Volume Speaks Volumes, Especially When Economies Slow Down

Blogs Bill Wade April 19, 2013

Here are three key ways dealership OES programs, national ‘chains’ (FleetPride or NAPA in a local market) or Internet parts sales sites are impacting independent distributors’ financial results:

Margins are squashed: Even when the independent distributor wins bids against ‘national’ competitors, it still feels the larger entity’s influence. Locals are bidding against un-quantified purchasing power, so prices are decreasing and consequently, gross margin is being squeezed.

Distributors lose suppliers’ leverage: Selling through the independent distribution channel provides certain advantages from the manufacturers’ perspective, but when it comes to supplier leverage, the benefits of selling through local distributors must be weighed against the high volumes generated by dealer and distributor consolidations.

Lost sales due to price shopping: The increased cost cutting focus from truck operators in a slow business cycle has affected any commodity products the distributor sells, highlighting price, not the total cost of procurement, as the most important operating metric. Logical, because …

Buyers Are Consumers First

Fleet purchasing managers don’t become a different species when they show up for work. So it seems logical that fewer of them are staying loyal to their favorite truck parts’ brands.

A new survey shows brand loyalty in general has dropped for the third year in a row.

Deloitte’s annual American Pantry Study (released April 9, 2013) shows nearly nine in 10 consumers are substituting private-label, or store brands for national brands they’ve regularly bought in the past. Sound familiar?

The survey finds 94 percent of Americans indicate they will remain cautious and keep their spending for food and household goods at its current level despite the ‘stronger’ economy and climbing stock market. Sound familiar?

The last recession left a deep scar, and many consumers are harboring a tremendous amount of remorse over prior careless spending habits, says Pat Conroy, vice chairman and U.S. consumer producers leader at Deloitte. He believes there has been a permanent shift in the way people shop.

Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at bwade@wade-partners.com.

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