First Signs of Maturation in the Office Fitness / Ergonomics Industry?

At the intersection of office furniture, fitness equipment, self-help, weight loss, physical therapy, and personal performance tracking apps and devices there’s a new industry category, newly dubbed “Office Fitness,” that has emerged to stand on its own. Within it are products like standing desks, treadmill desks, sit-to-stand desktop risers, sit-to-stand meeting tables and numerous ergonomic accessories.

It’s hard to put a finger on how large this sector is but it’s clearly growing at an impressive rate, both in terms of buyers and suppliers. We see new vendors and new products popping up almost daily in this category. Hundreds of well-established desk and accessory manufacturers have introduced office fitness products. In fact, we were hard pressed at last June’s NEOCON show to find a single office furniture or accessories manufacturer that hadn’t yet introduced office fitness offerings.

From “Emerging” to “Maturing” MarketLike any burgeoning new market there is going to come a day when people stop using the term “emerging” to describe its stage of development, and start using the term “maturing.” We’re a long, long way from there, but the first signs of maturation has recently surfaced. Maturation is typically evidenced in the form of large corporate acquisitions. A recent set of acquisitions caught our eye.
Just before the end of 2010, $2.5 billion conglomerate Nortek (NASDAQ: NTK) acquired one of the leading companies in the ergonomic products field, Minneapolis-based Ergotron. Already this year, Ergotron, headed by CEO Pete Segar, has acquired Anthro, a $38M Portland, OR-based manufacturer of adjustable height tables that has been family run for three decades. This is the first time we’ve seen a strategic “roll up” of office fitness companies since the category has been recognized as a separate and distinct sector from the general office furniture business.

We recently had the opportunity to interview Ergotron’s CEO Pete Segar and Daneen Kiger, Ergotron’s VP of Global Marketing, about the rationale behind this acquisition. What we learned surprised us in a number of ways.

On the surface, the acquisition makes perfect sense. Both companies have long histories and well developed distribution channels into health care, education, and corporate IT. Both are makers of high-quality products. Both have developed a culture around enabling workers to stand instead of sit to get their jobs done, making them pioneers in countering the sitting disease epidemic that is ravaging the modern world. Pairing Anthro’s medical cart and office desk products with Ergotron’s desktop risers and desk accessory products results in a very complimentary line of offerings.

The only ‘dissonance’ we can see in the combined companies’ product line is that Ergotron has long been focused on manufacturing cost reductions and pricing its products very competitively, while Anthrocart has been building more specialized products that have commanded premium pricing. We look forward to seeing Ergotron bring its overseas manufacturing prowess to bear and presumably reducing the costs of Anthro’s products over time.

Sit-Stand Products in the Education Market

Because we’re so focused on the sedentary worker at WorkWhileWalking we’ve not paid much attention to the education sector’s embrace of sit-stand products for students, until this interview took place. We learned of both companies’ product offerings in this sub-sector and will soon be covering school-oriented desk products like Ergotron’s LearnFit in more depth.

Early studies have shown that there are more benefits to placing these types of products in schools than countering sitting disease. There have been many positive behavioral consequences as well, all leading to higher student performance. The Mayo Clinic’s Dr. James Levine discusses some of this newly published research in his new book Get Up! Levine and Ergotron have worked together for more than 12 years, in fact, to take transform laboratory environment learning into real commercially available products that people can actually use to combat ‘sitting disease’ – a term first coined by Levine. (Levine is also known as the ‘father of the treadmill desk’ though Ergotron has yet to get into this product category.)

Overall: A Good Match

It’s a commonly accepted statistic that 80% of corporate acquisitions do not pan out as the buyer expected, which is why publicly-traded companies often take a hit to their stock price upon announcing an acquisition, while the acquired company – if also publicly traded – see its stock price pop on the news. In this case it’s hard to see how Ergotron’s acquisition of Anthro cannot succeed. Culture match? Check. Product line synergy? Check. Customer sector alignment? Check. Clear potential efficencies to be gained from the merging of organizations and production means? Check.

We wish both companies the best of success in their new union, and look forward to the benefits that will surely result in product improvements and innovations over the coming years.