Clean profits
As distributors seek new markets, many are looking to janitorial supplies much as they did to safety products a decade ago
By John R Johnson -- Industrial Distribution, 2/1/1998
When executives at Turtle & Hughes decided to publish a new catalog for their industrial division, there was little debate over the newest entry to the book: janitorial supplies. In fact, the company is dedicating nearly 40 pages of its catalog to janitorial supplies, seen to be a fast-growing area for industrial distributors.As integrated supply continues to reduce the number of distributors customers work with, janitorial supplies and paper goods are increasingly included on the same purchase order as cutting tools, safety goggles, and hand and power tools.
Jay Drummond Jr., marketing and operations manager for the industrial division of Turtle & Hughes, says his firm has always carried traditional janitorial goods. The company has been a stocking distributor for Rubbermaid's industrial line for some time. But now Turtle & Hughes is greatly expanding its line of traditional, commodity goods to include items like carts and buckets, cleaners, and even floor waxing machines. And don't overlook paper goods like towelettes and toilet tissue.
"We're seeing more and more of our accounts wanting to throw janitorial and paper supplies in with cutting tools, abrasives and other supplies that we supply them with,'' says Drummond. "Before, it used to be just industrial wipes, but now it's the entire janitorial segment."
And that's a big category, with plenty of opportunity for increased revenues and profits. According to a study conducted by the International Sanitary Supply Assn. and Sanitary Maintenance magazine, sanitary/janitorial distributors in the United States rang up $15.2 billion in sales in 1995. That figure represented a 12 percent increase over 1992, the last year the study was conducted.
The sale of chemical products (cleaners, degreasers, etc) totaled $5.8 billion, or 38 percent of the market, followed by paper and plastics ($4.9 billion) and supplies and accessories ($1.8 billion). Included in the last segment are the janitorial products that many industrial distributors already carry -- mops, brooms and brushes, floor pads, matting, gloves, waste handling equipment, absorbents/spill containment equipment and safety accessories.
The fact that janitorial represents such a huge market, and that industrial/manufacturing environments are the single largest customers for janitorial goods ($2.7 billion) explains why industrial distributors see the janitorial market as an enticing one. Hand towels, liners and bags and toilet tissue account for nearly three-quarters of sales in the paper and plastics category alone.
Another reason industrial distributors now find themselves involved in the janitorial market is that traditionally, MRO distributors are seen as being the most important link to end-user operations. Often, the most opportunity for cost savings occurs at the MRO level, so distributors of these goods are being challenged by end users to carry more product. And, of course, everyone is looking to add to their core markets, much in the way that distributors embraced the safety segment 10 years ago when it was experiencing double-digit growth.
Many distributors admit they are in the paper goods business, whether they like it or not. Charlotte, N.C.-based Piedmont Mill Supply, for example, recently partnered with Dillard, part of $6 billion conglomerate ResourceNet International, in an effort to satisfy its customers' requests for paper products. T&A Industrial Supply of Brookfield, Wisc. has long supplied its customers with paper products, and Drummond says it's a growing business at Turtle & Hughes, too.
"For most of our integrated accounts we have their janitorial supplies, but our truck is stopping [at the customer] anyway and once they hear we have [paper goods] in stock with competitive prices, it gets thrown into the purchase order,'' Drummond says.
Debbie Allyn, industrial segment manager for SCA Hygiene Paper, a janitorial goods manufacturer based in San Ramon, Calif., says it's important for distributors to realize that market opportunity is everywhere for janitorial supplies, including industrial plants, schools, warehouses, gas stations and retail outlets like shopping malls.
"The industrial market is growing for us, and you can find applications for these things...they are hidden everywhere,'' says Allyn. "All of these places have rest rooms. In industrial applications, even if they use conventional shop rags, they all have high capacity hand wash stations where disposable wipes are critical."
Allyn says that while some commodity products are easy sells for traditional industrial distributors, she notes that providing value-added services for janitorial items is
just as important as
doing so for items like cutting tools and safety products. She notes that new types of dispensers for wipes, such as the firm's center-feed pull systems, not only result in cleaner and safer systems for users, but also decrease labor costs due to modern consumption control features and larger rolls that require fewer refills. Another benefit is a saving in storage space for towelette-like items.
Randy Mayes, president of Springfield, Mo.-based Springfield Janitor Supply, Inc., says many new competitors in the janitorial field are simply taking orders and drop-shipping pallets to the customer. And he understands why outsiders are targeting his channel.
"It's a huge market, and it's an easy add-on item,'' he says. "Most of our competition comes from outside the [traditional] channel of distribution, like food service brokers, and food distributors. Probably the one industrial distributor I see the most is Grainger; they are making a serious push into janitorial.''
But Mayes makes it clear that in order to be successful selling janitorial supplies, distributors need to not only work the commodity items effectively, but place a high emphasis on being the janitorial expert for the customer. Distributors need to offer training for cleaning and safety, no different than a cutting tool specialist does.
"Janitorial supplies are just a commodity to [some industrial distributors],'' says Mayes, "but we are specialists in cleaning. We're not trying to fill up our trucks and drop off product at somebody's dock. We're trying to fill a niche with training and education.
"I'm a value seller. If you don't have real value to sell, you won't exist in the marketplace. If all you are doing is a facade in terms of value, [customers] will smoke that out. The big [distributors] can get it to people quicker and cheaper, but they don't do the training and support part as well.''
That's especially important, says Mayes, when it comes to selling non-commodities like chemical cleaning products, where using the wrong hand cleaner can result in injury. Aside from selling training, the other huge opportunity for distributors is helping customers save on labor costs. Mayes estimates that only about three percent of the total cost of cleaning involves product; the rest is pure labor.
"Because of that, we can dramatically impact customers' labor costs by knowing the right product to recommend,'' says Mayes. "The chemical side of the business is not a commodity business. People try to make it that, but it's not. Customers are trying to buy clean, healthy environments as opposed to buckets of all-purpose cleaners. That involves training and knowing the products that you stock. If you do that, you've got something to sell." I
Paper & Plastics
Total market: $4.9 billion
Hand towels $1.1 billion
Liners and bags $1.1 billion
Toilet tissue $1.0 billion
Foodservice disposables $394 million
Industrial wipes $344 million
Facial tissue $295 million
Packaging supplies $196 million
Office paper $147 million
Janitorial supplies/accessories
Mops $307 million
Brooms and brushes $253 million
Floor pads $235 million
Mopping equipment $198 million
Mats and matting $180 million
Gloves $126 million
Waste handling equipment $126 million
Absorbents/spill containment $90 million
Source: ISSA, Sanitary Magazine
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