Voice of the dealer: the Dealer Support survey results

While some came out of 2022 with a better scorecard than others, one thing we can all agree on is that it was a year of changes. As the pandemic receded, working from home reduced but maintained an important position in the tapestry of the new workplace. Inflationary pressures meant finding creative solutions to keeping a lid on prices, and many dealers took the opportunity to put into practice what they had learned through the pandemic - induced downtime.

As companies battled the cardboard shortage, grappled with supply chains and panicked about the cost of energy, efficiency in business was paramount - but that didn’t stop dealers from trying new things or launching ambitious projects. As we come to the end of the financial year, it’s a great time to not only reflect on the year that has been, but also to look forward to the 12 months ahead.

Earlier this year we asked our readers for their thoughts on the state of the industry today, and their outlook for the future. Our findings show a relatively stable situation, with a slight undercurrent of uncertainty, but sprinkled with plenty of optimism too.

50% of businesses turning over more than £5m a year feel they are back to pre-pandemic turnover, compared to only 27% of small businesses (under £500K turnover)

Charting The Recovery

Clawing their way back from the hardships of previous years has been at the forefront of many business leaders’ minds and, for many dealers, it’s starting to pay off. Around half the respondents to our survey said that they had returned to prepandemic turnover, showing positive outcomes for all the efforts made over the past year.

There were some differences between business sizes; larger businesses (with a turnover of £1.5m plus) were more likely to report a full recovery while among smallest of companies (turnover of less than £500k) only 27% said income had returned to pre-COVID levels.

Hampering the drive for recovery is the fact that customer order values have not returned to previous levels. Just 30% of businesses surveyed said they had, with businesses of all sizes equally affected. Many suggested this was due to many of their customers still working from home (WFH), or hybrid working, while cost-cutting and a sluggish economy were also thought to be having an impact.

While customers may be maintaining WFH or hybrid working as the norm, most of the dealer community has returned to business as usual. Over 80% of respondents said meetings were now conducted in-person, although the rates were slightly higher in the larger turnover businesses than those at the lower end of the scale. In fact,

93.5% of businesses turning over £3m plus said they were back to in-person meetings.

While the homeworking market has been a staple of the last couple of years, the majority of dealers in our survey did not believe it will continue to grow. Almost 82% thought it would either level off or decline, going forward. Leveling off received the highest number of votes (64%) overall but small businesses (under £500k turnover) were most likely to believe in growth in the homeworking market - a third chose this option.

Supply chain disruptions are still rippling through the dealer community, with almost 80% saying this had affected their business. The most pressing concerns here were longer lead times for products, lack of stock availability and the potential for losing customers as a result. Several respondents also noted that these problems require time and resources to manage, which further impacts the business.

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Across the responses, 21.5% said they were actively looking at M&A in the next 12 months

Growth And Diversification Among Dealers

Mergers and acquisitions (M&A) have been big news over the last few years, with ongoing consolidation apparent across all business sizes. For some dealers this presents an interesting opportunity, but are any of our respondents looking to merge or acquire another business in the year ahead?

Across the responses, 21.5% said they were actively looking at M&A in the next 12 months. However, there were some significant differences between the business sizes represented. For companies turning over in excess of £3m a year, an impressive 41% are looking into M&A. Conversely, 85% of the smallest businesses would definitely not be looking into this any time soon - just 8% said they were.

Diversification into new markets has long been seen as an opportunity to grow and expand the customer base, and clearly the dealer community recognises this; 53% said they were actively looking to diversify, and dealers across all business sizes were looking at diversification fairly positively in the future.

In terms of the areas most popular to diversify into, workwear was a clear winner; one quarter of those who said they were looking at diversification mentioned this as a focus. This was followed by PPE (12%) with other companies looking at areas including catering, print and facilities management.

