Project 2021: How Promo Companies Are Faring

Throughout the year, we’ll be following 10 promotional products companies – suppliers, distributors and decorators – as they meet the challenges of a post-COVID world.

Last year was the most challenging time the promotional products industry has faced, and full recovery from the coronavirus pandemic will be dependent on a variety of factors, from a successful vaccine rollout to the return of travel and events. Largely thanks to the pivot to PPE, the promo industry as a whole was able to finish the year better than expected, down 19.8% year over year, as opposed to the precipitous 44.4% drop seen in Q2.

Still, not every business has been affected at the same rate, with smaller firms, for example, hit much harder than larger ones. And every company has a different strategy for success. To get a better sense of the long recovery ahead, ASI Editorial staffers reached out to a cross-section of industry players – suppliers, distributors and decorators of every size, from one-person operations to top 40 multinational firms. We’ll be checking in with these 10 companies regularly to learn more about their unique challenges and celebrate their hard-won successes.

(The next installment will be published at the end of February, and each month subsequently throughout 2021.)

The Suppliers

Fairytale Brownies: A Sweet Year

Eileen Joy Spitalny

Eileen Joy Spitalny, co-founder

Despite the COVID-19 pandemic, Phoenix-based Fairytale Brownies (asi/53518) had a magical year.

Personalized sweet treats were all the rage, as companies sent gifts to employees working from home and people attending virtual trade shows, retreats and other events. The supplier also helped distributors market to healthcare clients and frontline workers, thanking them for their service and sacrifice with large bulk shipments of various flavored brownies. As a result, sales in the company’s incentives channel were up 59% in 2020 and sales in Q4 were up over 50% compared to Q4 2019.

“Holiday shipping delivery times were a big unknown, but our carrier made most of our deliveries on time,” says Eileen Joy Spitalny, co-founder of Fairytale Brownies. “Our Fairytale treats are prepackaged, and we drop-ship quite easily for the end-user, so our product line and its customization has been ideal for sending during a time when safety is a top priority and remembering the brand or special occasion is important.”

Spitalny and David Kravetz started the company in 1992, renting out a friend’s catering kitchen at night. Buddies since kindergarten, they both got sales jobs after college, but had always wanted to be their own bosses. Inspired by Kravetz’s mother’s brownie recipe, they could already taste success. The two-person team has grown to over 100 employees, none of which were let go during the pandemic. Luckily, business has remained strong, Spitalny says, as orders from both new and established clients continue to come in.

Although Fairytale Brownies didn’t sell PPE, the company did purchase a lot of masks, hand sanitizer and other equipment to safely stay open for baking, fulfillment and selling. While most employees have adopted a hybrid working schedule, bakers and shippers are always on-site to fulfill orders and at least one member from each department is also on-site.

Spitalny hopes that their sales reps will be able to travel to see customers in person again by mid-summer. “I feel we miss the energy when we’re all under one roof,” Spitalny says, “so once we can all safely resume at the bakery, that will be our ultimate goal.” – John Corrigan

Starline USA: An Unexpected Finish

Brian Porter

Brian Porter, senior vice president of sales and marketing

By the end of 2020, sales at Starline USA (asi/89320) were down less than expected. “If you had told me a year ago that finishing less than 10% down for the year would be a grand slam, I would have said you were crazy,” says Brian Porter, senior vice president of sales and marketing. “But we did.”

The supplier, with locations in Grand Island, NY, and Concord, ON, specializes in high-end bags, electronics, tech accessories, flashlights, knives and tools, writing instruments and safety items. It’s been an active few years for Starline, including partnerships with JanSport and uni-ball, as well as recognition by Counselor for Best Use of Social Media in 2020 and for Technology Executive of the Year in 2019 (that went to Jon Norris, COO).

Early on in the pandemic, Starline developed its own face shields and was fortunate to close a few large PPE orders quickly, though Porter says PPE sales had a minimal effect on final 2020 numbers.

“We had amazing third and fourth quarters in core promotional products,” says Porter. “Starline doesn’t traditionally sell into the events space; we focus on high-quality, value-added products, and that’s what people are buying right now. When that’s combined with our personalization services and flat-rate drop-shipping program, it was a perfect mix.”

