The promo industry can’t wait to forget 2020. Pivoting, adapting, surviving – distributors and suppliers did all they could to make it through this dreadful year.
It wasn’t entirely bad. Distributors and suppliers have proved deeply resourceful by rapidly shifting their business models and finding new and creative ways to reach clients. If not for their resilience, the promotional products industry would be in a far worse place than it is currently.
Now? Promo companies head into 2021 looking for a measure of certainty and a path back to prosperity. Reemergence and regrowth – these will be words that will define the promo products industry in the coming year. Undoubtedly significant challenges lie ahead and, sadly, some in the industry will succumb. But there’s a budding feeling that better days are near.
“Industry sales will rebound as the business, education, healthcare and nonprofit environments emerge from this COVID winter,” says Jo-an Lantz, president/CEO of Lewiston, ME-based Top 40 distributor Geiger (asi/202900) and Counselor’s 2020 Person of the Year. “‘Emerge’ is the operative word. It will be a long thaw, but it will get better.”
So what exactly does 2021 have in store for promo? With the help of promo industry leaders, here are 21 predictions for a better year.
Traditional Promo Bounces Back
At the height of the pandemic, it seemed the only thing promo firms could sell was hand sanitizer and PPE like face masks. But by August, there was a groundswell of interest in more traditional promotional products. That month, pens, water bottles, mugs, lanyards, tumblers and tote bags were among the top 10 most searched items in ESP, and searches for PPE and hand sanitizer, which had overwhelmingly dominated searches from April on, were respectively down 48% and 35% month over month, which highlights the shared belief that the return to traditional promo items will accelerate greatly. “We believe our core promo business will be up and that our PPE business will be down, which will net to a topline sales increase for us in 2021,” says Jeremy Lott, president of Issaquah, WA-based SanMar (asi/84863), which banked $2.4 billion in revenue in 2019.
2 Sales Improve (But Not as Fast as You’d Like)
The majority opinion among promo executives is that sales in 2021 will be better than in 2020. However, most feel they will not return to 2019 levels, when annual distributor revenue reached a record $25.8 billion. Many see sales momentum picking up in the second half of 2021, especially if an effective COVID vaccine becomes widely available and in-person events begin to return.
“We’re very bullish and believe dynamics will normalize in 2021,” says Norm Hullinger, CEO of Trevose, PA-headquartered Top 40 supplier alphabroder (asi/34063). “The industry will bounce back and build again toward pre-COVID growth figures. It won’t be easy, and it won’t happen overnight, but it will happen.”
3 PPE Remains a Big Player
The return of traditional promo items doesn’t mean PPE is completely going away. Most executives and sales professionals Counselor spoke with believe PPE will remain a strong seller in 2021. Some predict sales will taper in the second half of next year, while others expect them to last longer. “PPE will remain the biggest category for 2021, but hopefully by 2022 it will be the smallest,” says Jon Alagem, president of New York City-based distributorship Harper+Scott (asi/220052).
Regardless of how long PPE’s run at the top lasts, executives suspect the category will feature in promo’s playbook for the foreseeable future. “Face coverings, for instance, could become permanent for some non-medical industries like travel, food and beverage, in-home repairs/deliveries, salons and day cares,” says Hullinger. “As we move from the early days of ‘get me any face covering available’ to a more permanent state, companies will increasingly view masks as a branding opportunity for uniforms, corporate outfitting, giveaways and retail fashion.”
4 Businesses Finally Take Diversity Seriously
Issues surrounding social justice and diversity took center stage in 2020, and they’ll have definite reverberations in the promo industry, from hiring more diverse workforces to spurring distributors to seek out minority-owned suppliers. More end-buyers will commit to devoting percentages of their spend to minority-owned vendors. “Many companies are making such mandates,” says Kimberly Karp, owner of San Francisco-based KK Promotions, an affiliate of Top 40 distributor AIA Corporation (asi/109480). “Being a woman-owned business, we hope we can gain more attention and market share as the inequity has been brought to the forefront.”
