The More Things Change the More They Stay the Same

“The more things change, the more they stay the same.” Well-intended advice usually hurled across the generation gap from grandfather to grandchild ... or from business veteran to business upstart.

Before you roll your eyes and nod your head the next time this morsel of wisdom is offered up in the workplace, take a closer look around you. There’s a strong case to be made that the above maxim succinctly sums up the current state of the jan/san industry.

A close look at “Jan/San 2001” reveals a collection of predominantly small to mid-sized businesses — many of which are family-owned — that take pride in building sales relationships versus merely taking orders, like to think there’s still a place for start-ups short on capital but long on energy and determination, and see themselves as the last of a dying breed of entrepreneurs that epitomize small business opportunity.

And at the same time, this is an industry whose recent history is marked by unprecedented mergers, acquisitions, consolidation, roll-ups and technology “future shock” — among other phenomena — that make it more difficult, these days, to offer up a stereotype.

So how much of the ‘50s, ‘60s and ‘70s way of doing business lingers today? To what extent do bygone eras still personify today’s edition of sanitary supply distribution? And, to what extent can we never go home again?

Jack Ramaley has been involved in the jan/san industry for 45-plus years and served as the International Sanitary Supply Association’s (ISSA) director for 15 years. He remembers when he started in the business — working for a vacuum and floor machine manufacturer and spending days at a time on the road away from his family. He says the same was true of many other salesmen.

“Many of them wanted to stay home so they started their own businesses,” he recalls. “As I remember, in the ‘50s, the majority of the distributors were disgruntled former employees of existing distributors, or there were others that didn’t want to travel anymore.”

Many, too, worked for jan/san-related companies for a few years until they built the experience and capital to venture off into their own endeavors as distributors.

Janitorial and sanitary supply distributors really started to spring up following World War II, says Ramaley. He says many people returned from the war eager to start their own business and many found jan/san to be a fitting field. Many of those businesses are still around today, says Ramaley, and despite consolidation and sell-offs, many are run by second or third-generation owners.

Theda Kirk is a prime example. She and her husband run a Riverton, Kan.-based distribution company, Midstate Supply Co., of which she has been a part since her childhood.

“My dad started the business,” she says, “because he worked for a company that sold chemicals and paper. Then he started buying paper products and delivering them himself.” Kirk’s father started the business in 1978.

When Kirk’s father moved when she was 22 she took over his customer base. Kirk’s husband joined the company a couple years ago, she says.

“It worked out for the best. He wanted to spend more time with the family,” says Kirk, who claims she doesn’t have a title within the company, because she “does everything.”

And every family member has his or her place. Kirk’s 8-year-old daughter puts in her time, too. She spends after-school hours fixing labels to boxes, among other things.

“It’s a ‘mom-and-pop business’ and everybody does something,” says Kirk. “We’re around when she gets home from school. She’s with us.”

Customer Service Roles
As much as bonds with family members made this business what it is today, customer ties, friendships and trust still top the list in importance in the success of many small and medium-sized jan/san distributors. Many attest this business is renowned for its customer service, which often includes “free” education, and a personal touch that is nurtured and grown with their customer base.

Ron Kahn, owner and president of American Brenner Wholesale, Burlingame, Calif., offers up a more qualified assessment of business relationships today. He believes customers are more fickle when it comes to doing business.

“There are lots of choices,” he says. “The customer is more sophisticated, and price-driven in many cases. I think the relationships are still important but they’re not the full reason for making decisions anymore.”

Tom Blash, vice president of South Florida Janitorial Supply in Riviera Beach, Fla., got started in the family business in 1947, worked his way up through the ranks, was CEO for 10 years and recently started his own jan/san distribution business. He feels the industry maintains many of the traits that characterized it in the ‘50s and ‘60s.

“I think people are perceiving it as changed, but my personal perception is that this is a relationship-based industry,” he says. Blash feels that fact is the leading reason the consolidators, despite their profound impact, will leave room for the smaller business owner.

“In our industry, several large companies have come in and have tried to consolidate all the mom-and-pop stores into one big, happy family,” he explains. “In my opinion, that’s not the right approach to take.”

But Eric (Rick) Johnson, vice president of business development and partner in Indian River Consulting Group, Melbourne, Fla., says consolidation is always an issue that creates worry among distributors. Consolidation is what creates the Graingers of the world, he says, and it’s widely said that one of the best ways to beat out your competition is to buy them.

“I don’t know if it’s any bigger fear than it was 10 years ago,” he says. “I don’t think it’s some big dragon out there spitting fire at everyone.” But Johnson says remaining competitive is the challenge for businesses, and being progressive and prepared enough to absorb anything new that arises.

Face-to-face communication is still important, says Blash.

“In our business, the vast majority of our customers are looking for a body, a human they can talk to,” he says. “The big companies don’t offer those kinds of services.” Limited delivery hours and cutoff times will limit consolidators’ attraction, Blash contends, and that’s where the “little guy” has an advantage.

Eric Peabody is the director of market research and development for Bunzl, St. Louis, a $2.1-billion-a-year subsidiary of a British company and a master wholesaler in the jan/san industry, among others. He says distributors do offer a valuable commodity with their training and customer service capabilities, and it will slow the rate of consolidation.

“I see a move in two directions,” he says. “I see a very good opportunity for the small distributor to carve out a niche based on service.” Peabody defines “small” as $5 million and below. “In that level I think there’s a huge opportunity for good stable businesses because there are smaller contractors that require personal attention.” Peabody feels the large, national and regional distribution companies will do well, too, and will continue to grow.

