What does the future of the electrical utilities business in North America look like? How does the threat of new digital entrants change the value chain? How do you strategise for the future and ensure that you stay relevant in the business landscape of tomorrow? In January 2015, futurist Anders Sörman-Nilsson of Thinque addressed the NEMRA Annual Conference in San Diego with the aim of answering these questions.

1. FUTURE OF ELECTRICAL
UTILITIES INDUSTRY
©AndersSörman-Nilsson&Clementined’Arco-Thinque
J U L Y 2 0 1 5

2. T H I N Q U E
ELECTRICAL INDUSTRY CHANNEL VALUE CHAIN
Electrical Manufacturer
(Producers of lighting, Control, Building Wire...)
NEMRA Reps
(Outsourced Salesforce)
Electrical Distributor
Utilities Original Equipement
Manufacturers (OEM)
ContractorsIndustrial FacilitiesCommercial Buildings
End Customers

3. T H I N Q U E
Source: Hybris Software/SAP
WHY IS THE INDUSTRIAL/ELECTRICAL MARKET
ATTRACTIVE TO ALTERNATE CHANNELS?
B2B market is 2x the B2C market
B2C
40%
B2B
40% of top 200 electrical wholesaler websites
lack e-commerce capability
Several electrical categories, e.g., lighting,
have a high margin to weight ratio
Online sales of industrial products are growing
at twice the rate of traditional sales methods
Online sales accounted for
~30%+ of sales
at Grainger and MSC

4. T H I N Q U E
Source: Frank Lynn & Associates, Inc.
SIMPLE VS. COMPLEX PURCHASES
MIXED PURCHASES
67.9%
13%
19.1%
New product
Needs value-added suchas
job-site delivery, kitting, integrated
supply, technical support,
special pricing, staging, etc.
Projects
COMPLEX PURCHASES
Brandal readyspec’d
Customer knows product
Requires no value-add
Simple re-order
SIMPLE PURCHASES

5. T H I N Q U E
Source: Frank Lynn & Associates, Inc.
*Used mid-points of ranges and 25% for the range of >20%. Excluded respondents that did not purchase anything in a given product category
ONLINE PURCHASES BY PRODUCT CATEGORY*.
Power tools and hand tools
Cable/wire
Circuit breakers
and
integrated switchboards
Conduit
Lighting, lam
ps, ballasts
Connector and circuit
breaker boxer
Voice, data and video
equipem
ent
Security system
s
Power transm
ission and
distribution system
s
Low
voltage supplies
Renewable
energy products
Meters and accessories
6.0 %
4.0 %
5.0 %
2.0%
3.0%
1.0 %
0 %
%PURCHASEDONLINE
On average, about 55% of contractors sometimes buy online (excluding those who didn’t buy in the category),
representing about 8% of their total volume.

6. T H I N Q U E
Source: Frank Lynn & Associates, Inc.
VALUE IS KEY AND PRODUCTS
ARE BECOMING SERVICES.
Better/more
sales training
Better/more
technical training
Discussing,
negotiating with
manufacturers
Expanding
product lines
Upgrading
IT capabilities
Adding/upgrading
services
100 %
75 %
50 %
25 %
0 %
%OFDISTRIBUTORS
HAVE TAKEN
WILL TAKE
UNCERTAIN
NO PLANS

7. T H I N Q U E
AGES
Source: Frank Lynn & Associates, Inc.
IMPACT OF AGE ON ONLINE PURCHASING.
30
20
25
10
15
50
40
45
35
5
0
Average Age of Purchasing Agent by Online Purchase of Electrical Products (All Categories).
20%
10-20%
6-10%
3-5%
1-2%
0%

8. T H I N Q U E
Source: Frank Lynn & Associates, Inc.
E-COMMERCE PURCHASING TRENDS
12%
8%
10%
4%
6%
16%
14%
18%
2%
0%
LARGE MEDIUM SMALL
2016 2013
2013
2016
Overall Response By Contractor Size

9. T H I N Q U E
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