HARDI Presents 2nd Annual State of the Channel Research

Heating, Air-conditioning & Refrigeration Distributors International presented its second annual State of the Channel research at the 2020 virtual HARDI Summit.

The State of the Channel began in 2019 with HARDI’s mission: Making wholesale distributors the channel of choice for HVACR manufacturers and contractors. To understand this, HARDI needed a way to know they were accomplishing this goal. Through the State of the Channel research, HARDI established the benchmarks and methodologies necessary to track the size of the wholesale channel over time.

2020 presented a unique set of challenges as a consequence of an anomalous year. As part of HARDI’s 2020 industry research – the findings of which are now available for pre-order on HARDI’s website – the HARDI Market Intelligence team has identified the three most pertinent lessons for the industry and the ones they hope their members carry into the new year.

  1. Product availability remains wholesale distribution’s #1 value proposition.

26% of contractors completing the HARDI survey in 2020 stated that the effects of COVID-19 – primarily the shortage of HVACR equipment – led them to purchase from a different distributor or channel. Fortunately, most contractors were understanding of the challenges distributors and their suppliers were facing in keeping sufficient levels of product in stock, and 58% said that wholesale distribution outperformed all other channels in the area of product availability.

  1. Effective inventory and supply chain management are critical to the future of distribution

Mismatched supply and demand created widespread product shortages, and on average distributor revenues were clipped by 5% because of their inability to meet demand. Better demand forecasting, higher levels of safety stock and greater communication between contractors, distributor, and manufacturers might have reduced some of the pain the industry has experienced.

  1. Demand is (mostly) inelastic

While people tend to cut back on their spending when the economy sours, they still spend on the products they view as a necessity (like heating and cooling equipment). This is not to say that economic factors don’t matter – they clearly do, as the pain the industry felt during the Great Recession and presently in the commercial sector makes plain. But, relative to other industries, demand for HVACR products is inelastic – a point worth remembering in the years to come.

The State of the Channel is one part of a broader transition for HARDI, who expanded their Benchmarking Pillar into the Market Intelligence Pillar in early 2020. The program will continue to grow and develop through 2021 and beyond.

For more information on the State of the Channel, or if you would like the Market Intelligence team to drill deeper into your market, contact Tim Fisher at tfisher@hardinet.org.