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E/D/E Managing Director Member and supplier management, Tools, Occupational safety/technical trade, Construction
E/D/E Managing Director
Building services, Steel, Logistics, Construction equipment
E/D/E Managing Director
Digital Services, Marketing,
E-Business/E-Commerce
E/D/E Managing Director
Personal
E/D/E Managing Director
IT until 31 March 2024
E/D/E Managing Director
IT from 01 April 2024
The year 2023 was characterised by hopes of an improvement in economic conditions, which were not fulfilled. The German economy stagnated, accompanied by a significant rise in interest rates and inflation. The loss of purchasing power as a result of the energy price crisis dampened private consumption in Germany and presented us with a host of different challenges. While a slight increase was forecast at the beginning of the reporting year, German gross domestic product ultimately declined slightly. In contrast, slight growth was recorded in the eurozone in 2023.
The E/D/E was unable to completely decouple itself from these developments. In particular, the construction business declined, the steel business was characterised by very sharp price falls of up to 50 per cent, while the industrial business remained stable in a difficult market environment. On balance, the product business was down on the previous year, but remained at a high level. The ETRIS BANK was able to significantly increase its business volume to around EUR 2.6 billion, meaning that the E/D/E Group was able to close the financial year 2023 with a trading volume of EUR 9.3 billion at a decent level, even if it fell short of the previous year’s record result.
The economic conditions outlined above had different effects on the industrial B2B sector’s target customer groups. Following many successful years, the interest rate and price trend led to a decline in orders in the construction-related product ranges for the first time. One response to the declining construction and fit-out business was the strategic reduction of inventories and the shift of procurement to our warehouse. We achieved a new record here with sales of EUR 370 million.
On closer inspection, we initially registered largely stable demand in the core target group of industry in 2023. Over the course of the year, a slowdown was observed in mechanical engineering and capital goods. The craft sector performed particularly well in the areas of renovation, refurbishment and modernisation. In this operating environment, E/D/E members in the tools product range moved a volume above the previous year’s level with disproportionately high eLC inventory turnover. High interest rates and significantly more expensive raw materials led to a sharp decline in building permits. The order frequency of E/D/E members declined as did the trading volume in construction-related product ranges such as fittings and building elements. In the fastening systems sector, prices also fell sharply. In the interaction between member management, supplier/product group management and the E/D/E service areas, we have effectively stimulated our distributors with a wealth of services to achieve positive sales effects with a market-orientated and sustainable range of services. One example is the ELEMENTec concept for the smart combination of building components and fittings. Demand for personal protective equipment (PPE) products increased due to strong industrial business for distributors, meaning that the PPE/technical trade segment was able to increase slightly compared to the previous year.
The building technology distributors within the association recorded a contrasting demand for their product ranges: significant growth in the heating segment was offset by losses in the sanitary ware segment. After peaking in 2022, the decline in construction projects led to the aforementioned slump in steel prices and a foresighted reduction in inventories at the E/D/E steel distributors. Although we even managed to increase the total tonnage in the areas of drop shipment business relevant to E/D/E thanks to numerous activities of the EURO STAHL-Handel, the decline in steel business depressed the Group’s overall result.
The European economy was slightly more dynamic than in Germany. We at E/D/E also recorded lower declines in our international business than in our domestic market. The trading volume outside Germany totalled EUR 1.8 billion in 2023. Europe is a relevant growth lever for the association in the tools, construction and PPE/technical trade product groups, as well as for building technology. The eLC warehouse is growing at an above-average rate. New cooperation partners, for example, in France, as well as growth on the member and supplier side demonstrate the appeal of E/D/E services in a European context and the positive development of our international activities.
While trading volume declined, the E/D/E Group’s consolidated result was positively influenced by the interest rate environment. At EUR 23.5 million, the consolidated net income for the year was up on the previous year. Once again, a large proportion is retained, resulting in an increase in equity to EUR 478.9 million. The E/D/E association is therefore in a stable position and is able to finance the necessary investments in the future of the medium-sized industrial B2B sector from its own resources – even in turbulent times and periods of economic weakness. Reimbursements to our members amount to roughly EUR 165 million (extrapolation).
E/D/E’s own ETRIS BANK realised strong growth in business volume in the two strategic business areas of buying association business and factoring. The bank’s overall result was positively influenced by the rise in interest rates and stable risk costs. With the assistance of modern digital services and thanks to its highly motivated team, the ETRIS BANK is a powerful partner for its customers in these currently challenging macroeconomic times.
