Wholesaling remains on course at start of 21st century
After attending the final NHRAW and first HARDI convention in Orlando, Fla., SNIPS is happy to report that both hvacr wholesaling and its premier association representative are in excellent health. Wholesale-distributors of all sizes said that business has held up well during the past uncertain year. Contractors from around the U.S. and Canada continue to look for bargains, of course, but the demand for quality made equipment and parts continues almost unabated.
Trends that appeared to threaten the future of two-step distribution a decade ago have stabilized into manageable competitive factors.
Most manufacturers have not forsaken wholesalers in favor of direct-to-dealer or direct-to-consumer business models, although more producers have certainly experimented in these areas.
For the most part, contractor consolidation and cooperative buying groups have not resulted in iron-fisted negotiations that leave wholesalers with unprofitable margins. In fact, when contractors have banded together under any umbrella, they can help wholesalers streamline their ordering schedules and allow for more accurate forecasting. Under these circumstances, distributors are able to offer better pricing without harming their own profitability.
The Internet has improved communication between branches, competitors, and with suppliers, but it has not resulted in a free-for-all. Fears that widespread price wars and almost limitless availability for equipment have not been realized. If Enron-style brokers have designs on this industry in the future, they will find that existing players will not relinquish the market easily. A furnace is not a unit that can be traded as easily as a cubic foot of natural gas. (And, as it turns out, neither is a cubic foot of gas.)
Wholesalers are still frustrated by this industry's relative inability to make inventory control as automated as it is in many other fields. Ordering, stocking, and sales procedures are much more sophisticated than they were a decade ago, yet for many, the only way to be sure how much stock remains on the shelves is to assemble the staff's fingers and start counting.
The debate over bar coding still has not changed much over the years. No one is against it in principle, but there are so many barriers to making it work properly that progress has been slow. However, it is possible that technology may make the old UPC system as obsolete as hand-counting and that the industry will be better off waiting for better methods to become available.
SNIPS will have complete coverage of the NHRAW/HARDI convention in the March issue.