We asked CE and appliance distributors how they are surmounting challenges to their abilities to support the retailers they serve, head on. Here’s what they told us.
How would you summarize the effects of the past 18 months on your business as a distributor (specifically mentioning any of the direct and indirect factors involved — the overall pandemic, the ensuing chip shortages, effects on consumer buying patterns, etc.) — and in what ways is your company adjusting the programs and policies it offers dealers to help them stabilize and grow their businesses through this unsettling period?
21st Century Distributing
Tyler Nelson, Director, Marketing/Training
21st Century Distributing has been very cognizant of all the challenges in the CE industry over the past 18 months, and has maintained an attitude of offering not only the best in customer service and expanded product offerings but also educational opportunities to help our dealers achieve their absolute best in these uncertain times. We’ve secured a 24-hour non-contact and curbside pickup service at all our locations, upgraded our servers and online POS systems, and will be hosting our annual dealer event fully virtual for the second year in a row. This event provides our dealers a chance to increase not only their product knowledge but overall business acumen. 21st Century Distributing is looking towards the future by helping our dealers navigate these uncertain times, through education and adaptation of new business opportunities like commercial installations and technologies like fiber.
Jack Halperin, Senior Vice President, Dealer Channel Sales
Consumer demand has remained solid. Aside from diligently working to keep our staff and dealers healthy through the maintenance of safe selling protocols, supply chain has consistently been the biggest obstacle. Our Number One focus continues to be leveraging for sufficient inventory, securing incoming schedules from the manufacturers, and receiving goods in timely, cost-effective fashion.
Even through all the supply-chain challenges, it’s important to keep things in perspective. Most of our dealers’ performances this year, with the aggregate brands we represent, are tracking well ahead of CY19 and even recording-breaking CY20 levels. While always part of our core value proposition, we’re working harder than ever today to help our dealers grow and prosper during this unprecedented time within our industry.
Helge Fischer, Executive Director
What an unsettling time! Catalyst AV members and their dealers have experienced a very strong growth cycle in their businesses.
The biggest issues have been getting merchandise such as AV receivers. Through this, we have been encouraging our members to have enhanced websites, multiple pickup locations and offering their dealers site surveys and presentations for end users. They are also offering extensive system design and proposal assistance for their dealers.
Instead of the typical “classroom” trainings, our members are rolling out more “trade show” style [trainings], with a time window of several hours. This has worked really well and separated visitors. Online training webinars are successful, with AVPro Edge, Cleerline, LG and Eero; [they are] recorded and put on their websites for those that cannot attend.
There will continue to be COVID problems, so networking products will have strong growth. Again, great opportunities for our Catalyst AV members and dealers.
Climatic Home Products
Doug Allen, President
The COVID pandemic immediately caused stress on the appliance industry in April 2020. Later in 2020, the industry had significant increases in kitchen packages. The changing of consumer spending from entertainment and vacations to home remodeling and buying new homes fueled this demand.
Just as we have had some categories catch up, we will see other product categories reach their peaks before others. We know there are shortages of chips and constraints in logistics in our industry. With these issues, we will continue to see many Mass Premium and Luxury brands that use chips in their products continue to struggle to catch up with or meet the industry’s demands.
In the last 18 months, Climatic Home Products has been able to deliver appliances to our dealers by being able to allocate high-demand products, advising dealers on what’s next, and [having] the ability to ship products from out of zone warehouses with minimal cost to the dealers.
Trevor May, Vice President of Retail Sales
Despite the challenges in the marketplace, D&H has seen its retail business continue to grow. Shoppers are returning to retail storefronts, but research shows they are still looking for the same options they became comfortable with during the pandemic, such as curbside pickup and expanded online inventories. D&H has helped partners fulfill these trends and meet growing needs in areas like remote learning and work-from-home networks, esports, smart home automation, and pro AV. Even with shortages still lingering in certain areas, D&H will continue to offer best-in-class products, logistics, and expertise to help these customers attain ongoing success.
