Consolidation looms in WMS market

Top WMS suppliers gain more market share in shrinking market By Dave Hannon

Recessions tend to drive market consolidation, as the lean revenues thin out the herd in nearly all markets. And the warehouse management systems (WMS) market is no exception, say market analysts at ARC Advisory Group.

In a recent report, ARC analysts say the top-tier vendors in the WMS market saw strong growth in 2008, as they have in most of the past 10 years ARC has performed the study. However, that trend of the big getting bigger cannot continue for much longer, and soon—maybe as soon as next year—the WMS market will have consolidated to the point where the only way the top five vendors can grow is by taking over one of the other top five.

Overall the WMS market shrank by 1% in 2008 and is forecast to decline again this year in total size before trending back up to grow again in 2010 through 2013. Compound annual growth for the WMS market through 2013 is forecast to be 2.2%, but much of that top-line growth is driven by the largest vendors.

“ARC expects that at least 10 WMS suppliers will go out of business”in 2010, says Steve Banker, ARC analyst. “In a smaller, consolidated market, the major suppliers will find that the WMS market is much more of a zero sum game. One vendor’s growth will come at another’s expense.”
And among the smaller vendors, there is likely to be a snowball effect—as WMS buyers get more concerned about the risk or going with a lesser-known vendor, they will ask those vendors to open up their books. “And many will fail that test,” ARC reports.