As end customers or industry structures change, participants in the industrial distribution market need to understand how to adapt to rapidly changing channel requirements and behaviors.
L.E.K. has substantial experience advising industrial distributors for a range of sectors including industrial products, construction facilities and maintenance repair and operations (MROs). We have evaluated the strength and viability of a wide variety of distribution business models, from regional to ecommerce models. Our work in distribution covers a range of strategic and transactional issues, from international growth assessments and services expansions to ecommerce and pricing strategies.
We also leverage our experience across the full spectrum of advanced analytics techniques (from descriptive to predictive to prescriptive) to solve complex problems and deliver differential value for customers. Examples include competitive and market intelligence, branch network optimization, customer transaction analysis to determine segmentation and targeting strategies, and product transaction analysis for portfolio optimization.
Examples of our work
We have helped a wide range of companies assess players in the market or improve their business model to drive profitable growth and outsized returns.
- Channel strategy: L.E.K. helped a leading distributor of automotive parts and supplies to the aftermarket service provider landscape create a strategy to overcome channel convergence in the industry and protect EBITDA margins. Industry research and analysis and workshops with the client’s management team helped build consensus around the facts and the best path forward.
- Pricing strategy: L.E.K. helped develop a pricing strategy for an MRO distributor that included an assessment of performance and opportunities by product line and by customer segment. This work helped the client build a more easily understood value proposition, improve overall margins and grow its market share.
- Distributor synergy assessment: L.E.K. worked with a leading multinational flow control corporation on assessing distributor synergies from the acquisition of a multibrand pump company serving oil and gas, water, and chemical sectors. We assessed the third-party distributors of the client and the target in North America, Europe and Asia to assess overlaps, evaluate “keepers” and “losers,” and impact on its line card. We also evaluated changes needed to the client distributor footprint, cost savings and resources required to handle the expanded network, as well as the impact on pump brand structure.
- Third-party distributor opportunity assessment: L.E.K. supported a financial sponsor in the acquisition of a major industrial multinational focused on compressors. We focused on detailed voice of the distributor/end user in the U.S., Europe and China, identifying significant gaps and opportunities in third-party distribution. The assessment included benchmarking distribution structure and channels of direct competitors, as well as assessment of brand/line card repositioning. Recommended structural changes to distributor organization are currently being implemented, along with detailed brand repositioning.