SUMMARY
• Distributors have acted adroitly through the yearlong pandemic, swiftly tailoring programs to get dealers up to speed in digital, and in streamlining their just-in-time delivery processes.
• An especially challenging issue for dealers early on was securing adequate inventory to meet exceedingly high demand for certain categories such as networking products, replacement appliances and large-screen TVs – but distributor tools that aided dealers in accurate forecasting and product cycle planning proved to be invaluable resources.
• Having successfully adjusted to the “new normal,” distributors say they foresee business eventually settling down in the post-COVID period to a combination hybrid digital and in-person model – and add that they now have the resources in place to manage all aspects of it, moving forward.
Dealerscope: What will be the most salient features of your product and program presentations moving through the balance of 2021 and into 2022 that offer your retailers benefits beyond customary buying opportunities (i.e., educational initiatives, training events, seminars on business best practices, etc.)?
Tyler Nelson, Director, Marketing/Training, 21st Century Distributing: 21st Century Distributing has taken pride in offering not only the best in customer service and product offerings but also additional educational opportunities to help our dealers achieve their absolute best. In addition to our multiple monthly trainings from manufacturers and business professionals, we are hosting our annual dealer roadshow. This will be the second year of our fully virtual event and provides opportunities for educational sessions with our manufacturing partners on products and solutions selling techniques. Additionally, dealers have an opportunity to earn rewards, win prizes and take advantage of special promotions only available during the show.
Jack Halperin, Senior VP, Dealer Channel Division, Almo Corp.: Dealer needs vary. Some prefer attending in-person physical meetings and events while others, with staff limitations or for other reasons, have grown accustomed to virtual interaction. Since COVID-19 has become a major catalyst for the evolving online consumer decision-making and buying process, we continue to work with dealers on the development, enhancement and expansion of their online offerings. Successful independent dealers can no longer ignore this trend in the home appliance segment.
Helge Fischer, Executive Director, Catalyst AV: Business has been very healthy; the biggest issue is getting merchandise such as AV receivers. We are trying to provide great training and updates for the dealers. Most dealers are sick of Zoom meetings, so that part is hard. Catalyst AV distributors go the extra mile; it still is all about education, customer service, and training.
Doug Allen, President, Climatic Home Products: COVID has created many challenges over the last year within the appliance industry. At Climatic Home Products, we have been able to pivot to meet many of our customers’ needs. We have been able to get many customers to join in Microsoft Teams or Zoom calls to participate in new product launches and trainings. In recent weeks, we were able to get our customers together on a Zoom call in small groups to participate in vendor booth presentations at the virtual group shows. For the remainder of 2021 and into 2022, we are planning to start in-person meetings for training and customer sales calls. We will continue to use Zoom meetings for launching new products and programs as well as quarterly business reviews.
Fred Eddy, VP of US Retail & NSP Sales, D&H Distributing: D&H has added a new vendor onboarding specialist program, as both partners and vendors demand more robust work/learn/play-from-home technologies. To bring new products to market faster in the U.S., we recently trained our sales force on more than 20 new technologies. This included medical monitoring and purification/sanitation devices, home entertainment products like PC gaming and projectors, plus tablets, cameras, and accessories for school from home. This has resulted in triple-digit growth in emerging tech in six months. Also new for 2021: D&H’s enablement services and retail marketing resources allow consumer electronics manufacturers to accelerate their investment and return with key etailers. In addition, our National Solution Providers Group will continue to host virtual, field-based product training in high-demand categories relative to COVID-19 recovery, including consumer and commercial-grade PC devices, upgraded consumer networking solutions, home and outdoor products, plus entertainment merchandise like PC and console gaming.