Porter told ASI in the fall that kitchen tools, like bowls, tongs, spatulas, serving spoons and bamboo cutting boards, sold well this year as more people dined at home. Tech items remained strong, as did personalized coolers for in-office workers’ lunches. In fact, personalization jumped from about 10% of all orders pre-pandemic to 50%, said Porter at the time.

Now, traditional products from the company’s core lines are ramping back up, led by sales of uni-ball writing instruments, while staffing continues to move back to Q1 2020 levels. As for the return to the office and sales travel, while most of the work force – apart from the manufacturing team – is still working remotely, Porter says Starline is taking it gradually.

“We’ve started a slow hybrid process of both in-office and remote work with some of our internal team,” he says, “and we’re looking for reps to be back in the field by Q2 of 2021.” – Sara Lavenduski

The Distributors

Jack Nadel International: In the Thick of It in Cali

Craig Nadel

Craig Nadel, president

When the venerated 68-year-old Counselor Top 40 promo distributor Jack Nadel International (JNI; asi/279600) ended the year in 2019, it wouldn’t be over-icing the cake with hyperbole to say the company (with offices throughout the U.S. and overseas) was killing it. Sales had jumped 20% from $126 million in North American revenue in 2018 to $151 million in 2019, and like most other businesses in the industry, the first two months of 2020 were on track to be even better.

In February of last year, Craig Nadel (the scion of the company and its president of 37 years) and Debbie Abergel, (its chief strategy officer with 21 years in the business under her belt) had flown to the U.K., where JNI has an office, to attend the Merchandise World Show. Hosted by the British Promotional Merchandise Association (BPMA) and Sourcing City, the annual event attracts all the major players in the U.K. promo market. That would be their last trip for quite some time.

In March, of course, the pandemic and all its quarantines and restrictions took hold, and for a company based in California, JNI felt the pain of drastically decreased business immediately. It wasn’t a time to mince words – especially for Nadel, who’s so forthright he’s practically medically incapable of gilding the lily. So on one of the first industry COVID-influenced podcasts in March – one that featured three other Top 40 distributors and hosted by ASI President and CEO Tim Andrews – Nadel uttered stark words that resonated with listeners: “First, you have to save your business. That’s going to require hard choices and tough decisions, but if you don’t have a company, you’re not going to be able to help anyone.”

So how did JNI fare last year? Again, Nadel is characteristically straightforward: “We ended up being down about 24%” with PPE playing a smaller role than many other industry entities, he says. PPE accounted for 50% of JNI’s sales from late March to early May, but after that the company’s PPE sales declined precipitously, and now only account for less than 10%.

“For us, the business changed twice in 2020. The ‘traditional’ business fell precipitously as soon as COVID hit in mid-March,” Nadel recounts. “PPE was then an important part of sales for a few months, but that mostly went away. The business that replaced it was different than the pre-COVID business, and different from past recessions too. Now, that could be because of the shipping issues and the cost around it. We’re selling way more higher-end products than before and, of course, way more kits and drop-shipping to residences. I think it will be interesting to see what happens after COVID. I suspect that more kits will be a part of the business but that shipping will stop going to residences as much and more to offices as people return to work, but we’ll see.”

When asked to assess how his company – of which some employees have ownership shares, with Nadel having a significant stake in the business – survived the worst of it, JNI’s experiences mirror most of the promo marketplace: “Q2 was terrible, down about 45%, and Q4 recovered to the point where it was about the same as ’19,” Nadel says. “It’s no surprise but the businesses doing well are better clients now and those doing poorly are way down. For example, mortgage brokers with low-rate re-fi’s are up; Peloton, Netflix and Zoom also did incredibly well. On the other side of the coin were cruise lines, hotels, event planners, etc., whose businesses are all getting decimated.”

