WASHINGTON -- As it gears up for its 50th annual summer convention, the American Wholesale Marketers Association here is changing with the times.
Along with wholesaling candy and tobacco products, its members are distributing a variety of other items as they try to tighten the efficiencies of their operations and compete effectively in today's market.
"The change is actually accelerating," said David Strachan, AWMA's executive vice president. "We're finding that more and more of our traditional candy and tobacco wholesalers are carrying a much broader line.
"We're really evolving from being a product-specific organization to a distribution-based organization," he said.
"We're seeing a lot more [health and beauty care], general merchandise, soft drinks, juices, cookies and salty snacks. There's also a growth overall in the canned-good grocery business."
Thus, AWMA is taking a leadership role in this evolution.
"We're continuing to concentrate on what we believe our main mission to be," said Strachan. "And that is to provide a number of opportunities for wholesalers to better define and provide value-added services.
"So we're spending a lot of time and effort in strengthening our educational program, which has been in place for about three years," he said.
While some of the changes occurring at AWMA are subtle, there are others that are obvious, such as one involving its trade publication.
"We've changed the name of our magazine from Candy Wholesaler to Distribution Channels, which better reflects the business of the association and the business of our wholesaler members," Strachan said.
Except for some specific confectionery marketing programs, AWMA's education program is offering more distribution-based and category management-oriented programs, he added.
This will be the case at the association's annual summer convention this week in Minneapolis.
This year, according to Strachan, more retailers will be walking the show floor.
"Although attendance is stable, we see a decided increase in the number of retailers this year," he said, noting that most are convenience store operators. "We also have the usual cadre of mass merchandisers and large chain retailers."
The retail turnout indicates that AWMA's focused marketing effort proved to be a successful endeavor. "This year, for the first time, we've paid special attention to inviting retailers. And since this is our 50th convention, we waived the registration fee to qualified buyers, be they wholesale or retail," Strachan explained.
"We've actually increased the number of educational offerings by putting on half a dozen seminar programs on the Wednesday before the exposition opens. A couple of those are oriented directly toward retail buyers as well. We've had an excellent response."
Another change for this year's summer convention is in the show hours. Instead of opening on the first day at 1:30 p.m., the show floor will open earlier, at 11 a.m. Everything will shut down a couple of hours earlier (3 p.m.) on Saturday, the last day.
"There's always a last day to every trade show," said Strachan. "And the end of the last day tends to be the least productive time. So we're trying to get it over a little earlier to give people a chance to tear down their booths."
The exhibitors and the education workshops will also reflect the changing role of the wholesale distributor, who still faces a formidable foe in club stores and category killers, although the trend appears to be dissipating a bit.
"I think they certainly remain an important factor. But I'd have to agree that their growth has slowed and their popularity has waned somewhat, as more and more retailers recognize the value-added services provided by distributors," said Strachan.
"There's a change in the whole competitive atmosphere as more mass merchandisers and large chains deal direct with manufacturers," he added. "I think there are also challenges as the margin on the cigarette business shrinks.
"The challenge obviously is to replace that volume or supplement that volume with higher margins."
Therefore, the onus falls squarely on the shoulders of distributors to become more efficient in their operations. "The challenge of profitability is always going to be there," he said. "As distributors become more efficient, the profitability question answers itself."
Another trend that bears watching, according to Strachan, is that of the cigarette business moving away from supermarkets and into more convenience outlets.
One topic sure to be addressed at the association's summer convention is the shrinking of the distribution middle class.
"As far as distributors go, the trend continues where [companies] are getting bigger and they're getting smaller. The number of middle-size distributors is decreasing," Strachan said.
"That's a result of either acquiring or being acquired by others and becoming bigger. And every time there's a merger or acquisition or a growth of one of these distributors, it creates an opportunity for a small distributor," he said.
"As you get larger, the economies are often dictated by the efficiency that you can provide the market. So, for instance, if you can't efficiently service small, outlying customers, what happens then is a small distributor starts up and gets into that market and creates a niche for himself," Strachan explained.
The challenge for the shrinking middle-size company, he said, is to adapt proficient business practices and hold their own in the marketplace.
"The challenge for the whole industry is to become more efficient, but I think that challenge is more pointed in the middle-size distributor area. They really need to wring inefficiencies out of their system."
