Electrical Equipment Distributors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 7,500 electrical equipment and parts distributors in the US consolidate products across many manufacturers to offer customers wide selections, reasonable prices, and a single point of contact. Major product categories include switchgear and switchboard apparatus; wiring and cable; lighting fixtures; industrial controls; conduit, raceway, and fittings; power and distribution transformers; and motors and generators.
Competition from Alternative Channels
Electrical products are available through a wide variety of channels, including manufacturers, retailers, energy service companies (ESCOs), product specialists, niche service distributors, and distributors of other trades.
Counterfeit Electrical Products
Counterfeit electrical products, often produced outside the US, have infiltrated the supply chain and are raising distributors’ liability risk.
Industry size & Structure
A typical electrical distributor operates out of a single location, employs about 24 workers, and generates about $17 million in annual revenue.
- The electrical distribution industry consists of about 7,500 companies which generate $132 billion annually and employ 182,000 workers.
- Most electrical distributors are small, independent operations - 56% of electrical distributors have a single location and 68% employ fewer than 10 workers.
- Customers include building contractors (29% of sales), other wholesalers and distributors (24%), industrial businesses (10%), retailers (8%), businesses for their own use (19%), and government (4%).
- Large companies include International Electric Supplies, Rexel (Gexpro), Sonepar USA, WESCO Distribution, Graybar Electric, and Consolidated Electrical Distributors.
Industry Forecast
Electrical Equipment Distributors Industry Growth
Recent Developments
Oct 23, 2023 - Sales Slow, Inventories Rise
- Household appliance and electrical goods distributors’ sales have slowed in 2023, and sales were down slightly by midyear compared to the same time a year earlier. Meanwhile, industry inventories have gradually moved lower in 2023 but, by midyear, were elevated over mid-2022 levels. This may suggest household appliance and electrical goods distributors are trying to work through inventory that was built up as a hedge against supply chain issues. Producer prices charged by household appliance and electrical goods distributors were up sharply in Q3, year-over-year, signaling wholesalers may be successfully passing on their higher equipment costs to customers. In Q3, industry employment growth was steady compared to the same time in 2022; wages increased moderately over the same period.
- North American engineering and construction spending is forecast to rise by 5% in 2023 compared to the 12% growth seen in 2022, according to FMI’s fourth-quarter 2023 North American Engineering and Construction Outlook. Overall growth in 2023 will be supported by double-digit gains in key segments, including manufacturing (up 58%), multifamily (+18%), and lodging (+16%). Other segments expected to post strong growth include healthcare (+9%), public safety (+9%), amusement & recreation (+8%), educational (+8%), office (+8%), transportation (7%), and commercial (+6%). With a 13% decline in spending, single-family housing is the only segment that is expected to post negative growth in 2023.
- Demand for building design services fell in September from the prior month, according to a September report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 44.8 in September from August’s 48.1. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries dropped to 53.7 compared to 54.8 in August, and the index for the value of new design contracts decreased to 46.2 from 47.9. The AIA’s Chief Economist, Kermit Baker said, “The September ABI score reflects a marked downturn in business conditions at architecture firms, with the sharpest decline observed since the peak of the pandemic. While more firms are reporting a decrease in billings, the report also shows the hesitance among clients to commit to new projects with a slump in newly signed design contracts. As a result, backlogs at architecture firms fell to 6.5 months on average in the third quarter, their lowest level since the fourth quarter of 2021. "
- Home builder confidence declined in October as high interest rates undermine buyer purchasing power, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell five points to 40 in October 2022. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI in October marked the lowest reading since January 2023. The NAHB said mortgage rates above 7% are hurting housing affordability. Supply-side challenges - including shortages of workers, materials, and available lots – are also contributing to higher home prices.
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