A look at future distribution challenges with Distrelec

In this interview, Peteris Sprogis, Head of Sales for Eastern Europe at Elfa Distrelec, shares his insights and thoughts about the changing role of component distributors, the current state of the business and its strategy for 2023.

Please tell us a bit about Elfa Distrelec today. What is your business model and how do you operate in Eastern Europe?

Peteris Sprogis: Elfa Distrelec is one of the fastest growing high-service distributors in Europe within automation, test & measurement and industrial electronics. We have a local presence in 14 European countries, including here in Riga where we look after our Eastern European customers and also serve 100 countries through our export team. Our main distribution centre is in the Netherlands, and we’ve also got a satellite warehouse in Switzerland. For our customers in Latvia and in many other European countries, this means we can deliver available goods on the next day. Alongside our 1,500 quality brands we carry our own label called RND.

So you serve quite a lot of specialist industries and verticals. Which ones in your Eastern Europe region are the strongest at the moment? And are there any others that are struggling?

Peteris: Industrial manufacturing and electronic manufacturing are looking pretty strong at the moment. We are very fortunate that most of the industries we serve have been continuously growing, despite the global situation. We also continue to see a lot of progression with our resellers, for example in Turkey and in Japan.

What do you think your strengths and differentiators are compared to your competitors? When you talk to customers at trade shows, what do they say to you? What are they happy about? What stories do they tell you about their experience with the competition?

Peteris: First of all, our main differentiator is our product portfolio. We’re seen as someone who can readily supply products to all sectors, from industrial automation, MRO (Maintenance, Repair and Operations), and measurement technology to active and passive components. Secondly, we’ve made the crucial decision to invest in our stock and offering to address the allocation situation. The other key differentiator is our own brand RND. Launched six years ago, it now has over 10,000 individual lines. We have worked hard to get to where we are today, and our efforts are paying off, with market analyses showing we are one of fastest growing companies within our segment.

Obviously nowadays distribution can be just an online experience. It’s a significant departure from a more traditional buying experience. What’s the purchasing process for your customers like?

Peteris: In the distribution market that we’re in, the speed of the website is absolutely critical, which is why we’ve taken our web user experience to new heights. We’ve worked hard to improve the quality of our services online, and we’ve had great feedback from our customers so far. We’ve also been rewarded with higher ranking in search engines as a result. It’s like a virtuous circle! But we are not done yet, and we are getting ready to launch new online features in 2023. That being said, the human touch still remains central for a lot of our customers. If they can’t find the information they need online, or they need advice and technical support, we stand ready to help on the phone or via email.

It looks like Distrelec’s own brand RND has gained a lot of traction over the last few years, especially in Eastern Europe. Why do you think the RND brand is so popular in the markets you serve?

Peteris: I think there are three reasons to that success: quality, pricing and availability. RND’s vocation is to  offer the best price quality ratio possible. But that would be meaningless if we weren’t able to ensure good lead times and availability. We’re also always keen to get in front of our customers to demonstrate RND products. Where we demo, we win. Also, the RND portfolio has five different ranges: we have the cables, connectors, lab equipment, components, and the power devices as well. All of these are met with success in the markets we serve, but RND connectors and test & measurement products are particularly popular with our test & measurement, automation and industrial electronics customers. Owning our own brand means we’ve got better control of our supply chain, and we can offer a wider and deeper assortment of products in stock. That has not gone unnoticed for those who trust RND.

Let’s look ahead to 2023. What are the key trade shows for a company like Elfa Distrelec? And what’s the value of attending a trade show today?

Peteris: Trade shows are an irreplaceable marketing tool and occasion to meet with customers and industry friends face-to-face. For next year in our region, we are looking at attending events in Poland and in the Czech Republic. And we’re definitely going back to Embedded World in Nuremberg, Germany. That was a huge success!

Right. And growth wise, you said you’ve had an excellent two years. Do you see the growth for next year going the same way? Or is it difficult to say at the moment?

Peteris: We definitely look positive on that one. Although there are concerns and we all probably know about them. Will the allocations situation normalise next year, especially in the semi-conductor area? This is still hard to tell, and analysts don’t seem to agree with each other. There are so many factors to consider: gas prices, electricity prices, Covid, and of course the on-going conflict in Ukraine. The current geo-political tension in this region is very palpable. But we are really putting our best efforts to serve our customers and to organise ourselves in the best possible way. Currently, from a sales perspective, we don’t see a direct correlation, and we are still experiencing a huge demand.

That’s a very good point, it’s been a very eventful couple of years, to say the least. How did that affect Distrelec in the terms of how you work?

Peteris: We adjusted really well, and we’ve been very focused on people’s wellbeing. We launched an internal mental health support line, because of course with all the lockdowns people were not able to travel or to interact personally with their loved ones. Also, when the conflict in Ukraine broke out, we opened up a hotline so our colleagues could talk to someone if they needed to. So yes, it’s been an eventful few months indeed. Would I like to go through that again? Possibly not!