Industrial Distribution Industry Trends: Recovery Update
In Modern Distribution Management’s 2021 Mid-Year Economic Update, economist and panel participant Brian Lewandowski shared projections for the broader Wholesale Distribution market. Following a 4.3% contraction in 2020, overall industry revenue is forecasted to increase 19.8% in 2021, with double-digit growth expected in all but one of the 13 sectors.
- The Base Case projects 19.8% revenue growth in 2021 with the biggest gains forecasted in Oil and Gas Products (+59.6%) and Metal Service Centers (56.9%), both sectors that saw the steepest declines in 2020. Revenue growth in 2022 is forecasted at 4.9%. General Industrial is among the few sectors projected to see double-digit revenue growth (+13.9%) in 2022.
- The Optimistic Case projects revenue growth of 20.5% in 2021 and 7.2% in 2022.
- The Pessimistic Case forecasts growth of 17.3% in 2021 and a 3.6% contraction in 2022.
According to findings from the quarterly MDM-Baird Distribution Survey, business performance has improved in each consecutive quarter following the 2Q 2020 pandemic-induced trough, with 2Q 2021 seeing 20.3% growth—7.7% above estimates. Looking ahead to 3Q 2021, several markets are projected to see higher growth: OEM Fasteners (+28%), Electrical (19%), Plumbing (19%), Datacomm (19%), and Industrial/PFV. Markets forecasting slower albeit positive growth are Safety (+3%), Landscape Supplies (10%), FM Jan-San (10%), Mechanical/PT (11%), and LBM (12%).
MDM’s 2022 Trends Survey revealed optimism heading into 2022, however, ongoing supply chain (e.g., lead times, raw material shortages, port delays, rising prices) and labor issues are presenting challenges to growth, said surveyed executives, emphasizing the importance of agility and flexibility in business models.
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