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The (Consolidated) Elephant In The Room

The next generation of ownership & management is coming of age for manufacturers and wholesalers.

Much like succession planning, consolidation has been a theme in our industry for the past 20 years.  As the years have clicked by, consolidation at the wholesale and contractor level has slowly accelerated.  As a rep industry we’ve watched and discussed, yet done very little about it.  It’s time for rep agencies to acknowledge how the consolidation of wholesalers, engineers & architects, and contractors is affecting them and what it means to our future.  The elephant in the room cannot be ignored any longer.

When I started in the industry, the North East was divided into Connecticut only, Connecticut and Western MA, Western MA and Vermont, the rest of New England, eastern upstate NY, and western upstate NY.  Try explaining this to new people in the industry and it sounds kind of crazy.  However, it made sense given the locations, number of branches, and sheer diversity & size of wholesalers and contractors.  The speed of business was dictated by driving time, fax rates, and telephone calls (from pay phone booths.)  A manufacturer could have up to 6 different rep agencies servicing a geographic location – and it made sense. 

Over the years, those wholesalers & contractors sold, merged, and some went out of business.  The speed of business transformed to email, text, VMI, same day deliveries and the requirements of a rep firm changed to include job tracking, forecasting, social media marketing, and the like.  For the rep industry, the elephant in the room is scale.  Manufacturers expect more, the contractors and wholesalers expect more and the rep agencies that survive (and thrive) as the industry consolidation continues are the ones that invest now in building the infrastructure to service the expanded geography of their customers.  

The next generation of ownership & management is coming of age for manufacturers and wholesalers. This generation sees the opportunities and threats differently than the previous leadership teams. None of them see markets as tiny, segmented, trading areas that move at the speed of fax and telephone booths. Rep agencies need to look at the consolidated elephant in the room and get on the expansion/consolidation train themselves. The market expects it. 

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