One of the most asked questions I hear is “How did sales look in 2023 for Public Sector and what is the forecast for 2024?” Everyone knows I love data and one reason that I love public sector is that there is a lot of data available publicly if you know where to find it.
I find it much easier to find Federal data than State/Local/Education/Cooperative (SLED), but we can see enough to allow us to understand which sectors of SLED grew and which went down last year as well as how they are purchasing.
Let’s start by looking at federal spending fiscal 2023 (Oct 2022-Sept 2023) as it pertains to furniture and industries that could help us “forecast” what the next couple of years will do.
$15B in new construction up 15% from 2022 and up 50% from 2021. This has obviously been a focus for the Federal Government over the past couple of years.
Total federal contract awards up by approximately 1000 contracts
Overall federal furniture spend was up about 10% according to USA Spending with a total furniture spend of $1.02B
Furniture sales on GSA contract up around 16% according to D2D reporting with a total spend of $756M.
Small business spend for furniture under GSA Contracts down 7%.
National Stocking Number (NSN) program through GSA showed big gains with some contract holders having 100%+ growth.
VA had its largest spend year ever and the VHA IDIQ is going strong with around $130M in sales. Reminder, these sales do not show up under GSA contract sales since this is an open market contract.
Air Force Seating BPA is in its final year and had its best year yet around $7M in sales
Lots of moving numbers on 33721 and 33721P due to the changes made to the Packaged office contract rules last year.
SLED Spending 2023 January-December
Continued increased use of Cooperatives by SLED agencies.
Total cooperatives sales reached $60B and OMNIA represents over $30B.
There is no furniture reporting under cooperatives, but multiple sources say it is 2-3 x’s federal spend so $2-$3B.
Total furniture spend in SLED sectors was up 15% over 2022 reaching $5B in sales
State and Local spend saw a marginal decline due to budgets, sales still in excess of $1.1B
K-12 was basically flat year over year sitting just over $1.3B and latest survey shows over 25% of K-12 purchase off of cooperative contract.
Higher Education has the highest spend growth year, 229% over 2022 to reach $2.1B in 2023.
What a great year 2023 was for Public Sector!! But what does 2024 hold? I want to start by addressing the elephants in the room before I share Catalyst’s teams thoughts and predictions:
There is no federal budget. As of the writing of this article we are in continuing resolution through early March which will affect spend at least through then if not further.
We are in an Election year.
What will 2024 look like considering everything we have seen so far and the 2 above-mentioned state of affairs? My team put our heads together to “predict” what we think 2024 will look like. I will preface the comments below with these are what 4 consultants expect based on our vast public sector experience in the furniture industry.
Big Buyers/Federal spending priorities will show growth. DOD (including Defense Contractors), VHA, DHS (Border/FEMA), FBI & related security agencies, Transportation.
Co-op Gold: The cooperative space is really growing and they say they are only at 5% market share. Higher Education will show the most growth with a lot of state, local and federal money being pushed that way. We also expect an increased spend with Local Law Enforcement, Healthcare (County/City/State), and Urban Transformation investment.
Continuing Resolution Effects: Assuming we can get a budget passed and avoid a shutdown, a CR does tend to cause ripple effects, but what we’ve seen in the last 3-5 years is it doesn’t really hold up the day -to -day transactional business. It doesn’t hold up some of the smaller projects. It might delay some of those larger projects, but you do end up, depending on how late they pass the budgets, with pent up demand which adds some frenzy to the end of the fiscal year.
Election year: Furniture sales data does not support any ups or downs during an election year, but remember, the election is actually in FY2024 and if there is a change it does not happen until 2nd quarter. You will definitely see a difference in which agencies get money and how much change if there is a change.
Categorically, we saw an increase in seating sales last year and we anticipate that this will continue.
Hybrid Work/ Employee empowerment will lead to increase in new and different furniture solutions.
New construction and expansion should contribute to growth in large projects for the next 3 fiscals.
To sum everything up as far as predictions, Public Sector will continue to outpace commercial. Federally, there is money to be spent. It is just a matter of when and possibly which agencies.
Remember - The public sector furniture market exceeds $6B so there is ALWAYS room to take market share in any category. If you have any questions about how your business could benefit from public sector selling strategies - please reach out to me at any time! It’s what I love to talk about!
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 | February 2024 V.46