Distributors increased their sales in the third quarter of 2015 by 3.4%, according to new data released by ASI. It was the 23rd consecutive quarter with growth in the industry. In addition, the Counselor Confidence Index, which gauges the health and optimism of distributors, measured at 112 for the second consecutive quarter, residing near a record high and indicating continued optimism.
“If the industry is growing, and we’re outpacing the growth, we’re happy campers,” says Mark Ziskind, COO of Top 40 distributor CSE (asi/155807), which recorded 14% growth in Q3 and is up 11% for the year. The company has relied on a 50/50 split of organic growth and new business to increase its revenue. Ziskind adds that the industry’s growth in the quarter “is pretty much where most people we talked to were pegging the industry at.”
Large distributors (with more than $1 million in revenue) increased their sales the most, with 3.6% year-over-year growth for the quarter. Meanwhile, small distributors (less than $250,000 in annual revenue) actually experienced a decrease in sales by 1.5% compared to the third quarter of 2014. Distributors attribute that dichotomy to the increasing requirements from larger clients and demand for added services like technology and creative capabilities.
“For the smaller distributors, it’s becoming increasingly difficult to land larger clients,” says Tej Shah, vice president of marketing and e-commerce for Overture Promotions (asi/288473), a large distributor that had more than 10% growth in the quarter.
With a six-quarter moving average of 4.4% growth, the promotional products industry is in the midst of a period of slowing growth. In addition, only 36% of distributors reported an increase in sales this quarter, compared to 50% and 44% for the previous two quarters of 2015. Nevertheless, the stable position of the Counselor Confidence Index reflects a general sense of optimism among distributors as they plan for the remainder of this year and into 2016. Just more than half of distributors (51%) are predicting a year-over-year increase in sales overall for 2015.