Distributors Are Still Positioned to Grow During This Economic Downturn
Our friends at MDM have recently weighed in on the growing noise about economic uncertainty. While there are undoubtedly bumpy roads ahead, distributors might not have as much doom-and-gloom to worry about compared to other industries during this economic downturn.
If you’ve tuned into the news recently, there’s been an inescapable focus on the economy and the unspoken “R” word. It’s especially scary to hear as the distribution industry has boomed for the past year and a half. Such a prosperous period being halted in its tracks obviously throws a wrench in your potential growth plans. Worse, the threat of shrinking profits may be particularly devastating for smaller distributors that lack the cash reserve resources of their larger counterparts.
However, Mike Marks, Indian River Consulting Group Founding Partner, believes that looking at data might be more reassuring than listening to talk. As he says, “If you listen to what people are saying, you’re going to think things are a lot worse than they are.”
According to Marks, the truth is that there will be winners and losers anytime there’s higher uncertainty about an economic downturn. While not all distributors will continue to operate at the levels seen over the past 18 months, the industry as a whole will continue to grow because there will still be some businesses that do really well. Although, that will come with some businesses that do not.
Moreover, from their conversations with major industrial distributors, MDM has reported that you’re hard pressed to find any real concern among executives.
Despite the hike in interest rates and overall economic slowdown that will undoubtedly cause customers to pull back on their demand, it does feel hopeful and refreshing to hear industrial distributors expect to continue growth through at least the end of the year.
Companies such as Fastenal, MSC Industrial Supply, and MRC Global are all voicing the same story: growth will slow down but not stop. MSC Industrial Supply’s president and CEO Erik Gershwind says that while the conditions of an economic downturn are putting pressure on their customers, they are “not seeing the evidence of an imminent recession that is suggested by the headlines” and as a result, “remain in growth mode.”
If you’re not one of the major industrial distributors and are concerned about the uncertainty of the economy, there are steps you can take to recession-proof your business. Revenue Intelligence gives distributors the competitive edge to protect their businesses, so they don’t have to sit idly while weathering the storm.
