Five Year Review of the Promotional Merchandise Industry

Sourcing City have published a report providing a detailed analysis of the Promotional Merchandise Industry in the UK & Ireland over the past five years. The report has been created to provide a global picture of the industry for the use of professional distributors & suppliers and the trade press. Below provides a summary of some key findings from the Full Report.

The effects of world economic downturn was felt by the UK & Ireland promotional merchandise market significantly in 2009, with a market reduction of over 26%. The past two years have seen small market growth to around £754m; however the market is still around 15% behind the £916m market size of 2008.

Larger distributor companies are reporting growth above the overall market trend. This is seen as being due to a level of confidence returning to major PLC organisations. It appears significant that the number of distributors with a turnover above £1m increased from 121 to 129 last year, and many companies in this group have had growth of around 10% in 2011. So, even in these difficult times most large distributor companies are now obtaining growth.

Distributor companies over £1m have increased their market share from 40% to 47% over the past two years. This amounts to a growth of around £50m in this segment of the distributor marketplace.

In 2012 it is anticipated that more distributors in the £500k to £1m category will break the £1m turnover barrier.

The number of distributor companies that have ceased trading slowed to 69 in 2011. Interestingly, the number of distributor companies in the market has remained relatively static over the past five years. This can of course be explained by ‘virgin’ start-up companies being welcomed to the market, and people leaving one company to start another.  Also within the ‘new’ companies there is a proportion of ‘phoenix companies’, who have walked away from debt and restarted.

Last year’s supplier failures reached 59, which was the highest annual loss of suppliers ever recorded in one year. Since the beginning of 2006 the industry has seen a total of 769 companies cease to trade (540 Distributors & 232 Suppliers).

In 2011 distributors reported a noticeable change in the stock availability within suppliers. Naturally, frustrations arise when stock is not immediately available; however, it is no surprise that the current economic climate is causing suppliers to have to run with fewer stocks than they would prefer.

It is anticipated that a number of distributors and suppliers will benefit in 2012 from the European Championships, the Queens’ Diamond Jubilee, and to a lesser extent the Olympics (due to strict brand controls). However, the longer term world economic expectation is unoptimistic. The best forecasts are for some sign of recovery in around three years’ time, but so much is happening in the world just about anything could actually happen.

No significant growth is expected in the overall market in immediate future, so real growth for companies over the next three years is likely to come from winning market share.

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