In recent years, distributors rode a wave of unstoppable price increases, driving profits to new heights. But that surge has ignited something far more fierce—a relentless rock fight over pricing that’s now raging across the industry. Picture this: competitors hurling prices like stones in a chaotic brawl, each aiming to undercut the other. Every pricing decision feels like a critical throw in this brutal battle. The rules have changed, and if you want to survive and thrive, you need to fight smart, not just hard.

As we emerge from this period of rampant cost-passing, it’s clear that the market dynamics are shifting— and the competition is fiercer than ever. Imagine yourself in this rock fight: every stone you throw is a price discussion, every opponent is trying to take your share of the market. In this battle, you need more than just a strong arm; you need strategy, precision, and a keen understanding of the terrain. The days of easy profits are over, and those who thrive will be the ones prepared to fight smart, not just hard.

MARKET LANDSCAPE

Our research has uncovered a critical trend at the end-user level: price increase fatigue. After enduring two to three years of relentless price hikes from both manufacturers and distributors, end customers are beginning to push back—hard. They’re not just rejecting further increases; they’re actively seeking ways to cut costs, protect their margins, and maintain profitability.

For distributors, this means the playing field has changed. What worked in the past—relying on price increases to pad the bottom line— will no longer suffice. The challenge now is clear: how do you maintain the margins that have been bolstered by these price hikes without compromising your competitiveness?

CRITICAL WORK STREAMS

This is where the upcoming breakout session at this year’s convention becomes indispensable. Titled “How to Stay Competitive & Continue to Grow When Price Matters Most,” this session will delve into the strategies that will help you navigate this new landscape. Led by industry experts James Dorn and John Gunderson of the Dorn Group, the session will break down the fight into three key work streams that every distributor must master:

1 Sell-Side Improvement: The first work stream focuses on what you sell your product for, whether to a distributor or directly to the end user. This is where customer stratification, product stratification, and pricing optimization come into play. How do you get the right price to the right customer at the right time? The session will provide proven approaches to ensure you’re not just competing, but excelling, by delivering value that justifies the price and ensures you get paid what you’re worth.

2 Buy-Side Improvement: On the flip side, improving what you buy your products for is just as crucial. This is about becoming more important to fewer people—aligning closely with select manufacturers to secure price advantages that you can pass on to your customers. The session will explore how to forge these tight partnerships, ensuring that you can negotiate better costs and, in turn, grow your business.

3 Program Improvement: Finally, this work stream is all about tracking and optimizing everything. Picture your profitability as a bucket with holes. Program improvement is about catching the leaks—identifying where costs are slipping through the cracks and putting programs in place to plug those gaps. This session will offer insights into building robust processes that allow manufacturers and distributors to partner more effectively and maintain profitability.

As the session will emphasize, the time for relying on the old, legacy playbook is over. The traditional strategies that many distributors have depended on for decades— relying on the intuition of seasoned staff, sticking to long-established processes, and simply trying to run faster and harder—are no longer sufficient in today’s hyper-competitive market.

The modern playbook requires a fundamentally different approach— one that embraces digital transformation, data-driven decision-making, and the automation of manual tasks. It’s about capturing and democratizing the invaluable knowledge of your experienced team members before they retire and empowering the next generation of leaders to make informed, strategic decisions. With statistics showing that for every five people leaving the workforce, only two are entering, the urgency to capture this knowledge is greater than ever. But it’s not just about transferring knowledge; it’s about reinventing how distributors deliver value to end users in a rapidly evolving landscape.

This modern approach isn’t just about adapting to change; it’s about leveraging technology and analytics in ways that were unthinkable just a few years ago.

This means moving beyond gut feelings and historical success stories to adopt enterprise profitability controls, active category management, and market development strategies designed to steal market share in real time. It’s also about optimizing inventory, not just for efficiency, but to ensure that you’re maximizing working capital and positioning high-moving items effectively.

In this new environment, the question becomes: Are we clinging to the past, or are we ready to adapt to the future?

This session will help you answer that question, providing a comprehensive roadmap for staying competitive, expanding your market share, and maintaining your hard-earned profitability in a market where every price discussion feels like a rock fight. The key lies in adopting the modern playbook—an approach that will ensure your business doesn’t just survive but thrives amidst the challenges ahead.

Prepare to enter the fray with confidence. Join us at the convention and ensure that you’re ready for the rock fight that lies ahead.

DATE AND TIMES

James Dorn and John Gunderson of the Dorn Group will present “Stay Competitive & Continue to Grow When Price Matters Most” on Sunday, Nov. 10 from 8:30-10 a.m. and again from 10:30 a.m.- Noon.

James Dorn is the president & CEO of the Dorn Group and John Gunderson is a senior leader. Combined they offer over 50 years of consulting experience helping growth-minded executives build modern revenue and profit growth strategies.

Contact them at https://www.dorngroup.com/.

This article originally appeared in the October/November 2024 issue of Contractor Supply magazine. Copyright, 2024 Direct Business Media.

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The October/November 2024 of Contractor Supply magazine is here!

Our cover story, A Rewarding Passion - Dale Hahs II, third-generation of Denver's AIS Industrial & Construction Supply, is STAFDA's incoming 2025 president.

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