In an accompanying interview in this issue of Dealer Support Steve Morely, sales director at Spicers, highlights the importance of ensuring that any diversification is presented as a complete solution. “I don’t think a dealer should be selling ‘just a product’” he says. “They should be selling a solution, and that is absolutely key. We have to understand what the consumer wants, and how they want to consume it, and then what format they want to consume it in.”

◆ Workwear

◆ PPE

◆ Catering

◆ Print management

Performance And Future Outlook

One measure of how well a business is performing is whether its workforce is growing or shrinking. We asked dealers whether they were planning to add more staff over the next 12 months, or reduce. Amazingly, not one dealer said they were looking to decrease the size of their workforce, and over 40% said they were looking to grow.

Feelings on performance for the next 12 months were fairly positive overall, with over 60% of dealers reporting they were feeling either very positive or somewhat positive about the future. Only 12% of our cohort felt either pessimistic or concerned for the future. Again, there was some variation across the groups, with smaller businesses turning over under £1.5m more likely to feel negative (20%) while 79% of companies with turnover in excess of £3m felt optimistic about what lies ahead.

Asked about the fastest growing markets over the last year, there was a clear focus on furniture and interiors. This was specified as a growth area by 27%, with workwear and catering (both 9%) also mentioned. Votes were also in for facilities supplies, education/healthcare and promotional products as potential areas of growth.

As for what’s going to be hot in the months ahead, it doesn’t look like furniture and interiors is going away soon. A third of respondents said this would be a major sales area for the next 12 months, alongside facilities, print, and business supplies. Technology, workwear and, to a lesser extent, PPE were also seen as key sales channels for the year ahead. However, the road through 2023 is peppered with potholes, and there are some areas that are causing dealers more concern than others. Energy costs were cited as the biggest concern in the community, closely followed by rising inflation, fuel costs, and staying profitable as a business. Customer retention was seen as a key mitigator here - clearly dealers aren’t going to give up good business without a fight.

How do you feel about the performance of your business in the next 12 months?

Steve Morley agrees with these perspectives. “A current challenge is inflationary pressures, because they’re coming from all angles on cost of goods, fuel costs, even stock costs now. I would think the biggest challenge for a dealer is to reflect this in their pricing model.”

If we can mention the ‘B’ word for a moment - Brexit is still a concern. Of our respondents, 55% said it was still having an impact on their business, with almost 100% saying this impact was negative. The biggest effects have been seen in deliveries and the supply chain, with cost increases and staffing problems also noted. Several companies cited the additional red tape and administration costs involved, as well as problems doing business with Irish and Northern Irish customers.

Going Green

Sustainability has been a key focus for many dealers over the past few years, and continues to be a pressing issue today. Rising fuel bills and energy costs, coupled with inflationary price rises of products, mean that being greener and more efficient makes sense on many levels - but is it making sense for the dealers’ customers also? Reducing the number of deliveries would be a win for both the environment and dealers’ fuel costs, and it seems customers are becoming more willing to accept this change. More than 60% of our respondents said customers are more amenable to fewer deliveries, while just 20% said they definitely were not. It seems that the customers of larger dealers are more likely to be flexible, with 67% of dealers with a turnover of £1.5m plus saying this was the case.

Demand for eco products is still growing; 58% of our dealers are seeing more demand here. However, this was more prevalent in the largest businesses (£5m plus) - where 83% said their customers were keen – while just 8.3% of small businesses had seen growing demand for eco products.

In terms of stocking eco products, many dealers noted that price continues to be a barrier to offering a greater ‘green’ range and 15% were also concerned that there just weren’t enough eco products on the market, and not enough choice. Of those that are available, some respondents considered the quality to be sub-standard, and many worried about verifying the ecocredentials of these items.

Of course, sustainability begins at home, so it was great to see that almost two thirds (63%) were adopting the eco-agenda as part of their 2023 business plans. In fact, almost all business turning over more than £3m a year (96%) noted the inclusion of green targets in their plans for the year.

