Promotional Product Industry Headaches - China & Cotton

It’s been a rocky past couple of years for the promotional products industry in more ways than one. The good news is that business has picked up quite a bit over the past 8 months according to the industry press. And to me personally, it certainly seems a lot more like a normal year, especially compared to the debacle that was 2009.

However there are serious issues worldwide and especially in China right now that pretty much ensure that we’re not out of the woods yet and the prevailing opinion among many industry leaders is that more rocky times lie ahead. The situation has already had a direct effect on some of my clients and there’s a better than good chance that it will affect more of you in the coming weeks and months.

The Issues-

Rising Prices for Suppliers
Lack of Inventory
The Cotton Problem

Let’s take ‘em one by one:

Rising Prices- Lots of factors at work here. The economic collapse of 2008 put the lid on ordering and the Chinese factories responded by trimming operations and payroll. However, when demand ramped up again earlier this year, manufacturers had to contend with a couple of challenges that they hadn’t planned on. One was and is a labor shortage. It wasn’t publicized in this country, but coinciding with the Obama Stimulus Package, China enacted its own stimulus package – creating a ton of new jobs related to the rebuilding of China’s infrastructure – jobs that paid a lot better than the factories did.

And many of those workers, who happen to be under the age of 40, have only known an expanding Chinese economy with plentiful jobs. They’ve become much pickier about wages, benefits, social status and working conditions than their parents were. Combine that with tax incentives that make it more attractive to work close to home and the byproducts of China’s one-child per household policy and all of a sudden factories can’t find enough help. And the workers they do hire won’t work for paltry salaries anymore.

Bottom line, China’s much celebrated pool of cheap labor no longer exists and manufacturers need to spend more on compensation to maintain a work force. But the problem isn’t just labor, it’s also…..

Lack of Inventory- Demand for products here is way up and factories – even the ones that are sufficiently staffed- are struggling to get products to market. And a big reason is it’s harder to transport the products here.

The freight companies, which are already a quasi-cartel, got caught by the demand rebound as well. They cut capacity like everyone else in early ’09 and have struggled to respond. They also set their own rates which manufacturers have no choice but to pay. So the situation now is like heading to rush hour with not enough vehicles available to get everyone home. Space on the existing vehicles - i.e. boats that get the stuff here - is scarce and a lot more expensive.

This creates issues for industry suppliers with diversified product lines because when things are tight, core products come first and secondary offerings get kicked to the back burner. Product shortages right now are the worst I’ve seen them in 20 years of doing his.

The Cotton Problem- not a China specific problem – this one is worldwide. There’s a shortage, manufacturers cannot buy yarn, so we're seeing inventory problems and price increases since the Spring of close to 20% on cotton products. Further, lots of wearable suppliers now put out their new catalogs in August vs. January, so they’re faced with having to project where prices will go over the next several months, and their guess is as good as anyone else’s. It’s not a great way to have to run a business with high overhead.

So what does this mean to you, the buyer?

• Production lead times are increasing.
• Your first choice for products may not be available – which creates even more difficulty if you’re in a rush or deadline situation.
• Prices are heading in the wrong direction
• Your duties for ordering products for client events may be getting a whole lot harder.

What can we do about it?

• This is just a personal opinion, but in a situation like this, Geiger’s buying power and industry contacts are more valuable than ever right now. Due to the regular communication that we require of our Gold and Silver level production partners, we’ve got our finger on the pulse of inventory levels and production times from the best suppliers in our industry. Take advantage of our advantage.
• Consider ordering earlier or if there’s an ongoing need for particular products. Also think about ordering extra. That purple bag that’s available today may not be in stock 3 months from now.
• When planning, include 2nd, 3rd and even 4th options in case products are out of stock.
• If you can give me a heads up into what you’re considering, I can help with planning by checking into item availability and projected inventory levels right now.
• be very careful when ordering products from smaller manufacturers (this applies to me as well). The big suppliers have a major advantage right now because they can order from Chinese factories in higher volume which will demand the factories attention well ahead of suppliers ordering smaller volumes of items.

Bottom line, our industry's reliance on China forces it to ride out this storm because that country's ability to manufacture promotional items cheaper, faster, and with much better quality than countries like Vietnam, Cambodia etc still makes them the desired long range partner of industry suppliers. For the time being, no one sees that changing and ultimately the situation will improve. The question of course is when?

Also, it's good to keep in mind that American suppliers don’t have to deal with these issues (except the cotton one) so for items where these vendors are price competitive – like Frisbee-style flyers, cups and bottles and of course calendars, they’re the way to go.

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Geiger Galleria Report

Cool Stuff from Galleria

Recently, I traveled to Arizona to attend the Geiger Galleria, an annual gathering of the Geiger organization, its sales partners and key suppliers. It’s a pretty intense 3 days of education, creativity and socializing among Geiger’s vast network of sales and production partners, not to mention the many head office staff people who actually make the event happen. And whenever I attend one of these, I always find some pretty interesting new products - this year’s Galleria being no exception.

Here are some of the best ones that I found:

e.Ssential Collection Ceramic Tumbler-

A terrific 'Green' item that looks like a paper cup, but its much better for the environment.
This porcelain cup has double walled construction that keeps drinks hot or cold longer. Also has a silicon lid that both insulates and prevents seepage. The tumbler that's pictured has a sublimation imprint which allows you to print unlimited colors.

