Distributors serving electrical contractors are in a tough, competitive marketplace. They all want the electrical contractor's business - be it in standard electrical work, voice/data/video (V/D/V), both, or something more.
Yet contractors can be very demanding customers! As a result, distributors are constantly innovating - coming up with new strategies and services that will attract more of your business.
Perhaps one could say this is the American capitalist system at its very best: Competition driving a slew of competitors to serve the customer better, bringing innovations and concepts to the market that save contractors money and help them do a better job for their customers.
Here's a quick look at what's up in the distribution marketplace.
Channel of choice?
One major development distributors are talking about is consolidation.
"The most aggressive acquirers seem to be from other countries," says Bill Zillman, vice president of member services for the National Association of Electrical Distributors (NAED) in St. Louis.
"Rexel and Sonepar from France, Westburne from Canada, and the Dutch company, Hagemeyer, are all buying electrical distributors. Yet the top 250 electrical distributors have about 44 percent of the market, a number that hasn't changed terribly much in recent years. In Canada, for a contrast, the top five distributors have 85 percent of the market and, here in the U.S. the top eight voice/data/video distributors are said to have 90 percent of the market."
If anything, the consolidation trend might accelerate, Zillman says. The reason: Electronic commerce is seen as necessary, and smaller distributors might not have the funding to invest in this technology. NAED's magazine, The Electrical Distributor, reported that 40 percent of electrical contractors say they will buy via the Internet by 2005.
"I think consolidation is going to speed up because of e-commerce," says Zillman. "It comes down to this: What do distributors have to do to stay the channel of choice, not just for contractors and other customers, but for the manufacturers as well? One answer seems to be to bite the bullet and make the investment in electronic commerce today."
"There is major value for the contractor in the service and local decision-making of local distributors," says David Gordon of IMARK Group (Oxon Hill, Md.), one of several marketing groups for electrical distributors.
"This is important, a big benefit to contractors, even as it relates to customer-specific needs or inventory needs. Local contractors have specific needs and, when they need something, they need it today.
"An independent distributor can make the decision to make that happen for the contractor. In effect, this ends up helping the contractor to improve his productivity and reduce his costs."
Gordon's group is helping its 185 distribution companies (with more than 950 branches nationwide) to enter the V/D/V market. "We're also launching programs on lighting upgrades and job safety," Gordon says. "It's a benefit to the contractor when a local distributor works with a group like IMARK.
"We help our distributors with promotional tools. And they get to network with each other and share best practices, so that all distributors get better."
Local decision-making and accessibility to company owners is also stressed by Jay Platt, president of Platt Electric (Beaverton, Ore.), a regional distributor with more than 60 branches. "We have a policy that anyone can talk to the owners of the company. 'Anyone' in that case really means anyone - vendors, employees, and especially customers.
"How much better than that does it get? You can call the owner. This has an effect all the way down the line. Our people know we're accessible, and our people don't want us to get an unhappy call from a contractor. So they get the problem handled and, as a result, we don't get a lot of calls."
When a Platt Electric customer gets a letter from the company with a credit memo, the letter carries Jay Platt's direct-dial telephone number and personal e-mail address.
Going further, Platt's approach to customer service includes efforts to create satisfaction. The company stresses education, spending more than $1 million a year for training and classes attended by its roster of more than 800 employees.
"At any given time, at least 600 of us are taking a class, and we have a full-time director of education," Platt says. "We've also invested the money in technology to serve our customers.
"Our approach is pretty basic: We try to do what we said we were going to do, when we said we would do it, in the way we said we'd do it. It's old-fashioned, and there aren't a lot of bells and whistles. I don't want people in my company who just take the order. I want follow-up, to make sure that everything is going the way we said it would go."
Platt's high-touch approach is so extensive that it includes removal of voice mail from customer service telephones and taking steps to ensure that contractor telephone calls will be answered by a live human being.
Investing to serve
St. Louis-based Graybar Electric, a national distributor with more than 200 local operations, has made significant investments in the past few years to provide a high level of contractor service.
One contractor-focused innovation is the Project Manager software system, developed over two years. This new software - used in-house by Graybar personnel - will, the company says, greatly improve the flow of information to contractors on project details and specifics.
"It's interactive with the Graybar's main frame," says Bob Trolander, national marketing manager for Graybar. "There's a lot of information on the main frame. This system downloads it to the local Graybar's computer.
"We can recap, track, follow-up, manage, and report from this system. We'll be able to quickly report on the status of project orders. Instead of a contractor waiting for us to call him back with information he's asked for a week ago, we'll be calling the contractor, and telling him before he asks," Trolander claims.
