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This jam-packed issue includes nine articles that span Ferguson’s diversification and private brand strategy; QXO’s acquisition plans; research on labor trends; Fastenal’s AI tools; and much more.

Market Insight Reports

Find a wealth of data and analysis extracted from the 2Q24 Baird-MDM Industrial Distribution Survey, including trending charts and figures for revenue and expectations, plus plenty of interesting commentary.
See our Premium M&A articles from April-June 2024, including Sonepar’s acquisition journey; how dealmaking impacts MDM’s Top Distributors feature; and the latest EBITDA trading multiples.
See our in-depth M&A articles from the first three months of 2024, including the Home Depot-SRS blockbuster; the acquisition strategy for Ferguson and Border States; and the latest EBITDA trading multiples.

Case Studies

This report examines Fastenal’s strategic pivots over the past ten years – digital, self-service, product mix, sales specialization and more – that have created one of the highest performing North American distributors as measured across most financial benchmarks.
Even with the United States 10 percent tariff on $200 billion worth of Chinese goods set to rise to 25 percent Jan. 1, 2019, industry watchers and executives have yet to see a significant impact on bottom lines for distributors. Companies are addressing the Trump administrations indefinite timetable for the levies by adjusting business practices to make up for losses using a variety of tactics many expect will allow business to remain stable through at least the first half of the new year.

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Distributors have been through cycles of challenge and response before, but change is different in the digital age. Past challenges came from industry insiders with game-changing business models built around leveraging scale and removing redundancies across the value chain. Examples include big-box retailers, high-share consolidators, integrated suppliers, disintermediators and vertical integrators. The challenge for distributors was real, but the changes were familiar. New rules of competition emerged, but the fundamental roles of manufacturers, distributors and customers remained.

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Some industry analysts feel data transparency is inevitable, and that fear of the Amazon Business Marketplace is overblown; the real focus should be on how to survive in this new environment, not how to keep it at bay. Others see a threat to traditional distribution models. Some distributors are focusing on transitioning to new services-based revenue, away from traditional core product commodities. Justin King, Mark Dancer, Alex Moazed, David Sass and Ian Heller provide their takes on where they think distributors can best focus their resources.

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In this two-page report, available to download in PDF after log-in, we feature data on merger and acquisition trends and financial metrics for the largest publicly traded distributors across diverse sectors in the third quarter of 2018.

In partnership with Houlihan Lokey, an investment banking firm, the report includes data on M&A activity trends across all industries (not just distribution), as well as valuation multiples for deals in all industries.

Modern Distribution Management's monthly Industrial Inflation Index measures a cross-section of industrial supplies.

This index includes:

  • Abrasives Products
  • Cutting Tools
  • Power Transmission Equipment
  • Fasteners
  • Valves, etc.
  • Power Tools
  • Material Handling Equipment
  • Belting
  • Hand Tools
  • Misc. Metal

Subscribers should log-in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • Distribution M&A Playbook, pt. 3: Integration Best Practices
  • Grainger’s Pricing Initiative, pt 2: The Quest for Optimization
  • Commentary: Harvey’s Stark Reminder on Disaster Planning

In a recent conversation with MDM, Mike Rowlett, CEO of Womack Machine Supply, said: “If we treated young folks new to the business today the same way that I was treated 35 years ago, we wouldn’t be able to keep any of them.” How distribution companies integrate new talent today can have a big impact on success tomorrow.

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Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • Protecting Your Knowledge Base
  • The Case for a Radical Sales Overhaul
  • Commentary: Re-evaluate the Human Capital in Your Company
Epicor-logo-thumb

The U.S. economy has entered a slow growth environment, where 3 to 4 percent GDP growth is likely a thing of the past. And although employment is increasing year-over-year, it still has not rebounded to prerecession levels in some areas.

This article is a summary of the MDM Webcast: The 2015 Mid-Year Economic Update.

This article includes:

  • An overview of the current state of the U.S. economy
  • MDM Industrial Inflation Index: April 2015
  • Distribution industry specific area of concern

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  • Good News, Bad News for U.S. Economy
  • Case Study: The Disruptive Holiday
  • Brighter Days Ahead for Oil & Gas?

Plan for disruptions such as warehouse relocation, inclement weather and labor disputes.

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Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • Strategic Options for Shipping Efficiency
  • Case Study: The Disruptive Holiday
  • Distributors Adapt to More Sophisticated Supply Chain
ChooseEcommerce

Reasoning for and consequences of not investing in e-commerce.

