Economists, stock analysts, bookies and sports-talk radio hosts make a living picking winners in their particular fields of expertise. While they don't pick the next Super Bowl champ or Wall Street winner, business press editors dabble a bit in prognostications, too. It's always interesting to see how these prognosticators did on their predictions.
Fresh off a victorious season of football picks in the Lucy household and a tough pick-em battle against my three sons, I am feeling cocky and am ready to be rated on how I did with my picks last year for the “Ten Trends that will Shock the Industry,” feature that appeared in EW's April 2006 issue.
As I saw it, the electrical market was at an interesting juncture in 2006. Business was good for many companies and downright great for some overachievers. The electrical wholesaling industry's evolution in the early years of the 21st century is being shaped by a unique blend of market, technological, business and demographic factors already on the scene. In that article, I made some educated guesstimates about the people, companies and ideas that would have the most impact on the market in the near- and long-term future. Here's how I did on those picks.
The big will get bigger
Tough to lose on this one. It's a no-brainer in the current acquisition climate. But the size of acquisitions in 2006 was staggering. The dollar amount of acquisitions was incredible, as at least $5 billion in electrical sales changed hands in 2006. Electrical Wholesaling and Electrical Marketing newsletter reported on 30 acquisitions. The biggest deals were the acquisitions of GE Supply, Shelton, Conn.; Hughes Supply, Orlando, Fla.; Edson Electric Supply, Phoenix; and Capitol Light & Supply, Hartford, Conn.
Richard Worthy will make waves (again)
This was another safe pick. By year-end, Worthy's US Electrical Services, Exton, Pa. had acquired eight companies and established a foothold in metropolitan New York and New England.
I missed on one related development in 2006. Sonepar continued its acquisitive ways on a grand scale after Worthy's departure in 2004. Under Tony Burr's leadership, the company has not missed a beat in its efforts to build a national platform in the United States. In the past year, Sonepar purchased Boggis-Johnson Electric Co., Milwaukee; Crawford Electric Supply Co., Dallas; Friedman Electric Supply, Exeter, Pa.; Priester Supply, Arlington, Texas; Stuart C. Irby, Jackson, Miss.; and several smaller distributors.
The Hughes Supply mega-centers will be the real jewel for Home Depot
Chalk this one up as miss — so far. As you will read in Contributing Editor Dale Funk's article on Home Depot Supply “HD Supply Update” on page 24, Home Depot apparently has a different take on the Hughes Supply strategy of selling to different trades out of the same location. I also didn't see the departure of Home Depot CEO Robert Nardelli or his $210 million buyout.
Big builders will dominate
With a little research on the housing market, this was a pretty easy pick. The largest homebuilders continue to dominate this industry, and the 10 largest home builders, as ranked by Builder magazine on its “Builder 100” listing, now account for 36.6 percent of all homes started. Industry analysts expect them to account for more than 50 percent of sales by 2010. These companies closed on more than 500,000 new homes in 2005. After years of record growth, these big builders are now singing the blues as they work through thousands of units of unsold new homes. The market is already showing some early signs of improvement.
New workforce demographics will change how you manage employees
While this was also a pretty easy pick to make, it may be the trend that could have the most future impact on your business on a daily basis. Hiring the right people and knowing how to motivate them was never easy in any era. But with so many different generations crossing paths in the workplace these days, it's tougher than ever. There are no easy answers. Just ask the two 20-something zillionaires who sold YouTube to Google for $1.65 billion. Not sure exactly what YouTube does? Check with your 10-year-old kid.
Portable information will change how you communicate
I will take a half-point on this one, because the trend is on target but hasn't fully come to fruition. Take out your cell phone/camera, two-way pager, iPod with video capabilities, Blackberry, and XM or Sirius radio and mash them altogether into a battery-powered, pocket-sized device that sells for less than $500. You will have invented the next must-have piece of electronic gear.
It's not that far from reality. One company is half-way there. At press-time, Apple announced the iPhone, a $499 device that's a cell phone, Web browser and personal jukebox. Did I mention Apple has now sold 2 billion songs through its iTunes Music Store? While most people use their iPods for personal entertainment, I believe one day your future employees will use them or similar devices to download company podcasts, training materials, industry news, and to communicate from the field.
Schools and universities will continue to offer terrific profit potential
Here is yet another trend that was pretty easy to peg with a little detective work. Baby Boomers' kids are still filling up classrooms in near-record numbers, all the way from kindergarten to college. This market segment will be a solid growth opportunity in many markets for years to come.
You will make money from energy-efficient products
Will 2006 be remembered as the year the energy movement finally achieved critical mass? The energy bandwagon still has plenty of seats. It's powered by the new-found popularity of green buildings, energy rebates and other market drivers. It would interesting to learn just how many companies are making more money today than they did five years ago from energy-efficient lighting equipment, motors, controls and other electrical/electronic equipment.
China and India will offer sales opportunities
This prediction will be a bit of a reach for most EW readers. But as these economies grow, they will be massive market opportunities for someone.
Business basics will still matter
You can never go wrong with this evergreen prediction. To get a taste of just how important business basics are in the sales field, check out “Selling More to Current Customers” on page 62.
All in all, most of my predictions were pretty close. Some were looking at trends a bit further down the road, and others were pretty safe bets. The one big trend I missed was the rise of private labeling as a major topic of conversation in the electrical industry. You can read more about private labeling in “The 5-Ton Elephant” on page 28.