The year 2020 presented a unique set of challenges as a consequence of an anomalous year. As part of HARDI’s 2020 industry research, the HARDI Market Intelligence team has identified the three most pertinent lessons for the industry and the ones they hope their members carry into 2021.

1. Product availability remains wholesale distribution’s #1 value proposition.

In the HARDI survey of 2020, 26% of contractors stated that the effects of COVID-19 – primarily the shortage of HVACR equipment – led them to purchase from a different distributor or channel. Fortunately, most contractors were understanding of the challenges distributors and their suppliers were facing in keeping sufficient levels of product in stock, and 58% said that wholesale distribution outperformed all other channels in the area of product availability.

2. Effective inventory and supply chain management are critical to the future of distribution.

Mismatched supply and demand created widespread product shortages, and on average distributor revenues were clipped by 5%  because of their inability to meet demand. Better demand forecasting, higher levels of safety stock, and greater communication between contractors, distributors, and manufacturers might have reduced some of the pain the industry has experienced.

3. Demand is (mostly) inelastic.

While people tend to cut back on their spending when the economy sours, they still spend on the products they view as a necessity (like heating and cooling equipment). This is not to say that economic factors don’t matter – they clearly do, as the pain the industry felt during the Great Recession and currently in the commercial sector makes plain. But, relative to other industries, demand for HVACR products is inelastic – a point worth remembering in the years to come.

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