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February 2018

Household and Personal Product Distribution

Sectorwatch

Consumer retail is growing, driven by increasing customer confidence in 2018. In fact, Deloitte estimates the broad wholesale and distribution market will grow at an estimated 3.2%-3.8% in 2018 with heated competition among store formats, channels, and players expected to continue. With the proliferation of new products, technologies, and business models, consumers face an increasing number of choices—larger established brands reforming with both online and in-store operations; and newer online or application-based only entrants are emerging. This industry evolution has created substantial opportunities for niche player to grow organically at a rapid pace, while providing a target-rich environment for larger players to grow and expand capabilities/channels through M&A.

Industry Trends:

• Current revenue growth rate exceeds the average of the last 3 years, indicating that market momentum is increasing
• Current gross profit margin exceeds the average of the last 3 years gross profit margin, indicating supplier pricing power
• Current EBITDA margin is less than the average of the last 3 years EBITDA margins, which may signal further consolidation