“We see issues with lack of suitable inventory being a challenge next year too.” Steven McKee, Heritage Screen Printing
5 Firms Expand Their Services & Solutions
End-buyers will be more eager than ever to get the most bang for their buck in 2021. With that in mind, distributors are expanding their range of solutions to provide as much value as possible. “We’ve put a few new wheels in motion, such as creating our own brands, that we believe will allow us to have significant success in 2021,” says Alagem.
Marc Simon, CEO of Sterling, IL-based Top 40 distributor HALO Branded Solutions (asi/356000), finds the biggest opportunities coming from an expanded offering of complementary services and solutions. “We see strong demand for our services around digital engagement tools, global logistics, kitting and fulfilment solutions, and seamless back-end technology integration of all of these offerings,” Simon explains. “Companies with whom we are partnering want to incorporate uniform programs, complex kitting solutions, point-of-sale activation, sales incentives and employee recognition, among other areas.”
6 Competition With Other Marketing Mediums Intensifies
Marketers will continue to be more selective, and that puts the onus on promo companies to prove their value. “Capturing an equal or greater share of marketing spend could be a challenge as end-buyers will face tough decisions on the most effective means of reaching consumers,” says Ashley McCune, president of Facilisgroup, a software-as-a-service business and partnering community for the promo industry. As she points out, promo provides a robust value proposition – not just in dollars and cents, but helping brands deliver an experience that resonates. “This gives way to great opportunity for the promotional products industry to partner with their clients to create those experiences,” she says, “as promo products are one of the only forms of marketing that touches all five senses. For example, the sense of security is one that many consumers seek right now. The right promotional product can figuratively and literally deliver that sense of security.”
INVENTORY & LIQUIDITY ISSUES REMAIN
Colleen Heikka has a prediction: “We see potential impacts on inventory availability.”
The chief marketing officer for St. Cloud, MN-based Top 40 distributor ePromos (asi/188515) is far from the only one to raise that red flag. Availability on everything from PPE to apparel has been an issue in 2020, and some executives believe that will carry over to 2021. “This year, we’ve seen many larger T-shirt styles out of stock, and we see issues with lack of suitable inventory being a challenge next year too,” explains Steven McKee, owner of Warminster, PA-based apparel decorator Heritage Screen Printing (asi/700490).
Meanwhile, some predict an inverse issue relative to inventory: Too much stock. “I’m concerned that inventory surpluses among suppliers will cause them to offload products at below-market prices,” says David Miller, president of Hicksville, NY-based Top 40 supplier Chocolate Inn/Lanco (asi/44900).
Struggling firms will be tempted into such selloffs given liquidity issues for certain suppliers – a problem that also impacts inventory availability. “We anticipate future product shortages on some highdemand products, and that has to do with liquidity challenges,” says a Top 40 executive who spoke on condition of anonymity. “It takes significant funds for a supplier to bring inventory in. If the supplier is having cash or line of credit issues, then they will be more conservative in bringing in future inventory.”
8 Healthcare Is Huge … Again
In 2020, healthcare was the lone market in which promo sales were projected to increase, elevating from $2.53 billion in 2019 to an estimated $3.24 billion this year, according to ASI research. There’s broad agreement that healthcare will continue to be a hot market in 2021. Many health and safety initiatives across end-markets will also bear fruit for promo.
9 Historically Strong Markets Begin to Recover
Some top markets are dry this year, but they’ll become increasingly fertile in 2021, including education and manufacturing. Technology, including Fintech, should be a leading market for promo sales, too. “Companies operating in virtual spaces will be doing well, so there’s potential there,” notes Jodie Schillinger, executive VP of Mosinee, WI-based supplier Maple Ridge Farms (asi/68680).
The view on travel, hospitality and trade shows is hazy, but if a vaccine can keep COVID in check, some expect an explosion in business in these markets later in 2021. Meanwhile, with working from home on the rise, the commercial real estate market is set for a plunge.