Rex Berfield, National Sales Manager, DAS Companies, Inc.: As everyone knows, inventory is the name of the game in 2021. New requests from distant territories are much more common. Distributors face challenging issues — either take care of existing customers or forge new relationships. We have continued our stance. We keep it simple. We prioritize our retail partners ahead of all others, making sure they understand we are here to support them through good times and bad. As we all adjust in these COVID-19 times, we have adjusted our attention towards marketing opportunities for the dealers. Yes, we are still advertising, but we are focusing the communication on letting the dealers know what is available, what alternative options exist, and all new opportunities. The word remote has taken on a life of its own over the past 12 months, and will continue to impact how customer service is provided through 2021. Multiple locations and outside sales teams will continue to offer advantages that will expand in 2021, providing our dealers better, quicker information and quicker deliveries.
Kevin Kelly, President & CEO, Exertis: Exertis has more than doubled its outreach initiatives to retailers, supporting their retail and business divisions across all vertical markets by deploying the industry’s most robust virtual event and training platform that allows us to offer more customized product introductions, webinars, training sessions and, yes, buying opportunities. By taking our Big Book of AV Tour to this platform we are able to host more tour stops in more locations than ever before. We’ve removed all of the obstacles inherent with physical events and replaced them with a robust schedule of virtual programs that, we believe, will enable our customers to offer customized solutions across all verticals.
Raymond Levy, COO, The Fesco Group: As the world experiences major changes, inevitably, there are going to be some adjustments to the way people work and the way people purchase their products. 2020 was a year filled with extreme situations. The pandemic did a lot to change people’s work and purchasing habits. Some of those changes, such as work from home, web meetings, and purchasing online, will be permanent. Nevertheless, I believe that ultimately people will want again to work from an office, purchase from a store, and meet clients in person. Many of us were denied these privileges that maybe we didn’t appreciate, and not having them only caused us to yearn for that which we lost. As much destruction and loss of life as COVID caused, the one takeaway was that we all gained a new appreciation for that which we took for granted. As businesses, we need to keep all of this in mind and prepare accordingly. As a company, we’ve adjusted in 2020 and offered our customers a much broader range of products to meet their ever-changing needs. We now offer remote office solutions, personal sanitization devices, and a wider variety of grooming products. We’re continuously adjusting and anticipating. Never a dull moment!
Alexandra Harding, Director, Vendor Management, Business and Consumer Solutions, Ingram Micro: We are planning a national BCS Connections live show in Puerto Rico in 2022. For this year, beginning in May, we will host a virtual event roadshow that starts on May 18 that will focus on real-life solutions following the “Work Better, Play Better, Live Better” theme. A six-city virtual show tour will begin in San Diego, followed by Scottsdale, San Antonio, Buffalo, Greenville, and wrapping up in Miami. Each show will focus on the themed solutions, beginning with the theme “Work From Anywhere, Learn From Anywhere.” We will showcase some cool videos showing those solutions in action and go into more detail about those solutions. We will also focus on wearables for digital health. Part of each tour will include main stages for vendors and virtual evening social events, and select vendors will have 1:1 meetings with attendees. Prizes will be given away at each location. Our virtual Ingram Micro ONE experience is scheduled for this fall. It’s a big annual event where top vendors come to engage with various customers, including members of our Trust X Alliance and SMB Alliance solution-provider communities. Various tracks of our Business and Consumer Solutions program are also continuing in this virtual world until Q4, and we’ll continue to partner with key vendors to offer trainings.
Fred Towns, President, New Age Electronics: New Age will continue to provide training on our product portfolio and host events to further engage with vendors throughout the year. We will provide line reviews along with the vendors to bring exposure to new product direction and trends. We also have a collaborative forecast model that we can work on with our customers to provide the best inventory support. In addition to our training, New Age provides bundled solution options to retailers so they can bring a complete solution to their end users, versus just selling a product.
