Surviving price inflation and fundamental shifts in hiring took center stage Friday during a membership roundtable at the 2022 HDA Truck Pride Annual Meeting in Orlando.
In a moderated Q&A discussion led by Tom Hillegas of HDA Truck Pride, Mike Whitfield of Crossroads Trailer, Tim Corcoran of Triple R Truck Parts and Joe Steward of Betts Truck Parts & Service shared how their businesses are adapting to massive change happening in the secondary market and how they are doing their best to reposition their operations to succeed in a new business climate.
When it comes to price, the panel consensus has followed what has been said throughout the coin channel over the past six months – the only consistency in price is its volatility.
Distributors said that in the years leading up to the pandemic, they typically only received one price increase per year from vendors and it was usually a 2-4 point increase in the first quarter. . Now distributors say they receive new price sheets almost weekly and often these increases approach or exceed 10%. On average, panelists say their vendor partners have released three to five increases since January 2021.
How do distributors manage such significant changes? One day at a time, for the most part.
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Whitfield and Steward say that before COVID, he often leveraged his supplier relationships to glean insights into when increases might occur so he could factor them into his business planning for the year to come. to come. It doesn’t work anymore. Whitfield now says he regularly receives updated price sheets with little to no notice or explanation, which forces him to regularly restructure his prices on the fly. Corcoran sees the same thing.
Each distributor tries to develop their own best practices to absorb sudden changes.
Corcoran says its sales team worked hard to identify lines and categories where margins were high and push those products to help resist price increases on tighter lines. It has also expanded its supplier base, adding secondary and tertiary partners for key lines where price (and product availability) is good.
At Crossroads, Whitfield has found kiting and bundling useful because adding multiple components into a single product allows him to bundle all prices together and neutralize the impact of a price increase on one part. “It gives you enough runway to adjust as more prices come in,” he says.
Distributors also try to be as transparent as possible with their customers. These changes come from suppliers due to rising raw material prices, rising freight rates, skyrocketing production costs, product availability, and more. Distributors aren’t just raising prices because they want to or can. They adapt to the market to remain competitive. For the most part, distributors say their customers seem to get it.
“Customers are buying based on availability more than price right now,” Steward says.
But even with these soft landings, the trio admit it’s hard to stand in front of a longtime customer and tell them that a product they bought at a price in 2021 is 50% higher or more. this spring. No one wants to be the bearer of bad news.
Friday’s discussion also focused on hiring and how recruiting practices that have dominated the aftermarket for decades no longer work in a post-COVID world.
Today’s job seekers have options, and they know it. Friday’s panelists say they’ve dramatically increased their starting salaries to compete with distribution, retail, hospitality and other sectors. Starting salaries that would have generated 50-60 applicants for warehouse jobs three years ago, less than 10 in 2022.
And if you’re able to bring a talented prospect in for an interview, panelists say you better understand what they want from your company. Job seekers don’t just want a paycheck, they want to find a company that will value and appreciate them. This will provide benefits to support their families and flexibility to take time off work from time to time if needed.