What’s the Future Hold for Plumbing and HVAC?

by | December 10, 2021 | Blog, Lincoln's Insights

My team and I just got back from two major events in the Plumbing and HVAC industries: ASA’s The NETWORK, and HARDI’s Annual Conference. Both were incredible shows and valuable for all attendees which ranged from manufacturers, rep agencies, master distributors, wholesalers, and service providers like HMI. It’s been a strange couple of years for these two industries, as it has been in all of distribution, and the shows did a great job of nailing down the hot buttons of the industries and future-casting for 2022. I’ve summarized the 3 key trends and topics in Plumbing and HVAC that were most prevalent at both shows in the below:

1. Supply Chain Uncertainty

Unfortunately, the future of supply chain issues is a little uncertain at the moment. There are different schools of thought behind this issue, but analysts at the HARDI Annual Conference are optimistic. With stimuluses buoying the demand side (contractors wanting to buy), there will be big economic upturn as supply comes back to meet demand and more orders begin to get filled. In essence, contractors and homeowners will still have the cash to buy, so when products become abundant again, people will buy in bulk. Unfortunately, we don’t know when that will be. That unknowing is causing uncertainty and some worry. The good news is that, in the meantime, there are some ways to counteract losing customers to competitors who have more products and brands available. We call it an “offensive strategy”, or focusing on your secondary or tertiary customers, or middle-sixty. Most distributors have a customer base that looks like this: move the middle Thanks to supply chain, that right-hand top twenty is dwindling for many. So, targeting your middle 60 percent of customers with substitute parts and equipment can shift your sales to look more like this: move the middle While generally a good strategy even in normal market conditions, this strategy can help shift you toward higher success.

2. Labor Shortages and Hiring Tactics

Another major concern between the two events was attracting and retaining talent for the industries and the trades in general. This has become an extremely important yet frustrating issue for all pieces of the channel; from manufacturers facing a major skills gap and shortage, to the trucking firms battling for drivers, to distributors finding warehouse, inside, and outside sales roles. Focus on the relationship between a distributors internal team and its customers has become even more important in the last two years, all the way down to the tech and contractor which is estimated to have a 39% unfilled job rate. We’re seeing a more creative approach to hiring and retaining as every step in the channel re-thinks their business practices. In some instances, we’re seeing an increased spend in recognition and retention programs and awards. Culture shifts and principal updates to become more empathetic and thankful for employees and workers are becoming more popular especially amidst such a turbulent time both professionally and personally, for many. These same tactics are becoming recruitment tactics as a new wave of worker scrutinizes where they want to work and why. At HARDI, it was stated that, one of the main influencers for a distributor is also the Territory Manager. This person should not only be responsible for selling product but also for being a better business partner for their customers. In our own report about contractors’ buying behaviors, we found that a distributor’s inside sales rep was a pivotal contact when making a purchase. Attracting and retaining excellent talent like what is needed is a difficult task, especially when the demand for people with the skills outweighs the supply. But we’ve got a few articles available to help you build a better team and keep them around longer. Take a look:

3. Finally, Pricing

While price has always been an influencer for customers in the HVAC and Plumbing industries, the focus seems to be more on what kinds of products price matters for and on competitive pricing over lowest pricing as availability has changed the lens on this. At HARDI, the discussion upheld that price was still an important aspect for contractors, but that brand took precedence over price for equipment and tools, whereas price took precedence for parts and supplies. In our own study, it was found that while competitive pricing was a high priority, lowest prices in the area ranked second lowest in priority for what drives loyalty to distributors.

Conclusion

The landscape for Plumbing and HVAC is changing rapidly, and we got an expert glimpse into what the future holds at the NETWORK and HARDI’s Annual Conference. From hiring to supply chain, eCommerce to being a better business partner, it all comes down to People and Process. Who you have on your team, and how you do business better than the rest? Build trust with your customers and you’ll build loyalty.

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