JNI’s team, the majority of whom are working from home, is not yet back up to pre-COVID levels. “We laid off about 3.5% and through attrition we’re down about another 8%, so we’re about 12% below in total employees from where we were last year,” Nadel says. And how is he keeping his team motivated as we collectively start the second year of dealing with the pandemic? “First, I totally get it, and it’s been a lot. The infection rates, especially here in California, are sky-high, and I personally know many people who have tested positive in the past month. Most of us feel the fatigue and weight of all of this, at least to a degree. I ask people to be careful since their health is my main concern. Regarding business, I do think there’s a pent-up demand, ‘delayed not destroyed’ as economists would say, although there’s clearly some of each, and that when this ends sales will be fantastic. I very much believe that to be true. I don’t know when that will happen, but it will be this year. And there’s still business out there, and you have to adapt – sell more kits, for example, and look for clients doing well – and the good business and good times will happen again.” – Michele Bell

Full Line Specialties: Staying Strong With Safety Gear

Sam Singh

Sam Singh, president and CEO

Full Line Specialties (asi/199688), just outside Vancouver in Surrey, BC, saw a 20% increase in total 2020 sales versus the year prior, much of it due to PPE sales. President and CEO Sam Singh says the team’s long-term experience in selling hi-vis safety gear, safety glasses, hard hats and gloves meant it was familiar with PPE supply chains when demand grew exponentially last year.

“We transitioned very early,” he says. “It was an easy avenue to clients’ health and safety budgets due to our other PPE sales and established relationships with PPE and safety clients. We understand safety buyers’ mentality and expectations when it comes to this type of spend.”

Singh says sales of traditional promo items, mostly apparel like jackets, hoodies, sweatshirts and toques, along with blankets and other home gifts, increased significantly in Q4, though much of it was what he calls “pent-up demand from the previous seven or eight months of virtually no marketing spend.” Full Line was consistently busy servicing the safety and service/recognition markets with fulfillment options. “We manage them and warehouse product in-house,” says Singh. “Companies needed to ramp up safety protocols and take care of and recognize their valued employees.” While some larger clients have asked for Canada-made items, Singh says he’d like to see that number increase.

When the promo industry was crashing last Q2, Full Line Specialties’ sales were up 32% over Q2 2019, thanks to PPE. And Q4 2020 sales were up about 60% over Q2 2020.

As of Jan. 1, sales are split 50/50 between the company’s drop-shipping (what Singh calls “Special Order”) business and e-commerce fulfillment business. PPE demand has dropped off significantly, though customers continue to order supply replenishments. Full Line also trained a staff member in Health Canada guidelines for medical PPE, as another source of expertise for customers.

“The majority of our orders are from corporate clients, with or without e-commerce stores,” he says. For now, Full Line has given all team members the option to work from home full time, come into the office full time or split the work week between home and the office, depending on what works best for them. The company was able to retain all team members throughout the pandemic, and actually struggled to find talent to fill open positions.

“Our reps have started doing some face-to-face client meetings while following safety policies per the government and our company,” Singh says. “But most meetings are still done online. I feel it won’t be until 2022 that the industry will go back to prior pandemic levels of in-person client meetings and travel.” – SL

Whitestone Branding: Leveling Out After a Wild Ride

Joseph Sommer

Joseph Sommer, owner/founder

For Joseph Sommer and his Whitestone Branding team, 2020 was a rollercoaster.

Consider: The multimillion-dollar distributorship based in New York City had its best-ever sales week in the first quarter of last year, but that was quickly followed by the firm’s worst-ever week of sales. The coronavirus, of course, was the culprit.

Despite the ups and downs, Whitestone managed to end 2020 close to level with 2019. “We were 8% down in cash received and 4% down in total invoicing, but 3% up in sales orders processed,” Sommer says.

Remarkably, Whitestone achieved those business levels without selling much PPE. The company fulfilled PPE orders in April and May, but ultimately migrated away from the category, opting instead to focus on its core mission of building holistic marketing solutions through promotional products.

“We did well with traditional promo, selling to a lot of colleges and universities, which was new for us, as well as companies in financial services, commercial real estate and advertising agencies,” says Sommer. “However, our core customer from 2019, experiential marketing firms, completely fell off. I’m sad to say several went out of business.”

Still, for Whitestone, 2020 ended on a high. The firm’s fourth-quarter sales were up 16% over the comparable quarter in 2019, while Q4 2020’s total revenue outpaced same-year Q2’s tally by 37%. So far, the momentum is building into the first quarter of 2021. “We’re seeing a rise in orders from clients across markets, and our pipeline is decent, pointing to a strong Q1,” says Sommer. “Technology, finance, real estate, retail and education are doing particularly well for us.”