The industrial B2B sector’s customer target groups are actively driving forward the professionalisation and automation of their procurement activities, and digital networking is continuing along the entire supply chain. Our task as E/D/E is to help our members to utilise the opportunities that lie within. By applying a consistent digitalisation strategy, and by using the latest technologies, we can now give our members a clear competitive advantage in the field of digitalisation. Technologies and customer requirements are changing rapidly, thereby creating new challenges for the industrial B2B sector in networking with customers from trade and industry as well as in e-commerce. It is essential to review existing routines and to overcome limitations where necessary – as has been the practice for years with our EVOLUTION strategy and organisational development process. This is why we not only further developed concepts and technologies last year but also created en entirely new service element for e-commerce in the industrial B2B sector with SHOPcloud360. The combination of the leading cloud-based technology of our partner “Intershop” and the industry expertise of the E/D/E Group puts the industrial B2B sector on a par with its major competitors. In 2023, the focus was on the development and launch of the minimum viable product. This approach, which was new to us, enabled us to process valuable user experience at an early stage. We have been successfully rolling out SHOPcloud360 in the association since the beginning of the year, and are proud of the very positive feedback from our partners.
SHOPcloud360 therefore represents a central component of our e-commerce portfolio, which is geared towards various market requirements and is becoming increasingly important in the industrial B2B sector’s sales mix. In 2023, further significant sales growth was also realised in our members’ multishops – with a continuation of the trend towards efficient digital connection of customers via interfaces and platforms such as OCI and Ariba.
We have optimised the multishop’s interfaces to these platforms and to craft sector systems, in order to further simplify these procurement processes and specifically promote digital networking throughout the supply chain. We are also seeing a stronger trend towards the digitalisation of sales activities in building technology. With the SellSite Shop, we therefore offer a solution tailored to the special requirements of this sector, which unfolds its full effect in combination with the high quality of eDC building services data. Within a very short space of time, ten building technology distributors have decided to utilise this solution. With Commerce2E based on Shopware6 technology, an offer from the PVH FUTURE LAB rounds off our e-commerce portfolio.
Solutions such as the cloud-based ERP system “ERPcloud360” and the product information management system “nextPIM” support the digitalisation of business processes and efficient data organisation, and are being expanded in a targeted manner among members. Both systems are deeply integrated into the E/D/E ecosystem, they permit a high degree of networking and thus simplify procurement processes and self-service offerings.
“nextPIM”, for example, enables industrial B2B sector companies to easily and quickly transfer E/D/E data into their own structures, compile customised product ranges, and make them available for digital sales channels such as SHOPcloud360 at the touch of a button and without the need for a dedicated IT department or lengthy projects.
“Toolineo”, our online marketplace for craft supplies, held its own in a difficult market environment in 2023. The marketplace network’s offering was further consolidated to a significant extent. 850,000 items with attractive, marketable prices and good delivery times are now offered on Toolineo. More than ten distributors have been added, meaning that 55 distributors are now live on Toolineo, and the trend is still growing. A major milestone is planned for 2024 with the comprehensive modernisation of Toolineo’s IT infrastructure, which will mean a wide range of improvements to the customer’s shopping experience and processes for distributors and thus form the basis for significant growth steps for Toolineo.
In addition to cloud technology, artificial intelligence is now having a major impact on the (further) development of our digital service portfolio. E/D/E is now investing in the seven-digit range in this area. Thanks to AI support, SHOPcloud360, for example, offers a customer-specific and high-performance, personalised search function. As digital networking between the industrial B2B sector and its customers increases, data management is also becoming more important. With our innovative approach, we will achieve a new quality and breadth that would not be possible without artificial intelligence. With the supplier onboarding portal and the upcoming launch of the DATAcloud360 offering for our trade partners, we anticipate real breakthroughs that will sustainably promote and expand the competitiveness of our members.
For our Supply Networks/Industrial Services division, 2023 was a very successful year characterised by dynamic growth. With the intelligently designed full supply concepts of E/D/E, many industrial B2B sector companies were able to meet customer demand and thus gain turnover shares and strengthen customer loyalty. In 2023, we succeeded in convincing Groupsized customers of the benefits and gained them as a new target group for a supply partnership with the industrial B2B sector. We realised a total of 78 projects with industrial B2B sector companies and their customers. The division’s continued development into a value-added partner for consulting/analytics forms the basis of our success, and the comprehensive process analysis, which makes the savings potential across the entire value chain transparent, is proving to be a unique selling point in the market. We are constantly developing our extensive range of services and aligning them with current market requirements – most recently with a particular focus on dispensers specifically designed for PPE.