Jonathan Elster, CEO, Next Level Distribution: Over the last year, with trade shows and conferences having been cancelled, we were not able to get in front of our customers — so we’ve had to pivot. We’ve done this through digital platforms; that’s been a major focus for us. We offer virtual seminars on our website which have been very successful. We’ve launched new products and training videos that way; several vendors have provided unboxing and training videos. Unboxing videos are something we’ve never done in the past. They started in the traditional ecommerce world, where people liked to see products being unboxed. They’re no different from our customers. If LG, for example, releases a new OLED TV, we have one of our employees do an unboxing, we turn on the TV, and viewers can see the product live. Traditionally, we’d have gone to customers to show them, but since we’re not doing as much of that because of COVID, we had to come up with digital ways to conduct business in a virtual manner. And the feedback has been great – incredible, quite honestly. We’ve done a virtual seminar on how to get our customers more involved in social media, with a social media expert explaining how to get in front of their customers and use it to market to them with Facebook, Twitter and Instagram. We also just launched SMS marketing, so now we’re texting our customers, and we’re continuing to do eblasts and shipping stuffers. We’ve just opened our new Atlanta facility, and our biggest concern was making sure our customers knew that we moved. Of course, we sent emails and letters and put it on invoices – but people always have their phones on, so why not text them? It’s a great way to remind customers of a new product launch or vendor as well.
Dennis Holzer, Executive Director, PowerHouse Alliance: As we move through the next year, the PowerHouse Alliance members look forward to implementing new events and initiatives for our dealers as we begin to transition to life post-pandemic. Most importantly, we look forward to opportunities to connect face-to-face. The pandemic certainly slowed down the introduction of new products and we expect that new SKUs will be entering the market at a rapid pace this year. Those new SKUs, coupled with some of the new products, new dealer relationships, and vendors we have slated for 2021, means dealers can also expect a hearty lineup of product and best practice training. Additionally, capitalizing on what was a very strong year for PowerHouse Alliance members, we will see several new locations across the United States, and several locations will move to larger facilities in the same areas, giving dealers convenient access to additional product lines needed to complete projects successfully. The overall availability and delivery of products to dealers will be more efficient throughout the next year.
Can you review how you have adjusted or tailored your activities to help the retailers you serve this year, in light of the challenges posed by COVID-19 over the past 12 months?
Holzer: I’m proud of the way that PowerHouse Alliance members have served their dealers over the last 12 months. Dealers across the country saw an enhanced demand from homeowner clients for new technology and PowerHouse members were prepared not only with the product that was needed but with safety protocols at the forefront. Members implemented changes to daily operations including social distancing guidelines for dealers and employees. Restricted will-call and drive-through pickup allowed for dealers to get products they needed quickly while following social distancing guidelines. Warehouse locations also implemented strict cleaning procedures including freight disinfectant for inbound and outbound orders.
Towns: Despite the challenges of this past year, our focus continues to be keeping customers up to speed on the trends and direction of technology. Like many organizations, we have shifted our communications to virtual platforms, connecting regularly with customers through virtual meetings and events. To keep events and interactions with partners engaging, we have incorporated activities like a cooking class led by top chefs, providing a great opportunity to have fun and network. We have also worked with industry leaders like the CTA to provide content on industry trends through short, digestible videos.
Elster: We’ve been getting product to our customers even faster than ever. Regarding 24-hour delivery, we partner with mobile courier services to get product to customers within 50 miles the same day. More and more of our customers rely very heavily on distribution; 95 percent of our territory that we sell into gets product same or next day. Things like that are critically important – to make sure that our customers are getting what they need as fast as possible.
We’ve done so much to help our retailers. When COVID hit, we had to go beyond the norm for customers who were challenged and needed help, as far as things like extending credit and extending payment terms, and providing extra resources for them to help them stay in business. We’ve also provided curbside pickup. These were things we did to make sure our customers were able to get product just in time.
Eddy: Distribution hinges on logistics. D&H’s distribution centers remained open throughout COVID-19, and our transportation team responded amazingly quickly to challenges like matching inconsistent supply with the incredible demand seen from retailers for their BOPIS (Buy Online Pick Up In Store) and ecommerce initiatives. The flexibility of our freight and warehousing management was impressive, delivering better partner experiences as we navigated these unchartered waters, particularly through the 2020 holiday season. We helped retailers pivot to a stock, dropship, or curbside pickup selling model as needed. One of the most significant adjustments was securing inventory when production was constrained and addressing shipping delays caused by global port congestion. Our broad category knowledge and best-in-class services allowed us to help retailers provide the categories that were most urgently required during the pandemic. Our customer engagement activities, including cycle planning, forecasting, and execution, all successfully pivoted to virtual sales environments in 2020.
