Electrical Industry Roundtable 2014 - 15

SYER: I agree with everybody else, with a little bit of a spin. I don't
think the era of large consolidated distributors opening new branches
is dead. I agree that companies have to grow beyond the market and
that acquisition has been the preferred method. If acquisitions are not
available they will be forced to open new branches, and this may create
excess capacity in the trading area. You just have to be better than the
other guy... We saw that in a major way when an established electrical
wholesaler closed its doors in Ontario this year. A new entrant or
branch may be more than the market needs for a time, it's the weakest
that will close. Th e quicker gazelle will survive.
KERR: Th e other thing that is kind of interesting to watch is how some
of the larger distributors have now got these huge distribution centres
to feed this machine to enable them to have a lower cost than their
competitors. It's a way to be able to open new branches.
SYER: Th at's huge. I think that for the majors, that's going to be the
broader game. It's logistics. If you look at the costs and the profi tability
of a distributor's business, number one will be getting good people
and that's probably the biggest challenge, particularly in remote areas.
Number two will be logistical excellence.
BERCIER: Th ere are exceptions, and diff erent
business models too. If you consider a profi t
model-all they look at is profi tability and how well
the guys are paying...they are being very selective.
Th e programs are the same...
SYER: ...but when they compete against an
Amazon over time, the logistics makes for something
very interesting to see.
KERR: So this conversation leads into the next
question about the impact of specialized distributors.
I think we all agree by default that they are
coming and that opportunity is going to be there. I heard a couple
of very important things in terms of 'people'. If some one becomes
more specialized, are they going to have a better competi tive edge
getting those technical people that they need-and is that going to
be something that traditional electrical distributors have to start to
worry about? Is there going to be a drain of talented engineer ing
folks that drive that specialized distribution? We all know the top ten
distributors in this country that are very technically committed and
they have really good teams that way. Is that some type of competitive
pressure that we may be discounting or not thinking about?
Jean-Sebastien Bercier.
" And there are
only so many large
distributors that can
come together. "
Canadian Electrical Wholesaler JUNE 2014
15
Electrical Industry Roundtable 2014

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