The price of paper towels has been rising during past three years due to rising production costs and demand stemming from the economic recovery
Los Angeles, CA (PRWEB) November 09, 2014
Paper towels have a buyer power score of 2.7 out of 5. “This score indicates moderate price negotiation power for buyers due largely to a high number of paper towel suppliers as well as standardization within the market,” according to IBISWorld business research analyst Jordan Weinstein. Alternatively, demand growth and price increases for key inputs during the past three years have been slightly reducing buyer-negotiation power.
In the three years to 2014, paper towel prices have been increasing due to a rise in demand stemming from growth in per capita disposable income and the number of US businesses. The recovering economy has been leading to increased demand from all sectors for goods and services, including paper towels. Additionally, suppliers have been experiencing rising input costs for plastic and chemicals, which are passed to the buyer in the form of higher paper towel prices. Additionally, the price of wood pulp (the main raw material used in paper towels) has been extremely volatile. Suppliers have also been increasing paper towel prices in order to protect their profit margins.
Unfortunately for buyers, moderate price growth is projected in the three years to 2017. “However, this growth will be limited as a result of heavy competition among suppliers in the market, which will boost buyer power,” Weinstein says. Suppliers face significant pressure to price their products competitively, and suppliers that raise prices too drastically risk losing clients to vendors that offer lower prices. The top paper towel companies are large, publicly traded companies such as Koch, Kimberly-Clark and Uline; however, the majority of suppliers are privately owned small- to medium-size companies.
Buyer power is also aided by the widespread availability of paper towels and subsequent low switching costs. The commoditized nature of paper towels has led to a wide variety of suppliers capable of satisfying specific buyer requirements. These conditions benefit buyers and will remain relatively unchanged in the next three years. For more information, visit IBISWorld’s Paper Towels procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of paper towels, which are used to sanitize hands and clean spills or dirt from a variety of surfaces. Businesses in all sectors of the economy use paper towels. This report does not include toilet paper or facial tissue.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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