"Instead of constantly being reactive, as all distributors have been, we'll actually be able to be pro-active. We'll call the contractor with the information he needs, before he even knows he needs it! We realize this information is what he needs to do a better job on project work. We think our ability to get this information to contractors will give us a competitive advantage!"
Another effort to provide better local service - a major investment - is Graybar's plan to build more than a dozen "zone warehouses."
"Our goal has been to build the system so that we can promise 90-plus percent of our customers that they can have no later than next-day delivery of whatever they order from Graybar--with an order that's accurate and complete, as well as fast," explains Ed Keith, vice president of logistics for the company.
"But there's more to this than just 'pick-pack-ship.' We want to add value, for both our customers and our suppliers. For example, we will be able to provide customer services like special bar coding, special packaging, and the like. We're already able, in the existing zone warehouses, to do custom modifications to lighting panels and motor controls."
With the world recognizing the importance of electrical contractors in voice-data-video, distributors who specialize in this market - such as Anixter and Communications Supply Corp. - have come up with unique contractor services.
CSC is sponsoring a series of seminars, in one city per month, for 12 months. Each city will host two separate one-day seminars, one on fiber optics and one on structured cabling for private networks.
"New technology has come out of Lucent Technologies, Siecor, and many other companies, and fiber is becoming much easier to install," says David Bemoras, vice president of marketing at CSC (Carol Stream, Ill.). "We want to eliminate that fear, uncertainty, and doubt that is out there, and show contractors how easy it is to install fiber."
CSC's other seminar is designed, Bemoras says, to showcase "solutions for structured cabling - from companies such as Lucent, Berk-Tek, Ortronics, Siecor, Panduit, CommScope, and Siemon that really enhance the performance of the network, by eliminating bottlenecks."
At Anixter, Katie Schamberger is a company executive who strengthens and develops the company's relationship with contractors. She offers a long list of services the company provides, including:
- $550 million in inventory located in five regional distribution centers and dozens of local warehouses nationwide, so Anixter can provide contractors with whatever they need, when and where they need it.
- "Speedpull" - custom bundling of cables by Anixter for contractors, with as many as 40 cables together under one sheath. "This reduces installation time dramatically, which allows contractors more time for additional installs," Schamberger notes.
-"Feed-the-Job" - a company program to house all of the material needed for a specific project up front, and ship it at the exact time it's needed.
- "Installer's Edge" - a newsletter written for contractors which features Standards and BICSI Updates, Emerging Technologies and Markets, and Hot Products (go to the Anixter Web site to get on the list).
- Installer's Edge Pocket Guide - "with many industry guidelines for (V/D/V) installation. It includes various installation tips we've gathered from people in the business," Schamberger notes.
Anixter also provides education and training for contractors, which can be especially helpful for those migrating to data networking. Examples of Anixter's training include the introduction of a national seminar series in 2000, as well as technical white papers and technical support.
"We're also working on a password-protected Webster, geared specifically to contractors," Schamberger says. "We're going to provide information of interest to contractors on this site, such as Standards Updates, a definitions library, an "Ask the Expert" interactive section, Supplier-Partner information, and much more."
Affiliated Distributors (King of Prussia, Pa.), the largest electrical distributor marketing group, with 174 distributor members and 1,663 locations - has assembled a number of interesting programs for its distributor members. Many are geared specifically to their contractor customers.
One is the A-D Earth Savers program, which, according to Jeanine O'Mara, market programs manager, "is an Internet-based energy audit program that provides electrical contractors with all of the tools necessary to make a complete lighting retrofit proposal to their customers."
Included: a project financing option and, more importantly, a saving guarantee to the customer. "The only cost to the contractor is for initial training on the system," says O'Mara. "It's a great tool for contractors to use to partner with deregulating power utility companies, who are seeking to reduce their customers' energy costs."
A-D has also been active on the voice/data/video education front. "For instance, our supplier partners - CommScope, Erico, Ideal, and Pass & Seymour/Legrand - just put together a great one-day course on structured cabling," says Steve Ruane, A-D's vice president of marketing.
"This course is designed specifically for our electrical contractor customers. We think that these types of product- and application-intensive seminars are a great complement to more formalized voice/data/video training that contractors are receiving."
SALIMANDO is a Vienna, Va.-based freelance writer based in Vienna, Va., specializing in electrical, voice/data/video construction and integrated technology issues. He can be reached by e-mail at JSALI@cris.com. Twice monthly he also writes the "Web Prowler" column on Electrical Contractor magazine's Web site: www.ecmag.com.
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