“I don’t see the mid-sized growing,” he says. “The alternatives are to become one of the acquiring regionals or to position themselves for acquisition. The middle classes seem to get pinched in every direction.”

Manufacturing, wholesaling and contracting will continue to consolidate at a rapid rate, but jan/san distribution lags behind, Peabody says.

Clyde Hardin, owner and president of Tri-Star Supply Co., Kerrville, Texas, agrees.

“Sure the big houses are out there giving stuff away,” he says. “They’re always a threat but I still think there’s plenty of room for the little guy. All he’s got to do is give better service because that creates a lot of loyalty.”

Hardin says that when he first got into the business 15 years ago, he had no background in it and in his first month, pulled in $250. He says his company will do a little more than three quarters of a million this year.

“Anyone can sell chemicals,” says Hardin, “but in order to get in the market you have to sell service and that’s how we’ve built the business.”

Peabody agrees that selling labor and cost savings truly sets small distributors apart.

“The small distributor can be so competitive because they know how to go in there and sell those solutions,” he says. “It’s hard to hold onto in a national organization.”

Stay Close to Home
A study done by ISSA confirms that close-to-home customers are still the bread and butter for the majority of sanitary supply distributors. In fact, the majority sell to customers located within a 60-mile radius of their headquarters.

Kirk says customer service ties in to the close relationships with local customers.

“When you’re dealing with the big companies, you might talk to ‘Sue’ today and ‘Joe’ tomorrow,” she says. “With the small guys, they’re the one who took the order, shipped the order and they’re the one person who can fix things.

“I’ve got customers I’ve had from the first day I started and I have some that I just picked up last week,” Kirk explains. “You get your own personal clientele. We set up almost friendships with people,” she continues, “and you kind of build a history. You know what their kids are doing in school, or what’s going on in the community.”

Customer loyalty is vital in this business, says Mark Lowery, owner of Enviroclean Supply in Redding, Calif.

“A lot of the customers want to keep money in our town, and they want service that day,” says Lowery. “They don’t want to have to wait an extra day. They want knowledge, where they can call and say they’ve got this type of problem and can we help them out with it.”

Fierce Competition
The distributors we spoke with all agreed that competition today is probably the biggest factor that separates business from what it was in its early days. There are tons of hybrid companies out there, not to mention the large consolidators who are able to service larger, more spread-out accounts.

Blash says competition is inevitable.

“It’s a juggling act,” he says. “We’ve been at that for a long, long time. Back when I got in the business,” he continues, “there were only a few competitors around, so price wasn’t much of an issue.”

“It’s a competitive industry,” adds Lowery, “especially when you’ve got the big guys knocking on everyone’s door.”

“Over the years much, much more competition has come into the market,” says Jeff Feder, vice president, sales, of Quality Chemical Co., Columbus, Ohio. “It is more competitive and price sensitive than it was years ago.”

Bunzl’s Peabody says the industry’s consolidation is slightly less at the distributor level than he’s observed with other industries.

“There’s some consolidation as in all industries,” he counters, “but there’s less at the retail distributor level and I think it has a lot to do with the personal service level,” he says. Peabody is convinced that the value end users gain from the education distributors provide is vital, and is much of the reason small and mid-sized distributors have been able to stay competitive.

“This started out as a niche industry,” says Johnson. “That’s changing and that’s where the consolidation factor comes in. Maybe 20 years from now,” he continues, “the mom and pop is not going to be able to compete.”

Consolidation Wary
Wholesalers, according to Feder, are allowing more companies to get up and running on a very small scale.

“The person selling out of the back of their station wagon can now go to a master distributor, pick up a case of toilet paper, and deliver it tomorrow. That has really changed the market a lot more than the consolidation of the companies,” he says.

Surprisingly, consolidation didn’t top the list of what distributors fear in running their businesses. Rather, they say the formation of larger companies ensures their place within the market.

“It’s left the market wide open for the medium-sized companies, and for the guy who wants to sell out of the trunk of his car,” says Feder.

“The consolidation in many markets hasn’t really worked to the advantage of those companies in getting the small and middle-sized customer,” says Feder. “Really it’s made a boon for these really small guys who have no overhead.”

A Hard Sell
In its heyday, jan/san distribution was viewed as an easy start-up — a business that was easy to get into. With competition, consolidation, falling profit margins, and regulation all posing valid threats, does this still ring true today?

Ramaley feels the business climate in general makes it easier to start a business today because of the availability of investment capital.

“If a person is willing to make the commitment I think he could be just as successful today as he could 50 years ago,” says Ramaley, who is 81.

Blash feels it’s more difficult than that.

“I would say it’s extremely difficult,” he says, “because of competition, and the amount of capital required, and the training curve.” Blash also says finding capable employees is also a challenge, since the level of sophistication with regulation is so much higher than in the past.

“I think that my overall impression is how much more sophisticated our industry has gotten over the years,” observes Blash, “We didn’t have to be too smart 20 years ago, we just had to be smiling.”

Add that to the fact that customers are better educated, are more price-conscious and are more demanding, and you’ve got a long hard road ahead to becoming — and staying — successful.

This industry will have its successes and its failures, says Feder, just like any other industry. But all agree the future of jan/san distribution is bright.

The importance of cleanliness and sanitation has increased drastically in recent years, ensuring distributors of cleaning supplies a ready market.

Others agree that although the playing field has changed somewhat, many of the attributes that have made this industry thrive over the years will lead it to a successful future.

“In a way the industry has changed and in a way it’s remained true to its roots,” says Blash.