Promotional Products Present Perfect Sales Opportunity for Printers
If your printing business isn’t tapping into the promotional products marketplace right now, you are undoubtedly missing out on a huge opportunity. The $23.3 billion industry increased sales by 9.31% in 2017, the highest sales volume surge since 2000, when sales grew a whopping 19.5%, according to a sales volume study done this spring by the Promotional Products Association International (PPAI).
“I believe the promotional products industry is strong,” says Tom Goos, president of Image Source in Kirkland, Wash., who was interviewed by Print + Promo Magazine as part of its 2018 “State of the Industry” report. “It is a mature industry that continues to grow. We see many marketing industries declining (e.g., radio, direct marketing, newspapers), yet the promotional products industry continues to grow. This is a good sign that clients see the value of promotional products in their marketing mix.”
Image Source is a full-service branded merchandise and apparel company that provides clients with promotional products for events, trade shows and product promotions, and apparel for uniforms and college wear, etc. Some of the company’s clients include Microsoft, Boeing, Costco, Comcast and Expedia.
Gap Between Those Thriving vs. Surviving
However, Goos sees the gap continuing to widen between those companies thriving and declining within the industry. He blames this separation on pressure around compliance, technology, generational buying habits, procurement practices and many other factors that make it more challenging to manage strong and profitable business.
Two major influencers driving this growth were found to be online sales and sales of products from non-industry providers. Online sales of promotional products grew significantly in 2017, representing 23.2% of the year’s total sales volume compared to 19.8% in 2016. Total online sales grew by 28.1% to $5.3 billion, compared to $4.2 billion in 2016, and that trend is driven by a significant increase from both large and small distributors.
PPAI found that, on average, almost $3.4 billion came from product sales from non-industry providers - 14.6% of the total dollar volume. Overall, sales from non-industry providers increased by 20% over 2016.
Big changes are in store this year for promo products, says Goos. “I think there are change drivers that will continue to affect our industry and most others. Those include technology, evolving demographic shifts and globalization. Forrester Research expects millennials to be the largest demographic in the workplace by 2020.”
He says these folks (millennials) are digital natives who are used to buying online for their personal purchases, and this oftentimes transfers into their buying habits at work. “It is not a seismic shift, but rather an evolution of thinking,” he notes. “Both distributors and suppliers need to change how they go to market to relate and connect with these buyers.”
Goos also sees a change in our culture and our marketing. “An example of one of our shifts is the move to videos,” he explains. “We have a product that allows us to send short videos from our desktop through email. It doesn’t have to be just words in an email; it can actually be a quick, 15-second video clip. In the last month, we have sent more than 100 of those videos to clients.”
Clients Seek One-Stop Shop Arrangements
Consolidation in this industry, as in many industries it seems, has become the new norm. Companies are merging together to form a one-stop-shop atmosphere. If you can’t offer a client everything they need, you are at risk of losing that business - because there are others out there who can.
PRINTING United Expo, the new industry trade show brainchild of the Specialty Graphic Imaging Association (SGIA) and NAPCO Media, launching in October 2019, is proof of this need for consolidation. Focusing on the opportunities presented by the convergence of printing technologies and markets, PRINTING United Expo will cover print and finishing technologies in industry segments from garment to graphic, packaging to commercial, and industrial. Its objective is to convey all components of integrated solutions to satisfy virtually any client need.
Overall, I see consolidation as a positive,” says Goos. “The promotional products industry needs to continue to grow and gain in professionalism, and I believe some consolidation can aid in this. We are also seeing private equity continuing to invest in the industry. I believe there is a thriving marketplace and that outside investors see value in not only online companies, but also traditional distributors and suppliers.”
There also continues to be new suppliers and distributors entering the market, so the overall number of companies continues to stay steady, he notes. “My expectation for the future is both supplier and distributor numbers will decline as competition continues to increase and mergers and acquisitions continue.”
Goos says we can no longer rely on past trends to predict future performance - the industry has changed more in the past five years than in the past 25.
“The promotional products industry used to be an unknown supply chain with secret codes for pricing and line names to hide the supplier’s corporate name,” he explains. “The internet has changed all that. Type in promotional products codes, and our secret comes out instantly. Many industry companies have been around 50-plus years, and many of those have gone away in the last few years. A company’s history no longer reflects its future stability in this dynamic marketplace.”
Forget Calendars. How About Mini-Drones?
In 2018, he doesn’t see any radical shifts in in the future of promotional products. Key categories are evolving and online sales continue to grow. For example, three years ago, calendars were a top five product category, and now they are a rare sale. “We are seeing categories like technology products (e.g., mini-drones, travel chargers, speakers, multi-function cords, water bottles with a built-in speaker, etc.) rise and, oftentimes, are the first product we show.
“Times are changing and you better be open-minded to the transformation in all aspects of the business; otherwise, clients will move on past you. Change is the new norm, and we all need to be comfortable in that space.”
The promo products sector is proliferating and printers can capitalize on this upward trend by partnering with a promotional products company and becoming a hub for both promotional printing and promotional products - creating a one-stop shop for customers.
Sending a client away for something you can easily offer them through smart partnerships with promo products suppliers is not an option, or least, it shouldn’t be.
See the latest promotional products at SGIA Expo, taking place Oct. 18-20, 2018 in Las Vegas. Visit www.sgia.org for more information.