Sanya Sahi

MOUNTAIN VIEW, CA—The consumables segment of the cleanrooms industry has traditionally been highly fragmented, with a large number of suppliers focusing on niche or regional markets.

In recent years, however, the number of cleanrooms distributors has shrunk significantly, as national chains such as VWR, Fisher Scientific and Cintas have acquired several smaller niche/regional players.

As a result, manufacturers of consumable products have seen the number of companies supplying their products in the US significantly reduced. One industry participant saw the number of outlets for its products fall from 45 to 15 in just a few years.

Another effect of the significant consolidation in US distribution channels has been the number of brands available from each supplier. Previously, one supplier used to carry only a few brands within each product category; now, distributors tend to carry the majority of major brands available. The number of product categories with each supplier has increased as well.

The motivation behind the consolidation trend has largely been end-user demand. Companies such as Intel, Motorola and Texas Instruments have, in an effort to reduce procurement costs, increasingly sought to buy supplies from distributors offering the widest selection of products.

While the increasing trend toward one-stop shopping has fostered advantages such as greater visibility in national chains, the ability to do mass marketing, and larger one-time product orders, some effects have been less than desirable.

For one thing, the amount of direct competition among suppliers in the industry has increased significantly, as more suppliers have moved away from niche market specialization to multi-segment participation. As a result, price pressure has intensified, threatening to hamper future market growth rates.

In addition, the greater availability of brands with each supplier has fostered competition among individual product manufacturers, which now have to fight for end-user attention. In turn emphasis on brand-name development and superior technological capabilities have emerged, as manufacturers have tried to differentiate their products from the competition. While these strategies have enabled growth in unit sales for individual companies, increasing marketing and product development costs have somewhat mitigated positive effects on the bottom line. Small-to-mid-size manufacturers have found it difficult to get their foot in the door with potential new customers if they do not already have good relationships with the top distributors. This level of competition may result in the elimination of many smaller companies in the industry.

It is still early to determine who will come out the winner among manufacturers, as the battle for brand-name recognition and product differentiation is still very much on-going. What is already certain, however, is that end-users are benefiting from the consolidation trend. The overall shopping ease, potential price reductions and a larger product selection will make for a more efficient purchasing process, allowing significant cost reductions in the procurement department.

Editor's note: To offer participants in the contamination control industry an accurate view of the US cleanrooms market, Frost & Sullivan, a global market research and consulting company, in conjunction with CleanRooms magazine, is conducting a market research study of the industry. This article, based on research for the second segment of the report, Cleanrooms Consumables, offers insight into some of the trends in the cleanrooms consumables industry. This is the second in a series of monthly installments. More details will be available in October when the entire project is released.