NAW Institute for Distribution Excellence Fellows' Predictions

From NAW SmartBrief 12/13/2007

No. 1 thing your company should emphasize in new year: Our partners are advising most of our distributor clients to focus on strategic pricing as their No. 1 priority for 2008, says Brent Grover, managing partner at Evergreen Consulting LLC. Pricing is the last "unplowed field" for most companies. Sales people are overwhelmed with the challenges of managing the pricing for their customers. The chaos of distributor pricing begs for a simple, elegant solution.

The economic outlook for 2008 is less than robust for many sectors. A pessimistic outlook for sales growth can become a self-fulfilling prophecy.

Distributors work hard to pass along cost increases and to nurture their accounts, but the only factor they really have control over is increasing market share. Taking business away from competitors needs to be an active process even when the economy is bad. As the prices for companies cool down, 2008 and beyond may present a golden opportunity to make small, low-risk acquisitions to jumpstart market-share growth.

Most important message for distributors:  The most important message to distributor executives for 2008 is to not get distracted, says J. Michael Marks, managing partner at Indian River Consulting Group. The coming year will be one of uncertainty, and many will get consumed with the ups and downs of current events. Peter Drucker often spoke about the opportunities in chaos, and Marks says he firmly believes that the distributors who win during 2008 will be the ones who stay focused and get their execution of fundamentals right. Keep confidence in your country, the underlying strength of our economy, and your personal leadership. Support your channel partners but challenge them when necessary. This is easy to describe but hard to do, he adds.

W-Ds may face tough year in 2008: Most wholesaler-distributors will find 2008 to be the toughest economy in nearly five years, says Pembroke Consulting President and NAW Institute for Distribution Excellence Fellow Adam J. Fein Ph.D. Use the changing environment to make the tough decisions and survive. Growth has allowed some distributors to over-serve unprofitable customers, but a downturn is the right time to review cost-to-serve economics and focus on your truly profitable customers. Hopefully, you have used the recent period of economic growth to clean up your company's balance sheet. If so, a business slowdown can be the best time to invest in productivity-enhancing automation and new technologies because the pressure of day-to-day business is lower.

From NAW Member Survey:

Does your firm plan to get involved in private-label manufacturing in 2008?
Yes, we are already involved in private-labeling. -- 44%
No, we don't have any interest in private-labeling. -- 41%
We are considering it. -- 15%

Do you think gas prices will continue to affect your business in 2008?
Yes, we do not foresee gas prices decreasing next year. -- 81%
No, we are hopeful gas prices will stabilize within the next year. -- 11%
Gas prices have not really affected business thus far. -- 8%

Will your business increase its Web presence in 2008?
Yes, we plan to get involved in various Web 2.0 applications. -- 23%
Yes, we plan to build or improve our Web site. -- 63%
No, we are satisfied with our current Internet presence. -- 14%

Does your business have any mergers or acquisitions planned for 2008?
Yes, we already have at least one planned. -- 26%
We don't have any plans yet, but there is still time. -- 22%
No, we don't foresee any 2008 mergers or acquisitions. -- 52%

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