Rep Consolidation: Will We See Much More?

So many reps are reaching retirement age that they are being snapped up either by distributors or other reps, essentially redrawing the territorial map.

Most industry members we polled, said the trend will continue. In fact consolidation goes well beyond 12 volt and is a norm in many industries, they said.

The Progressive Group, which has merged with or acquired about five rep firms in recent years, said the company has “no specific information on further expansion at this time,” according to Director of Business, Midwest Jason Dubie.

Consolidation is taking the form of distributors or reps expanding their territories or distributors adding rep firms.

Combined rep/distributors are able to squeeze more sales out of a territory–winning both the commission for a direct sale as a rep and the profits from sales as a distributor.

Plus, if you are a distributor, you may not want your dealers using a rep who is allied with a competing distributor. As one supplier put it, “It’s just companies wanting to be in their sandbox and not let anybody else play in it.”

Josh Eatherly, Executive VP of the Elite Distributor Alliance said of consolidation, “It’s just happening because reps are retiring. Someone needs to take over the business.  There’s not a concerted effort or initiative.”

Still, the combining of distributors and reps solves a growing problem. Calling on retailers gets expensive between hotel, meals and gas, costs which have risen, in some cases dramatically in recent years.  If you are already out there as a distributor making visits and holding training sessions, you can also check in as a rep and save traveling costs.

The Progressive Group recently purchased Oliver Marketing, and has also purchased or merged with CF Marketing/ RJR Distribution in the Mid-Atlantic, AVR, a southeastern rep firm, Premier Marketing, GA and Encore Sales, Washington, DC.

Last month, leading personnel from east coast distributor Specialty Marketing announced they launched a rep firm called ALPHA Sales Group and many now work at both firms.

Pacific Northwest rep firm Crossover Marketing, recently partnered with Shawn Simpson to open a Southern branch called Crossover Southeast.

Chris Hilbert of retailer Sound Decisions, Racine, WI just purchased Chicago rep firm Echo Sales.

As one distributor said, “We all know the business isn’t growing. If anything you are taking market share from someone else.”

Dubie said larger distributors can purchase product at lower prices, and pass savings to their dealer customers.   And as a national distributor, Progressive “has a more sophisticated logistics network, which can lead to faster and more reliable delivery…”

But it can also lead to conflicts. Progressive is owned by Patrick Industries, which, in turn, owns Rockford and Wet Sounds.  Suppliers who compete with these brands might lack confidence that their brand will be serviced equally to Rockford and Wet Sounds.

Dubie said, “Each Patrick Industries Business Unit operates independently and is responsible for its P&L.  The Progressive Group functions no differently than any other multi-branded rep or distribution company with the exception of having the financial stability and corporate resources that a multi-billion dollar publicly traded company offers.”

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