LEDVANCE considers new research warning traditional brick-and-mortar wholesalers in the electrical industry against complacency as results show installer loyalty could be dwindling.
Staying relevant is a challenge many traditional businesses – and indeed industries – are currently battling to overcome, and the electrical installation market is no exception. Specialised, traditional wholesalers are having to adapt to a changing industry, which is being driven by several factors, including the shifting requirements of electrical installers and the growth of pure online players.
Recent European research undertaken by the USP Marketing Consultancy interviewed 1,200 electrical installers across Europe.† The study highlighted that wholesalers have to consider reinventing themselves in order to add value. UK installers are largely happy with the traditional wholesale. According to the findings, 96% of respondents say they are satisfied with the current payment conditions wholesalers offer. Satisfaction is also high for product delivery (84%), the need to not hold any stock (83%) and the provision of knowledge and networks (75%).
Even with these ratings, wholesalers should not get too complacent. This is because the ratings of other channels, such as e-commerce compared to the traditional wholesale, is quite balanced, suggesting the playing field is even.
Despite the traditional wholesaler currently occupying a strong position in the distribution structure, a considerable number of installers are already preparing for a future where products are no longer purchased through this channel.
This is illustrated by the fact that 19% of installers admitted they would consider changing their purchasing preference in the future, providing the third largest share of businesses behind those in France and Belgium.
The good news for wholesalers is that the majority (68%) of UK installers believe they will stay loyal to their wholesalers and aren’t likely to turn to another purchasing channel, suggesting that the existence of wholesalers isn’t in danger of disappearing anytime soon.
Channel changers
The likeliness not to buy from a traditional wholesaler appears to be more dependent on country than it is on product type. Of eight different product groups – cables and wiring, switches/socket outlets, lighting and luminaries, electrical enclosures,detectors, electrical heating, access control and home automation systems installation – there were few significant differences among UK installers.
However, a considerable proportion of installers indicated they would switch to other channels if they start outperforming the wholesaler market.
For example, 44% would consider switching if the wholesale was being outperformed in payment conditions, suggesting that loyalties are being tested and installers are beginning to have their heads turned. This means wholesalers can’t afford to stand still and will have to consider adapting their strategy to keep installers on-side.
It appears that, for those who aren’t considering jumping ship, loyalty comes at a price. Electrical installers indicated that, in order for them to continue buying through this channel, they expect wholesalers to keep developing themselves in several areas. In the UK, 84% of businesses believe most attention needs to be paid to competitive pricing in relation to other purchasing channels. Interestingly, this same trend was present for all seven countries, emphasising the importance.
Logistical performance (70%), warranty policy (67%) and technical support for installation companies (63%) are the other important areas to be improved, while investments in websites/webstores and providing product training are of least importance for UK installers.
These findings suggest the wholesaler market is still in a strong position, but this could all change if other channels continue their rapid rate of development. Wholesalers continue to be seen as a trusted partner, but still have to embrace change.
The loyalty being shown among installers is starting to diminish. They clearly face a battle on their hands and will have to be willing to embrace change if they want to survive.
For further information, visit: www.ledvance.com
† USP Marketing Consultancy