Product diversification spurs continued growth
By Bill Drennan, Maggie DeWitt and Danielle Litka
DIstributors are experiencing another strong year as total sales for the Top 100 Distributors has reached $1.92 billion, compared to $1.76 billion last yearan increase of nine percent. The reason appears to be product diversification as form sales for the Top 100 declined slightly to $780 million, a five percent drop from last year's $822 million.
Form sales accounted for only 40.6 percent of total sales this year, down from 46.8 percent a year ago. Label sales increased by five percent to $177 million this year. However labels as a percentage of total sales decreased from 9.6 percent last year to 9.1 percent for 2000.
Last year's Top 100 Distributors reported that 43.6 percent of their sales were from all other productsincluding commercial printing, promotional products, direct mail, electronic forms and other non-forms items. This year all other products accounted for 50.3 percent of total sales. These categories include commercial printing at $414 million or 21.5 percent of total sales, promotional products at $175 million or 9.1 percent of total sales and direct mail at $89 million or 4.7 percent of total sales.
This year's Top 100 Distributors reported 6,987 employees, an increase of 15 percent over last year's 5,958 employees. The number of distributor locations grew by five percent to 1,297 offices. Both of these increases can be attributed to acquisition activity and an increased number of franchises reported by both American Business Forms and ProForma.
Productivity, as measured by sales per employee decreased to $275,172 from last year's $294,737. Sales per location increased slightly from $1.4 million last year to $1.5 million in 2000. Looking at the numbers another way, it took an additional 1,029 people to generate additional sales of $160 million for the Top 100 Distributors or about $155,000 in increased sales per additional employee.
The share of market for the larger distributorships is growing. This year's top 20 companies account for 70 percent of the overall revenue for the Top 100 or $1.3 billion in total sales. The top 20 companies employ 4,628 people at 1,054 locations or $289,693 in sales per employee and $1.3 million in sales per location.
Top 10 Growth
The Top 10 distributors are gaining even more influence. As a group, they account for 56 percent of the total sales for the Top 100 Distributors, or $1.08 billion. This is an increase of 18.5 percent over last year's top 10. These 10 distributors employed 3,644 people at 1,014 locations, accounting for $295,237 in sales per employee and just over $1 million in sales per location.
The top 10 companies sold $450 million in forms, $97 million in labels, $110 million in promotional products, $29 million in direct mail and $227 million in commercial printing.
Five-Year Comparison
In the past five years, sales for the the Top 100 Distributors has risen 26 percent from the $1.52 billion reported in 1996 to this year's $1.92 billion. The total number of employees has increased by 1,007 from the 5,980 reported five years ago and there are now 422 more locations than the 875 reported in 1996.
The company making the biggest jump over the past five years is ProForma, which increased sales by just over $100 million, closely followed by this year's overall leader, SFI, which increased sales by $94 million since 1996. Rounding out this year's top five, American Business Forms increased its sales over the past five years by $75 million; Precept by $63 million; and GBS by $2 million.
Looking Forward
Expect the product diversification trend to continue as distributors exploit their customer relationships by offering a full range of printed products. Sales of promotional products in particular are growing rapidly, following a national trend which has seen total promotional product sales skyrocket toward $15 billion. Continued growth in the commercial printing and direct mail categories is also expected.
Further consolidation will also continue as large distributors gobble up smaller ones and small- to medium-sized distributors take advantage of the benefits offered by franchisors.
- Companies:
- GBS Filing Systems
- Proforma
- People:
- Bill Drennan
- Maggie DeWitt