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  • Distributors Embrace, Expand Online Customer Base
  • Prioritizing Big Data
  • 2015 State of E-Commerce in Distribution, Part 2: Integrate or Stagnate
MA_plastics

The MDM Market Analysis, based on data from MDM Analytics, includes consumption of plastics products by end user in the U.S., Canada and Mexico, plus the top end users by 6-digit NAICS.

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Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • MDM-Baird Distribution Survey: Growth Exceeds Expectations
  • Market Analysis: Welding Gases & Equipment Consumption in North America
  • MDM Interview: TTI's Strategic Approach to Global Growth

Modern Distribution Management's monthly Industrial Inflation Index measures a cross-section of industrial supplies.

This index includes:

  • Abrasives Products
  • Cutting Tools
  • Power Transmission Equipment
  • Fasteners
  • Valves, etc.
  • Power Tools
  • Material Handling Equipment
  • Belting
  • Hand Tools
  • Misc. Metal

Subscribers should log-in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • First Quarter 2015 Financial Metrics & Trading Multiples
  • Industry 4.0: Technology-Driven Change
  • Market Analysis: Welding Gases & Equipment Consumption in North America

Modern Distribution Management's monthly Industrial Inflation Index measures a cross-section of industrial supplies.

This index includes:

  • Abrasives Products
  • Cutting Tools
  • Power Transmission Equipment
  • Fasteners
  • Valves, etc.
  • Power Tools
  • Material Handling Equipment
  • Belting
  • Hand Tools
  • Misc. Metal

Subscribers should log-in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • First Quarter 2015 Financial Metrics & Trading Multiples
  • MDM/Baird Distribution Survey: Disruptions Stunt Growth
  • Market Analysis: Welding Gases & Equipment Consumption in North America
MA

Unlike previous cycles of strong merger and acquisition activity in distribution, todays market is unique in that strategic buyers and private equity firms are going after the same targets, setting the stage for an especially compelling consolidation story in the second half of 2015.

This article includes:

  • The role of strategic buyers and private equity firms in M&A
  • Distribution sectors currently seeing the most M&A activity
  • Potential negative influences to M&A

Subscribers should log in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • First Quarter 2015 Financial Metrics & Trading Multiples
  • IDGs Journey to Sonepar
  • Tackling the Profitability Yo-Yo
shopkey-small

The fourth annual MDM distribution e-commerce survey conducted with Real Results Marketing revealed that the barrier to entry for e-commerce has lessened, but distributors are still deciding if they should launch e-commerce capability on their websites.

Part 1 of this series showed how the industry’s e-commerce offerings are maturing.

This article includes:

  • Why distributors might be reluctant to launch an e-commerce capability
  • Marketing vehicle effectiveness and spend
  • An overview of the integrated marketing approach

Subscribers should log in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • Amazons B2B Move Reduces Threat
  • Grainger Tackles the Data Challenge
  • Industry 4.0: Technology-Driven Change

Technology continues to introduce new disruptions to the supply chain. Jim Barnes, ISM Services managing director, recently spoke with MDM about the potential these disruptive technologies have for fundamentally changing how the supply chain operates.

This article includes:

  • The current stage of technology adoption
  • How the Internet of Things is being adapted
  • The effect of automation

Subscribers should log in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • MDM Interview: Creating a Culture of Innovation
  • Strategic Options for Shipping Efficiency
  • Overcoming the Barriers to Analytics
MA_welding

The MDM Market Analysis, based on data from MDM Analytics, includes consumption of welding gases & equipment products by end user in the U.S., Canada and Mexico, plus the top end users by 6-digit NAICS.

Subscribers should log in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • Destination: Mexico
  • Market Analysis: Power Tools Consumption in North America
  • MDM Pricing Trends Report: First Quarter 2015

Modern Distribution Management's monthly Industrial Inflation Index measures a cross-section of industrial supplies.

This index includes:

  • Abrasives Products
  • Cutting Tools
  • Power Transmission Equipment
  • Fasteners
  • Valves, etc.
  • Power Tools
  • Material Handling Equipment
  • Belting
  • Hand Tools
  • Misc. Metal

Subscribers should log-in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • Improve Market Access to Unlock Potential
  • Destination: Mexico
  • Market Analysis: Power Tools Consumption in North America

Robert W. Baird & Co., in partnership with Modern Distribution Management, conducted a survey of about 500 distributors and manufacturers to gauge business trends and the outlook for the distribution industry in diverse sectors. Here is a summary of first-quarter results and distributor and manufacturer expectations for 2015.