10 Cybersecurity Costs Rise
In recent years, cyberattacks on promotional products companies have proliferated, hitting large firms like alphabroder and fellow Top 40 supplier Bag Makers (asi/37940) and closing some small companies. The growing sophistication and organization of cybercriminals means the threat will only increase in 2021 and beyond. Companies will have to invest more in employee training and technology infrastructure to stay safe – especially as remote work continues, and even becomes permanent for some companies. “The cost of improving IT security and security in general will continue to be a big issue,” says Lantz.
Virtual Events & Work From Home Present Major Potential
Despite our desire to return to normal, in-person events are on hold or pared down, and at least portions of many end-clients’ workforces remained in remote work mode at least part of the time. That reality will influence industry sales and product preferences in 2021. “Employee engagement solutions and recognition will present huge opportunities,” says Jo Gilley, CEO of Waukegan, IL-based Top 40 distributor Overture Promotions (asi/288473).
In such an environment, premium apparel basics will have a big year due to the “massive remote worker transition, which converted business casual dress codes to straight casual and athleisure,” says Chris Blakeslee, president of Commerce, CA-based supplier Bella+Canvas (asi/39590). “In terms of unit volume, this will be the highest growth category in the industry.” Expect clients to seek comfort-centered styles and fabrications like cozy hoodies, fleece and Sherpa.
Meanwhile, personalized gifts that help remote workers feel valued and part of a team will prove important. “For some initiatives, it won’t be enough to just have the company logo,” says Chris Anderson, CEO of Braintree, MA-headquartered Top 40 supplier HPG (asi/61966). “There’s a growing trend toward creating greater connectivity among remote communities and showing appreciation through personalized products.”
12 Automation & Integration Standards Come Into Focus
Despite a tough 2020, Heritage Screen Printing will be investing in automation software for 2021. “Looking back at past recessions, companies that invested heavily in their own infrastructure often bounced back sooner and with greater market share,” says McKee. For sure, promo leaders feel the industry’s adoption of automation technology and integration standards will expand next year – at least among promo’s more successful players.
“The industry will be solving new challenges for end-consumers, as society will focus on personal health/wellbeing and demand will require smaller individual purchases and shipments,” says Nancy Schmidt, CEO of AIA Corporation. “This will create opportunities for automation with the virtual sales process, orders through fulfillment and logistics.”
13 E-Commerce & Digital Continue Their Ascent
E-commerce exploded this year, and web and company stores will continue to prove important, along with new business channels with on-demand e-commerce. “We have clients both domestically and internationally who are selling shirts online through various platforms, including Amazon and Etsy,” explains decorator McKee. “Once they collect their daily orders, they send them to us for POD fulfillment. We order the blanks, print on demand and then ship out white label to the end-users.” Industry marketers and sales pros will also increasingly digitize their marketing tools (e-catalogs with product videos, for instance) and leverage social media to connect with clients, nurture customer relationships and build creditability.
"Employee engagement solutions and recognition will present huge opportunities.”Jo Gilley, Overture Promotions
14 Food Gifting Reaches New Heights
Food gifts (including individually wrapped morsels) and houseware/home-use items have been a hit this year. Expect that trend to continue. “We are in a time of necessary gifting to encourage and promote feelings of comfort and joy, recognition and worth, and overall togetherness,” says Schillinger of Maple Ridge Farms, which specializes in food gifts. She terms it “a year-round approach to gifting.” And with kitted solutions being popular, companies are aiming for the best of both worlds by combining food gifts and other promo products – including HPG, which launched its Batch & Bodega line in late summer that matches snacks from small-batch brands from across the United States with best-selling hard-good products.
15 Sustainability Grows in Importance
Despite the significant impact of the pandemic on the global economy, sustainability has not been put on the back burner. In fact, it’s gained even more momentum. “In many ways, the crisis has drawn more attention to the ‘unsustainability’ of many of our pre-pandemic practices, especially around product and supply chain expectations,” says Hullinger. “Sustainable business practices are becoming as important to our end-users today as product safety, fair labor practices and supply chain safety were 10 years ago.”
Karp of KK Promotions thinks suppliers, distributors and subject matter experts need to team up to develop “not just more green-washed products, but sustainable, functional solutions. That’s what end-buyers want.”
