Market Report
COVID, Brexit & supply chain disruptions impacting profitability
A new survey commissioned by OGL Group reveals that Covid, Brexit, the continued reliance on manual processes and supply chain issues are the greatest factors affecting profitability for electrical and lighting wholesale businesses in 2022.
T
he research results in this article focus on those companies that distribute electrical supplies and lighting products to providers and commercial businesses. The electrical wholesalers’ market contracted significantly in 2020 due to the impact of the COVID- 19 pandemic. However, the market is expected to return to robust growth in 2022, as the economic situation improves and the electrical and lighting sector revives, with market value forecast to exceed pre-pandemic levels of £4.95 billion by 2025. Lighting and cable systems remain the largest product sectors within the electrical wholesale market, accounting for around 46% of market value.
Both the COVID pandemic and Brexit have hit supply chains hard. Exacerbated by stock management pressures, firms are citing top technology priorities for the next 12 – 24 months as business performance reporting 47%, linking ERP with eCommerce 47%, delivery tracking 44% and managing inventory 44%.
The five main factors affecting electrical and lighting businesses’ profitability in 2022 were cited as the COVID-19 pandemic 50%, outdated technology
47%, manual processes 44%, employee cost 33% and Brexit 28%.
Digging deeper into coronavirus and its effects, respondents’ business priorities were to have flexible business software that can be easily adapted to new business models 97%, manage cash flow 94%, and upgraded IT systems enabling effective sales strategy and improved route to market 92%.
The pandemic has led to supply chain shortages and sees some electrical and lighting businesses stockpiling products and parts to ensure timely supply. Manual processes are still plaguing businesses leaving them behind the curve with regards to digital transformation; 99% of all respondents still use them, and 81% cited manual processes as slowing down their business efficiency.
Economic uncertainty
Entering another potentially uncertain economic period with continuing supply-chain issues, the Ukraine-Russia war, cost of living and fuel price rises, electrical and lighting firm’s efforts to increase profitability are critical. Technology is at the heart of this. 92% of respondents agreed that technology
is vital to the efficient running of business, an increase on 63% three years ago, while 92% agreed that automating business processes helps their companies stay competitive, up from 50% pre- pandemic.
Integrating to a single central ERP system appears to be beneficial. 53% listing the main reason to use a single system as removing duplication of work across different departments, followed by future proofing business using latest technologies 53%, 47% citing reduced administration time, and 47% stating improved efficiencies by improved accuracy of information.
Jason Huang, Assistant CEO from NVC Lighting Ltd and survey respondent, commented that benefits of integrating disparate systems include the ability to “track the whole processing of all kinds of orders, including sales, purchase and works orders. Additionally, all reports of operations can be exported quickly and accurately.”
Single systems are beneficial for online stores, where stock checks and reporting ensure that customers have a good understanding of delivery timescales and product availability. Survey
26 | electrical wholesaler August 2022
ewnews.co.uk
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