maintenancesuppliesmag.com |

It is difficult to open a newspaper these days without seeing a story on economic doom and gloom. The housing and credit markets are in disarray, oil prices continue to rise and the dollar is weak. But what does this current economic climate mean for the jan/san distributor?

Given the steady drumbeat of poor economic news, it can be easy to be pessimistic about the current state of the economy. However, leading buying and marketing groups in the jan/san industry are not buying into all of the negative economic hype.

According to Jeff Baden, director of marketing at Network Services Company, there will be hurdles to overcome, but there also will be a certain amount of stability and areas of opportunity for the smart distributor.

"While the slowdown in our economy has had a negative impact on the jan/san industry, the continuous need for janitorial services remains," says Baden. "Additionally, the demand for cost-effective equipment and Green products remains strong, fueling the introduction of new products and expanding the need for distributor assistance in product selection, education, training and other services."

Paul Lemieux, president of Pro-Link, is cautious but also sees a certain amount of stability for the jan/san industry.

"Jan/San is a relatively stable business compared to a lot of businesses. As long as the square footage stays occupied, the downside risk on jan/san is relatively low," says Lemieux. "If we hit a recession to the point of wholesale layoffs and facilities are closing, then we could see a negative impact, but nobody that I'm talking to is anticipating that happening."

Even in this environment, growth will be achievable for the smart distributor, but it will take more efficient ways of doing business. "I see the industry as a whole growing somewhere between two to three percent over the next year," says Dennis Riffer, president of AFFLINK. "But smart distributors are taking advantage of market channel expansion, leveraging economies of scale and solidifying relationships with the best manufacturers available. For these companies, double digit growth is a real possibility."

Keith Marcoe, president of NISSCO, also sees relatively low growth this year, but does offer a word of caution about the potential recessionary economy. "Historically, we are a little less prone to recession than other industries. However, as other industries suffer, those customers look for budgetary improvements, and one of the places they will turn to is their janitorial supply buyer."

Hurdles remain

Many of the critical issues that distributors will face amidst the changing economic climate will seem very familiar. These are issues the industry has already been dealing with such as higher oil prices.

"We've had raw material price increases that have gone on for the past few years, especially the petroleum-based products," says Lemieux. "It is a mixed blessing. When the price increases stick, it means that your business grows, but rapid price increases can get the end-user customer shopping, and that can be disruptive to business."

The general price volatility is an ongoing issue for the jan/san industry. "Volatile pricing will always be a problem. The downward pricing pressure of the consumer in the face of increasing prices in the manufacturing marketplace is a very, very volatile combination," says Marcoe. "It's really a triple whammy. The manufacturers are raising their prices, the customers are demanding lower prices, and the cost of doing business is rising."

Even as distributors navigate through the current turbulent economic waters, historical issues remain. Internal costs related to labor such as health care are likely to continue to rise, and attracting talented employees in key areas will still be important to the success of distributors.

Working smarter and more efficiently

Despite the hurdles presented by the current economy, success and growth in this environment will be possible for distributors. End users will still need to purchase supplies. The ability to grow will depend on working smarter and more creatively while becoming more efficient in order to become an integral partner with customers.

Information technology is one tool that distributors can utilize to improve the efficiencies of their business. By streamlining transactions through information technology processes, distributors can reduce business costs by increasing efficiency. This streamlined transaction process can also help strengthen relationships with customers. The distributors' increased efficiencies will carry over to their customers, making the business relationship more valuable to them than that of a competitor.

Distributors will also want to increase their focus on becoming consultative problem solvers for their customers. This will be beneficial for parties because an involved, creative sales team will be able to mitigate price increases and budgetary pressures.

"There is great opportunity for the smart distributor," says Marcoe. "That's the guy who says, 'You know what, Charlie? Let's sit down and work this out together. I can see ways that we can move to a different chemical program that can save you 10 percent in chemical usage, and I can see a way we can change the equipment you use to more productive equipment.' "