ELECTRICAL DISTRIBUTION: DEVELOPING A STRATEGIC PLAYBOOK FOR OPENING A NEW PROXIMITY EXPANSION LOCATION IN A DENSITY MARKET

ABSTRACT

Distributors' operational weaknesses and reliance on a few large customers became magnified during the 2019-2021 covid pandemic. In today's B2B marketplace post-pandemic, the distributor has new challenges to grow market share, meet "Amazon” expectations for B2B customers, and overcome the loss of market share to competitors. For a distributor to support the small to the mid-market customer, proximity locations are needed to bring inventory, counter showrooms (will-call), and knowledgeable associates closer to the customer in a brick-and-mortar location. This paper will present a model and playbook to evaluate the current geographic footprint to best serve the small to mid-market customers. Growth initiatives to grow organically thru geographic expansion into new, adjacent, and proximity markets are researched to identify objective market indicators and subjective variables that can be weighted to determine and rank for future proximity locations. Research from "like” industries, competitors, and interviews, helped to ten variables for ranking. The research includes interviews with experts in B2B business and analysis of over 800 competitor locations in the electrical distributor's footprint. Competitor locations were mapped to showcase areas of brick-and-mortar (expansion) opportunities, threats, and saturation. Data from an electrical distributor who opened two new test proximity locations during the project is used to determine post-Covid-19 customer behavior, evaluate financial analytics to refine Pro-forma, and outline for standardization for future expansion. The model and playbook can be used to drive data-driven decision-making and monetize efforts for pre-launch efforts of a proximity expansion location in a density market. Copyright, American Society for Engineering Management, 2022.