**Product distributors overcome challenges to break records in 2023.
ASI Research's just-released quarterly dealer sales survey shows that in 2023, dealer sales increased by 12% to $26.1 billion. Total annual sales surpassed the industry's previous peak of $25.8 billion, which was first seen in 2019, before the pandemic, and again in 2022. The growth rate of the industry is lower than the 11. growth rate in 20224%, which is also lower than the 25% GDP growth rate.
While the growth isn't staggering, distributors in our industry have really shown resilience in the face of seemingly ongoing threats to our business," said Nate Kucsma, executive director of senior research at ASI, who spearheaded the quarterly survey. "The results achieved in this case are impressive, if not great. ”
While 2023 was ultimately victorious, some light was dimmed due to weak growth in the second half of the year and the struggles of the industry's larger distributors.
ASI research shows that sales across all dealerships in the fourth quarter were essentially flat year-over-year, with only a slight increase of 01%。This is still the 11th consecutive quarter of growth, but it is the weakest quarterly growth in the post-pandemic recovery period. The previous low quarter of that time? In the third quarter of 2023, sales increased by 24%, down from 5 percent in the second quarter and 5 percent in the first quarter6% and 33% increase.
Factors such as inflation, market uncertainty, recession fears among corporate buyers, shocks in the tech and financial sectors, concerns about the impact of the war in Ukraine and the Middle East, and domestic political volatility are all factors influencing investment in 2023, especially in the fourth quarter, executives said.
"Looking ahead to 2024, the persistent threat of an economic slowdown triggered by inflationary pressures will shift into a more stable period of growth," Kuchma said. ”
Peak Performance Enterprises had a stellar year in 2023. The Georgia-based distributor saw a 23% increase in sales, thanks in large part to finding creative ways to expand opportunities with long-term existing customers and earn quality referrals.
When we help a client, they volunteer to make a referral within their organization," said Dick Francis, co-owner and president. "We've had great success this way. ”
Mid-sized distributors like Peak Performance (with annual revenues between $250,000 and $1 million) had the highest collective earnings of any distribution revenue category last year at 31%。In addition, 53% of distributors saw full-year sales growth, once again topping the category of distributor revenue.
Why relative success? A single cause is difficult to determine. Distributor ASI Media talked about common factors such as increased spending intentions from key customers, tapping into existing customers to expand sales opportunities, and successfully developing new business.
In addition, mid-sized distributors often work with small and medium-sized customers who are not as deterred by economic headwinds as large enterprise customers. On a related note, industry professionals say that some mid-sized distributor customers are just returning to pre-pandemic investment levels in 2023, which also helps.
In 2023, Seth Kaminstein has undoubtedly been struggling to get business.
SK Promotions Inc., headquartered in FloridaThe president of the show is a one-man show who has more than doubled the business of his distribution business to $500,000 in annual revenue, providing solutions to clients including colleges, high schools, healthcare providers, social influencers, and social events, such as weddings and ceremonies.
Cummingstein says strong sales skills and customer order management skills have helped him win over customers and keep them happy. "Our customer base is growing as a result of referrals," Cummingstein shared. "All of us have a lot of business to do. Growth requires hard work, good communication, dedication, consistency, and strong relationships. ”
Overall, 46% of dealers saw an increase in sales in 2023, while 41% saw a decrease in sales last year. Larger dealers put in the most effort.
That said, nearly half (46%) of large distributors (with revenues between $1 million and $5 million) and 43% of very large distributors (with revenues over $5 million) experienced a decline in revenue.
In addition, the very large dealers saw the smallest increase in annual sales – an average of just 01%。Large distributors performed better at 15%, but that's still slower than companies in the lower revenue category.
Executives at large industry companies say economic concerns have led many end buyers to tighten marketing spending.
Jo Gilley, CEO of Overture Promotions, a Fortune 40 distributor in Illinois, said, "Corporate customers were cautious about economic headwinds at the start of the year, and even when the economy reacted positively to Biden**'s moves, corporate customers didn't really adjust. And it's counselor'A member of the list of the most influential people in the S Power 50** event.
At the same time, some customers are reallocating available budgets, increasing spending on everything from business travel to hosting in-person events. Some of the mega-distributors admit that some large customers have scaled back their spending** due to sustainability concerns, such as the planetary impact of product manufacturing, and what they believe is an inadequately documented ecological impact of production and the materials used.
Executives also asserted that 2022 was such a strong year for the branded merchandise business, as larger corporate and institutional buyers came out of the Covid downturn with a ready-to-prepare checkbook, making it difficult to outperform the performance of these 12 branded merchandise. Monthly span.
Terry McGuire, Senior Vice President of Halo Branded Solutions, a Fortune 40 distributor, said: "In 2022, the industry experienced significant growth, largely driven by pent-up demand from the pandemic. "The company's sales fell slightly last year. "In 2023, the return to normal growth trend in the industry has had an impact on the largest players in the market. ”
Based in Texas, Home Run Promotions is a print provider with annual sales between $1 million and $5 million. The company's revenue in 2023 has decreased compared to 2022.