Given the work-from-home norm and social distancing of the pandemic, clients have been clamoring for kitted and drop-shipped solutions in Q1. “Because of that, we’re doing fewer but larger projects, with our average order value increasing along with the time it takes to execute every opportunity,” says Sommer, noting clients have shown no increased interest in Made-in-the-USA or Made-in-Canada products as a result of pandemic-caused supply chain issues or otherwise.

Pre-pandemic, Sommer enjoyed having his team at Whitestone’s New York City office, but COVID-19 compelled the switch to remote work. These days, Whitestone is all-remote, with staffing levels having fully returned to what they were in the Q1 2020 – 17 employees. “While our roots are in New York City, we now have staff spread out across the country and have recently on-boarded employees in Chicago, Oklahoma, and Asbury Park, NJ,” Sommer shares.

Whitestone plans to remain remote for the time being. “Some companies may never get back to the office,” Sommer says. He suspects things like in-person sales visits will stay relegated to the past, meaning reps will have to keep improving their virtual presenting and relationship-building skills.

“Come December 2021, we’ll look back at this time as the ‘The Great Reshuffle,’ ” says Sommer. “I believe more than 30% of the work force will have either started a job with a company that’s different than the one they worked for in March 2020 and/or be living in a different city or state than they were at the start of the pandemic.” – Christopher Ruvo

Quality Logo Products: Automation Saves the Day

Bret Bonnet

Bret Bonnet, co-owner

Like so many companies last year, Top 40 distributor Quality Logo Products (asi/302967) saw a significant decline in sales revenue – about 30%. But that’s where the bad news ends for the e-commerce distributor. Despite the revenue drop, QLP actually increased its profit slightly in 2020.

How? Automation. Co-owner Bret Bonnet says the company spent much of 2020 implementing new systems, and while many of those projects were already in development, they were fast-tracked out of necessity. “In a sense, 2020 was the pause we needed to solve problems with code versus people,” Bonnet says. “Prior to the pandemic, we had so many other things going on, that instead of solving the problem, we’d just throw money and people at it. That all changed last year.”

The company reduced its staffing levels by 40% and doesn’t anticipate adding people back anytime soon. While some employees are still coming by choice into the distributor’s Aurora, IL, office, QLP has embraced a hybrid model that lets people work from home, or just about anywhere. Says Bonnet: “Employees love the flexibility, and selfishly, it saves us money. There is nothing wrong working from your R/V while camping in Montana so long as you get your work done (and well).” The hybrid model is going so well that Bonnet and co-owner Michael Wenger plan to shed some office space, furthering the cost savings.

The changes certainly spilled over to the company’s product mix. “We sold and continue to sell a metric ton of PPE,” Bonnet says. The company added over 1,000 PPE-related products between February and March last year, and the timing proved crucial: the distributor added five new top 10 clients in 2020. “We helped fill the void for some Fortune 500 and 1000 companies at a time when other companies were struggling to fulfill orders,” says Bonnet, “and by doing that, we’ve earned some lifelong customers.”

It wasn’t all PPE, however. Traditional promo items did well with retail and small business clients. QLP also continues to do tidy business in the burgeoning cannabis market. As a result, the distributor finished with its best Q4 ever thanks to a very strong December.

So far in Q1, the company is still seeing the same mix of clients and markets buying from them. And while the demand for PPE lessened from the height of the buying frenzy in 2020, Bonnet predicts that it will remain a major segment for the company this year. “The great thing about most PPE, at least from a business perspective, is that it’s perishable and requires frequent reorders,” he says. “Many clients who are near the end of their supply are restocking now. Also, with the slow rollout of the vaccine, I think we’re going to see PPE sales remain strong until at least 2022.” – C.J. Mittica

Custom Logos: Focused on Survival

Jeff Golumbuk

Jeff Golumbuk, owner

Best friends Alan Mittleman and Jeff Golumbuk founded San Diego-based Custom Logos (asi/173183) in 1989, performing in-house screen printing and embroidery out of a small shop. Twenty years later, Golumbuk took sole ownership, partnering with four long-term staff members to expand the company’s services to include promotional products, print collateral, graphic design, kitting and e-commerce stores.

Between 2018 and 2019, the distributor made four acquisitions: two local competitors (Amazing U Promotions and What’s New Promotions) and a couple of California-based businesses (Cairdea Design & Marketing and Apropos Promotions) with a similar “boutique agency” mentality. Based on those acquisitions, Golumbuk anticipated revenue of $20 million in 2019. However, sales maxed out at $15.2 million. “That was due to a variety of unforeseen factors, including a $4 million account that slipped to under $1 million,” Golumbuk says.

