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The Wild World of Global Distribution

Oct. 1, 2012
As you explore the global distribution market you soon realize some market trends cross all borders.Part 2 of two parts.

Last month's article covered the acquisitions of electrical distributors and manufacturers transforming the global market. Part 2 of this two-part article covers the role of international buying groups and the development of global technical standards for electrical products and product data.

Although the acquisitions by global chains nibble away at their core membership base, the buying/marketing groups outside the United States remain strong and viable forces in their markets. North of the U.S. border, the two key buying/marketing groups are Independent Electrical Distributors (IED), Mississauga, Ontario, and the Canadian division of Affiliated Distributors (A-D), Wayne, Pa. IED has 38 members with more than 100 branches in nine Canadian provinces, according to information on its website, and in 1998 it inked a deal to work with IMARK Group, Bowie, Md., on national account and integrated supply contracts. A-D has 19 Canadian members in 175 locations that last year did combined sales of $852 million, up 10% from 2010. According to an A-D press release, combined sales for its Canadian affiliate grew 3.3% in the first half of 2012 on a same-store basis from $372 million to $385 million.

Buying/marketing groups are thriving around the world, too. IMARK recently joined IMELCO, a 20-year-old consortium of 12 buying/marketing groups from 16 European countries and Australia that in 2011 had combined sales of an estimated $8.4 billion. IMELCO's member associations include the United Kingdom's Associated National Electrical Wholesalers (ANEW), which according to its website (www.anew.co.uk) has 37 members with 300 branches, and GEMCELL, an Australian buying/marketing group with 34 members operating 258 locations. According to information on IMELCO's website (www.imelco.de/en), ANEW accounts for an estimated $853 million in sales and GEMCELL's members combined do an estimated $754 million in sales.

The United Kingdom has at least five other buying groups, in addition to ANEW: Fegime, based in Lutterworth, with 30 companies running approximately 100 locations; Association of Wholesale Electrical Bulk Buyers Ltd. (AWEBB), Ilkeston, with an estimated 60 companies with 130 locations; MIDA International Ltd., Alvechurch, with about 70 members operating more than 100 branches; Independent Buyers Association (IBA), Chalgrove, with 73 members running 91 locations; and Associated Independent Electrical Wholesalers (AIEW), Ilkeston, with more than 90 distributors operating 100-plus branches.

Trade associations seek to streamline electrical product data with international product data. As more manufacturers, distributors and reps do business around the globe, they are looking to the various electrical standards committees for assistance with the nitty-gritty technical details. That's the thinking behind a recent collaborative partnership that IDEA, Arlington, Va., formed with ETIM International, Zaventem, Belgium. According to the press release announcing the agreement, the partnership will help align the e-commerce standards used within the North American distribution channel with their counterparts in Europe to make global business more efficient for electrical manufacturers and distributors.

The European Technical Information Model (ETIM) is the European equivalent to the industry's UNSPSC Electrical Attribute Schema used to communicate product information. IDEA led the development of the Schema to give electrical manufacturers a guide to provide descriptive marketing content to their trading partners throughout the United States and Canada. Through this new partnership, IDEA will work with ETIM International to align the standards and develop a cross reference so manufacturers can simultaneously send their marketing content to their U.S., Canadian and European-based distributors.

International standardization efforts continue so that more manufacturers can market their electrical products around the world. The global mission of the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., is to provide a favorable business environment for its members in the countries where they manufacture and sell their products, and the association works with standards committees and electrical trade groups throughout Europe, the Pacific Rim and Latin America. For the past several decades, NEMA personnel have worked with standard committees from outside the United States such as the International Electrotechnical Commission (IEC) headquartered in Geneva, Switzerland, which prepares and publishes international standards for all electrical, electronic and related technologies, and the International Organization for Standardization (ISO).

Despite the sluggish economic conditions in the United States, it still remains an attractive market for exporters of electrical products from outside North America. You only have to walk several aisles of trade shows like LightFair or SolarPower to realize just how many manufacturers in these markets want to build their businesses in the United States,. Manufacturers of LEDs and photovoltaic panels from Pacific Rim countries are flooding the market with their products, manufactured either under private labels by U.S. manufacturers or under their own brands. These are just the latest examples of market niches under assault by manufacturers that can offer less-expensive products than U.S.-based companies because of their lower wages and other manufacturing costs. They also exemplify just how global the electrical wholesaling industry has become.