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Electrical installer: future role of the traditional wholesale

One of the key trends in the construction and installation market is the changing role of the specialised traditional wholesale. This in turn is driven by new players entering the market and online & omnichannel developments. For a long time, the distribution structure in Europe was, as the Germans call it, a ‘dreistufigen Vertriebsweg’. Products were sold via a distributer/wholesaler to the end user.

Trends in the market

The digitalization of the industry and e-commerce in combination with the slow adoption of the traditional specialised wholesale to these developments, opened the door for pure online players and more direct sales from manufacturers. This has placed a lot of pressure on the traditional specialised wholesale and threatens their future. How should they react to pure online players? How important are their main added values (keeping stock, knowledge, distribution etc.) now and in the future?

These questions, and many more, are answered in the new Q2 2017 report of the European Electrical Installation Monitor (quarterly research amongst 1,200 Electrical installers in 7 countries). The theme of this research is the changing role of the wholesale. This research is conducted by USP Marketing Consultancy, a leading, global operating research company specialized in the construction, installation and DIY sector.

One of the questions we have asked the electrical installers is about their future purchase behavior and the likeliness that this will no longer go via the traditional wholesale channel. Although the full report covers all 7 countries, I would like to share some of the results from France and Spain. These countries represent the highest and lowest likeliness of changing their buying behavior.

France vs. Spain

Around 11% of the electrical installers in Spain indicated that it is (very) likely that they will not be buying at the traditional wholesale in the future. For France this is 29%. One could state that the majority (both in France and Spain) will stay loyal to the traditional wholesale. On the other hand, 29% is a significant number of installers indicating that they will no longer be buying at the traditional wholesale.

European average

The European average regarding this question is 18.6%. More information about other countries like Belgium, Germany, Poland, the UK and the Netherlands can be found in the full report. We have asked a similar question split per product groups, but it appears that the main differences are between countries and to a far lesser degree between product groups.

Strong position of the traditional wholesale

Overall, the current position of the traditional wholesale is still strong, however it is possible that this dominance will diminish and other channels will get a more significant market share. The feeling of connection and loyalty of installers towards the wholesale is already decreasing. The other channels will need to develop at least similar levels of distribution, competitive pricing, payments terms and knowledge in order to tempt installers to switch. It will also be interesting to see if and when manufacturers decide to start selling directly or via multiple channels.