Our annual Survey of Distributor Operations features seven distinct categories, but there is arguably one that’s most important: The Balance Sheet, a segment that covers financial results and explores the gut feelings behind expectations for the coming year. In other words, the variables impacting distribution companies are many – always – but what’s critical is their ability to emerge with sales and profitability relatively unscathed. And, in our latest report, it seems they have.
This year, we find a distribution industry that’s been battered but not broken by the relentless challenges they face. Resilience – bordering on optimism – makes these survey results unique as distributors manage the books effectively against high prices, supply chain challenges, tariffs, talent gaps and everything in between. Our 2025 report featured a theme of unease as distributors digested the “Liberation Day” tariffs and undertook reflexive action; today, while many of the same challenges persist, distributors are on surer footing.
Whether that lasts or exists here as a mere blip on the radar remains to be seen. We invite you to read on for more details about the ways distributors are mitigating their more emergent challenges, as well as what’s still keeping them up at night.
As always, Industrial Distribution’s Survey of Distributor Operations aims to provide a snapshot of the industry and how distributors are faring across an array of operating areas. The coming pages will examine seven main categories:
- Demographics — establishes a profile of survey respondents based on company size, years in business, sales volume and product lines.
- Challenges, Trends & Economy — outlines the initiatives distributors are undertaking to address key business and market concerns, as well as mergers and acquisitions and how distributors view the impact of the economy.
- Tech Usage & Investments — covers areas like e-commerce and other big-impact technology solutions for now and the future.
- The Balance Sheet — offers insights into revenues and profitability, addressing areas of investment and concern, along with other analysis of factors impacting revenue.
- Best Practices — sheds light on distributor relationships with suppliers and customers, as well as their global business plans and what challenges are involved.
- Value of the Distributor — addresses the reasons our survey respondents believe customers do business with them, and which service offerings play a significant role in the industry.
- Employment — identifies hiring and layoff trends, recruitment and retention strategy.
Methodology
The results of this study are based on an email survey sent to Industrial Distribution subscribers in April of 2026 with a collection time of three weeks. Recipients of the survey were offered an incentive to complete the questionnaire. The majority of the ID subscriber base includes executive, upper management, sales or sales management roles. Results are based on our pool of survey respondents within this subscriber base.
Comments on this year’s results? Email ID executive editor Anna Wells at [email protected].
Demographics
Distributors responding to this year’s survey largely hail from the Northeast, Midwest and Southeast United States. Just under 5% of our respondent pool represents a company with a headquarters outside of the U.S.
This year’s respondent pool largely represents family-owned businesses, although the pool shifts a bit from our 2025 responses: while last year, 7 in 10 said their distributorship was family-owned, this year, it’s just under 6 in 10. We expect this identification to decline gradually as heavy consolidation persists, though it’s unlikely to have shifted that significantly industry-wide year-over-year; more likely, it reflects a minor change in who completed the survey. The mix from a revenue standpoint trends toward smaller businesses: more than 35% of respondents hailed from distributors with less than $20 million in annual sales.
This year, 90% of respondents said the number of product lines they carried either expanded or stayed the same (compared to 95% last year), with a wide margin – 72% – noting product line expansion.
As for the most common line categories, similar themes emerged compared to previous years. Common MRO categories like hand tools, power tools, PPE and safety products dominated the list, as they often do. In addition, there was a heavy emphasis this year on electrical equipment and related supplies – no surprise considering the electrification trends taking place in applications employed by many end users in these distributors’ target markets. Chemicals, automation & instrumentation, and the catch-all category “MRO supplies” are also widely distributed.
The largest end markets for our audience of industrial distributors are fairly consistent over last year, with manufacturing/processing leading the pack with nearly two-thirds targeting these customers. Other key areas include:
- Construction: 47%
- Utilities: 36%
- Machine Shops: 36%
- Automotive: 32%
- Energy: 25%
- Government: 21%
Challenges, Trends & the Economy
As predicted, the most selected “primary concern” was “economic conditions this year,” a grievance distributors tend to gravitate toward in our survey across every range of economic factors, making it the longstanding top concern for many years. And it’s fair, when you consider that B2B sellers are often on the front lines when businesses undertake cost cutting measures or customers undergo even small shifts in sentiment.
