Strategy April 20, 2017
Promotional Product Sales Report - South
Growth and robust optimism propel the South to the top.
f you’re looking for growth in the U.S., look south. The promotional product industry in the region grew 5.6% in 2016, highest among all regions. And considering the optimistic sentiment seen across many industries there recently, as well as several business-friendly actions proposed by President Trump, the news is likely to get even better for distributors in the South this year.
In particular, the possibility of reduced business regulation is music to the ears of financial institutions that seek to make more loans to businesses large and small. Meanwhile, the idea of bringing manufacturing activity back to the U.S. sets up the South, with its low costs of hiring and living, to capture much of that new production. The region already has a deep base of manufacturers ranging from automotive companies to pharmaceutical makers to food producers to high-tech firms.
Many distributors in the South are reaping benefits from the optimism in tangible ways. “There was a noticeable uptick in our business in 2016 and it’s still going,” says Chris Ferriter, vice president of business development for SoBe Promotions (asi/245603) in Miami, a firm that’s strong with cruise lines, hospitality, wine/liquor companies and universities. “Even small businesses are looking to spend more per item. A lot of clients are no longer asking for 1,000 items at $1.50 each; they want 300 items at $6 each to focus on a more distinct audience rather than the widest one possible.”
“It seems that many businesses are thinking, ‘This environment feels different; we should move on expanding operations and personnel,’” adds Lori Anne Lord, owner of Promotional Marketing Services Inc. in Athens, GA. Joree Ouzts, owner of Promotions Unlimited (asi/301414) in Greenville, SC, works with various suppliers to auto manufacturers, down to their waste-recycling companies. “They’re putting more funding toward uniform programs, safety awards and performance recognition. And more clients want high-end retail; we’re approaching a lot of brands for resale. One large tech reseller recently told me, ‘This time we don’t want Eddie Bauer; we want Patagonia.’”
Tim Hennessy Sr., president of Concepts & Associates (asi/166235) in Birmingham, AL, is excited about the prospect of more federal infrastructure spending. “I do think the president’s stated priorities have something to do with the improved atmosphere. We’ve seen a good increase from utilities and suppliers like pipe makers in their service and safety awards. Their goal is more than awareness – they want team-building too.” For customer acquisition and retention programs, “we offer a good/better/best menu tailored to each client,” Hennessy adds, “and they’re choosing the better and best options much more often.”
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In North Carolina, where both population growth and the rate of startup firms are among the highest in the nation, many professional-services firms are coming in to support all the people based in the Research Triangle, says Richard Berger, co-owner of Think Promotional Group in Raleigh. “We’re seeing a big jump in attorneys, dentists and the like.” And among his larger accounts, “higher-end brands have been doing great the past 12 months. Every week we’re getting an order for Under Armour in a program – even clients with just decent budgets are asking about it. That is definitely different.”
Elizabeth Tate, owner of Signet Inc. (asi/326636) in Memphis, says that what she’s reading in the weekly Memphis Business Journal plus the monthly updates from the chamber of commerce and the visitors bureau (such as home-appliance maker Electrolux recently moving a large operation to the area) are consistent with her on-the-ground observations. “Business from our existing manufacturing clients is up, and the potential for getting new businesses is also out there,” she says. “We’re moving deeper into existing clients, and seeing recognition awards exploding across several departments. Even training programs are using awards for completion of certain levels.”
Rebecca Hunter, owner of Proforma Anchor Printing and Promotions (asi/300094) in Tallahassee, FL, feels better about 2017 after first seeing a drop in purchasing at the end of the year. “Nobody bought anything in December,” she notes. “Things have stabilized now, and we’re networking among the trades. There’s tried-and-true business there.”
And Teresa Moisant, owner of Moisant Promotional Products (asi/275276) in Oklahoma City – where the depressed oil and gas industry of the past few years deflated other industries – sees a change: “I made a lot of cold calls during the downtime last year, and I’m starting to see the payoff now.”
Key Trends
Drinkware Gains Value
“Probably the hottest items of the past year have been water bottles – but ones at $7 and higher,” says Lori Anne Lord of Promotional Marketing Services. “Name brands such as Contigo, Arctic, Camelbak, Yeti are all much more requested because clients want to be associated with quality.” Joree Ouzts of Promotions Unlimited says that “the S’well water bottles with the textured look are popular, even though decorating it takes more time because of brand rules. SoBe's Chris Ferriter adds: “If a client brings us a water bottle they like, we’ll present one with more features or a bigger imprint area, and they say yes.”
Cotton Comeback
In apparel, cotton is making a comeback with items like polos. “We’ve gotten more requests for cotton apparel in the last six months than I have heard in a long time,” says Tommy Lewis, vice president of enterprise and program sales for Halo Branded Solutions (asi/356000). “We’re seeing orders for dress shirts and golf shirts, where cotton hasn’t been used for years in lieu of the no-dry-clean, no-iron options. It’s a throwback, but it’s different right now in a market that always wants something different.”
Wellness Programs Are Healthy
Whether it’s to keep health insurance premiums down, reduce absenteeism or increase morale, more companies are creating programs focused on employee nutrition and exercise. Richard Berger of Think Promotional Group is dealing with many HR departments on this and selling them technical shirts with wicking properties for use outside work, or even during exercise sessions at work. Also, “we recently put together a lunch container with utensils, and the outside had caloric guidelines for different types of food printed on it,” he says. “Another client bought jump ropes with the company name on the handles.” Elizabeth Tate of Signet adds there are more internal health fairs now.
The Shows Go On
“We’re seeing more conventions and meetings, plus the sales-incentive trips are coming back after a lull,” Tate says. One item she gets great reviews on is the virtual-reality enabler for smartphones and tablets, from the affordable viewers to the expensive full-size units for incentive groups. Teresa Moisant of Moisant Promotional Products is helping her banks and credit unions with products for public events such as car and boat shows as well as home, garden and outdoors shows. Strong items include kitchen utensils, jar openers, measuring tapes and an unsinkable keyring.
Decoration and Packaging Pay Off
Staple items in the promotions universe now deliver stronger impact thanks to full-color designs and custom color matching, and distributors are gravitating toward the suppliers who offer the most robust decoration capabilities. “When prices are close, I choose suppliers for their decorating and packaging abilities,” Lord says. “Most clients’ logos are not just one color, so now I can get closer to exact for their brand.”
Tate says that enough suppliers have bought equipment to decorate packaging that “it gives us an opportunity to go into clients and present like an agency would. It really helps.”
Berger had a big hit last year when his firm procured custom-printed gift boxes with a handle for Moscow Mule copper drinkware that added just one dollar to each item. “The client said the packaging created so much buzz that they immediately reordered with us. It screams retail, like right out of a store; the perceived value is instantly higher.”
Rob Carey is a contributing writer for Advantages.