Some industry executives estimate that the COVID-19 pandemic cost the industry about $80 million in sales between late February and mid April. But the industry may be making up for some, if not all of that.
The Elite Distributor Alliance (EDA), consisting of about 11 leading distributors, saw about 40 to 70 percent declines from week three in February through the middle of April. The range depended on the severity of the lock down in the region. EDA estimates the industry lost $80 million at that time, a figure with which four other executives we contacted agreed.
EDA Executive Director Jim Warren said prior to the pandemic, 2020 was shaping up to be a very good year. And after the shutdown, sales are picking up to the point that some distributors are saying they are ahead year-to-date over last year.
“The good news is that the CARES stimulus checks when combined with reopening activities [at the level of supplier, distributor and retailer] have largely wiped out the deficit. Some of our members have now eclipsed 2019 sales YTD – reporting many customers coming back repeated times each week to take advantage of good availability of inventory,” Warren said.
He added, “What remains to be seen is what the long-term effects are to our business, and what level of commerce remains when we return to normal. At EDA, we are largely optimistic that 2020 could end up being a very good year.” But he noted the following unknowns:
- Tariffs – Many of the tariffs are still in place and this has some impact on our businesses.
- Parts Shortages – On some items, manufacturers are experiencing parts shortages which could impact things later in the summer.
- Inventory Shortages – Some vendors, at the peak of the COVID-19 shutdown, cut back on incoming shipments which could create shortages.
The Mobile Electronics Association (MEA) also revealed data on the effect of the pandemic on industry sales. Preliminary data from January to April shows sales are down 15 percent compared to a year ago. While not all data is finalized for April, the projected 15 percent decline for this period, would show a minimal effect, given the overall economy.
On an MEA call with sales reps from around the country recently, one manufacturer’s rep said he’s already beat his quotas for May for some of his lines. Another said that one of his dealers who just reopened said “every day is Black Friday” in sales levels.
Our calls around the country show that some dealers are in a slump while others are weathering the pandemic well. And not all dealers are expected to survive the pandemic. According to a MEA survey, 12 percent of dealers said they may not keep their doors open.
Other MEA survey results showed that 35 percent of retailers have applied for a PPP loan, 3 percent an EIDL loan and 44 percent had applied for both. Sixty eight percent had received their PPP loans as of May 8.
I believe most mature retailers will start to purchase heavy and stock their inventory because of current shortages and unsecure “Just in time” purchase strategy that use to work previous to pandemic.