Last year, Custom Logos’ sales were down only 2.8%, thanks to pivoting to PPE. As a matter of fact, PPE sales accounted for almost 20% of the company’s revenue last year, including two large orders that totaled $1.4 million. Even though the demand for PPE has softened substantially, Golumbuk says it still accounts for roughly 5% of business.

Meanwhile, traditional promo sales were down about 20% last year. “We sell primarily to large corporate clients, and a lot of those sales in the fourth quarter involved kitting projects,” Golumbuk says. “Q4 improved over the first three quarters of 2020, but was still down from Q2 and Q4 of 2019.”

Business is coming back “very slowly” from the wide range of industries Custom Logos services, Golumbuk says. One thing he hasn’t seen during the pandemic, though, has been an uptick in “Made in America” requests.

As far as staffing is concerned, Golumbuk furloughed 20% of his employees at the beginning of the pandemic. So far, only half of them have been brought back. “Most of our sales team and administrative staff are working remotely, coming in only as needed,” Golumbuk says. However, the production team remains on-site and has been working throughout the pandemic. He hopes to have employees back in the office for good by early spring and have sales reps traveling again around that same time frame.

“I think the first six months of 2021 will be rough, but hopefully the second half of the year will see a return to normal,” Golumbuk says. “Our primary goal is survival. Our secondary goal, as well as our quotas, are based on achieving our 2019 sales.” – JC

Moore Promotions: A One-Woman Powerhouse

Kelly Moore

Kelly Moore, owner

For 24 years, Kelly Moore has been kicking butt in the promo industry.

A solo operating distributor with just a single assistant for help, Moore is an independent, energetic, optimistic entrepreneur who has hustled her way to mega sales, including six-figure orders.

For all her ability and positivity, though, Moore admits that the current reality of Q1 is far from ideal. “I think I may end up down 40% year-over-year for the quarter,” admits the owner of St. Petersburg, FL-based Moore Promotions (asi/601617).

While she’s scoring sales with real estate agencies, loan officers and mortgage companies, as well as retail clients eager for custom T-shirts, business on the whole has been slow. During the middle quarters of 2020, sales of sanitizer and face masks soared. Now, however, that revenue stream has evaporated to little more than a trickle.

“I just don’t feel much excitement from clients,” Moore says. “I’m a bit concerned that the economic effects of the pandemic on our industry could be more widespread this year. It just feels like clients don’t know how they’ll spend, if they’ll spend or when they’ll spend.”

Overall, COVID-19 challenges resulted in Moore’s annual revenue declining about 20% in 2020 compared to 2019, with the fourth-quarter gifting season being one of the weakest for sales that she can remember. Even so, the year wasn’t without its successes. Her deft job sourcing PPE led to referrals to new clients, including cities, fire departments and rescue companies.

“Many referrals were looking for PPE at first but then they had me sourcing a wide array of swag,” Moore says. Certain mainstay clients, which include orthodontists, pediatric dentists and hospitals, kept investing in traditional promo too, buying everything from totes and pens to mouse pads and travel mugs.

While Moore’s profits plummeted by 35% in 2020, that was in part due to her altruism. When it came, for instance, to PPE, she tried to give everyone end-quantity pricing. She also made extensive donations of masks, provided nonwoven totes at cost for food banks, and covered the cost or donated 100 or so extra masks on many mask orders she fulfilled. “I wasn’t trying to be a saint,” she says. “I felt it was important to pay it forward and do what I could to help.”

As a solo distributor, Moore has long worked from home, so there was no big transition for her there. She reckons many more professionals will continue to be in the work-from-home mode for the foreseeable future. “I don’t think we’ll see reps traveling for sales calls any time soon,” she says. “I predict working from home is here to stay.”

While 2021 presents challenges, Moore plans to stay upbeat and keep hustling, making the year as good as it can be. “I connected with clients in 2020,” she says, “and there’s opportunity to build on that.” – CR

The Decorators

Rockland Embroidery: A Rocky Road to Recovery

Andy Shuman

Andy Shuman, general manager

The second quarter of 2020 was rough for Rockland Embroidery (asi/83089). In the middle of March, the contract decorator – which operates 250 embroidery heads and four screen-printing presses from its Topton, PA, facility – was shut down overnight, thanks to a state-mandated lockdown of nonessential businesses.