In an accompanying interview in this edition of Dealer Support Andrew Beaumont, MD of Exertis Supplies points out how important he thinks sustainability will be this year.

“There’s a movement of endusers who want to purchase sustainable products, and legislation means that companies also have be to eco-compliant, which is possibly even more powerful,” he says.

“We’re almost seeing a bit of a polarised market this year, because you’re going to have the sustainability push that underpins everything but, as costs are increasing, you’re also going to have a market that wants to go for the cheapest options; the question is, how we will support all those routes to market?”

Electric vehicles can be a quick and effective win for dealers, although the investment required can be a barrier to adoption. This was reflected in the results of our survey, with just 50% saying they were investing in electric or alternatively-fuelled vehicles. Unsurprisingly, it was the biggest companies that were most actively pursuing electric transport options, with 83% saying they were investing. This contrasts with just 8% of businesses turning over less than £500k, and 36% of businesses in the under £1.5m bracket.

As expected, price was the main barrier, not just to electric vehicles but also to becoming a more eco business as a whole; this was the view of three quarters of respondents. However, it seems there is also some room for more support for the dealer community, as a number of dealers cited time (13%), knowledge (8%) and suppliers (5%) as other barriers.

Working With Wholesalers And Dealer Groups

Two thirds of our respondents have a single or preferred wholesaler that they work with, and the other 33% work with multiple wholesalers, some with all the providers mentioned in the survey - VOW, Spicers, Exertis, CTS, Nectere and Data Direct.

Our dealer respondents have mixed reviews of the service they are receiving from wholesalers, they suggested a few things that could be done to improve their experience – for example, 32% of respondents wanted more flexibility on prices, and for costs to be more competitive. Almost a quarter (23%) said deliveries were a key area - they wanted more next day and overnight deliveries to provide stock for the next working day.

Other areas of improvement identified were service levels, having enough stock and communicating better with dealers - communication, reporting and, in particular, listening to the dealer community were mentioned by many respondents.

Andrew Beaumont also told us that communication and listening were a top priority for this year. “Our goals and ambitions will be led by the dealers and where they want us to go. We’ll keep working with the community and, when the challenges arrive, hopefully we’ll be able to react in ways that can help the dealer through those difficult times.”

In his interview Steve Morley, highlighted the importance of having a good range of products available to dealers – our survey respondents will be pleased to hear that this is a key ambition for Spicers in the future. “The key for us, really, is just to make sure we’ve got the right products, at the right price, with the right service offerings. We plan, by the end of this year, to have a million products available online to dealers and we intend to increase that further in 2025 by up to three million products.”

Dealers feeding into the survey were members of various dealer groups including Office Friendly, Nemo, Integra, Advantia and Superstat; however, almost 30% were not currently members of any dealer group – and nearly 40% of those not currently in a dealer group were businesses turning over more than £5m a year.

A Healthy Outlook Overall

We thank all dealers who responded to our survey, giving us vital insights into the state of the industry and community and how they see the future. Overall, it’s encouraging to see so many of our community with such a positive outlook, despite the challenges that are still present in the current environment.

With almost two thirds of respondents feeling optimistic for the future, and half of our dealers returning to pre-pandemic turnover, this suggests we can start to look beyond ‘recovery’ and more towards business as usual. Yes, it’s a new normal, but there’s no reason we can’t thrive in that environment too.

This is reflected in the significant number of dealers looking to diversify into new markets, and those that already have. The opportunities for M&A are still there, particularly for larger companies. For around a third of firms, the benefits of joining dealer groups have yet to be realised. Weaving its way through everything, sustainability remains a key driver for most dealers.

It’s great to see the vast majority have returned to in-person meetings; let’s face it, Zoom just doesn’t cut it when it comes to making connections. We can’t wait to make connections with all of you at Dealer Support Live in Coventry later this month, where we can put the pandemic behind us and enjoy some quality in-person time together.