Amid Market-Share War, FER Top Dealers Report More Balanced Growth In 2014

Two big things stand out when we run the numbers on the 57 dealers that verified their volumes for Foodservice Equipment Reports’ annual Top Dealer Report, to be published in June. First, in a mature foodservice equipment and supplies market, dealers of all sizes are fighting intensely for market share, but especially for profitable market share. Second, 2014 revenue growth among these 57 companies was more balanced, and less dominated by the very largest dealers than in last year’s Top Dealer listing.

Overall, this year’s Top Dealers grew revenues 10.6%, strong growth by any measure, but slower than the remarkable 16.1% spurt in Top Dealer combined verified revenues in 2013, goosed in part by several very large mergers. The growth of the Top Dealers in 2014 compares with FER‘s current estimate of E&S market growth of 4.4%. (And we may take that estimate down to about 4% this month.) So clearly, the Top Dealers are taking significant market share from other dealers and distributors and outperforming the market, at least in revenue terms.

For a knowledgeable observer, there also is plenty of evidence in the Top Dealer numbers of intense share battles within market niches and regions. Not every Top Dealer, even some very large and dominant ones, grew faster than the market last year. But as our friend Hal Schroeder of Concept Services reminds us every year when he respectfully declines to report or participate in the survey in any way, not all sales growth is profitable sales growth. Often it makes business sense to let a competitor win a job or a bid or a contract.

Sales gains were clearly more evenly distributed among the 57 reporting companies in 2014 than the 52 reporting in 2013. (All but three of last year’s Top Dealers verified again this year.) In last year’s Top Dealer listing, the top 10 companies were up 20% and the largest 17 (the top third given our 52 reporting dealers last year) grew 2013 sales 18.4%. The bottom third, on the other hand, saw sales decline 5.4%. This year, based on 2014 sales, the middle third of Top Dealers, those ranked 20 to 38, outperformed the top 10 and the top third, with a combined revenue increase of 13.9%, compared to 11.1% for the top 10 and 10.4% for the top third. It wasn’t just one or two companies goosing the growth either. Nine of the 19 companies in the middle third reported revenue increases exceeding 15%. And the bottom third posted market beating growth of 5.5%.

Among other insights to be gleaned from a close analysis of the lists, including those dealers that report but choose not to verify (often because it’s just too much trouble at tax time) and those we estimate: 1.) Internet sales of all types by all kinds of dealers and distributors continue to show very, very strong growth. Distribution will find its most efficient means. 2.) Spec- and bid-oriented dealers, for the most part, had a year of strong sales growth in 2014, a sign that the spec market fully recovered last year.  3.) Mergers and acquisitions still played a significant role in the growth of a number of companies, but the effect on the overall growth numbers was less pronounced than in 2013.

For more detail you will have to wait until we publish the full 2015 Top Dealer Report in FER‘s June issue. You should receive the digital edition version the first week of June and the print issue a week or so later. Among new features of this year’s Report will be listings of the top broadline distributors according to their durable supplies and equipment sales and a first-time listing of the top five E&S dealers in Canada. We learned a lot from those analyses, too.

Chris Palmer and I thank all of you who reported, verified, and at least responded to our e-mails and calls this year. We appreciate your help. Have a successful and profitable 2015, too.

Cheers,

Robin Ashton

Publisher

rashton@fermag.com“””