Industrial Supply Trends is pleased to introduce a new service to the industrial supply channel … our Pulse of Industrial Supply report.
Launched last month, the Pulse of Industrial Supply, sponsored by William Blair, is a quarterly report.
Each quarter we’ll survey distributors, manufacturers, and manufacturer representatives to gather insights into the past quarter, projections for the next quarter, and potentially ask other pertinent questions that are of importance to the channel.
The purpose of getting input from multiple segments of the channel is to correlate perspectives and to enable sharing of information.
All input is confidential, and we ask solicit input in ranges so that no confidential information is shared. Eventually, once we achieve “a critical mass,” the report will be available to respondents and for a nominal fee to others.
2025 Q1 Pulse of Industrial Supply
Our initial survey, conducted during the last week of March, received 46 responses, pretty evenly split between distributors and manufacturers.
In the words of one distributor who responded and received the report, “gloomy.”
Key feedback included:
- Distributors, on average, were down 1.49% and manufacturers reported up .6%. Essentially a flat market.
- Only 14% of distributors reported being up more than 5% whereas 40% of manufacturers reported +/- 2%.
- Looking towards Q2, the market is looking for nominal growth.
- Distributors were projecting 1.4% and manufacturers projected 1.85%
- Feedback from both audience used words such as “caution, uncertainty, and trepidation.
- Some manufacturers expressed a desire for tariffs to be “margin neutral.”
- Some manufacturers also commented that labor (finding it) is a challenge.
A caveat, however, regarding the Q2 projections, is that the forecast was predicated without knowing what the tariffs would be. Obviously there has been a change. We do know, however, that companies will need industrial supplies. For some of the quarter there will be no impact other than any from steel and aluminum increases as many announced increases will not happen until May. What happens beyond …
So, look at the projection as an “organic” projection.
- Some additional insights gleaned from respondents included:
- 57% of distributor respondents shared that they had increased their inventory, perhaps in anticipation of tariffs, perhaps higher inventory due to slower Q1 sales results.
- Distributors shared that, on average, about 15% of their business is generated electronically, either via EDI, punchouts / eProcurement, or websites. While this is less than reported by publicly held companies (Fastenal and Grainger), the business dynamics (Fortune 500 customers) is also different.
- Distributors reported average price increases of 2.67% and manufacturers reported 1.85% … so, essentially, the same. Almost everyone expects Q2 price increases … worst case from tariffs
- Looking forward,
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- Many distributors reported “unknown” due to the impact of tariffs with some concerned about margin erosion. Most also think that demand will be down, however, this can correlate to whom their customers’ end-user markets are. Those with customers who have contract pricing are concerned about being able to pass through all, or even some, of the incremental costs caused due to tariffs. Distributors are investing much time in price changes to their systems, communicating with manufacturers, and communicating with their key customers.
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- Manufacturers see similar. They foresee a period of uncertainty and are concerned about a slowdown. Much also depends upon where manufacturers manufacture or source material.
To request a copy of the report, email me or John Gunderson.
The survey will be updated in June.
How was your Q1? Outlook / thoughts for Q2?
As always, we appreciate the feedback and comments.
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