Boss Larry Forbes said the reasons for the decline include inflation, increased taxes hurting the business environment, and increased competition from large product companies. "We're also seeing fewer and fewer companies investing in exhibits, and we're having to deal with more late and non-paying customers than we've had in the last few years," Forbes said.
Still, the larger distributors in the industry certainly have success stories. 4Imprint, Promo's largest distributor, said preliminary data showed global revenue grew 16% to 13 percent last year$300 million. Overture, while not growing significantly, achieved single-digit percentage growth. Publicly traded stran & cois a top 40 distributor that is set to have a record-breaking year in business.
Then there's Platform Industries – a Pennsylvania-based distributor decorator with a product category of $1 million to $5 million. The company's annual sales increased by more than 22% last year.
We've done a really good job of retaining customers and acquiring new ones, so our customer base has been growing," said owner Chris Murray. "Good customer service is what drives the success of businesses in our industry, and we've taken a deep dive into that. We are in the field of customer service and happen to sell ** products. ”
Unfortunately, 2023 ended dismally in sales in the product industry, with Q4 growth nearly flat at 01% is proof of this. This is well below the 3 percent GDP growth in the U.S. in the fourth quarter3% of reports.
Digging deeper into the data found that less than half (44%) of dealers saw year-over-year sales growth in the quarter, while 41% of dealers saw revenue below their Q4 2022 revenue levels. This is the lowest percentage of distributors that recorded quarterly growth since the industry began to recover from the pandemic decline.
Large companies were the hardest hit, with quarterly sales down 26%。Medium- and very large distributors saw almost the same growth rate of 07% and 08%。
Notably, the strongest quarterly growth was among the smallest distributors in the industry (sales of $250,000 or less). They achieved 11% quarter-over-quarter growth.
Paradise Promotions & Designs is one of the successful companies valued at $250,000 and below. The Alabama-based distributor grew double-digit percentages for the quarter and for the full year of 2023.
We have gained more business in the real estate market," said owner Traci Kontoulas. "We're also seeing a lot of young influencers starting the production line through social**. We helped them launch their product line. ”
Arizona-based Amazing Marketing Products, a two-year-old distributor with less than $250,000 in revenue, stepped on the growth gas pedal in the fourth quarter, nearly doubling sales compared to the fourth quarter of 2022. A tireless community network and strong partnerships with quality merchants helped founder Alicia Gillman find opportunities and make the most of them.
Gilman told ASI Media, "My sales are mainly focused on the education sector as well as the retail sector. ”
Gilman wasn't the only company to see sales performance among education customers: ASI research shows that, overall, distributors see education as the strongest market for sales in the fourth quarter. The top five markets also include healthcare, construction, professional services, and nonprofits.
Although nonprofits remain the top five markets, the percentage of distributors that ranked them as strong in Q4 2023 decreased by 12 percentage points compared to Q3 2023, a sharp decline that is almost reflected in a plummeting decline of 11 percentage points for association organizations. Club. Even so, a higher percentage of distributors were seen in Q4 compared to the previous quarter in other key markets, including manufacturing, financials, construction and retail.
The Advisor Confidence Index, which measures dealers' financial health and business optimism, fell to its lowest level in three years in the fourth quarter. The reading of 99 also marks the first time in three years that the index has fallen below the benchmark of 100, which was first established in 2001.
This stormy sentiment is not surprising given the generally weak fourth-quarter sales, continuing the slower growth trend of the previous quarter. "Challenging," "slow," "sluggish," and "cautious" are the most common words dealers use to describe the fourth quarter to ASI Research. Even so, the words "good", "stable", "stable", and "busy" appear frequently, indicating the complexity of the times and the change in experience.
While challenges and concerns remain, and not everyone is optimistic, there are certainly dealers who are looking forward to better days ahead.
We are optimistic about the outlook for 2024", said Halo's McGuire. "We are seeing growing demand from healthcare, retail and manufacturing. In addition, big tech companies are once again seeing positive momentum, driven by their renewed focus on growth. ”
Others have more modest expectations, but still expect revenue growth. Overture's Geely said: "I think sales will go up, but not by a big margin. We assume that our clients will remain cautious because of the significant global uncertainty in Ukraine and the Middle East, as well as in our election cycle. ”
*It's not just the top 40 companies that are growing their revenues.
We believe 2024 will be a better year as we take the same proven approach to being a trusted partner that adds value to our customers," said Francis, whose company is valued between $250,000 and $1 million. "It earns loyalty. ”
Gilman also has a positive outlook. "My business is built on loyalty and rewarding customers when they come back to me," she said. "My sales continue to grow. ”
Hopefully, I will be able to say the same thing at the end of the year.