The established dealers / stockiest and distributors often have a rigid mindset on margins, way of working and capital needs. Very few realise that present market does not offer much scope for conventional thought process on margins. Distributors have to reinvent if they are eager to grow in present market scenario that requires capital, approach to offer service with a good company image, so that a distribution firm can build a sales / effective
Every product category be it Plywood, Laminate, wood veneer, PVC boards, Particle Board, MDF is crowded, competitive and confusing in today's scenario. Active manufacturers are strengthening their grip on market with increased spent on sales personals, marketing & promotions, and adding new products and infrastructure to support the spend. On the other side large percentage of distributors / dealers are confused on their part of acts. There is over supply of materials from each product category yet majority of distributors - dealers are still sitting dull instead of working on changes because they expect their suppliers / principal companies to do all the effort for sales growth or wait for market to get better.
During last 6 - 7 years, there has been 5 fold jump in number of retail shops and 2 fold in number of distributors at all key centers across the country. With rise in production capacity, outlets have grown too but the consumption on the ground has not grown with the same speed resulting in high competition and price war. Competition gives edge to alert and hardworking distributors and retailers specially to commitment driven players. That's why new comers (in distribution) who are hungry and pro-active to establish themselves are growing 3 times faster than the old dealers.
The established dealers / stockiest and distributors often have a rigid mindset on margins, way of working and capital needs. Very few realise that present market does not offer much scope for conventional thought process on margins. Distributors have to re - invent if they are eager to grow in present market scenario that requires capital, approach to offer service with a good company image, so that a distribution firm can build sales effectively.
Expecting / asking companies to bring secondary or providing sales people, launching schemes, are ok but one shall not wait to weaken own margins and market grip. Distributors need to put greater effort by hiring own sales people and infuse more capital if they wish to earn a net of 8 - 9 % on a bigger volume. Rising competition shall restrict conventional distributors at 3 % net profit even on smaller sales volumes which is not sufficient.
Time is suitable for active, hardworking and market savvy distributors for the reason that there are so many companies & good brands looking for right channel partners. In the same way a conventional retailer has to improve by remodeling their outlet with more space. 300 sq feet shops do not offer much scope in modern retailing because of variety of product range that a customer need. If a retailer can afford to expand to 700 + sq feet area, he can re - define his presence and relevance among contractors and consumers.
“A retailer is the Guru of products and interior design, because in this purview lies the capacity to change buyers’ perspective during purchase decisions. However, to remain a Guru, you need to change the approach while retailing.” Present times are tough, competitive and full of stress for those who are not active. It is advisable for distributors & retailers to enhance knowledge base; reach out to customers instead of waiting for them to come. It is also time for increased efforts instead of waiting for companies’ support and schemes. The margins are too tight & limited for expecting anyone to do the needful.
Embrace the change and reinvent your working to stay alive in fast changing Indian market.