Adapting to a changing market
By John J Keough -- Industrial Distribution, 3/1/1998
If you were to ask why some distributors went out of business in the last decade, one reason would have to be a failure to adapt to changing market conditions. For example, how many distributors do you know who relied too much on a single customer or market such as the automotive or aerospace industries? Too many, I'd bet.That is why it is refreshing to read our cover story (p. 48) on the John Day Co., a distributor based in Omaha, Nebr. While many of Day's competitors were going out of business several years ago due to a downturn in the agricultural sector, Day seized the opportunity to enter the industrial market. The results are remarkable. Day's sales last year reached $30 million, a 15 percent increase over 1996. And it is significant to note that in 1992 the industrial side of Day's business represented only 25 percent of its revenues. Today that figure is 50 percent.
Day hasn't abandoned the agricultural market but sales were flat in that sector last year while the industrial segment was up by 30 percent. Obviously, the company has made the right decision to seek other segments of the marketplace to sell its products.
And the company is not interested in staying stagnant. Last year it also opened a safety division.
The John Day Co. successfully re-engineered its business and there's little doubt that it will remain a player in both its traditional agricultural business as well as the industrial segment for many years to come.
Also thinking ahead is a group of fluid power distributors in the Southeast who have pooled their resources to reduce redundancies in the channel to better compete with the large and national distributors. (p. 54)
Members of the six-month old alliance are in the process of installing software that will link the companies, so each member will have access to the other's inventory.
The successful distributors in the next millennium will be the ones who are proactive and ahead of their competitors who continue to do business the "traditional" way. This means finding new customers outside of your existing customer base.
Take a look at your own company today. Could you have ever imagined five years ago that you'd be selling products to your present customers?
Successful distributors in the future will be the ones who become strategically focused. These are the distributors who will develop closer partnerships with their existing customer base and at the same time look to new markets. They're also the ones who will invest in technology, recruit and hire technically astute employees and understand the differences between marketing and sales.
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