Close behind, we see tangential issues like increased operating costs and price competition, followed by workforce issues: keeping qualified employees and finding more qualified people took the nos. 4 and 5 spots, respectively.
Since survey respondents were permitted to select their top three choices out of 12 possible options, it was notable that nearly one in five selected “tariffs,” despite the availability of “increased costs” as an option that was more encompassing. The word itself likely triggers anxiety for many distributors at this point: the outcome of these duties has meant either increased operating costs or higher prices — and sometimes both. That said, the recent U.S. Supreme Court ruling that kneecapped unilateral tariffs has clearly eased the pressure; that, or distributors have simply adjusted: in last year’s survey, a much higher number (56%) pegged tariffs in their top three concerns.
Growth objectives for our pool of distributors also tended to be similar to what we saw last year. When asked to select their three primary strategies for growth, growing sales among existing customers (50%), taking market share from specific competitors (37%) and focusing on growing industries (36%) led the way. Close behind were distributors’ plans to add to their customer base and invest in new technology.
One in five cited mergers and acquisitions as a way to meet their growth objectives and, despite rather routine economic concerns, this may prove likely moving forward. Earlier this year, in its “Distribution M&A Pulse” report, PMCF noted that while deal volume declined in the fourth quarter of last year, it “reflected a higher level of discipline from buyers rather than diminished interest in the market.” Analysts believed that a more active M&A climate in 2026 was likely, based on “structural tailwinds” such as “customer outsourcing, product complexity and service-driven supply chains.”
Our survey respondents shared how mergers and acquisitions have impacted their businesses in the past year, and it’s clearly top of mind:
- 37% said their company was approached, but a merger/acquisition did not go through.
- 28% reported that their company merged with, or was acquired by, another company.
- 23% said their company was not approached.
- 11% said their company was the pursuer of mergers/acquisitions.
Tech Usage & Investment
E-commerce continues to be a priority for industrial distributors with nearly 92% attesting to the fact that it takes precedence within their businesses. But we’ve long seen this consensus suffer from a distinction between companies who are “walking the talk” on robust e-commerce, and those who view this as more of an aspirational priority compared to other, more urgent ones.
The proof comes from other data points that this survey has yielded in the past and continues to show today. For example, while an overwhelming majority say they prioritize e-commerce, 40% of respondents say that they get less than 20% of sales via web channels. While this has creeped up nominally compared to previous years, the number of respondents that attribute more than half of sales to their web channels has not: last year, it was 6%; this year, it’s 7.5%.
One cause could be distributors’ widely varying approaches to their websites, many of which seem to carry equal importance. When asked to select what best describes what they primarily use their websites for, our survey respondents highlighted many:
- E-commerce: 53%
- Marketing: 46%
- Housing technical/product information: 45%
- To generate orders: 45%
- To find new customers: 44%
Because of the heavy role these websites play in overall operations, it stands to reason that distributors would be updating their content frequently. For many, updates take place daily (48%) or monthly (36%). Very few (2%) say they “hardly ever” update the content on their websites, a notable change over the past decade. For context, in our 2016 survey report, 24% of respondents said they hardly ever updated their sites — evidence of a significant swing in priority.
Furthermore, the response pool of today believes in the value of an omnichannel experience for their customers, with more than three-quarters assigning importance to omnichannel capabilities.
Distributors are also increasing their use of business technologies, with artificial intelligence gaining ground quickly as use cases are proven. Thirty-four percent of respondents said they use AI currently, an increase of five percentage points over last year. Another 34% expect to adopt AI tools in the coming two years.
As far as the technologies distributors believe have made the biggest impact over the past two years, the usual suspects emerged at the top -- CRM (customer relationship management) and online web ordering. Interestingly, and despite a short tenure in the industry, AI emerged as the third-most impactful technology cited by our respondents. Meanwhile, more than 90% say they now regularly use business intelligence and data analytics to make decisions. Perhaps it’s this technology emphasis, coupled with ongoing improvements in web content and a focus on omnichannel experience that has distributors optimistic about their online sales prospects: while 11% expect their digital sales to stay the same, 80% believe they will increase.
Read part 2 of ID's 2026 Survey of Distributor Operations, covering balance sheets, employment trends and best practices, here, and see the complete feature in the May/June issue of Industrial Distribution magazine.