Allen: During the last 12 months, one thing became very clear, when unprecedented demand started in our industry, as well as the shutdown of North American factories. It put many customers [in the mode of] looking for new partners to help meet their sales demand. We at Climatic Home Products had been working on new partnerships prior to COVID that enabled us to receive products to help supply many of our customers’ needs. We were also able to get ahead of forecasting on key products and were able to get a consistent product flow until late Q4 2020. Late-2020 container shortage plus high demand created a slowdown of receiving imported products. At that time, we were able to shift some key production back to North American factories to continue to flow key models.
Kelly: In addition to the launch of our virtual event program, we have taken aggressive steps to realign our product strategy to offer solutions that are in demand in today’s post-COVID environment. [These include] audio and video collaboration solutions, displays, cameras, speakers, microphones — literally anything that enhances the work and learn-from-home world that we live in today. We’ve also expanded, significantly, the support programs we offer our customers. We created the Exertis XtraCare Program to provide employees with much-needed extra protection, and our partners with business relief and facilitation tools, as well as Personal Protective Equipment (PPE) kits to enable them to complete projects in a safe and secure way. We also created the PROAVXchange online auction hub where resellers can turn slow-moving product into cash that is needed to operate their business. The PROAVXchange provides resellers with an opportunity to sell product for a price that is most likely greater than what a bank would offer. We’re also working with all credit-worthy customers to roll out FleXFinancing that extends existing and future invoices payment terms by 30 days. Exertis also rolled out a new AV as a Service (AVaaS) plan that provides end users with a monthly payment option that enables them to upgrade to the most up-to-date technology in the future. Partners will get paid in full up front. Everyone at Exertis can take great pride in all that we have achieved during the last very challenging year.
Nelson: 21st Century Distributing took a proactive and educational approach to the challenges posed by COVID-19 over the past 12 months. We provided our dealers with direction and resources with PPP loans and Employee Retention programs. We secured 24-hour non-contact and curbside pickup at our locations. We upgraded our servers and online POS systems to handle the uptick in online ordering and processing. Finally, we implemented a robust cleaning and hygiene program at all our facilities to align with the WHO and CDC guidelines to help stop the spread of COVID-19.
Halperin: Our priority has always been on keeping everyone safe and healthy, while still moving business forward. At Almo, we quickly acquired tools to allow our employees to effectively engage remotely with dealers. We also stocked as much core appliance inventory as possible early last year, which has allowed dealers to continue moving product, especially as the appliance demands increased.
Harding: It is all about virtual. We use Microsoft Teams and encourage every associate to have video calls with their customers and tell them to turn the camera on – it’s OK if they see your living room, or if the dog barks in the background or if the kid comes up and asks a question; it’s OK to be human, with life going on around you.
Consistency is key, and we’re constantly driving that message to be face to face and not just hide behind email or phone calls only. It’s important to keep that customer connection. We also looked into customer needs and are looking at credit facilities and at payment terms to adjust where needed.
We did a lot of different things to make sure our customers have what they need to be successful. We also made the trainings fun by adding personal touches – what we call door drops – that is, sending DIY kits to learn how to cook or bake or make charcuterie boards – and we even send whiskey boxes.
Fischer: So yes, the protocols have changed. The most important thing is that the dealers need to feel safe when they pick up products, so there is a lot less personal contact, and more pickup after hours and ordering remotely. We have secured the areas of pickup, increased sanitizing, and [implemented] social distancing, etc., to make sure our customers feel good about being at their distributor.
What do you think constitutes the ‘new normal’ in the distribution business, for the post-COVID recovery period – what do you expect to return to the way it was before, and what do you think has changed irrevocably?
