Distributor Sales Jump 4.6% In Q3
15th Consecutive Quarter Of Sales Growth
Ad specialty industry distributors increased their revenues by 4.6% in the third quarter of 2013, a total year-over-year gain of $232 million, according to a report released today by ASI. This is the 15th consecutive quarter of sales growth for distributors of promotional products. Further, the latest Counselor Confidence Index (CCI) – a measure of industry health – rose during Q3 to a score of 111, a 1.4 point improvement compared to the second quarter.
"Overall, I'd probably say this is the healthiest recent year," said Jeff Becker, president of Kotis Design (asi/244898). "The last year or so has been much better. Some of our clients are definitely spending more, but there are also those clients spending less. The market is stronger, but not amazing."
Large firms (annual sales of more than $5 million) reported an average sales increase of 6.1% in the third quarter, the highest of any group. Distributors with yearly revenues under $250,000 reported a 2.3% average increase in Q3 revenues, up from 1.1% in the second quarter. Nearly half (49%) of distributors reported their third-quarter sales were better this year than in Q3 of 2012.
"The popular answer, I suppose, is that the economy is improving and that is prompting customers to spend more," said Ross Silverstein, president of Top 40 distributor iPROMOTEu (asi/232119), which has grown its sales by 20% in 2013.
"Maybe that is partially true. However, another factor may be that distributors, instead of just waiting for the economy to improve, are actually working harder to secure new customers and increase their sales."
Large distributors are the most optimistic about sales, as two-thirds expect their revenues to be higher this year than they were in 2012. Still, optimism among these large firms has faded a bit – in Q2 about 83% anticipated higher 2013 sales. Among all distributors surveyed, 55.2% now believe their 2013 sales will be stronger than their 2012 sales, a modest drop in optimism when compared to earlier this year.
"The spend is in reasonable shape but the margins continue to be challenging," said Dan Craig, general manager of Top 40 distributor Accolade Promotion Group (asi/102905). "Luckily, we are strong in a couple of sectors that are in good shape and are spending. Our numbers are ahead of last year and we feel confident about the close of 2013."