We see two significant trends in the Import/Distribution sector which started several years ago, continuing for the next few years.

  • Fast paced consolidation through M&A activity in order to take advantage of economies of scale so that companies can maintain or improve higher margins. We see resulting vertical and horizontal integration occurring.

In addition to economies of scale, other factors that encourage company integration include brand alignment, market reach expansion, globalization and downstream consolidation. Companies seek to acquire brands that fall into their portfolio naturally, either to diversify or narrow on a specific market. Meanwhile, growth through market reach expansion is particularly enticing to traditional brick-and-mortar industries.

  • The off shoring and outsourcing of production continues to be a dominant factor leading to the decline of dozens of manufacturing industries such as apparel, furniture or hardware.

Not all is doom and gloom for some of these dying industry companies as good operators move to protect their competitive strengths in profitable market segments, target new niche opportunities and adapt to technological change intended to return them to success over the next five years. For example, some apparel companies have altered product mixes to include more high-end products that carry a bigger price tag, cannot be cheaply produced abroad, .and attract a more specific consumer base. Companies in furniture or hardware manufacturing are also focusing on high-value activities like designing and marketing, and creating new distribution strategies that have helped stabilize revenue.

For more information contact:
Stephen Reisler, CM&AA

Tel: 514-842-3911 ext 228