Continuing this two-part series on cooperative purchasing, Lisa Merder, OMNIA Partners Vice President, Workspace Solutions, and I finish the series by talking trends from 2023 and some things that could shape 2024 spending.
Michelle: I think it is important to really understand the scope of this vertical, because a lot of times, in our industry at least, everyone's looking at Federal, as was I, until you and others educated me on the SLED (State, local and Education) side and the volume that is done there. First, let’s point out that this category of furniture spend increased in 2023. Which should be eye opening to those that are not selling in this vertical. This market definitely increased last year, and is projected to increase this year. But, more importantly, total SLED furniture purchases are close to $4.5B. So, it's a huge market. And when you compare that to federal which is just over $1B billion in furniture, this is a huge opportunity to grow your market. Such a great vertical to be in, for sure, from a furniture standpoint.
Lisa: We have done an analysis with several different companies, and the potential for public sector spending in all categories is $1.2 trillion. So, we have a lot of white space to grow..
Michelle: Lisa, if there was one category that contract holders should be focused on, specifically furniture manufacturers, in this vertical what would it be?
Lisa: I like the education vertical. I really think this is going to be the year for education. It’s interesting to me you have the Esser funds that are going away at year end. $1.2 billion that has not been spent in Esser funds. I would say all different types of education opportunities, not just 4-year schools but 2-year, trade schools, etc. I'd like to break it down by public schools, private schools. K-12 schools. If you look at a student in a public school, it's about $90 per student. Take that time 20,000 students and that is what they can project for spend. That's the average. If you look at the private schools, spend is $180 per student. Take this amount times 20,000 and you see what their projected spend could be . Now, we're talking specifically about furniture. If you're a K-12 furniture manufacturing company or distributor, you're looking at about $260,000 on an annual basis. So, there's a lot of big numbers there.
A lot of people bypass schools that have 2,000 or less students and they go for the bigger campuses. No one is calling on more of the rural area, the smaller private schools, or the community colleges. So that's where I think this year's going to be a big focus.
Michelle: Education definitely should be a focus. What other emerging markets, or what other groups that can buy off a cooperative should we be looking at?
Lisa: Well, a lot of them have a lot of money. But the one group that's not being touched is the nonprofit organizations When you start to look at nonprofits, you know you think about YMCA or Big Brothers/Big Sisters. They are large corporations, right? They have CEOs and CFOs. They have money to spend, but they don’t have a GPO. When you meet with them and explain what is a cooperative and the benefits, they gravitate to the ease of using a cooperative. It's real, simple, and for us in the furniture world, they do not have an architect or design firm assigned to them. So, they look to OMNIA Partners, our suppliers, me as a Subject Matter Expert to help them figure out what they need. We have a list of the top 100non-profits that we have built a relationship with. This was not a focus for us until about a year and a half ago, and the reason being is because we just took it for granted. When we looked at how big the non-profit space is, it would be higher than the city/state space. If you ever do a Google on a nonprofit, charitable organization and see how big they are, they're huge. So, we dedicated a whole team to just focus on the nonprofits and build relationships with non-profits throughout the United States.
Michelle: Great information. Every time I mention nonprofits someone says “nonprofits, they don't have any money.” I always say talk to Lisa Merder, they definitely do have money!.
I love a lot about cooperatives, but one of the things that I love over Federal is everyone has a lot of agencies that can purchase off cooperatives. With cooperatives everyone has state and local, everyone has nonprofits, everyone has higher ed, everyone has K-12. It's definitely something that can be used universally across the nation.
Let’s switch topics. We are in an election year. What does that normally mean for SLED/Cooperative spend?
Lisa: I looked back on all the election years. We've seen growth through the cooperative of 2 -5% every year. An increase in spending because people have the money and they're afraid of what's going to happen after the election, right? So, spend it while you got it! Especially in cities, counties, and municipalities, but also in the higher education, or K-12 using Esser funds. I would make sure you know where the money is coming from when you are speaking to an agency.
Michelle: Clearly this is a vertical we need to be watching to grow but especially we should see some good growth in the election year!! Thanks so much Lisa for your insight!
So, what are the top tips out of this 2 part series we hope you captured?
Understand Cooperative purchasing
Have a targeted approach
Partner (with dealers in your market and if you don’t have a contract find a partner that does)
Focus on 2 strong/emerging markets within cooperative: Higher Education and the Non-Profit sector
The SLED market represents a very large part of the total furniture industry each year. Contracts are the main way that agencies, higher ed and non-profits procure furniture. Cooperatives are a larger and growing contract vehicle that these end users feel comfortable using to make their acquisitions. This should be on everyone’s radar as a potential vertical to grow sales and market share in 2024 and beyond!
ABOUT MICHELLE WARREN
Founder, President - Catalyst Consulting Group
Michelle Warren is President of Catalyst Consulting Group, a firm specializing in providing strategic solutions to the commercial furniture industry to enhance their sales, positioning, and distribution. With 25 years of industry experience on the dealer and manufacturer side of the industry, Michelle has been recognized as an innovator in selling to the Federal Government, State/ Local Government, Higher Education and Cooperative Purchasing. Her expertise includes: sales strategies, strategic planning, 3-5 year road mapping, targeted marketing plans, distribution development, hiring reps, and training for reps and/or dealers. Michelle is known as a “serial networker” in the furniture industry and enjoys meeting people and making connections happen.
If you’re interested in connecting - reach out at: [email protected], connect on LinkedIn or visit www.strategic-catalyst.com to learn more about her work.
As seen in Delve | May l 2024 V.49
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