This article includes:

  • Revenue, inventory and pricing expectations
  • Sector breakdown
  • Analysis of trends affecting sales and operating performance

Subscribers should log-in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • MDM Industrial Inflation Index
  • First Quarter 2015 Pricing Trends Report
  • 1Q2015 Financial Metrics & Trading Multiples

This report was formerly called the Inflation by Commodity Group Report.

This report is researched and produced by MDM editors. View the Fourth Quarter 2014 & Annual report here.

These product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. First quarter 2014 pricing levels are compared with first quarter 2015 and fourth quarter 2014 with first quarter 2015.

To view this report, log-in and click on download link below the product listing to access the print-ready PDF.

Not a subscriber? Subscribe today for immediate access.

Industrial

  • Abrasives
  • Adhesives & Sealants
  • Metal Cutting Machine Tools
  • Metal Forming Machine Tools
  • Pumps, Compressors, & Eqmt
  • Ind. Material Handling Eqmt
  • Rubber & Plastic Hose
  • Rubber & Plastic Belts & Belting
  • Ind. Rubber Products, nec
  • Metal Valves (not fluid power)
  • Personal Safety Equipment & Clothing
  • Steel Mill Products

Construction

  • Softwood Lumber
  • Hardwood Lumber
  • General Millwork
  • Gypsum Products
  • Hardboard, Particlebd, Fiberbd
  • Plywood
  • Plastic Construction Products
  • Wood Ties, Siding, Shingles,
  • Shakes

Electrical

  • Electrical Machinery & Eqmt
  • Electronic Components & Accs
  • Integrating and Measuring Instruments
  • Motors & Generators
  • Wiring Devices
  • Transformers & Power Regulators
  • Switchgear, Switchboard, etc., Eqmt
  • Communications & Related Eqmt
  • Electric Lamp Bulbs & Parts

Other Related Electrical

  • Lighting Fixtures
  • Nonferrous Wire & Cable
  • Fabricated Ferrous Wire & Cable

Power Transmission/Bearing

  • Mechanical Power Transmission Eqmt
  • Ball & Roller Bearings
  • Plain Bearings & Bushings
  • Speed Changers, Drives & Gears

Fluid Power

  • Fluid Power Eqmt
  • Fluid Power Valves
  • Fluid Power Hose/ Tube Fittings
  • Fluid Power Pumps & Parts
  • Fluid Power Actuators/ Accum/ Cylinders

Plastics

  • Plastic Resins & Materials
  • Plastic Products (Overall)

Fasteners

  • Nuts, Bolts, Screws, Rivets, Washers (overall)
  • Aircraft Fasteners
  • Externally Threaded Fasteners
  • Internally Threaded Fasteners
  • Nonthreaded Metal Fasteners

Hardware

  • Hardware (overall)
  • Builders’ Hardware

Tools

  • Hand & Edge Tools
  • Power-Driven Hand Tools
  • Tools, Dies, Jigs, Molds, Fixtures
  • Cutting Tools & Accs (overall)
  • Precision Measuring Tools
  • Small Cutting Tools

Gases/Welding

  • Industrial Gases
  • Welding Machinery/ Equipment

Paper

  • Pulp, Paper & Allied Products (overall)
  • Sanitary Paper Products
  • Boxes
  • Packaging Products from Plastic

HVACR/Plumbing

  • Air Cond. & Refrigeration Eqmt
  • Heating Eqmt
  • Plumbing Fixtures & Fittings

To view this report, log-in and click on Download pdf below the product listing.

Mexico

Because of its manufacturing strength, proximity to the U.S. and increasing acceptance of the distribution channel, Mexico has become an attractive market for distributors looking to expand internationally. Despite these compelling reasons, companies must be strategic when they head south of the border.

This article includes:

  • Benefits of expanding in Mexico
  • Opportunities for distributors
  • Negative aspects of doing business in Mexico

Subscribers should log in below to read this article.

Not a subscriber? Subscribe below or learn more. Subscribers also have access to the following related articles:

  • MDM Interview: Minimizing Risk in Your Business
  • Strategic Options for Shipping Efficiency
  • Think Globally, Service Locally

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