Companies Face Staffing Headaches & Opportunities
COVID-19 triggered widespread layoffs in the promo industry. That could leave suppliers and distributors short-staffed as demand ramps up and puts firms in the position of having to hire new team members with minimal industry experience. Such factors could lower the quality of customer service. “Staffing will be an issue for some companies as they rebuild their teams,” says Lantz.
On the flipside, promo’s layoff wave put a lot of established talent into the job market. Suppliers and distributors can capitalize on this as the economy recovers. “There’ll be opportunities to add good salespeople,” says Blakeslee. “In a commission environment with a lot of virtual selling, the risk of adding remote team members to the sales team to help expand into new markets is fairly low. While it’s not a true replacement for in-person connections, a good remote seller can create two to three times the customer interaction per day virtually than they could in person. That means great economics for companies that adapt.”
17 Consolidation Accelerates
The common consensus is that the total number of companies operating in the promotional products industry will contract in 2021 – a result of everything from businesses closing due to the economic hardships of COVID-19 to larger industry firms acquiring smaller ones.
“Heartbreakingly, more businesses are probably going to have to close their doors,” says Schillinger. Spending power centralization is also likely to increase as more independent distributors consider joining entities commonly referred to as buying groups or affiliating with large distributor networks to gain scale, pricing, vendor access and technology support they might not have on their own.
18 U.S./China Relations Loom Large
Like it or not, China is essential to the North American promo industry. Import tariffs on $370 billion in Chinese goods during the trade war of recent years triggered everything from price increases on some products to supply chain upheaval, with industry firms looking to move at least some production to other countries to the avoid the levies. There will be a lot to monitor in 2021: growing tensions over COVID-19, forced labor in Xinjiang, alleged oppression in Hong Kong, intellectual property theft, potential Phase Two trade deal talks and more could complicate matters for promo. (None of which will instantly disappear no matter who’s sitting in the Oval Office.) Furthermore, the cost of shipping from China will increase too, some fear. If a strong wind blows in Beijing, promo pros in North America could feel it.
19 Direct Sourcing & Selling Concerns Increase
The typical supply chain in promo has distributors buying products from suppliers who source the items from manufacturers that are most often based overseas. And even as distributors have increasingly gone direct overseas, that long-established model still accounted for 95% of promo orders.
However, in the mad scramble of COVID-19, more distributors sought to source direct, particularly when it came to PPE. “I’m concerned about the continuation of this,” says Miller of supplier Chocolate Inn/Lanco.
For their part, some suppliers began selling PPE directly to end-buyers during the pandemic – a practice some think could act as a foundation for more direct sales efforts going forward. “This crisis will accelerate an already existing trend for manufacturers to reach buyers directly and to reduce the participation of agents/intermediaries if they don’t bring value,” says Jose Gomez, senior vice president of operations at Kalamazoo, MI-based Top 40 supplier Edwards Garment (asi/51752).
20 Supply Chains & Transportation Become an Issue
Supply chains were already pushed to their limits in 2020, and more of the same can be expected this coming year. Lingering effects from full or partial shutdowns of production centers/fulfillment facilities, the potential for more such shutdowns, and the shift to manufacturing PPE instead of traditional promo items could all cause hiccups in the supply chain.
Meanwhile, service challenges in transportation/shipping that firms experienced in 2020 could spill over into next year. “Our industry has been historically reliant on cost-effective, quick and predictable ground transportation services,” says Hullinger. “The consumer surge in online buying caused by the pandemic has overwhelmed our transportation and delivery networks. The expectation is this consumer behavior shift will be a mostly permanent one. Our industry will face service level challenges in transportation until the service provider segment can retool and improve for the long term.”
21 Grit and Resilience Won’t Be Optional
A flip of the calendar won’t magically erase the monumental challenges of 2020. And if the year’s taught us anything, it’s that roadblocks can rise from seemingly out of the blue. To succeed, promo pros will have to exhibit the same mental toughness, adaptability and entrepreneurial optimism that’s borne many through 2020. “I’m so impressed with the resiliency of our industry,” says Lott. “I’m more confident than ever about the value we bring and our future success.”