Jan-Pro has over 10,000 franchises in the U.S. and Canada.
ServiceMaster has more than 5,100 company-owned and franchisees. It has 27,000 corporate employees and a franchise network that employs over 31,000 additional people.
Many players in the Jan/San industry were considered too small in the office product world for the attention or cost of a commercial sales rep, but we’re entering a new world. Will paper and pens become an up-sell product?
Competition is Growing
Increased competition for market shared in the Jan/San category has created a crowded environment.
Major industrial suppliers and industry specialists, previously content with selling chemicals, forestry products or selling into niche markets, are gearing up for a major push into the broader Jan/San category – and why not. They are currently selling into the category now and have the technical expertise, but are missing the opportunity for growth and higher margins by not reaching out to a broader end-user market with their products and solutions.
SCA, a Swedish forestry company, (Fig.4) has divested itself from packaging and through aggressive acquisition over the last 7 years has become a world leader in consumer and commercial tissue and away from home (AFH) washroom products.
Don’t ignore these niche players. They’re big and making a profit on 3-7% margins. "We haven’t given up on launching innovative, earth-friendly products; we’ve just taken a step back to think about how and when consumers will be ready." Bruce Fleming, Chief Marketing Officer, Arm & Hammer
Consumer Brands Are Not Immune
To combat private label encroachment, P&G offers at least two product forms in many product categories. For example, the company has seen increased sales in Gain detergent from Tide and offers "Basic" versions of its Charmin toilet paper and Bounty paper towels.
The traditional commercial resellers are feeling the squeeze. Industry consolidation in products and equipment is rampant. Cleaning companies are moving into building management, security, and landscaping. Finance and equity firms are also putting skin in the game.
Battle Lines
Price Wars
The concentration of the market has begun and the threat is coming from all directions.
Producers will lower prices rather than shut down or reduce output to maintain the economy of scale.
Merchants will introduce alternatives instead of trying to price-match existing products in the market.
New entrants with a healthy bank balance will deliberately under-price new products in an attempt to topple existing merchants.
Firms who recognize their strengths and weaknesses will join with like or complementary competitors, or simply sell or close their business.
Firms that do nothing will fade away.
Go Green
Price is the number one reason more consumers are not going green. These premium priced products have seen a drop in sales since the economic downturn in 2008, resulting in a near zero advertising spend in 2010 and fewer product launches by the big consumer players. The more expensive brands like Method and Seventh Generation continue to see double-digit growth demonstrating that there is a solid core of users. Others will follow if the price is right.
Green products simply do not have the economy of scale. In a recent Green Day survey, 59% said they were unwilling to pay more money for green products.
Green products are still viewed as a niche product and priced at a premium.
Are we are waiting for a brave company to do some creative pricing in the short term to tear down the price premiums and achieve volume and price parity?
Ford recently did an industry-first by pricing their Lincoln MKZ Hybrid the same price as the gas version, and their hybrid option skyrocketed.
Green may soon be cheaper.
With soaring energy prices pushing up the price of mainstream goods, will they soon meet falling price of green products?
Green manufacturers point to the higher cost of ingredients as the reason for higher prices. But, for the 38% of all conventional detergents containing stain and odor removing enzymes, the two most common enzymes (proteases and amylases) are becoming commodities.
Alternatives such as quality microfiber cloths and water can eliminate over 99% of bacteria from hard surfaces.
Green cleaning can also describe the way residential and industrial cleaning products are manufactured, packaged, and distributed. Will governments levy an Eco tax?
According to a Forbes media estimate, if one accounted for the types of pollution caused by the manufacturing and the use of a new car, then the price of a car would rise by over $40,000.
If you were investing in Janitorial and Sanitation products would you put your money into traditional or green products?
How and When The industry is changing. Green is the future. How and when is the only question.
Timely information is critical: product sales and volumes, traditional vs. green products, retail vs. commercial. Are you taking full advantage of this growing category?
Reprinted by permission by the Canadian Office Product Association.
The Jan/ San category is being moved up COPA’s Data Factory schedule. If you wish to participate or take full advantage of the Data Factory services to COPA’s members please contact Sam Moncada, President of COPA at smoncada@copa.ca for full details
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