Recovery? Maybe Next Year
To say 2009 was a difficult year for jan/san distributors would be an understatement. Even though economists say the recession has ended, the "recession-resistant" cleaning industry is far from being on the road to recovery.
Distributors in 2010 are going to continue to find themselves between a rock and a hard place. On one side, manufacturers are indicating (if they have not already) that they will be forced to raise product prices. On the other, customers are going to have either the same budgets as last year, or even less money to spend.
Sanitary Maintenance's sister publication, Housekeeping Solutions, recently surveyed the in-house cleaning departments servicing education, healthcare, government, hospitality, transportation and commercial markets. This customer base typically accounts for half of distributor sales.
Unfortunately, the numbers don't look promising. Nearly 70 percent of in-house service providers (ISPs) experienced budget cuts in 2009 and this year doesn't look much better, as 46 percent will decrease budgets and 39 percent will keep levels the same. Only 15 percent of respondents expect to have additional money to spend in 2010.
The majority of ISPs (63 percent) will purchase the same amount of chemicals, consumables and hand tools as they did last year. When it comes to bigger line items such as equipment and vacuums, however, 34 percent expect purchases to decrease while 48 percent expect purchases to stay the same. This is especially bad news because equipment purchases weren't high to begin with. In 2009, 63 percent of ISPs postponed these larger product purchases.
With stats like these, distributors will need to remain as aggressive as ever. If customers aren't buying new equipment, make sure you have the resources to service their old models. Motivate sales staff to reach as many new customers as possible. Invest in technology to streamline your warehouse and logistics operations. And cultivate quality relationships with customers through value-added services, especially the one all end users want the most: product training.
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