What Should Distributors Do When Uncertainty Rises? Four Industry Leaders Weigh In
Economic signals are sending mixed messages to wholesale distributors in early 2026. Rising fuel costs, persistent inflation and uneven demand patterns are forcing companies to reassess how aggressively to invest, price and operate. At the same time, new technologies—particularly artificial intelligence, are reshaping how distributors think about productivity, customer engagement, and growth.
Against that backdrop, distributors are debating a familiar question with renewed urgency: When uncertainty rises, should distributors pull back or lean in?
The following Q&A is drawn from a live Wholesale Change webcast hosted by Distribution Strategy Group on March 25, 2026. Participants included Ian Heller, co-founder and chief strategy officer at Distribution Strategy Group; Jonathan Bein, Ph.D., co-founder and managing partner at Distribution Strategy Group; Matt Mullen, chief executive officer of White Cup; and Mark Brohan, executive editor at Distribution Strategy Group.
What are distributors actually seeing in the market right now, and what does that mean for companies that are waiting and seeing?
Mark Brohan: You can drive yourself crazy with stats, but if you look at them the right way, you can start to read the tea leaves of how things will impact wholesale distribution. Diesel prices are up, the Federal Reserve is already predicting a softer second quarter driven by rising prices and inflation, and we’re watching public distributors disclose exactly which commodity indices they’re tracking. That tells you something. The smart ones know what indicators to watch. The question is whether you act on them or just observe.
Matt Mullen: It almost seems like it’s the new normal. Once a year, some event hits, whether it’s geopolitical, economic or health concern, and it impacts the supply chain and distribution broadly. How you adapt and grow through change is incredibly important. When you have a downturn, it’s not the time to pull back. Efficiency gains come from two directions. There’s operational efficiency on the cost side, and there’s efficiency on the revenue side, where you lean in and improve your ability to capture your target market while things slow down.
Ian Heller: Oil prices aren’t going to be like this forever. It’s inconvenient and expensive, but it’s unlikely to go on for more than a year. This is actually a great time to take share. When I was at Grainger in the 1980s and 1990s, analysts used to say Grainger was good at taking share during downturns because they had deep pockets and kept investing in demand generation when everyone else was pulling back. You must manage cash carefully. You don’t want your inventory aging out of your bank covenants. But you also don’t want to give up share because you stopped being aggressive.
What is the risk of pausing your strategy during a downturn?
Matt Mullen: The risk is that you had a strategy for growth, and then instability hit, and you just stopped. That’s the pattern I’d push back on. Last year in the second quarter, we had tariff uncertainty. Everyone paused. My advice to distributors is don’t pause. Yes, manage your cash. Be a good businessperson. But if you can continue the strategies that allow you to come out of a downturn ahead of competitors, do it. Operational improvement continues whether the economy cooperates or not.
Jonathan Bein: There’s a standard playbook when uncertainty sets in. Companies freeze headcount first. Then they defer capital projects and slow technology rollouts. The irony is that the decisions most deferred in uncertain periods are the ones that matter most: sales process improvements, customer relationship management (CRM) adoption, territory optimization, pricing, artificial intelligence (AI) pilots. These are exactly the things that make a business more resilient. Deferring them feels safe. It’s the riskiest move.
Where should distributors focus AI applications right now, especially if they’re trying to protect investment in revenue-generating activities?
Jonathan Bein: There are three objectives with artificial intelligence. First is revenue generation. Second is cost reduction, which is where distributors naturally go because they’re wired for efficiency. Third is customer experience, and we’re starting to see that as agentic artificial intelligence gets deployed, though we’re in very early stages. Right now, what we’re seeing most is artificial intelligence applications that free people up for higher-level work. I use the term matching and reconciliation. Quote and order automation involves a lot of ambiguous product requests where there’s no stock-keeping unit (SKU) and no brand specified, and the artificial intelligence must figure that out. A person can do it, but it takes much longer. This happens throughout the order-to-cash cycle, in rebates and in other areas. You end up doing more with the same headcount, or even a smaller one.
Matt Mullen: I want the conversation to move beyond just automation. Yes, accounts payable (AP) automation, route optimization, faster task completion—all of that is real. But those are things we already knew how to do. We were just doing them slower. What I want from artificial intelligence is intelligence, specifically better decision-making than you currently have. That is not automation. It’s taking the data inside your business and applying massive processing capability to make better decisions. That’s how you get more effective sales. That’s how you improve productivity per transaction. Workflow management that’s outcome-driven and built natively into your applications is fundamentally different from bolting artificial intelligence onto a process.
