In my last column, we went over the basic, but very meaningful, contributions that a strong distributor provides to your business:
- Local distribution and support
- Local market knowledge
- Product knowledge and training
- Support credit
- Long-term relationships
- Loyalty programs
- Contract market
But the two most powerful benefits they offer may at first seem like polar opposites, but they are, in fact, two sides of the same coin.
They are: Opportunities to source the latest and greatest products literally from around the corner and from around the world, and, an in-depth knowledge of the local market.
We’ve covered the importance of local market knowledge in the last column, but there’s more.
Industry and distribution guru Jim Gould of the Floor Covering Institute, emphasized the importance of local knowledge and local management. He said, distributors have people who survive on how well they know their particular region and how quickly they can react to challenges when they arise.
Based on that local market knowledge and expertise, distributors say they bring advice, guidance and support to their retail customers in a way that others cannot “because they are more nimble and can make quick decisions for their local marketplaces,” said Hoy Lanning, president of J.J. Haines.
The right product based on local market knowledge and fast, local delivery when you need it is only part of the product story.
With so much innovation happening in product development, how does a retailer stay on top of the latest trends? Are you looking for something a little different? Something that you’re not going to find at the larger manufacturers? Something your customers can’t source from a home center?
Distributors carry some of the best domestic brands and suppliers. In the era of ongoing trade wars and rising nationalism, Made in the U.S.A. is a powerful marketing message that resonates with today’s consumers. Several successful retailers have made this a cornerstone of their go-to-market strategy.
Some of these very same domestic suppliers are not necessarily large but that also means you won’t find their products in every retail store. That’s another point of differentiation that many retailers are building on.
Speaking of differentiation, distributors also literally comb the global market to find unique products for you.
With local distribution, these globally sourced products can all be in your warehouse tomorrow. That in itself is no small thing. That sourcing strategy gives you a selection of the best of both domestic brands and globally sourced products–on demand, when you need it.
The ability to globally source products means that no matter where your store is located, you can provide your customers with the best and most advanced flooring products in the world. And let’s face it, if you’re a flooring specialty retailer, you’d better have something that the nearby home center doesn’t carry.
I know many retailers attend international trade shows, but few are actually in a position to source directly; it’s much more complicated than you might expect. And it is much more capital intensive–and risky to try to go this on your own.
That was reinforced for me when I had the opportunity to lead a delegation of top U.S. distributors on a trip to China to visit suppliers and view their factories.
There, I got to see firsthand the process by which distributors vet suppliers to ensure that you’re getting a reliable product from established manufacturers, that it will be available in sufficient supply to meet the demands of the market, that it will perform as promised and that it will fill a unique gap in your offering (whether it be product type, price point, alternative supplier or any number of other factors).
It’s not just about pricing: They talked to the factory foreman, they ask about suppliers and the raw materials used, they look at the workforce, they meet with the owners, they discuss finances, they scope out not just the products they’re interested in but the total output of any given factory. So many variables go into a distributor’s vetting process–I had no idea how extensive it can get. Several leading distributors actually have personnel and offices based in China to provide the kind of oversight necessary to keep things running smoothly.
As Gould points out, distributors are not bound by multimillion-dollar investments in plants and factories. That frees them to change products and suppliers as the market itself changes.
On my distributor trip to China, we literally witnessed factories changing production lines to accommodate the new SPC formats that are a fast-growing part of the luxury vinyl category. That is much more difficult (and costly) for larger suppliers.
Likewise, when new product comes out, distributors can quickly shift gears by simply switching suppliers to help them stay ahead of changing market preferences and needs in a way that a company with a large manufacturing plant cannot. That speed to market can only be replicated when companies source direct. For some product lines that are sourced overseas, this means that even a well-established manufacturer may be no better than a distributor in this regard.
In fact, a distributor’s smaller footprint means that manufacturers of new products can advance into the U.S. market in a measured way rather than having to take on national supply right away, according to Gould.
In a complex global sourcing environment, distribution has a heightened value and importance in the supply chain, said Paul Green, president and chief revenue officer, Gesco. “Navigating the complex world of sourcing from multiple countries and ensuring supply that delivers product quality, chain of custody of raw materials involved, and the overall integrity of the source of supply from a material and human treatment perspective is a key responsibility of distribution.”
Green predicts that going forward, the role of distribution will only strengthen as retailers need to be specialists and best-in-class when competing for the scarce consumer disposable income and will require support from distribution in product supply and program support.