Executives of U.S. wholesale-distributors have altered their growth and operational strategies to offset sector weaknesses and the rising costs of doing business, says a recent report, according to Modern Distribution Management’s Web site.

Because of declining business conditions (only 38 percent of those surveyed described their companies as “thriving and growing,” down from 21 percent in 2006), many distribution companies will alter their growth strategies for the upcoming year, according to the survey from RSM McGladrey, a professional services firm.

Increasing brand recognition is the most popular growth tactic cited, increasing from 44 percent in 2007 to 49 percent this year. Strategies that saw a sharp decline according to the survey include vertical integration, creating private label products, and growing with large retailers.

Mergers and acquisitions, a prominent growth strategy in the past, has dropped in popularity, with just 18 percent of executives planning such activity, down from 48 percent in 2007. This is most likely due to the tightened credit markets in the United States, as well as lower valuations.

Many distribution companies are also embracing green initiatives. Almost half of the largest distributors, as well as many smaller companies, report being asked by their customers to become more environmentally friendly. But many companies have also taken such steps on their own, with 38 percent of executives reporting a reduction in nonrecyclable waste and 23 percent eliminating the use of certain chemicals.

To read the full RSM McGladrey 2008 Distribution Industry Report, click here.