“We had zero dollars for an entire quarter,” says Andy Shuman, general manager. “Over that time frame, we did zero business.”

Shuman and some other accounting staffers worked remotely during that period to make sure the bills were paid, but the bread and butter of their business – selling the service of apparel decoration – could only be accomplished on-site. In early June, Rockland got the greenlight to ramp production back up, but it wasn’t just business as usual for the skeleton crew that returned to work. “We couldn’t come back on June 8 and pretend it was March 19,” Shuman says. “So much had been canceled or altered. We had to dig through that first. The lion’s share of what we had in-house had been canceled.”

Many of the orders that started coming in after reopening were for branded masks. “PPE became a big part of our business, from a decoration standpoint,” Shuman says, estimating that Rockland decorated nearly a million masks over the course of 2020.

By the end of the year, traditional decoration jobs were making a comeback. “It just slowly happened. Every day, there are more people selling T-shirts,” Shuman says. “We’re still doing masks, but not at the clip we were.”

In Q4, business had returned to typical levels, but completing orders quickly was a challenge. Vendors took longer to ship, carriers took longer to deliver, and though Rockland was back at nearly the same staffing levels as pre-pandemic, the need for social distancing and other heightened safety protocols put a wrinkle in the production process. “Even if you have as many people employed as before, you don’t have access to as many of them each day,” Shuman says.

Rockland ended 2020 down by about 25% overall, thanks to a late-year recovery. Despite how busy the end of last year was though, Shuman isn’t expecting the first half of 2021 to continue the trend. “I think you had a lot of people spend money that they had been putting aside. You had the end-of-year money dump,” he says. “If that’s done, it doesn’t shine a great light on Q1 and Q2. I’m not pessimistic, but I don’t have a great outlook.” – Theresa Hegel

Rowboat Creative: Staying Afloat With Diverse Offerings

Lucas Guariglia

Lucas Guariglia, owner

Back in early 2020, Lucas Guariglia, owner of Chicago-based apparel decorating firm Rowboat Creative (asi/313715), was talking up the appeal of live event decoration – how the opportunity to participate in the creation process gives consumers more brand buy-in. There was no way of knowing then of the hit experiential marketing and events would take in the wake of the coronavirus pandemic.

Despite its experiential division taking a nosedive, Rowboat still managed to keep 2020 revenues even with the previous year, thanks to a diversified client base and a nimble shift to e-commerce and drop-shipping. “We have never wanted all our eggs in one basket,” Guariglia says. “We were able to scale up some pretty amazing drop-ship programming, virtual fundraisers and consumer kitting programs that made up for the dips. … Honestly, more of the population was at home buying online than ever before, so we took to that very early with our ideas.”

Like many in the industry, Rowboat also got involved in PPE, but Guariglia says he was uncomfortable with the predatory nature of profiting off survival items. Instead, Rowboat approached it from a philanthropic angle, arming frontline workers with what they need and leveraging sourcing relationships and manufacturing partnerships to help get much-needed supplies for hospitals. “I was working deals for $2.5 million worth of PPE at straight cost to hospitals, literally making zero dollars,” Guariglia says.

Rowboat also converted its sewing/tagging department to assist with cloth mask making and has made creative masks for schools, brands and other clients. “We went very lean on margins to simply ensure our time was covered and ultimately that an end-user received a solid piece of PPE,” Guariglia says.

The pandemic forced Rowboat to reevaluate its production process. “Sometimes, it takes having to strip everything down to realize where the holes and inefficiencies are,” Guariglia says.

“Our industry is just nonstop, and until we were forced to slow down for a moment, we likely would have just kept on moving the same way.”

The shop is now operating as a hybrid – with some employees on-site doing production and some at home. Certain positions that existed pre-pandemic were eliminated, and several team members were able to shift into new departments where they’re thriving. “Our relationship with staff has actually never been better because everyone sees the human aspects even more clearly,” Guariglia says. “We’ve tried to ensure that we take care of everyone as the family they are to us. Health has been the main focus at all times, but really [my business partner Joe Zangrilli] and I have felt the huge responsibility to keep our staff above water.” – TH