Towns: I feel we have a new business climate that moves faster with digital information and content and communication. Meetings can share information and open discussions and not have to wait for a face-to-face visit – SPEED is key!
I am not sure if the world will ever return to the traditional ways that we had in 2020 — it will be a hybrid model with new SLAs and fresh, new ideas. I think the role of distribution will be more important than ever to support our retailers with the right inventory and fulfillment of goods faster to their customers. I also feel in-person meetings will be better planned with more focus for the vendors and customers because we can have planning discussions and provide content digitally before we sit down in person to meet. We have entered into a hybrid world, where people can choose in-person or virtual, depending on what avenue best suits their needs. Like we experienced in 2020, there is something for everyone, and NAE will provide the solutions in all formats so that our customers will continue to enjoy growth in their business.
Elster: I hear people talk about the new normal. I do think the digital approaches we’re taking will continue. We’ve seen a lot of value in it and so have my customers. [Even in non-COVID times] not every customer is able to travel to a trade show because of cost or because they are owner-operated. However, I do envision getting back in front of customers and getting back to trade shows, and getting in front of our suppliers. I don’t think this is the new normal – that we’re going to sit inside and just work from our workplaces. But as for the digital aspect of doing business, that will continue 100 percent. It’s really provided another avenue for us to get product in front of our customers even quicker than we have in the past. It’s been very successful, we’ve enhanced our website to be best in class, and we’ve made a lot of changes to search capabilities, online promos, invoice tracking and bill paying, that have been very valuable to our dealers.
Holzer: I expect the distribution business to return to business as normal prior to the pandemic in the post-COVID recovery period, but we have certainly learned some important lessons as a result of COVID-19. Through the pandemic, communication was key to keeping dealers and distributors successful. PowerHouse Alliance distributor members have adopted new options to get products to dealers including same-day delivery, more member trucks on the roads, additional locations, and stocking warehouses with larger quantities of product. Through the remainder of 2021, we will continue to reap the benefits of enhanced communication as we introduce new locations, vendors, and products and return to a consistent in-person training schedule that offers more, including some additional surprises to be unveiled.
Levy: We all experienced the attenuation of the distribution business as brands went direct to retail and bypassed the distributor in the middle. More retailers have closed, and we find ourselves in a new world with more and more brands chasing less and less retailers. Retailers are continuously trying to simplify their supply chain by shrinking their vendor base. As a result, opportunities have opened up for distributors who have vendor numbers and can supply a multitude of solutions.
Fischer: Things will normalize, as restaurants, movie theaters and more open up, and people ‘feel’ like things are getting normal, and they are being vaccinated… There will be less fear — that is key to actually having meetings and demonstrations with dealers. I believe we will have mask mandates at trainings and still use video conferencing more than in the past, so networking products will continue to have strong growth. The world is maybe going back to the office, but a lot of companies will still prefer their employees to have a mix of office and at-home work. Again, there are many great opportunities for our Catalyst AV members and dealers.
Nelson: We at 21st Century Distributing believe that change is inevitable and are always looking to improve our dealer experience day to day. Will we see the same kind of face-to-face interaction that was considered the “normal” prior to COVID? No. However, that was changing regardless, with dealers utilizing incredible technological tools to showcase pre-project designs and proposals online without needing to be in front of the client. This change was also coming on the distribution side, and a need for dealers to have access to their products quickly. We implemented a 24-hour pickup program at our locations specifically to address this need so an integrator could place an order anytime and know it would be waiting for them that night or early the next morning. Change happens sometimes slowly and sometimes in the blink of an eye. It’s how you adapt and adjust your business models to meet this change, and then anticipate the next one that will determine your level of success. 21st is looking forward to the future.
Allen: As we move to the next chapter of the pandemic, there will be a “new normal” in distribution. This new normal will allow distributors to use technology and speed to market that will help better communications to our customers and delivery of new products. I believe that customers who were able to find distributors that could support some of their needs over the last 12 months will continue to support some percentage of their business moving forward because of the lessons learned during the pandemic.
