As with every June issue, this month's magazine is dedicated to program group distribution. When I started at the magazine some five years ago, some on the staff were inclined to discontinue this annual ritual. They argued that program distribution had run its course, and perhaps something more exciting and interesting was worthy of such in-depth coverage. At the time, it was a compelling thought, but after much dialogue we agreed to forge ahead and continue to report on the state of programmed distribution.
Since that discussion, no fewer than four major consolidations and one disbanding has taken place among program groups, in addition to a flurry of WD acquisitions among program group members.
During this brief respite, we've done our best to put together the most current and comprehensive overview of programmed distribution in the special pullout poster attached to page 35. A lot of changes have happened, so take some time to review the poster carefully to get caught up on who's who and what's what. If you look closely, I think you'll find that of the groups that remain, some very strategic positioning is starting to unfold. We believe this will be the next trend among program groups: strategic partnering, niche marketing and true differentiation.
When it comes to consolidation, program groups and their WD members are simply following a trail blazed by their retail competitors a few short years ago. Consolidation via acquisition was all the rage among the major retail players during the latter part of the '90s and early into this decade. True to form, the major WDs and program groups are following suit. So, watching consolidation take place, while fun, is merely just watching a market mature. Once natural efficiencies emerge and unnecessary costs are exposed, consolidation happens. Grow or die, right?
In true "survival of the fittest" form, what's left are the strongest players with the deepest pockets. Certainly, more acquisitions and consolidations will take place among WDs, which may spur more group consolidation (as was the case with IAPA and Parts Plus). But, even so, the time has come for true differentiation among the groups that remain. In his feature that starts on page 20, Counterman Editor Brian Cruickshank outlines some differentiating strategies that we are already observing among some of the groups. Differentiation comes in many forms and at varying degrees of difficulty. For some, adapting to a differentiating strategy is a necessary evil, while others (within the same group) embrace it with passion and diligence.
Ultimately, these differentiating strategies - and their successes or failures - will dictate whether a program group survives and thrives, or dies a slow death. Rather than thinking about who will buy whom next, our staff is focused on who will differentiate themselves in the most unique and advantageous ways.
Sure, consolidation is interesting and fun, but it will run its course. What's left will be only the strongest independent and publicly held operators who find a way to successfully differentiate themselves from the rest and by doing so create true value for their customer base.
Happy differentiating to all! See you next June for an update.