Stocking Distributor's Role Growing

Frank E. O'Dowd Executive Vice President National Building Material Distributors Association

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I of NBMDA members have experienced significant sales increases in 1976 as their {ealer customers rblied on local distributor inventories to a much greater degree.

It was a good housing year, particularly for single family residences, and consumer-oriented retailers continued to grow in importance throughout the country. This combination of activity

Story at a Glance

High level of distributor sales wilf continue into '77 more services being required of the stocking wholesale distributor wholesale margins may have to go up to compensate him.

built both sales and profits ceeded the previous year wholesale distributors of materials.

that exfor most building

It appears that this high level of distributor sales will continue in l97l Housing starts are projected to slightly exceed 1976, and the retail sales of lumber and building materials for remodeling, home repair, and do-ityourself projects remains the fastest growing segment of total retail sales in the U.S. All of these are prime markets for the building products stocked by wholesale distributors.

The record turn-out at NBMDA's 25th Annual Convention in November (a solid 35% increase over the previous year) indicated a much more optimistic evaluation of the 1977 business climate. The prevailing strategy will be to cover strong sales with satisfactory inventory levels without over-investing or speculating on [uture price increases.

There is genuine concern on the part of wholesalers about the high unit costs of their product lines, most of which have also been expanded with new items. The cost of realistically "stocking a line" has risen so dramatically that many retailers are purchasing in smaller quantities in order to increase cash flow and accelerate their inventory turnover ratios. This creates both additional opportunities and responsibilities for local wholesale distributors.

In order to exploit these new sales opportunities, wholesale distributors are aggressively reviewing overall operations to battle impending cost increases and to eliminate any operating costs that have lost priority with their retail dealer customers. Service remains the No. I need of the sophisticated retailer, but the nature, type and frequency of these services continues to change. Providing such services at the lowest possible cost remains the distri butor\s p rimary challenge.

As the trend continues in which the stocking wholesale distributor will have a greater role to play in the total distribution system from manufacturer to consumer, it seems clear that wholesale margins must be increased in order to compensate the "middle man" for services currently provided.

"The laborer is worthv of his hire."