DAS Companies, Inc.
Rex Berfield, National Sales Manager
This pandemic has illustrated the importance of “the relationship” in regard to account management, sales, and service. Everyone is facing the same issues; we have used this opportunity to focus on what we can affect and improve.
We understood the importance of in-person visits. The value of human contact for industry news and updates, business trends and insights, and the moral support of talking in-person has proved dividends for us.
Additionally, we recognized very early that this pandemic would impact everyone very long term. We immediately implemented an allocation strategy equalizing product distribution to help all our business partners, large and small, stay in business. Our Number One goal is to keep everyone’s business going during these times.
Exertis North America
Jeff Willis, Senior Vice President of Product Management
We had to pivot to help resellers focus on the types of products and solutions needed as the pandemic evolved and work from home became broader to include “work from anywhere and everywhere.” We also helped manufacturers adjust their supply chains to gain a higher level of visibility into the pipeline to see all the way through to the end user. Our partners relied upon us for the real-time understanding as to which projects were still in play, which were going to be able to close and when product was needed for those projects.
We offer programs that are successful for our partners; although many were delivered virtually, it was important keep offering these programs. Being a global distributor allows us access to unique capabilities and funding streams. We are also transparent with our customers regarding supply-chain availability and all that we are doing together to help their business.
The Fesco Group
Raymond Levy, COO
There was a huge shift in what and where people purchase. Our goal is always to be a turnkey solution for our retailers. We realized, as diversified as we were, that we needed to further diversify our product categories so that we meet our customers’ various and changing needs. We added private brands, licenses and distributor brands in multiple categories. We’ve also moved into engineering and designing cutting-edge products.
The infamous chip shortages have contributed to an increase in prices. Plus, stimulus money has caused a significant increase in demand for consumer goods and triggered freight rates to rise fivefold and sixfold. With the pent-up demand, sales units have slowed a bit, but sales dollars seem to be flat or better.
Alexandra Harding, Director, Vendor Management, Business and Consumer Solutions
To say that the past 18 months have been interesting is an understatement. We have learned a lot about how resilient our associates are and their ability to pivot quickly has been amazing. Giving our associates the support and tools needed to enable our partners to have continued success is key. Understating our partners’ needs and business is critical, as not all needs are the same. We offer our partners a wide variety of solutions from product availability and warehousing programs to creative financial solutions. These are just some of the tools that Ingram Micro has to offer. Being creative during these times is a must.
New Age Electronics
Fred Towns, President
We have experienced ongoing challenges within the supply chain, as have most companies in the industry. Though we see some improvement, we expect this to continue through the holiday buying season and beyond. Chip and glass shortages, specifically, are impacting many of our brands. With the pandemic continuing, we continue to work daily with manufacturers as they seek to return to pre-pandemic output levels.
Despite these challenges, New Age Electronics continues to bring innovative products and new solutions to market. We are working with dealers to find solutions to maintain availability and additional options that satisfy the consumer on constrained product areas where possible. While customers want to shop and seek in-store experiences that afford them the opportunity to see and touch products, we are also working with our dealers to build a more robust online presence.
Next Level Distribution
Jonathan Elster, CEO
Since COVID hit, we wanted first to keep our employees safe. Protocols were put in place, and several worked remotely. But our job was to continue shipping products needed in these times. We set up curbside delivery, and used our own trucks for same-day delivery. We’d always been big about getting in front of customers with training, and that changed to virtual training and virtual Zoom visits. COVID has obviously affected inventory with continued constraints, but we’ve been able to bring in additional product, when we saw things getting tight. Certain categories are still challenging like car audio and AV receivers, but we’re hoping that in Q4 things open up a bit. We’ve gotten closer to our customers as a company, via Zoom and other ways. When vaccines started rolling out we were back in front of customers, but with the Delta variant, we slowed it down to protect customers and employees. We have managed from Day One to keep our team together and drive our culture with cool things like our monthly Book Club to keep up our camaraderie. The most important thing is people; we’re all about collaboration.