What is the top AI function delivering results for distributors right now in sales?
Matt Mullen: Our aging inventory model. We have artificial intelligence that looks at inventory aging out and automatically creates promotional activity targeted at customers who have previously bought that product or similar products. The promotion is built and delivered to the sales representative in a ready-to-use format. It manages margins, gets inventory off the shelf, and eliminates the need for a representative to track this manually or for an inventory manager to manually publish a promotion. As that aging inventory moves, the system automatically registers what worked and in what customer segment it worked, and it rebuilds the intelligence for next time. It’s a constantly improving model, and it’s highly used across our customer base.
Ian Heller: The other reason that matters is that every distributor has their line of credit tied to inventory. Once inventory ages out, it no longer covers bank covenants. You must replenish with newer inventory. Mismanaging this, alongside a few other factors, can take a distributor down fast.
Is AI an IT project or a business project?
Matt Mullen: It’s clearly both. Your information technology (IT) team needs to know the tools, how to deploy them, how they interact with the rest of the technology stack, and how to protect the company from misuse. That’s non-negotiable. But the business side must own the why. What are we using this for? What do we expect from it? What outcomes are we driving toward? Those two must work together or you won’t maximize what you’re getting from the investment.
Jonathan Bein: You need to draw a distinction between artificial intelligence-enabled applications and generative artificial intelligence. Artificial intelligence-enabled applications are the enterprise flavor—artificial intelligence-enabled customer relationship management, artificial intelligence-enabled inventory management. Take anything in your technology stack and put artificial intelligence-enabled in front of it. That’s one category. But personal productivity with generative artificial intelligence is also real. Our chief operating officer (COO) has nearly tripled his own productivity with it. It’s not one or the other. You need both.
Mark Brohan: Part of why companies struggle to get the artificial intelligence results they want is internal friction. Certain departments can’t build the cross-organizational teams needed to develop and execute an artificial intelligence strategy. The companies getting results are the ones that have figured out how to align across the business. Surveys still show a lot of friction about what artificial intelligence is, who owns it and who is responsible when something goes wrong. Until you resolve that, you’re going to keep getting inconsistent outcomes.
Who is responsible when AI makes a mistake?
Ian Heller: You are. The customer doesn’t care where a wrong answer came from. If your company passed it on, your company owns it. Artificial intelligence hallucinates. I was researching someone the other day and was told he died of cancer. I had to go back and correct it. We’re all responsible for verifying what we get from these tools before we act on it or share it.
Matt Mullen: Remember that these are partnerships, and with the large general-purpose models, you’re not actually a partner, you’re a consumer. If you’re trying to deploy artificial intelligence inside a distribution environment, work with someone who has built artificial intelligence for that specific use case, has tested it and will stand behind it. That’s who’s responsible. When I build something into our platform, I own the outcome. That accountability matters.
Where should distributors lean in rather than pull back during this period of volatility?
Matt Mullen: Start with where you want to be in 18 months. Have clear eyes on your goals. If you respond preemptively to a downturn by cutting costs and shrinking, and you don’t think about where you need to be in 18 months, you can move backward. I frame it as this: What is your best chance to extend your advantage? How do you take what you already do well in your markets and push further with it? That’s the path to higher margins, not cost compression. You will take share. You will also open new doors.
Mark Brohan: The best story I can offer came from a lighting distributor that got hit hard by COVID-19. What they did was simple. They brought their top people into a room, formed a war room, and watched inventory and pricing day to day. And when an order didn’t come in, they found out why, and they fixed what they could. That blocking and tackling got them through it. The same approach applies now. Your best minds are what you have to work with.
Jonathan Bein: Technology investment is typically the second thing companies pull back after headcount—and that’s usually wrong. The projects most likely to be delayed are the ones that would make the business more resilient: pricing improvements, customer relationship management adoption, artificial intelligence pilots. Companies that invested in those areas during past downturns came out ahead. The data supports it.
Ian Heller: Tighten pricing discipline right now. There’s a public-facing reason to raise prices. Stop rounding to even margins. Push your C and D items up where customers won’t notice. Apply all your normal pricing practices and apply them better than you ever have. Don’t pull back on marketing and sales investment beyond what you absolutely must. And get automation where you can in areas that don’t touch customer experience. That’s the playbook. Pull all the handles—just pull them faster.
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