn’t come at a better time.
Case 1: Airgas is in a fight for its life. In February, Air Products made a hostile bid for Airgas. It has been getting more hostile since. The investor analysis by Air Products is at www.airgasoffer.com. And here are the documents Airgas has produced for its investors to fight the offer.
Indicators the past month have largely been positive across most distribution sectors. And at industry meetings, executives are looking forward instead of down. That’s a great change from a very tough year. At the same time, I have not heard anyone say we are out of the woods.
From our surveys, we found that many distributors were forced to use layoffs to stay viable, and many more did everything in their power to avoid layoffs or use them as creatively as possible.
Grainger’s investments into e-commerce 10 to 15 years ago don’t look like large gambles today, but as our lead article by associate editor Jenel Stelton-Holtmeier illustrates, it was in fact a large dollar amount for what the adoption rate was at the time and also the company’s culture. I was publicly skeptical at the time, questioning whether it was bleeding edge rather than leading edge. How smart was I?
As the timeline illustrates, Grainger’s online sales took off with the dot-com era by 1999. It has continued to scale up along with the Internet.
A $14M distributor’s technology implementation experience.
Still, strategic buyers are in a sweet spot to buy market share in 2010.
Keep your Web site focused on your customers’ needs, and not on flash.
The announcement that Industrial Distribution was folding was a blow to the entire distribution industry.
The first few days of 2010 have already produced a number of announcements regarding deals in distribution and manufacturing sectors. There are a relatively high percentage of distressed sales, but some healthy companies are in play, as well. There are some excellent opportunities to build value in this part of the cycle. It’s a fundamentally different M&A landscape than just a few years ago when valuations were sky high, and distribution markets were the hot ticket for investment funds.
Oliver H. Van Horn Company, New Orleans, LA, saw its headquarters wiped out with Hurricane Katrina in 2005. The 100-year-old fourth-generation family company’s traditional market literally disappeared that day. The company reshaped itself to deal with the reality of its circumstances, and found new ways to add value in the wake of disaster. They have been rebuilding since, only to encounter a financial hurricane a few short years later. This publication has worked consistently to avoid hyperbole since its founding 1967. But this has been a hyperbolic year.
Where previous recoveries were marked by a “bounce,” this one is forecast to be flat. Topline growth alone won’t hide weaknesses this time. But there are many well-run distribution companies that positioned for profitability even before the downturn. Today they have healthy balance sheets. They have more flexibility (and cash) to respond to market opportunities and pick up share this year. An MDM survey in November examines what distributors and their suppliers are doing to improve profitability as we enter this slow-growth recovery over the next 12 months.
MDM Webcast tackles the question: Which path will lead you to profitability in 2010?
Take the annual MDM Reader Survey and help us hone our strategic priorities.
In MDM’s 2010 Economic Forecast for Wholesale Distribution Webcast, Adam Fein painted a not-so-rosy picture of what this recovery is likely to look like. For a number of reasons, not many distributors will feel much of a bounce. It will be more like a grind to find growth in new areas as we emerge from the worst recession since World War II. While he agrees with many other economists that technically the third quarter will probably be the official end of the recession, 2010 is still going to be a slow-growth year for many distributors.
Buy this issue now for only $24.95.
Colorado town’s energy efficiency incentive program drives business to local contractors.
Here’s a preview of the Nov. 19 Webcast with Adam Fein; CD recording is available now in the MDM Store.
By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.
Wholesale distribution news and trends delivered right to your inbox.
Sign-up for our free newsletter and get: