Business Service Centers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 10,300 business service centers in the US offer mailbox, parcel handling, and document processing services to individuals and business customers. The mailbox rental segment provides private mailboxes, packing, shipping, and notary services, and sells mailing and office supplies. The copy centers segment offers document printing, copying, and facsimile services, as well as word processing, and on-site computer rental.

Competition from Large Office Supply Chains

Business service centers have seen increased competition from large office supply store chains.

E-Commerce Drives Growth in Parcels and Returns

The growing popularity of online shopping has resulted in a surge in parcel growth delivery to businesses and consumers, accompanied by a surge in returns.

Industry size & Structure

The average business service center employs fewer than 10 workers and generates almost $2 million annually.

    • The US business service centers industry (including copy shops) includes about 6,300 firms that operate over 10,300 facilities, employ 81,000 workers, and generate annual revenue of about $12 billion.
    • The US industry is concentrated: the top 50 companies account for about 60% of revenue.
    • Large companies include The UPS Store (5,100+ locations), FedEx Office and Print Services (2,200+ locations), and AlphaGraphics (250+ US locations).
    • Many mailbox rental firms and copy centers/shops are franchises of large national chains.
                              Industry Forecast
                              Business Service Centers Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Apr 4, 2024 - Steady but Slower Industry Growth
                              • The business service center industry is expected to experience slower but steady sales growth in the coming years. The industry’s year-over-year sales increased by 7.4% in 2021, 4.2% in 2022, and 3.9% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to drop to 2.3% in 2024, then rise nearly 3% in 2025. The industry will then see flat but steady average annual growth of about 3.5% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                              • The business services industry could see a downturn if economic conditions reduce small business marketing budgets and/or capital spending. In February, the US rent delinquency rate among small, independent businesses rose to 40% compared to 37% in January, according to a March report by Alignable, a social media outlet for small business owners. More than half of survey respondents (55%) said they were struggling with rent increases; of those, 16% said rent was up by 20% or more compared to six months earlier. Small businesses rated inflation as their top concern, as costs for supplies and labor were higher compared to six months earlier. The industries that struggled the most to pay rent included restaurants (with 43% of those surveyed saying they couldn’t make February rent), science and technology (42%), travel and lodging (41%), musicians and artists (40%), beauty (38%), gyms (38%), and real estate (38%).
                              • In February, the National Federation of Independent Businesses’ (NFIB) Small Business Optimism Index fell 0.5 points to 89.4, marking the 26th consecutive month of being below the 50-year average of 98. Nearly a quarter of small businesses (23%) cited inflation as their most significant problem. The percentage of small businesses reporting labor quality as their top business challenge fell five points to 16%, marking the lowest reading for the metric since April 2020. About 54% of those surveyed reported capital outlays in the last six months, down five percentage points from the previous month. NFIB Chief Economist Bill Dunkelberg said, “While inflation pressures have eased since peaking in 2021, small business owners are still managing the elevated costs of higher prices and interest rates. The labor market has also eased slightly as small business owners are having an easier time attracting and retaining employees.”
                              • Commercial bankruptcy filings increased 22% in the first quarter of 2024 compared to the same period in 2023, according to Epiq Bankruptcy Solutions. New commercial Chapter 11 filings increased 43% in Q1 2024 compared to Q1 2023. Epiq Vice President Micheal Hunter said, “March marks 20 consecutive months that total, individual, and commercial bankruptcy filings have registered monthly year-over-year increases. Factors contributing to this trend are the higher cost of funds and interest rates, a reduction in consumer discretionary spending, higher housing costs, and a continued drawdown of excess savings. These factors coupled with the post-pandemic anticipated normalization of bankruptcy volumes lead me to believe this upward trend will continue through 2024.” Higher rates of commercial bankruptcies could impact demand for business service centers.
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