Distributor Industry Sales

2Q 2013 Industry Sales Report: Industry Sales Increase 5.1%

Research by Larry Basinait

On July 1, 2013, ASI® commissioned an exclusive survey to estimate industry sales for the second quarter of 2013. The industry outlook for the remainder of the year was also included in the study. Invitations went to ASI distributor members who were the primary contact with their firms, and had been in business at least one year. The results of this survey will be published in Counselor® PromoGram® and on ASICentral.com.

A total of 421 distributor firms responded to the survey request out of 13,300 invited, resulting in a 3.2% response rate. An incentive of a drawing for $500 was offered. Larger distributors were over-sampled, with results then weighted for a more accurate analysis. Further, ASI maintains an ongoing participant panel of 42 members, all among the larger players in the industry.

Once again, ASI has included a new metric to quantify distributor business results. The Counselor Confidence Index (CCI) shows how well distributors believe the "health" of their business is relative to other years since 2001. The index uses 2001 as a base year to compare current findings. The index is patterned after the Consumer Confidence Index.

The 3Q 2013 Sales Study Report will be published in September 2013.

Conclusions:

  • During the second quarter of 2013, there was a 5.1% year-over-year increase in sales among ASI distributor members. The largest distributors, defined as those revenue over $5 million, reported increased revenue of 6.3%, the highest of any group.

  • The increase in sales reported indicates industry growth of $247 million over the second quarter of 2012. Sales for the second quarter of 2012 were approximately $4.9 billion.

  • Distributors remain fairly optimistic about sales for 2013. Over one-half (58.7%) of all distributors feel sales for 2013 will be higher than sales in 2012. Similarly, during the first quarter 57.8% of distributors forecast higher sales in 2013, which was down from the reported 67.1% of distributors anticipating an increase for 2013 at the conclusion of the fourth quarter of 2012.

    • The largest distributors are the most optimistic, with 83.3% of those with annual revenue over $5 million now expecting an increase in sales for the year.

  • The second-quarter 2013 report again contains the new Counselor Confidence Index. Results for the second quarter show a score of 109.6, up from 102.6 in the first quarter. The baseline was set at the 2001 confidence level, equal to 100.

Detailed Findings:

How did your second-quarter 2013 sales compare with your second-quarter 2012 sales?

  • Just under one-half (49.8%) of respondents reported an increase in sales in the second quarter of 2013 compared to the second quarter of 2012.

2Q '13 sales vs. 2Q '12 sales

  • The second-quarter year-over-year sales increased 5.1%. The last five quarters have been fairly consistent, between 4.8% and 5.7%. This shows steady, sustained growth.

  • Distributors with revenue under $250,000 reported a 1.1 percentage point increase in revenue. The smallest distributors as a whole are the most volatile, with more distributor firms entering and leaving the industry than any other group. The largest distributors, defined as those with revenue over $5 million, reported increased revenue of 6.3%, the highest of any group.

Current quarter sales vs. quarter year ago

Industry Sales vs. Same Quarter Prior Year

  • The second quarter of 2013 resulted in a sales increase of 5.1%, the fourteenth straight quarterly increase.

  • The quarterly increase in revenue was somewhat less than what was reported for 1Q 2013, which was 5.7%, and higher than the 2Q 2012 increase of 4.8%.

Industry sales revenue % change vs. year ago quarter

Current Quarter Sales vs. Same Quarter One Year Ago

  • The percentage of distributor firms that indicate the current quarter's sales are greater than those of the corresponding quarter from the prior year rose 4 points to 50%, reversing a trend over the prior three quarters of fewer distributors reporting an increase.

    • Since 2Q '10, the average number of distributors reporting an increase in sales over the corresponding quarter from the prior year is 53%, so the current quarter is below the recent average.

% of Distributor firms with increase in sales qtrly comparisons

What is your forecast for your overall sales in 2013 compared to sales in 2012?

  • Over one-half (58.7%) of respondents expect an increase in sales in 2013.

  • The number of distributor firms anticipating an increase is about three times greater than the number of those anticipating a decrease.

Sales forecast 2013 vs. 2012

How do you feel your sales for all of 2013 will compare to your sales for all of 2012? (By company size)

  • The sales forecast among distributor firms for 2013 vs. 2012 shows optimism across different sized distributorships. The larger the distributorship, the more likely they are to feel 2013 will have higher sales than 2012. That's a change from the first quarter of the year, when smaller distributors were the most optimistic, and back to a more typical pattern seen over the last several quarters.

  • The largest distributors were also the most optimistic, with 83.3% forecasting higher sales in 2013 than in 2012.

  • Distributors forecasting an increase estimated an aggressive increase in sales of 14.0% for 2013. Those forecasting a decrease estimated a decrease of 15.0%.

sales forecast 2013 vs. 2012 by company size

Counselor Confidence Index

Please rate the "health" of the promotional products industry for distributors in general for the second quarter of 2013.

Beginning with the first quarter of 2013, ASI is producing another measure of industry sales results. Taking data from over a decade of Counselor magazine State of the Industry survey results, ASI has developed the Counselor Confidence Index.

Patterned after The Conference Board's Consumer Confidence Index®, the Counselor Confidence Index is an indicator designed to measure distributor health, which is defined as the degree of optimism on the state of the industry that distributors are experiencing through the results of their business operations. The value from the industry health question is compared against each respective score since 2001, and an index is derived. The year 2001 was chosen as a benchmark because it was neither a peak nor trough in the business cycle.

The chart below shows annual results of using the index. Results for the second quarter show a score of 109.6

Counselor confidence index