Distributors expect a great '98
By Daryl Delano -- Industrial Distribution, 1/1/1998
Last year will certainly be remembered as a good one for distributors. According to a poll conducted by Industrial Distribution in October, an overwhelming 98 percent of respondents expected sales to be higher in 1997 than in 1996. The average expected gain in 1997 was 11 percent.But the outlook for 1998 looks just as bright. Despite a predicted slowdown in the overall growth of the economy, 89 percent of distributors polled expect a sales increase in 1998. Just nine percent think sales will decline, while two percent foresee flat sales. Thirty-six percent anticipate sales gains between seven and 10 percent, while another one-third predict growth in the 11-20 percent range.
Many distributors expecting sales gains are still nervous about the economy's performance in 1998. Bill Todd II, president of Fairmont Supply Co., anticipates a six percent increase in 1998, but notes that any uptick in interest rates could alter that prediction. And David Ruggles, vice president of sales at Martin Supply, is forecasting a doubling of sales, mostly due to acquisitions. But he is also concerned with the economy and with increased competition from non-traditional suppliers.
And even the few who predict sales will be down in 1998 say it's not a reflection of the economy. Bill Elias, president of Welles Supply Co., located in Elmira, N.Y., says sales at his firm will be down only because the company finished a large material handling project in 1997. That revenue will be missing in 1998.
"We'll only be down because of that, and I'm not talking a significant amount,'' says Elias. "It's not a reflection of the economy at all. We got very heavily into one start up operation, and after it's done you don't always get another one that quickly.''
In fact, Elias says that although sales might be down, his firm concentrates more on gross margins, and they will improve in 1998.
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