A Plymouth-based maker of exhibit booths adopted a new business model to survive the Great Recession.
(left to right) nParallel Executive Vice President Don Gonse and President Megan Diamond, photographed on 1/17/13 at the Plymouth MN., company offices, with a LED light curtain for client Wolters Kluwer Health. nParallel makes trade show exhibits for clients. It also makes customized exhibits to rent to clients who cant afford to buy one.
These days, nParallel's client list is impressive, and its book of business is approaching $10 million in annual revenue.
But it wasn't that long ago that the Plymouth-based maker of trade-show exhibits was on the ropes.
The Great Recession hit the business almost without warning. The marketing budgets of its clients were slashed, trade-show attendance took a dive and demand for custom-made exhibits dried up.
NParallel's staff of 40 was cut in half. The remaining employees took pay cuts and worked four-day weeks.
"Clients were canceling shows right and left," recalled Don Gonse, executive vice president for business development. "We couldn't react fast enough."
"It was painful," said company president Megan Diamond.
Indeed, the trade-show industry reported nine consecutive quarters of year-over-year attendance declines from the end of 2007 to the middle of 2010 for a total drop of 15 percent, according to the Center for Exhibition Industry Research (CEIR).
But nParallel turned the corner with a tweak to its business model in 2009. It went into the rental business.
Instead of exclusively building custom-ordered exhibits for clients, nParallel began offering a custom-rental option.
Today, rentals account for about 20 percent of nParallel's business.
"Our clients were saying, 'I can't afford a new exhibit; what can you do for me?'" said Diamond. "That's how the rental business was invented."
NParallel sits on 85,000 square feet of space at its Plymouth location, the bulk of which is a warehouse and construction shop where exhibits are made, assembled and stored.
NParallel's client roster ranges from tire giant Bridgestone to Angie's, the kettle-corn company from North Mankato. About 70 percent of nParallel's work is for trade shows, and 30 percent is for retail displays.
Most of nParallel's clients own their exhibits, which can be reused at multiple trade shows throughout the year and generally have a lifespan of three to five years.
The rental projects use generic cabinetry and interchangeable electronic features such as laptops and flat-panel TVs. NParallel will design and add components for the exhibit that are unique to the client. In the end, a customized rental exhibit costs about half as much as a full-scale customized exhibit.
"We purchase as much as we have to and then we rent it out," said Gonse.
The rental option was the perfect fit for Plymouth-based Nonin Medical, which attends more than 20 trade shows a year to display its evolving line of noninvasive medical monitoring devices.
"We really wanted to test-drive different layouts before we buy one," said Melanie Stanek, Nonin's director of corporate relations. "We're in the middle of a brand refreshening and update, and we have markets we've never been in before. NParallel is constantly coming up with new designs."
Stanek said Nonin wanted a display with a back-lit center console and display counters in the front.
"Our sales reps like to sell up front. Demonstrations up front tend to attract more people," Stanek said. "We need to display different products but still have a clinical feel."
Trade shows are big business in the United States. Dallas-based CEIR estimates that companies spend $120 billion a year on trade shows when air fare, hotels and the cost of custom exhibits are included. And that includes custom rentals, which are growing in popularity.
"Exhibit makers resisted rentals for a long time but then realized that was the trend that was going to carry on. They've diversified just as a recession makes you do," said CEIR president Doug Ducate in an interview. "Materials are so pliable now you can't tell rentals from custom-built exhibits."
David Phelps • 612-673-7269