Sourcing City publish review of promotional merchandise industry (UK & Ireland)

Sourcing City has published a report providing a detailed analysis of the Promotional Merchandise Industry in the UK and Ireland over the past six years.

The report contains analysis of the UK and Ireland Market Value, profiles of Distributors in the market, analysis of £1m plus turnover Distributors, Distributors by County, Distributors by Region, Distributors in Ireland, Supplier Analysis, Ceased Trading Company Analysis, Product Group Analysis, Sourcing City Analysis, New Legislation and a view on the future of the UK and Ireland Promotional Merchandise Marketplace.

Summary of 2012
The past three years have seen small year on year market growth to the current market size of around £763m. In 2012 a market growth of just 1.1% (£8m) could easily be argued as a flat market.

The effects of 2008/9 world economic credit crunch was felt significantly by the UK and Ireland promotional merchandise industry, with the market spend falling by over 26% from a £916m market spend level in 2008. Today, the market is still around 17% (£154m) behind 2008.

One area of success and the main market growth area were amongst professional distributors with a turnover in excess of £1m. The average company turnover of £1m+ distributors grew by 12.2%, whilst the smaller distributor sector experienced a decline in both average turnovers, market share and company numbers.

The 135 companies with a turnover of over £1m have increased their market share from 40.6% in 2007, and now represent 52.8% (£403m) of the entire market spend in 2012. Growth has come from increasing market share, and also from a level of confidence returning to major end user PLC organisations.

In 2013 it is anticipated that more professional distributors in the £500k to £1m category will break the £1m turnover barrier.

Disappointingly, the UK Promotional Merchandise Market did not benefit significantly from the 2012 London Olympic Games. It appears that LOCOG (London Organising Committee for the Olympic Games) made no specific attempt to support distributors, suppliers or manufacturers in the UK industry.

The Olympic Committee applied strict brand controls, and no unauthorised companies were allowed to use the Olympics logos or references to the London Olympic event. Few of the promotional products purchased by the Official Olympic Sponsors appeared to have been bought through UK companies. Many goods used during the Olympics were of Far East origin, but not purchased through UK distributors.

The Queens Jubilee & the European Championships in 2012 did appear to generate some sales for the industry, however the volumes were not sufficient to have a significant impact on the market overall.

Once again a significantly high number of distributors ceased to trade in 2012 (117), this is the highest annual level since 2009. The vast majority were smaller companies.

Over the past four years a combined total of 498 distributor companies ceased to trade. In the same period the industry has lost 189 supplier companies. For the first time since 2007 the number of professional distributors in the market has reduced to 1953, from 2041 in 2011.

Suppliers ceasing to trade remains relatively stable at 49 companies in 2012 against the seven year average of 40.

2012 saw the total of UK Suppliers increase by 57 companies. It is believed this growth is related to the continued poor economy driving suppliers previously focused on other markets, to look at the promotional merchandise marketplace as a new market for their products.

Whilst distributors continue to look for the ‘best deal’, there is no evidence to suggest that greater numbers of distributors are turning to buying directly from the Far East. Indeed increased prices in China, UK credit benefits and local service is slowly making the UK once again a favourable option.

No substantial growth is expected in the overall UK & Ireland promotional merchandise market in the immediate future, so the main opportunity for real growth for companies over the next three years is likely to come from winning market share.

The full 2012 Review of the Promotional Merchandise Industry (UK & Ireland) Report contains further detailed analysis, detailed review, historical data and graphical information. Click here to read the full report.

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