Over the past few weeks, we’ve been sharing quarterly reports from distributors and manufacturers in the industrial supply space. For the most part the earnings, topline and bottom line, have been good / met expectations.

The drivers – industrial market performance and tariffs, especially since tariffs increase pricing, so, sales dollar volume inevitably goes up.

Here’s the challenge with the data. Publicly-held companies are large.

So, with the quarterly reports, we know how large companies like Fastenal, Grainger, Distribution Solutions Group  , and Applied Industrial are doing. What about everyone else?

Q3 Pulse of Industrial Supply Results

Early last month we released our Q3 Pulse of Industrial Supply survey results to survey respondents.

The survey gathers input from Industrial Supply Trends readers – distributors, reps, and manufacturers. The survey is sponsored by William Blair and is a service of Channel Marketing Group and IndustrialSupplyTrends. Respondents receive a free copy. A podcast was developed and is available on Spotify and the full report is available for $35.

Pulse of Industrial Supply Highlights

Here’s some of the highlights:

• The response base was indicative of the channel, with 34% coming from distribution, 21% from manufacturer sales reps, and 45% from the manufacturing community. We solicit all three so that we can correlate results.
• 60% of distributor respondents were companies <$50M, enabling the feedback to be broader than what gets reported by national chains. More “company on the street” feedback.
• Key end-user markets are industrial manufacturing, metal working, automotive, and industrial safety.
• Sales
  • According to distributors … barely mid-single digits, on average … below Grainger!
  • Performance for manufacturers, in general, was a little lower (which means we have correlation in the data)
  • Reps split the difference, which adds validity to the findings.
  • Most market segments are “flat” with safety, fasteners, and jan/san products performing the best.
• Q4 Outlook
  • Slightly better, but only for about 66% of distributor respondents
  • Manufacturers also think it will be slightly better but the feedback is due to realization of tariff-induced pricing, not due to demand. The feedback that they hear from end-users … steady.
  • The reps are the most pessimistic with their growth projection essentially being price. They don’t see organic market growth.
• Tech is talked by some, but not all
  • Feedback from distributors, based upon weighted average, is <20% is digital, however, it’s a tale of two distribution environments. 66% generate <10% of their business digitally and 33% do more than 25%, and it’s correlated to distributor size.
    • The takeaway … digital performance is a direct relationship to the customer base you have. Larger customers expect digital (EDI, punchouts, storeroom management, vending machines, etc.) Smaller customers … not so much. Think who calls on the Fortune 1000. At the end of the day, tech is talk and needs to be talked to generate adoption and utilization. Check stats for utilization rather than transaction.
• Pricing
  • Distributors experienced slightly less than mid-single digits, and expect more in Q4
  • And most manufacturers expect Q4 price increases to occur.
  • Reps so mid-single digit price increases from their manufacturers in Q3 and almost half expect price increases in Q4

Additional feedback:

• Distributors are talking about AI for process optimization and personnel issues. (Regarding AI, Channel Marketing Group will be launching its AI for Distributors eBook shortly with roadmap, insights, and a supplier directory.)
• The impact of tariffs is expected to continue which means price management is in ongoing project for distributors and point of discussion between manufacturers and purchasing, between distributor sales and customers.
• Price management / price negotiation is an ongoing dynamic and occupying much time.

Many hope that the tariff issue will die down and enable them to focus on the business but they know this is out of their hands. They are playing the cards dealt. Some hope a reduction of interest rates will stimulate business, some expect to benefit from industrial construction that is expected by their key customers .. converting into ongoing needs, some of which is driven by tariff-induced foreign investment. Personnel is an ever-present issue, driven by generational change and dynamics, and distributors are experimenting (and some benefiting) from AI initiatives.

Lots of marketplace dynamics.

Want access to the full report? Listen to it on our Insights from Channel Marketing Gorup on Spotify or request the report for only $35.