ASI President & CEO Tim Andrews moderated the discussion, which featured executives speaking about ongoing challenges and what the new year will hold for the industry.
Heading into 2023, there’s a lot to be optimistic about.
“In the U.S., business is booming,” said Jo-an Lantz, president and CEO of Top 40 distributor Geiger (asi/202900) and a member of Counselor’s Power 50 list of promo’s most influential people. “The average order count and value across the board is up.”
But challenges remain, noted promo industry leaders during a “World Update” panel discussion moderated by ASI President and CEO Tim Andrews on Monday, Oct. 17, at Promotions East, the trade show hosted by the Specialty Advertising Association of Greater New York (SAAGNY) at Harrah’s Resort in Atlantic City. Inflationary pressures, in many cases, have helped push profits above 2019 levels, but they’re also putting a strain on business expenses. Supply chain and inventory levels remain ongoing issues. And the prospect of heading into a recession next year has many people concerned.
Lantz was joined on stage by Lance Stier, Power 50 member and CEO of Top 40 supplier NC Custom (asi/44900); Andy Shape, president and CEO of Top 40 distributor Stran Promotional Solutions (asi/337725); Dan Edge, president of supplier Peerless Umbrella (asi/76730); and Eric Levin, executive vice president of decoration service for Top 40 supplier alphabroder (asi/34063). The supplier and distributor executives talked about how they’ve kept their teams engaged and supported during the last few years; why technology is critical for solving everything from labor to inventory issues; what trends they’re seeing among clients; and how the industry can best weather another recession if it materializes.
Retaining employees on the distribution and decoration sides of alphabroder’s business has been particularly difficult in the last two years, according to Levin. “It was a real, real struggle,” he said, adding that the supplier’s distribution centers were all within five miles of Amazon distribution centers, and alphabroder often found itself losing workers to the e-commerce giant.
To help raise morale and stem attrition, alphabroder focused on “continuously communicating with employees” about what was going on with the company, and also fielded anonymous employee engagement surveys to get a better handle of workers’ pain points, Levin said. “I think it really helped,” he added.
At Geiger, COVID and its ripple effects had employees “totally stressed out,” despite great sales in 2021 and 2022, said Lantz, Counselor’s 2020 Person of the Year. So, the distributor doubled down on HR, hiring a new chief human resources officer, renaming the department “the people team,” and focusing on what employees need to thrive, rather than just handling payroll and benefits.
NC Custom has also invested heavily in human resources and increased its recruiting budget significantly, Stier said. Rapid growth over the last couple of years – growing from 900 to 1,400 associates – requires a commitment to training and hands-on involvement, he added. Despite the growth, the supplier hasn’t lost its family business ethos and the executives try to lead by example whenever possible.
“You’ve got to be out there,” Stier said. “People respect you if you’re the CEO, and you’re out there packing boxes when the order has to get out.”
The suppliers on the panel also noted they’ve put an emphasis on technology – both to improve their employees’ workday and to make things more seamless for distributor clients. For example, alphabroder is adding robots to many of its distribution centers: Human associates pick out inventory from a particular area of the warehouse and put it on the robot, which then delivers it to the front of the building. The technology has helped overworked distribution center employees get back to a normal eight-hour workday, Levin said.
The supplier is also committed to customer-facing technology solutions. “Anything we can do to help our distributor partners self-serve,” Levin said, “We’re focused like a laser on that.”
Edge noted that Peerless has added live inventory – where distributors can type in a color and quantity and see how many products are available – but it’s been a struggle to get customers to trust them. “We’ve put so many tools on our website, and it kills me because no one is using them,” Edge said.
Peerless and other suppliers say they’ve also made deep inventory investments to help curtail some of the stock issues that have plagued the industry in the last few years.
Executives also discussed some of the trends they’ve been seeing. High-end food gifts continue to be popular as well as brand-name items. Buyers are increasingly asking about supply chain diversity and cybersecurity measures in their contracts, Lantz said. “If you think just outsourcing credit card transactions to a third party makes you safe, you’re wrong,” she added.
Sustainability has also become a bigger conversation among clients, Shape said. But it’s not merely about whether an item is made of, say, recycled materials; it’s also about considering the lifetime value of a product. Clients want to ensure they’re sourcing promotional products that are useful and something end-users want so that “they don’t end up in the trash can,” Shape added.
Regarding a potential recession in 2023, panelists urged the distributors to broaden their client base and expand into areas of the economy that fare better during a recession. “Treat it almost like a stock portfolio,” Levin said. “If you’re all in with a certain type of customer, you’ve got to diversify.”
It’s also important to sing the praises of targeted, tangible advertising over digital, print and other forms of blanket marketing, Shape said. During the pandemic, he added, “A lot of events got canceled and people started doing a lot more direct marketing. I think our customers started to realize that targeted marketing is highly effective.
“We need to be evangelists for this industry. It’s one of the only forms of advertising that doesn’t take away your time, it actually gives you time.”
While the future is uncertain, the bottom line, according to Stier, is that whatever the challenges, they’re better tackled as a unified front whenever possible. “The industry is about collaboration,” he said. “It’s a collaborative place where people come together and we work hard to achieve something. We don’t know what the road’s going to be, but we know we’re all going to be in this together.”