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Building Blocks of Our Business

April 7, 2020
Here are EW’s picks for the 25 trends that made the industry what it is today.

It may sound like quite an undertaking to pick the 25 most important trends in the electrical wholesaling industry over the past 100 years, but EW’s editors found it wasn’t quite as difficult as we initially thought. After whiteboarding dozens of trends, we culled them down by asking ourselves one simple question about each of them: If that trend hadn’t occurred, what would the industry look like today? We believe the trends below had the biggest impact on the electrical market over the past century. Did we miss any? All are open for debate. If you would like to add to this list, send them along to Jim Lucy, editor-in-chief, at [email protected].

1. Rural electrification and the industry’s expansion from the “city counter” to the branch.  As the nation expanded, so did the need for electric utility infrastructure and a local source of supply provided by branches of electrical distributors, first into more rural areas and then to suburbia, which grew at an explosive rate after World War II.  A 1928 directory of distributors published by the Jobber’s Salesman listed 815 locations. Depending on your definition of a distributor of electrical supplies, today there are probably 6,000-7,000 total branch locations.

2. The National Electrical Code’s (NEC) 123-year mandate for the installation of safe electrical systems. Old-timers in the industry may remember EC&M’s Joe McPartland as the godfather of National Electrical Code training. Today, the top NEC guru is Mike Holt.

3. The enduring importance of the family-owned business for all of EW’s 100 years. While the industry continues to consolidate at a rapid rate, it’s the family-owned company that gives this business much of its personality.

4. The Thomas & Betts Distribution Plan sets the standard for manufacturer-distributor policy. Back in 1937, T&B CEO and President Nestor MacDonald and his management team published a policy supporting distributors that for many years served as a model for the industry.

5. The impact fluorescent lighting had on Industrial America. When fluorescent lighting started being used commercially in the 1930s, factories began running two shifts, an important technological advance that helped the United States produce military supplies during World War II.

6. The rise of NEMRA and the independent manufacturer’s rep. Over its 50 years, the National Electrical Manufacturers Representatives Association (NEMRA) has helped the independent rep gain equal footing with electrical distributors and electrical manufacturers.

7. Going green. The Green Movement’s constant march for ever-more efficient electrical products has revolutionized the lighting industry and opened up sales opportunities related to electric vehicles, Net-Zero buildings, solar, wind and battery power.

8. Pricing services give distributors a reference point, and occasionally spark some heated debate with far-reaching implications over who should control and manage product data. For decades, Trade Service Pricing and a smaller competitor, National Price Service, were the primary source of pricing data in the market.

9. Buying/marketing groups help distributors prosper. The concept of smaller independent companies pooling their purchasing power to get volume purchase agreements comparable to the national chains first became widely popular in the 1980s. Today, billions of dollars in electrical sales flow through Affiliated Distributors and IMARK.

10. The growth of the specialist. Niche distributors for wire and cable, lamps, utility products, voice-data-video (VDV) and other electrical products are common now, but 30 years ago, these companies sometimes had to fight for respect.

11. Business strategies like the Quality Process, ISO 9000, vendor-managed inventory, matrix pricing, NAED’s PAR Report and Six Sigma help companies operate more profitably. In an industry where distributors sell large quantities of electrical equipment at net margins of  just few points, these management tools help many companies improve their profitability.

12. The personal computer, tablets and cellphones give individuals access to a more mobile world. We now laugh about the size of mobile car phones back in the 1990s, but they were the first sign of a technological trend that would revolutionize the electrical sales profession.

13. Green screen, ERP and cloud-based computers give workers access to centralized company data. As the computer industry moved away from humongous mainframe computers, software companies specializing in systems for distributors helped the industry eliminate manual data entry.

14. The relatively short life but huge impact of the CD-ROM catalog. CD-ROM catalogs held more data than  shelves  of print catalogs and made life easier for a generation of counter salespeople, inside sales and field personnel.

15. IDEA’s Industry Data Warehouse (IDW), bar coding, QR codes, BIM and enriched data add new depth to product data. Savvy distributors, manufacturers and reps realized that accurate, robust online product data could help them sell more electrical products and compete effectively with digital competitors.

16. Bar coding, QR codes and advanced picking strategies revolutionize the warehouse. Many battles were fought in committee meeting rooms over bar code standards, but the result of these wars is a more efficient ordering process.

17. The maturation of the omni-channel sales strategy. While full-line electrical distributors still sell most electrical supplies, electrical manufacturers blend this central channel and a still relatively small amount of direct sales in most product categories with sales through home centers, specialists, lighting reps, hybrid distributors, Amazon and other digital merchants.

18. Savvy distributors master merchandising to compete with home centers. Distributors learned to beat Home Depot and other big-box retailers at their own game by adopting many of their retail display, merchandising and promotional strategies

19. Bricks vs. clicks and the battle against Amazon and other digital merchants. It’s a battle still raging, as electrical distributors slowly but surely figure out where they need to play in digital and where they need to focus on their age-old strength as dependable local sources of supply for electrical products.

20. Programmable logic controllers (PLCs) bring computer technology to the factory floor. Back in the 1980s, the ideas of an industrial electrical product being loaded with enough “brains” to control processes in a factory was quite revolutionary.

21. Integrated supply becomes popular. This trend of distributors from different industries banding together to offer customers a wide variety of industrial or commercial products is still evolving, but it’s here to stay for large companies looking to buy on a national account basis

22. Mergers and acquisitions consolidate the industry. EW has counted close to 600 acquisitions in the last 25 years, and there’s probably a hundred more before that, going back to the 1970s, as big-time acquirers like Consolidated Electrical Distributors and Ron Kinney of All-Phase Electric (in photo on the left) built their businesses through acquisition.

23. Back then and still here today — the electrical contractor. No single customer group has ever been more important to the typical full-line electrical distributor than the electrical contractor. Today, contractors account for no less than 40% — and for some companies 50% — of sales.

24. GE’s enduring impact on the industry psyche. General Electric is part of the very foundation of the electrical market, and although you can’t get too sentimental about mergers and acquisitions, it hurt to see a proud brand exit this industry.

25. The financial resilience of electrical distributors. Since 1900, the electrical wholesaling industry has survived two World Wars, the Great Recession and several smaller recessions, and assaults from manufacturers selling direct, home centers, Amazon, product specialists and other competitors. While these challenges may have convinced some business owners to sell their companies, surprisingly few distributors have gone bankrupt. It’s a tribute to their savvy business management.