OVERVIEW OF THE REXEL GROUP A generally more mature market in developed purpose products. This emergence paves the way countries for a trend towards more added value and the need The characteristics of the professional distribution for consistent offerings. of the low and ultra-low voltage electrical products A fragmented market sector vary according to the level of market maturity. In emerging countries, markets – with On a global level, the market for the professional a larger share of major infrastructure projects – distribution of low and ultra-low voltage electrical are mainly served by manufacturers that sel l their products is characterized by a large number of products directly to end users. Developed economy players. countries present a more favorable environment 1 In 2017, the Rexel Group estimates that around 25% of for the professional distribution model, as a world sales in the professional distribution of low and preferential interface between manufacturers and ultra-low voltage electrical products market were end customers. This is notably due to more diverse generated by ten major distributors: Rexel, Sonepar industrial and construction needs, more attention and to a lesser extent Electrocomponents, operating to comfort linked to higher purchasing power and in the main world markets, WESCO International, more stringent regulations. Graybar Electric Company, Consolidated Electrical A market that is constantly changing depending on Distributors, HD Supply Holdings and Anixter International, primarily located in North America, customer expectations and Solar and Würth, located essentially in Europe. The Rexel Group considers that the role of professional distributors is strengthened by the Around 75% of global sales in the professional change in its customers’ expectations. The latter distribution of low and ultra-low voltage electrical are more attentive to improvements in the level products market are, therefore, generated by a large of services, in particular, in terms of ease of number of companies operating at national, regional procurement and the availability of products and or local levels. solutions associated with the reduction in energy Levels of market consolidation are very different consumption. depending on the country. In the United States, The traditional players in the industry of low and the market can be divided into two categories of ultra-low voltage electrical products are, therefore, players: multi-regional distributors (including the seeing the definition of their role and their market(s) Rexel Group), which the Rexel Group estimates changing and growing due to: represent around 35.5% of the total sales generated in 2017, fol lowed by a very fragmented spread of •The extension to their product offerings (Heating, regional and local distributors. This configuration Ventilation and Air-Conditioning, etc.) and services can be explained, in particular, by the geographical (inventory management, etc.); and scope of the market and the historical presence of The emergence of new markets connected to numerous local players. However, in some countries • the increasing digitalization in the energy world such as Australia, Canada, France, the Netherlands, (connected devices, etc.). the United Kingdom, Scandinavia and Switzerland, a large share of the market is occupied by a limited A renewal in the product offer number of distributors. Such a situation arises The ongoing development and renewal of the higher from the historical presence of players that have value added product offer encourages regular consolidated and structured these markets. growth. This trend is particularly noticeable in the This market fragmentation in some countries, most technical product families, such as industrial combined with the search for productivity automation, lighting, security and communication. savings and economies of scale, favors distributor It is also supported by the change in safety and consol idation. Indeed, the Rexel Group bel ieves energy savings standards, promoting the renewal that size (materialized by the market share) has a and shift to more advanced products. direct impact on the quality and profitability of its With the move towards the Internet of Things and operations in a given country. a software offering, the offer is driven towards In parallel, in some countries, small-sized distributors complex systems of connected products, steerable of electrical products are looking to increase their on-site or remotely, and of interconnected multi- relative size by forming central purchasing offices. REXEL 2017 – REGISTRATION DOCUMENT 19