For any customers who initially had cash flow issues, we offered extended terms and credit; we also provide just-in-time inventory and 24-hour pickup in all seven locations, and brought product to customers who couldn’t get to us. We did virtual trainings and enhanced the website to make sure they were getting the support they were used to.
We have incredible customers, and we’re out there, always looking for inventory to make sure we can support them.
Tate Morgan, President
As a distributor, it is our responsibility to offer the right products to our customers at the right time. Listening to our customers, we were able to utilize our supply-chain logistics expertise to pivot our operations and fulfill their changing needs. At the onset of the pandemic, our merchandising team acted quickly to identify and secure critical products from key suppliers — including onboarding crucial PPE supplies and shifting to support work-from-home product offerings. Additionally, Petra’s marketing efforts both online and through our digital email campaigns surfaced product assortments tailored to the new challenges the market faced. Our goal is always to provide the right products and insights to support our customers no matter the circumstances.
Dennis Holzer, Executive Director
The past 18 months have both positively and negatively impacted business for the PowerHouse Alliance distributor members. Our members have seen a high demand for products across the display, AV, networking, and security categories as consumers focus on home upgrades and home safety. Supply-chain issues and chip shortages have prevented manufacturers from getting certain products to dealers, making the role of the PowerHouse distributors more important than ever.
The PowerHouse Alliance distributor members have stepped up to become resources for new and existing dealers as they grow their businesses. With PowerHouse new member locations and larger locations opening across the country, dealers have easy access to all product categories they need to succeed. In addition, our recent partnership with CEDIA to bring in-person trainings to all PowerHouse locations will help dealers succeed, as they’ll be equipped with the skills they need to succeed in the industry.
Wally Whinna, Senior Vice President
Business continues to trend positively from a revenue growth standpoint. As a result of decreased travel and more restrictions at entertainment venues, customers are interested in better in-home entertainment. Additionally, the shift to remote work and school has driven demand for upgraded network performance. Simultaneously, chip shortages, labor availability, COVID’s impact on overseas production, shipping availability and cost are all playing a role in price increases and constrained inventory. Snap One proprietary brands committed early to higher inventory levels and as a result, have generally been in a better stock position than some competitive products. Additionally, we have been consulting with and educating our customers on alternatives to products that are extremely constrained, so they can continue to deliver quality products in a timely manner.
• The COVID crisis has prompted distributors to dive deep into their think-tank wells more than once for ways to bolster their support of dealers in this unusually prolonged pandemic period, with its unexpected twists and turns. They must work to simultaneously juggle unpredictable external business fluctuations with the internal machinations of running a company, in what has arguably been the most daunting period in a century.
• Distributors are more reliant than ever before on mutual support and collaboration between themselves and their retail clients — and on their vendors who are, in turn, dealing with chip shortages — as the consumer technology industry faces Round Two of COVID-19, the challenge of the Delta variant, and all the unknowns attached to an ever-changing business and societal landscape.
• Supply-chain logistics and product allocation strategies are constantly being fine-tuned by distributors to keep them closely aligned with dealer requirements, and with consumers’ work-from-home needs, as the pandemic moves into new phases.
After having rapidly accommodating to dealer needs with a slew of new distribution solutions at the pandemic’s start in early 2020, distributors are now having to double down anew with fresh and creative business approaches in the face of the COVID variant, as they strive to help retailers shepherd their businesses through 2021 and successfully into 2022. Those who have been most successful to date have shown impressive responsiveness, along with a good measure of common sense and true empathy for dealers, as long-held relationships with both manufacturers and dealer clients are being tested as never before.
This roundup originally appeared in the October 2021 issue of Dealerscope.
Nancy is a contributing editor for Dealerscope.