Fran Doris agreed that the geographical limitations of their business can be a difficult reality to grapple with. “Because we don’t have a national presence, we can be at a disadvantage with businesses or facilities with multiple locations outside of our geographic area; often, companies want to do business with the same supplier at all locations and we aren’t able to provide that service,” she said. “In addition, there’s the stigma that independent distributors can’t buy products for the same price as national chains because we don’t have the buying power. We also have to outsource more services such as marketing and IT. Independents can suffer in the online arena because we don’t have the resources to build custom solutions like Amazon or Grainger.” From Adams’s experience, independents often have less clout with vendors and are more likely to face both vendor- imposed market restrictions and national account restric- tions imposed by large customers. On a separate front, “a recent
Wall Street Journal
article identified an increasing trend toward large companies shifting from smaller to larger suppliers,” he said. According to Goodman, independents are often most vulnerable when they try to compete with national chains at what those players do best. Specifically, he said, “Try- ing to sell the same product at or near the same price is a death wish.” Stressing the importance of delivering value-added services, he added, “Years ago, a distributor could just buy and resell product because it created value strictly by giving customers access to product locally. With today’s improved logistics and the Internet, a dis- tributor in Reading, Pa., could compete with a distributor in Rancho Mirage, Calif.—if the only benefit it delivered is ‘access.’” Brown summed it up. “By definition, national chains are large organizations with deep financial resources, mul- tiple locations, large inventories, sophisticated logistics, broad personnel skill sets, state-of-the-art internal and customer-facing technologies, and solid marketing and social media presence,” Brown said. As a result, he noted, “Independents have to pick their battles with the chains and take advantage of the (perceived) advantages of nim- bleness and agility that come with independence.”
Strategies for Success
Our experts offered their best tips to help independents capitalize on their strengths and enjoy continued success: •
Don’t concentrate on consolidation.
“I think that every time consolidation occurs, it’s a good thing for the independents in that market because their competition just became less focused, less committed to the local mar- ket, less flexible, and more pressured to conform to KPIs,” said Blazer.
• Leverage the industry network.
“Get involved in
the industry through committees, conferences, distributor advisory councils, etc., and leverage the strength of buying groups so that you can continue to learn and share with some of the brightest minds in the industry,” said White.
• Invest in technology.
According to Adams, “E-commerce could shut down markets currently domi- nated by independents. If Millennials prefer to purchase online, most independents won’t have the resources to create a leading-edge web-buying experience or leverage big data,” he said. Blazer agreed. “E-commerce might become more of a factor in the future, with our customers gravitating to sys- tems that are the easiest to use and have the broadest fea- tures and functionality,” said Blazer, who recommends
COVER STOR Y /
in this issue
back issues 2012-2013
Click to subscribe to this magazine
article text for page
< previous story
next story >
Share this page with a friend
Save to “My Stuff”
Subscribe to this magazine