In a recent survey conducted by William Blair and Channel Marketing Group, a comprehensive analysis was conducted to gauge the sentiments and performance of electrical distributors, manufacturers, and lighting agents/manufacturer reps. The survey, conducted between June 13-20, 2023, garnered responses from 216 individuals, including 62 distributors and 154 manufacturer personnel, lighting agents, and reps.
Distributor Responses: Distributors were asked to share their lighting sales performance for the second quarter (Q2) of 2023. The survey revealed that, on a weighted average basis, distributor reported sales were up by 4.32% in Q2 compared to the previous quarter (Q1) of 2023. However, when asked about their outlook for Q3 2023, distributors projected a 2.79% increase over 2022. This forecast indicates a slowdown from their Q2 performance, as economic concerns and backlog affect stock sales, small projects, and larger project billings.
Manufacturer Responses: The survey also examined the responses from manufacturers regarding their sales performance. The weighted average sales for Q2 showed a modest growth of 0.67%, down from Q1’s 3.32%. This figure is significantly lower than the previous quarter’s projection of 5.48%. Moreover, only 27.3% of respondents reported sales growth over 5%, marking a decline from 37.5% in Q1. A considerable 63.6% of respondents experienced either flat or declining sales, indicating an acceleration in the slowdown compared to Q1.
Manufacturers also provided valuable insights into the marketplace, citing factors contributing to the sluggish performance. These included a slowdown in project activity, potentially influenced by the cost of capital. Distributors were reported to be overstocked, leading to reduced stock and flow re-ordering patterns. Furthermore, distributors were streamlining their supplier base after expanding during the COVID-19 pandemic due to supply chain challenges. Some manufacturers noted an increase in distributor returns of materials, further affecting the market dynamics.
Rep Responses: The survey captured the responses from manufacturer reps, shedding light on their experiences. Approximately 54.5% of reps reported growth exceeding 5%, a notable increase from 36.6% in Q1. However, the overall projection from reps suggested a continued flattening or slowing of the business. Feedback from reps pointed to various factors contributing to this trend, including a slowdown in commercial construction due to economic impacts, a scarcity of major project opportunities, and persistent project delays caused by switchgear delays.
The survey results highlight the contrasting performance and outlooks within the electrical distribution and manufacturing sectors. While distributors anticipate a slowdown in sales growth for Q3, manufacturers are experiencing a significant decline in their sales projections. Reps, on the other hand, reported mixed experiences, with some achieving robust growth while others noted a deceleration in business activity.
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