Q4 2016. Customers are, slowly but surely, resuming capital spending and many well-known
economic indicators have been trending positive for at least the past six months.
This economic optimism is reflected in our
survey. When asked to identify up to three primary concerns, 68 percent of our 2016 survey
respondents chose economic conditions —
the top choice by more than 27 percentage
points. This year, only 39 percent of respondents chose economic conditions as a primary
concern. That still ranks No. 3 the list of 18
concerns we listed, but shows distributors are
feeling much better about the current industrial economy.
Price competition was respondents’ No. 2
concern this year at 47.5 percent, up seven
points from 2016; distributor competition was
next at 40 percent, up 8 points; manufacturers
selling direct was tied for No. 3 at 33 percent,
with its 11-point increase the biggest one-year
jump on the list; while finding more qualified
people was also picked by 33 percent.
Among other concerns that respondents
wrote in, employees’ healthcare benefits one-third of them.
Merger and acquisition (M&A) activity remained strong over the past year, though our
survey indicates it wasn’t quite at the level of
the previous two years. Only 6 percent of our
respondents said their company merged or
was acquired in the past 12 months, down
four points from last year. Another 24 percent
said their company was approached, but a
merger/acquisition did not go through. Looking
ahead, the amount of respondents who expect
M&A to increase — 38 percent — dropped by
6. 5 points from last year, while 70.5 percent
of respondents said they would not be agreeable to a buy-out — up more than two points.
Likewise, 71 percent of respondents said they
are not actively looking to purchase another
distributor — up three points. Perhaps the
industrial recession has induced a cooling off
period M&A? Only time will tell.
Tech Usage & Investments
As more and more millennials comprise management and executive positions at industrial
distribution companies, those firms are steadily becoming more tech savvy and incorporating more technology into their operations.
The other side of this area is e-commerce
— a topic that drives endless conversations
among our audience. Though the B2B world
was slow to adapt to e-commerce implementation compared to B2C, distributors continue
to get better at it.
This year’s survey shows that 63 percent of
respondents consider e-commerce a priority at
their business, up more than three percentage
points from last year. Likewise, the amount of
respondents who say they are currently generating web-based revenues ticked up by more
than a point to 57 percent. While these figures
show increased e-commerce utilization, they
also show there’s plenty of untapped potential
in this space, especially given that more than
91 percent of respondents say they buy products online.
Surprisingly, our respondents indicated that
the utilization of several technologies declined
from last year’s survey. The amount that say
they use Wi-Fi/wireless email declined nine
points to 71 percent; customer relationship
management (CRM) software declined two
points to 53 percent; warehouse management
systems (WMS) declined nearly five points to
30 percent; ERP software declined a whop-
ping 12 points to 27 percent and sales force
automation (SFA) dipped one point to 20 per-
cent. The only technologies that increased in
usage were online web ordering (up 4. 5 points
to 60 percent) and RFID (up two points to 13
Those declines are contrasted with the
technologies respondents say they are likely
to adopt over the next two years. There, CRM
increases 11 points from last year’s survey to
23 percent; SFA increases two points to 20
percent; demand forecasting grows six points
to 20 percent; WMS grows three points to 17
percent, Wi-Fi grows five points to 15. 5 percent and ERP grows five points to 14 percent.
Meanwhile, online web ordering grows another
six points to 33 percent of respondents.
Some other notable stats in this section:
• Nearly 81 percent of respondents say
their business has redesigned its website
within the last several years — the same
figure as last year’s survey. Nineteen percent can’t recall how long it’s been since
their last redesign — up more than a
• Fifty-one percent say their business updates the content on their website at least
monthly — down one point from last
year’s survey. On the positive side, the
amount who say they hardly ever update
website content declined more than four
points to 20 percent.
68.1 ECONOMIC CONDI TIONS
22.7 MANUFACTURERS SELLING DIRECT
31.5 FINDING QUALIFIED PEOPLE
31.9% DIS TRIBU TOR COMPE TI TION
40.8% PRICE COMPE TI TION
21.5% INCREASED OPERA TING COS TS
Priority or no?
IT’S A PRIORITY
IT’S NOT A PRIORITY