Over the next five years, two trends will cause the transfer of millions of dollars in power tool accessory business—vendor consolidation and product innovation. How accessory distributors and vendors handle it will decide to which victors go the spoils.

The motivation is still the same: everyone wants to do more business, increase margins and lower costs. But it is the strategy of decreasing SKU counts and inventory that drives the trend. By consolidating accessory vendors, distribution looks to fewer relationships for complete product solutions. For those who can offer more than just accessories, such as the complete system with power tools, there is even more potential.

This creates efficiencies that affect distribution's bottom line. Consolidation eliminates the repetitive nature of working with multiple vendors, such as duplicate paperwork, programs, inventories, and communication with each and every initiative—all elements that require time and money. Just like customers, distribution is moving toward a one-stop-shopping resource to cut erroneous costs.

By consolidating vendors, distribution can often benefit from higher margins based on better pricing. Frequently, larger orders from a single vendor result in better overall pricing. And where a distributor consolidates from three or four vendors to one or two, the potential for a significant order increase for those select vendors could point to price breaks for the distributor.

Beyond pricing, additional benefits include marketing/sales programs such as co-op advertising dollars and rebates. Handling back-office paperwork associated with each of these programs is also easier to manage with fewer vendors to coordinate.

For vendors selected as consolidated partners, this trend can mean a significant increase in sales. Larger accounts provide vendors with the ability to offer better sales support, such as joint sales calls, store-based event promotions, staff training, and increased access to point-of-purchase materials or other merchandising components.

Though all of these are important, how will this affect the customer's experience? For the most part, customers benefit from lower prices and better service related to the various promotional programs and more efficient distributor.

Conversely, consolidating vendors will decrease a customer's options with fewer individual brands to choose from. To help ease the transition, distribution looks to their vendors for assistance with sell-through programs designed to help move product from the shelf. These programs usually reward customers with positive pricing and extra premiums such as free goods and promotion items such as t-shirts, hats, and footballs. The list of what vendors will utilize is endless.

But while it is said that a good sell-through program is key, one particular trend continues to shape the success of certain accessory brands—innovation. Without it, vendors and distributors can't keep up with the vastly changing construction industry.

Accessory categories such as bits, blades and abrasives have not changed in years, and probably won't for a long time to come. But manufacturers are not just sitting idle. In fact, successful manufacturers continuously innovate the tools used both for the simplest and most complicated projects.

C3 Dyanite carbide teeth, hardened body and a thin plate, and kerf are all innovations in circular saw blades that changed what customers came to expect out of accessories. Each feature allows the blade to last longer, cut more precisely and handle the most abuse possible. Customers recognize the value of such features and are willing to pay a premium for the time and money it saves them on the job.

Similar to auger bits, spade bits recently saw the addition of a threaded tip to increase speed up to three times that of the current market leader. In fact, the technology also decreases the amount of work required from the user, because the threads, similar to a screw, actually pull the bit into the material, rather than require the user to constantly push.

Some features, such as diamonds, that once were innovative in merely their application, are now standard. But manufacturers are re-innovating their use with improved production processes such as Laser Fusion, a Bosch-patented process that uses precise, laser-generated heat to fuse a synthetic diamond mixture and bonding material directly into the blade core. As manufacturers research and explore options such as these, more innovations will come to market.

Parallel to innovating current accessories, manufacturers also are keeping a close eye on the new types of building materials introduced and embraced by contractors each year. While today's accessories handle a broad array of applications, not all can handle the new composites or engineered building materials being introduced. And as long as contractors search for ways to cut costs with new materials and techniques, manufacturers will need to keep pace with accessories that can drill, cut, fasten and shape these materials of the future.

Two trends are indeed shaping the accessory industry. As distribution continues to consolidate its resources, it needs to select its key vendor partners carefully. Those vendors with a finger on the pulse will be able to react innovatively and help guide the various trends shaping the industry.