Predictions for the promotional products industry.
The $4 Billion dollar US promotional products industry is in an immense, transitory set of changes. How business is done, what business will look like in 2022 and how we reach clients in the new post- Covid -19 world is being reconsidered.
Let’s look back before we look ahead.
To say the promotional products industry has changed in the last 24 months would be a colossal understatement. In fact, I can argue that our industry will never ever be the same.
In the last quarter of 2019, the American and global economy was on fire. With that “ready to rumble” approach by all local, national and global brands the promotional product business was keeping in lockstep. In 2019, ASI recorded it’s highest sales and it predictions for the best historical year, ever to come, in 2020.
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Then along came Covid-19.
No one saw that coming!
In early January 2020, China’s 1.4 Billion workers left in mid-month to celebrate their annual lunar new years. As we are constantly working with our factory’s in China we were well aware that the next month was, as always, going to be disruptive. What happened next was shocking!
On January 20th I received a Wechat from our factory manager in Shenzhen, he sent me a short 30 second video. The video was taken from his 30th floor apartment where he and his family were in lockdown.
Shenzhen, a city of some 30 million people was closed. No one on the streets, no one driving, no one outside of their homes. I was stunned.
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What happened next stunned us even more!
The Chinese government continued the lockdown and extended the Chinese New Years (CNY) by a full additional 3-4 weeks. This caused the first havoc in the promo market as products and orders that had been sitting on the factory floor prior to CNY, along with the orders in their inboxes, were now delayed an additional 3-4 weeks.
Trump steps in to cancel flights from China
On January 31’s 2020, then President Trump cancelled all incoming passenger flights from China.
On the face of it, that decision seems like a simple one as why would we want passengers coming in from China, the then epicenter of the virus?
However, the underestimated result of this was to further strangle the supply chain. We spoke extensively about this in the first quarter of 2020. The short and sweet version is as follows. Prior to the pandemic 70-80% of all incoming goods from China came in in the belly of all commercial passenger flights.
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Then came the PPE Pandemic Panic
In my 25 plus years in the promotional products industry I have seen lots of product trends and fads but I have never, ever, seen what took place with PPE.
In March of 2020 we were importing hand sanitizer. We were one of the few who were able to get products in from the offshore factory’s. To give you a slight idea of the level of interest in PPE consider this. In a typical day we usually get about 1500 visitors to our site. In the months of March and April in 2020 we were getting on average, 12,000 visitors to our site. It was that crazy!
Then came the great promo silence.
The PPE Panic lasted about 6 months. There was lots of heated debates as to what was a KN95 vs KN94 masks, what level of alcohol could be used in hand sanitizer and what could be done by the promo business to help with and capitalize on the need for PPE.
In my opinion, PPE was and is not, one of our core capabilities and strengths. We did an amazing job at filling in the needs for PPE in the overall marketplace for that period of time, but it will never be a big part of our future business.
Once PPE became more available at retail and in the market in general, the demand and the prices for PPE fell like a stone. This lead to the great promo silence.
The great promo reboot, again, again and again.
The reasons I repeat the words again 3 times is that the time between PPE settling back into its proper place at retail (August 2020) and today is it seems to me that we have had a series of false starts and repeated reboots.
All of which is related to the arc of the covid pandemic.
Vaccinations, breakthrough infections, delays in reopening of business and a general uncertainty in the business world has caused the ability of the promotional product supplier and distributor to gain any meaningful ongoing traction to be one of “fits and starts”. Then along came Omicron!
The best news, Omicron is here!
Now I may get some hate mail for what I just said but let me explain.
I am a bit of reading nerd. About a year before the covid-19 pandemic was anywhere near our radar I was fascinated about reading on the the great Flu pandemic of 1918-1920. I also read 3 companion books on viruses and how they work. I said I was a nerd.
What I found that was consistent in all of this reading and information was the following.
Firstly when a new virus (novel virus) is introduced into the populace we have no immunity. This means the greatest damage in terms of deaths and hospitalizations take place. This is what we saw in early 2020.
Secondly, once there is some general immunity (people who had covid and survived) and then the introduction of the vaccine, we, as a society, collectively raise our of level of immunity. Preventing, to an extent the worse effects of the virus as we have more and more antibodies.
Finally (and hopefully), the virus mutated into the Omicron variant. It has become a widely spread but very mild “cold-like, flu-like disease.
Without going into great details and citing a number of papers such as the Lancet and CDC the short summary is this.
“The virus now wants to co-exist with us by being the least lethal to us so it can replicate as effectively as possible” CDC Dec 2021
If Omicron is the end of the pandemic, what’s the future for promo?
If the end of Omicron is truly the last gasp of the virus and covid becomes endemic much like the common cold and flu, then we can start to get back to work.
The date for the end of Omicron is fairly certain to be towards the end of February.
The reports out of South Africa, where the variant raged 2 months before coming here, is best described as a sharp massive upwards spike of infections, very few hospitalizations and then followed by an equally massive drop in infections as everyone (almost) had caught Omicron, due to its high rate of contagiousness.
Given when Omicron started here and following the same pattern of sharp infection rates and low hospitalization, I see the end of February as the best case scenario for downside of this variant. And the end of serious covid, for now.
But what will the promo business look like?
This is my best guess.
I apologize that I cannot guarantee that what I am about to say is going to actually happen. But here goes.
Firstly, business (our customers) , will need to gather their world together and reassess where they are in their marketplace and what they will need. If they are ready to rock without much ramp up time, they will very quickly see that they have a tremendous opportunity to market themselves in their specific marketplaces.
Their competition will be weakened, their customers will need re-engagement and they will be ready to re-establish their place in the market. This means sales for the promotional product business.
Trade shows, unfortunately will lag behind. Due to the time frame to book shows and the overall cautiousness of their business models I expect trade shows to return in full force come the fall of 2022.
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The final word.
In my opinion, there will be survivors and then the rest.
I think in those that will survive these past 2 years, we will see a much leaner and more nimble promotional product business model.
The survivors have all learned the “ins and outs of pivoting” , so, those of us left to take advantage of the next wave of business will be ready to take on the marketplace in whatever challenges that come our way.
For those who haven’t learned to pivot or become more creative in their approach. The future may not be so bright.
Here’s to a great 2022, albeit, a little delayed of a start!