We have also sharpened our focus within the different branches of the industrial B2B sector. In building technology, the new concept of interest groups per supplier – which replace the previous service groups – allows us to take better account of the individual interests of specialised wholesalers and industry partners, and has met with a positive response. Our training courses on the current topic of the 2023 heating transition have also registered high-level demand. In the construction sector, we addressed the future topic of Building Information Modelling (BIM) at an early stage and, together with the Fraunhofer Institute, were able to intensively prepare and train members who actively work on tenders in the property business for this process. This means that they will be ideally prepared for property processes going forward.
Marketing is changing, and we have been developing alternative solutions for some time to offer distributors effective sales promotion within the association, even in times when the importance of print products is declining. We envisage a promising addition to our marketing mix in centrally created microsites that can be integrated into distributors’ websites or online shops. We successfully implemented pilot projects in various concepts and groups – such as “HANDWERKSTADT” and “UNION” – in the reporting year and feel vindicated by the great response. We have also expanded the marketing portal and now offer our members the option of using ready-made social media post templates. With its FORMAT 3.0 sales concept launched in 2023, EDE International is set to make digital marketing and digital sales the centre of attention. Future services from E/D/E Marketing will focus on digital sales channels.
We see collaboration within the network as an important lever for our joint and continued development. In 2023, the exchange within the association provided plenty of stimulus, partly in new formats such as “Business NETZWERK Online-Kompakt”. We have prepared numerous current topics there as well as in the “E/D/E AKADEMIE” programmes. One particular highlight in our network was once again the “Branchentreff spezial”, our industry get-together, which met with an extremely positive response in a new format and at a new location in Cologne. Once more, we have seen how important personal dialogue is for our business. On balance, we see that a hybrid form of collaboration has become established within the association that combines the respective advantages of digital and face-to-face meetings. In 2023, the E/D/E once again organised more events in person than in a digital format for the first time.
Digitalisation and Artificial Intelligence (AI), whose relevance for our living and working environment in 2023 has become much more visible, represent key sources of opportunity and present managers, employees and companies with questions to which we do not yet have complete answers. We see AI as a tool for efficient and effective work, especially in times of increasingly scarce resources. At E/D/E – as in the industrial B2B sector – it still depends on the individual: and it is our aim to make as many employees as possible fit for the changes brought about by AI and digitalisation; to this end, we are offering numerous internal exchange formats and further training opportunities and continue to develop the modern working environments at E/D/E. We also operate an active health management programme, for example, with our first-ever “Health Days”. We are delighted that the further training concepts of our E/D/E AKADEMIE are also highly recognised in the industry. Lifelong learning is more important than ever.
Interest rates are stabilising, and there should be no further loss of purchasing power. However, according to all known indicators, we cannot expect a broad-based upturn for at least the first half of the current year. In the industry, important sectors continue to provide minimal impetus. There are no signs of a revival in the new construction business, and modernisation efforts will not be able to compensate for the lack of volume. The E/D/E will provide targeted support for market trends such as digitalisation in construction or energy-efficient renovations as well as further digital networking so that distributors can take advantage of the opportunities and create their own economic situation to a certain extent.
We expect positive impetus for the association from new members and suppliers as well as growth in Europe and the strengthening of the trademarks. Our persistently complicated operating environment has prompted us to plan somewhat more cautiously than usual and to aim to stabilise the trading volume at the current level of over EUR 9 billion.
We are maintaining our investments to secure the future viability of the association and expect breakthroughs in various core projects such as data management and e-commerce with the broad roll-out of SHOPcloud360 in 2024. In doing so, we can offer our members competitive advantages in an increasingly professionalised e-commerce market. The continuous modernisation of our IT systems and the addition of AI elements also remain high on our agenda.
We can only be successful if we pool our strengths wisely, see change as an opportunity and use this attitude to tackle the tasks ahead of us with creativity, vigour and confidence. This applies to our association, as well as to the companies within the E/D/E Group. With this in mind, we would like to thank our employees for their commitment over the past year, and are confident that we can continue to rely on their dedication. Our gratitude also goes, in particular, to our members, cooperation partners and contract suppliers. The high level of trust and willingness to cooperate that we once again experienced in 2023 forms a reliable foundation for the successful future of our association.
The Management Board
Einkaufsbüro Deutscher Eisenhändler GmbH