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Electrical Wholesaling’s annual ranking of North America’s largest distributors of electrical supplies always provides an interesting measure of the electrical market, both in terms of which companies are growing the fastest; acquiring companies; and the industry issues demanding the most attention from industry executives.
Accounting for an estimated $81.4 billion in sales — 69% of EW’s $117.5 billion in estimated 2019 total sales through distributors of electrical supplies — the 2020 Top 200 electrical distributors possess an enormous amount of clout. The five largest distributors on the list (Sonepar, WESCO, Graybar Electric, Consolidated Electrical Distributors (CED) and Rexel) continue to increase their market share. EW estimates that these companies had an estimated $39 billion in revenue — 33% of total industry sales.
However, many of the larger independents distributors featured in the Top 200 in the table below continue to grow, too, many at well over the +2% annual growth rate from 2018 to 2019 for the 127 distributors that shared revenue data for both of those years. In fact, two Texas independents based in Houston absolutely crushed that average — Lonestar Electric Supply at +44.8% (#44 in the Top 200) and Wildcat Electric Supply at +36% (#112 on the list).
Although that +2% average annual growth rate for the Top 200 looks pretty sluggish, the electrical wholesaling industry still sailed into 2020 with a fair amount of momentum. The nonresidential construction market was expected to slow down some in 2020 after a solid run, but distributors’ contractor customers had enough projects in backlog and underway, while national data showed they were hiring at a record rate — employing more than 900,000 employees. The overall industrial market was a bit sluggish, but there was business to be had in the retrofit of lighting equipment in commercial and industrial facilities with the latest in LED lighting and in the installation of new industrial control systems.
Add in the surge in the construction of data centers and massive distribution centers by Amazon and other online and brick-and-mortar merchants; a surprising amount of activity in the auto industry in both car factories and feeder businesses; a solid flow of mixed-use projects; and some decent residential construction activity, and you had a 2020 electrical market that could easily grow at a modest but healthy rate.
After the COVID-19 coronavirus virtually shut down the national economy in mid-March, the electrical world was in many ways changed forever. Five major trends became quickly apparent as we analyzed the responses:
1. A move toward digital sales and marketing strategies because customers won’t allow in-person sales calls from distributors’ salespeople.
2. The use of Zoom, Microsoft Teams and other videoconference strategies for intracompany meetings and virtual sales calls to customers and other buying influences.
3. A broad acceptance of remote or home offices now that companies have seen these officing strategies can be quite efficient for some types of jobs or workers.
4. Dramatic cutbacks in overnight travel to conferences, and real questions about which industry conferences can most easily be converted to virtual formats.
5. The importance of having a disaster recovery or emergency preparedness plans.
The move toward online sales calls, distance learning and other virtual marketing initiatives will transform the industry forever, according to executives from several of the nation’s largest distributors.
“Digital solutions will continue to differentiate distributors and influence how we serve our customers,” said Brian Begg, VP of investor relations and treasurer, WESCO Distribution, Pittsburgh.
Wes Smith, Mayer Electric Supply, Birmingham, AL, believes some business fundamentals have been forever changed. “We will never go back to ‘normal,’” he said in his response. “Digital will accelerate, counters will look different, education will be distance. Work from home will become a way of life.”
Chris Scarbrough, CEO, Springfield Electric Supply Co., Springfield, IL, said, “The future of selling in the electrical market will be digital sales development.”
Phil DeLoache, president, First SOURCE Electrical, Houston, has already seen plenty of major changes in how his company and others are working to provide a safe and healthy workplace and how they have used e-commerce and other electronic tools to connect employees and customers. He believes the work-at-home trend is here to stay.
Some distributors used disaster recovery or emergency preparedness plans to guide employees through the crisis. Said John Kelly, executive VP, Sales & Process, Jo-Kell Inc., Chesapeake, VA, “The biggest lesson we have learned so far is that it’s important to be prepared. While no one knew exactly what we were in store for, we have had a formal employee disaster preparedness plan in place since 2002.
“We utilized the strategies laid out in that plan before the pandemic lockdown occurred. We had team meetings to go over the plan and even had a Pandemic Planning Reimbursement program, in which every employee was given $150 to stock up on supplies that could be required for the pandemic. Doing this allowed our employees to feel secure and, along with new cleaning and distancing measures in our office, helped us to keep employee fears low and morale high.”