Just as retailers found out that less suppliers are probably not the way of the future, distributors also found that a mix of suppliers from around the globe is important to the future of their businesses.
Halperin: We anticipate overall manufacturer inventory levels will continue to improve as the year goes on. Manufacturers will be looking to make up lost share from the previous 12 months — this year’s holiday appliance offerings should be more in line with the traditional promotional period.
We also expect the buying groups to some extent will be able to conduct physical Buy Fairs. While the virtual experience has become a necessary and relevant way to conduct business, it’s still important to meet with dealers and vendors in person at such events when safely possible.
Over the past 12 months, we have learned that conducting business remotely is effective. Once our offices fully reopen, we’ll be able to provide a hybrid balance that is effective and productive for both employees and dealers.
Eddy: The new normal — whatever that looks like — will require versatility and fortitude. D&H has a depth and breadth of consumer and commercial solutions, and has proven its ability to provide high service levels regardless of how or what the world wants to buy. That agility applies across retail, ecommerce, and B2B disciplines. Even if business travel remains limited, D&H’s tenured field sales team will serve as a vital resource for manufacturer and retail partners. We’re positioned to fulfill day-to-day business needs in the short and long term, both virtually and in person. No one can fully predict the permanence of recent developments, but based on D&H’s 104-year history and current growth trajectory, we’ll be here, ready to support the channel’s evolution for many post-pandemic years to come.
Harding: I do not think we will ever go back to the way it was. We are going to continue to see growth in ecommerce sales. I am happy to see some of these retail stores succeed in changing their model to curbside pickup and same-day delivery options. I think when we see each state start to reopen, you are going to see more of a rush, because people are so tired of being cooped up. You are going to see [unleashed] that pent-up demand just to get out. Ecommerce is still going to drive it; there is still going to be pressure on the carriers and that whole network. The delays will continue with delivery, but patience has changed things, and lowered the expectation of 24-to-48-hour delivery – and consumers understand this.
How will businesses open? When offices open back up, they will not open 100 percent – maybe only 50 percent. Will they offer hybrid work solutions that will continue to drive those work-from-home solutions? People rushed and went out and bought whatever it was that they could to make work from home do-able. Fast forward one year, and people are going to refresh these things because they will continue to work from home, and they will want to have a better camera, better monitor docking stations, and better networks. Once they realized they had their entire family working online, they realized that that four-year-old router needed to be thrown in the trash and upgraded, so that they could get on board with the latest Wi-Fi solutions that are available now, with mesh networking protection. So these are areas of business that are going to continue to see growth.
I think travel will resume being the way it was before because, again, people want to get out. But things will be slightly different – like that dining experience using QR codes to scan the menu, for example, will continue. These solutions save some trees. Touchless displays are out there a lot more. Not touching things as much, but where self-checkout options or mobile pay options are available, are trends, and because of these trends, things will change for the better for the environment.
My takeaway from this is that I hope people can be more kind and more compassionate. Many lives were lost during this pandemic; we shouldn’t lose sight of that. People are going to be more health-conscious, and more aware of their surroundings.
Kelly: COVID has demonstrated that manufacturers and resellers alike have to work with a distribution partner that is capable to provide the resources and solutions needed to meet a challenge that is unthinkable in scale and scope. That’s exactly what COVID was — and is: A challenge that shook the business to the core. We demonstrated the true value of a distribution partner during the last year. In good times, everyone can use the word ‘partner’ when it comes to distribution. It’s easy to be a partner when times are good. When times are bad, really bad, manufacturers and retailers need a distribution partner that can stand with them and help them through a crisis in every way they need, including business support, expanded credit, flexible terms, and staged delivery of solutions. We did all of this — and more. Frankly, retailers need a distribution partner who, in every sense, is their business partner. I believe for all of these reasons the era of small distributors is coming to an end. Consolidation, already under way, will accelerate.
Nancy is a contributing editor for Dealerscope.
