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Dealers Depend On Distributors For Inventory, Credit

2/20/2009 01:56:00 PM Eastern

Steve Caldero, Ken Crane’s: It used to be that the distributors were my competitors. Thank God they have product now.

Jeannette Howe, Nationwide Marketing Group: Our bright light last year was obviously distribution. Distribution has been a channel that has grown. Our distribution partners have grown tremendously, and they’re allowing our dealers to buy into different categories and get more share of the customer without having to make a tremendous investment in inventory of their own.

I strongly recommend retailers look at distribution as an opportunity to carry less inventory, control cash flow better and allow yourself to look into other categories and get more share of your customer. That’s what we need to do now.

TWICE: It seems the distributors are carrying most of the burden in this environment in terms of inventory and credit.

Dan Schwab, D&H Distributing: There’s a bit of a macroeconomic effect going on. Some of our retailer partners — national, regional and specialty retailers — and even the vendors are relying more on distribution. Manufacturers are trying to cut their costs because they’re not great at pushing product through the channels, at providing credit, at shipping. A lot of our retailer partners have started to embrace the fact that we can be complementary to their business.

We see exciting growth this year. We’re really trying to help our partners, and offer products like gaming and mobile devices to help them differentiate themselves and add more margin. Sometimes it’s a great new product that helps the solution. It’s about trying to complement your current solution. It can’t just be about that big-screen TV. That’s where distribution can help our partners succeed.

David Workman, PRO Group: Agreed. Distribution is part of the answer. All these new technologies don’t have the margin structure. We need a partner to handle the inventory the traditional retailer can’t. To embrace this new technology, you need a distributor partner.

You have to think about different logistics solutions. I believe that’s the only way that retailers can potentially go into some of these new product categories. It isn’t the old "I buy from distributors or I buy from the factory." It’s really a hybrid being forced upon us by the vendors and nobody wanting to carry inventory. Cost management gives you the ability to entertain new product categories with a different business model, and you can really grow your business.

Schwab: We’ve been in this business for a long time and we’ve been through a lot of cycles. It’s all about being focused on the customer. We feel the onus is on us to continue to offer downstream credit, to offer innovative and emerging technologies. We don’t run our business a month or a quarter at a time. We’re looking at the categories and customers that we want to be aligned with for the next three to five years. We actually invest more in down economies.

 

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