The Promotional Products Industry is going through rapid change. Are you ready?
Our industry is changing fast in many ways and in others, not much is changing. How do I thrive in this environment? Let’s look at where we are, where we are going, and what you need to do to succeed.
Where are we today??
We are in good shape in a lot of areas. Margins continue to hold steady for distributors in the 33-35% range. This has not changed in decades. The Supplier/Distributor relationship is strong and thriving. Most importantly, the power of the promotional product has never been greater in my opinion. People are overwhelmed by digital marketing any time they log on to their computer or look at their phones. The value of a physical product bearing a message or logo is powerful and resonating. Let’s all leverage that!
The industry continues to grow. Total industry sales bottomed out in 2009 at 15.6 billion in annual revenue. In 2017, total industry revenue was 23.3 billion a 50% increase over 2009! Projections for 2019 show a flat to slow growth year followed by increased growth in 2020 and 2021.
Where are we going??
We are on a rocket trip to Changeville. Many of these changes have already begun and some are just beginning. I don’t think it’s a stretch to see our industry in this light in a couple of years.
Although relationships will always matter in our industry, technology and the efficiencies it brings will be a much bigger part of the relationships between distributors and suppliers, and between distributors and end-users. The end-users will want more flexibility and speed built into the relationships, and technology will be the driver of those changes. Demographics are a big driver of these changes. The younger generations build and grow relationships in different ways than they were built 20 years ago.
The majority of large distributors and suppliers will be owned by Private Equity, and we will have more massive suppliers and distributors. This will push the market to continue to improve on cost, creativity and service. It will also create opportunities; niches that smaller players can fill as long as they do the other things necessary to keep up.
More and more conversations between end-users and distributors and between suppliers and distributors will revolve around social compliance. These conversations will not just be about safe products, but labor practices, transparency, environmental issues, etc. As our customers and sales reps get younger, what you stand for is going be increasingly important to have a seat at the table.
Procurement and purchasing departments among mid and large-size customer companies will continue to attack and challenge our business model to get more efficient and deliver more and more value. Our industry is not alone here but start thinking about things from the customer’s point of view. They want safe products, transparency and cost savings with better measurable service metrics. This is already happening.
What can my business do to succeed??
First of all, don’t feel sorry for yourself. All industries and businesses are being disrupted in some shape or form. This disruption creates opportunities and niches to attack. My first suggestion is to think like the customer thinks first. Put yourself in their shoes and build your business that way. What is your value proposition to your customers? If you can’t come up with one, start over!
Start by improving your technology. We all buy online from Amazon and others and use Uber and many other technologies to improve and simplify our lives. Give that experience to your customers. There are lots of great options in our promo world to help you get there if you don’t want to build your own. Give the customer the technology and experience they want and deserve.
Build a culture that works for today’s work force and today’s buyers. The ping pong table isn’t the only answer. People need to be challenged, feel included and be informed. Make targets and the importance of hitting them part of your conversations. Build that culture. Talk about succession plans within your company. People want to aspire to something bigger.
Build a value proposition where your customers feel you have the best order experience for them, you are the most creative resource they have, and you outwork your competition. Guess, what, that hasn’t ever changed, you just need to use different tools and processes to be there.
Finally, as a leader, don’t be afraid to show yourself to your customers and team members. Live and learn in the moment to build the best company you can. You can do it. We all can!