Website Search

Analysis of UK & Ireland Promotional Merchandise Industry in 2009

Last year the industry saw another dramatic increase in the failure of Distributor Companies, with Supplier Companies also feeling the pain.  The recession has certainly bitten hard in the Promotional Merchandise Industry & the market size continues to fall.

The overall Promotional Merchandise marketplace is now estimated to be worth £722million, this is significant reduction to the £1billion+ marketplace the industry had just two over years ago.  The estimated market decrease of over thirty percent could indeed be higher, but most UK & Ireland companies do not publicly publish their revenue figures to enable exact figures to be analysed.  This lack of growth in the marketplace will mean that most companies in the industry will continue to face major issues if revenues cannot be increased.

The UK & Ireland marketplace has over 2000 identified ‘Distributor’ Companies.  A ‘Distributor’ is defined as a company who "has a dedicated focus to the sale of promotional merchandise".  (This study does not include sales from Printers, Sales Promotion Agencies, the 'Premiums Market', the 'Incentives & Motivation Programme Market' or 'Direct Supplier Sales'.)  Interestingly, only 119 Distributor Companies have a turnover in excess of £1m, however those same companies account for a significant forty five percent of the entire market spend.

Profile of Distributor Companies
Total Distributors in Market:	2,049	Number of Distributors in UK & Ireland Market
Total Market Siza:	£722,400,000	Turnover of Distributors in UK & Ireland Market.
Distributors Over £1m T/Over:	119	Number of Distributors in Market with Over £1m Turnover.
Distributors Over £1m T/Over:	£324,000,000	Value of Spend in Market by Distributors with Over £1m Turnover.
Distributors Over £1m T/Over:	44.9%	% of Total Market Spend by Distributors with Over £1m Turnover.

Between 2007 & 2008 the rate of companies ceasing to trade increased dramatically, with both Distributor & Supplier Company failures increasing by around one hundred percent.  This dramatic new level did not drop between 2008 & 2009, indeed a further rise was experienced in both types of companies. 

Most dramatic was the increase in Distributor Companies who ceased trading, which increased by another eighty percent on the previous year.  In 2009, 181 Distributor Companies are known to have ceased trading, & this represented around ten percent of the entire market.  The most high profile Distributor loss in 2009 was CMC, who had for many years been the third largest Distributor company in the UK.  Whilst we can identify the companies reported, we believe that the true figure is likely to be higher, as many small companies can cease trading & then remerge as ‘Phoenix Companies’ without the knowledge of the majority of the trade.  In 2010 we have already seen the loss of other major Distributor players, Non Stop Promotions & PPAG, both of which have left substantial debts for the Supplier’s to cope with.  UKL Ltd, a major leisurewear clothing wholesaler, has also entered liquidation.

Supplier Companies are also suffering, and between 2007 & 2008 the rate of Supplier Companies who ceased trading dramatically increased by around one hundred percent.  Between 2008 & 2009 the increase continued, albeit at around twenty five percent higher than the previous year.  It appears that we lost around 53 Supplier Companies in 2009.  The good news is that all of the high profile Supplier Companies have so far weathered the storm.

All indications point to 2010 remaining a difficult year in the UK & Ireland, particularly as the effects of the ‘double dip’ recession are still expected to hit later this year.  As the overall market is not experiencing growth, companies in the industry can only experience growth by increasing market share, and doing so is critical for most companies, but of course there can only be a few winners in a contracting market place.  Many companies have survived the past two years mainly by cutting, & closely managing costs.  Should revenues continue to fall most companies have nothing left to ‘cut’, therefore any further cost cutting will have a direct effect on the businesses ability to create sales, maintain service levels or to invest in correct stocks.  Cash of course remains the major danger for most companies & highly geared operations will have further hurdles to overcome due to the current reduction in the flow of money, plus expected interest rate increases anticipated for later this year.  Every Distributor Company failure costs suppliers much needed cash & significant sums have already been lost by some.  It is hard to see when the failure rate of companies in the industry will arrest.

Prominent observers indicate that the recovery of the UK economy may not be underway until 2012, which will be too late for some.  Let’s hope that in next year’s market review will be able to report on the first signs of an earlier than anticipated recovery.