Cost- $7.00 - $8.00

Solar Powered Pedometer-

Another green product as it's powered by the sun, and also a very useful one for anyone who walks or jogs. This is a quality promotional pedometer that any organization would be happy to put their name on. It’s great for any program that promotes wellness or physical fitness, green marketing or any theme that can incorporate words like ‘walk’, ‘stroll’, 'steps' etc.

Cost: $4.00

Travel Soft -

I grabbed one of these for myself. It’s a 3-in-1 multi use product that functions as a screen cleaner for a laptop or Ipad, a screen protector for when a laptop or Ipad is being transported and finally a non-slip mouse pad. It also has anti-microbial properties that protect it from odors and stains and it has a huge imprint area and can be printed digitally or via direct screen.

Cost:$2.75

If you would like to see a sample of any of these items, just drop me an email.

Cool Summer Promo Items

With summer time now officially upon us, it's probably an appropriate time to offer up some great summer related promotional product ideas. Whether you're trying to reach people at the beach, the pool, at cookouts or at the ballpark, there are lots of ways to effectively showcase your branding message once the heat and humidity hit.

Here are some examples:

Summer Stuff

Beach Towels are one of the staple items of summer. However one of the challenges with these is that creating something with a really dynamic design is often costly, especially if you're not looking to order a lot of towels at once. With a design incorporating 4 or more imprint colors, those $120.00 screen charges really start to add up.

Here's a solution. The Westmoreland Collection of designer beach towels. These are a series of creations by artist Scott Westmoreland who's work is sold in galleries nationwide. Choose from a series of 'stock' designs (standard sized or over sized) add your logo and you've got the type of towel that will get plenty of use -- meaning lots of exposure for your brand. You can order as few as 36 at once starting at $18 each with no set up charge.

Seaside Beach Tote-

Anyone heading to the beach needs to take a tote bag and here's a pretty cool option. This fashionable sling tote with cinch closure is perfect for carrying towels, books, and accessories—And if it's a rainy day you can use it for shopping in town. Also features removable translucent PVC bag with Velcro closure keep to keep contents dry and secure, and has a front zippered pocket and mesh side plus metal grommets help keep sand out Available in four dynamic colors and is on a supplier special right now: 50+ @ $8.48 ea.

Email me for more details.

Collapsible Party Cooler-

Here's a great idea for an employee thank you or recognition gift -- Collapsible for easy storage when not in use, even comes with a retractable metal bottle opener attached to it. Top grab handles, heat sealed and has a 28 can capacity. Whether you're storing soda, wine coolers or beer, the cooler will keep it cold. And it's also easily storable.

Cost: 50 @$19.55 ea

Flip Flops-

This is a great item for making a statement at the beach....or actually ON the beach. Your logo can be die cut into the bottom and before long your 'talking footprints' are all over the sand. Imprint can also go on the strap. Price range is $10 to $16

Sunscreen-

Can't have a summer promotion without this! 1/2 oz. capacity carabiner bottle with SPF30. Water and Sweat Resistant. Starts at $2.39 each with standard production.

Autograph Book-

Lots of organizations do summer outings at the ballparks of the hundreds of major and minor league teams nationwide. What better item to give out at an event like this than an autograph book? Imprint the name and date of your event on the cover along with your logo and you'll go a long way towards creating a lasting memory for all who attend. Autograph books start at $3.20 each

And don't forget a Sharpie -- and this one is perfect for the task. It's even called the 'Autograph Sharpie'. These start at $1.24 each for 200

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The Supplier Inventory Challenge - Part 2

A short time ago I blogged about inventory shortages that I personally had encountered with our suppliers - a trend that, to me, seemed to be occurring a lot more frequently than normal in recent weeks. Turns out I was definitely on to something. This past week, the President of Polyconcept, one of the larger suppliers in our industry (owner of Bullet Line) advised all its affiliated distributors that it has been having major issues with its supply chain and product inventory. He also said the situation will not be immediately rectified.

He alluded to reasons that I had cited in my previous post, but also noted a few more that I'm going to pass along, as I'm sure this will be affecting all industry suppliers if it hasn't already.

I had previous blogged about my belief that the continued tight credit market and the downturn caused by the Fall 2008 economic meltdown had forced suppliers to make hard decisions on inventory. Now factor in news that China's own domestic economy has recovered far more quickly than the U.S. and Europe -- in fact it's booming right now --and that recovery has caused a labor shortage in their factories. As a result, production timelines are longer and the costs of doing business over there are increasing. And since at present, 80 to 90% of all promo items are manufactured in China, this is all a recipe for inventory trouble.

My own view is that near term, I see prices increasing and more product shortages. However I also see an advantage here for the deeper pocketed suppliers because they'll be in a position to allocate more money to grab as much inventory as they can to meet their distributors ever increasing needs. Bullet announced that they're responding by pouring more dollars into inventory and adjusting their Substitute Item policy to one where they'll always offer either items of higher value or generous discounts on similar priced items for anything that's out of stock long term.

However, small supplier operations that rely on Chinese made product are in for a very rough go of it in the near term because they lack the resources to react the same way a Bullet Line would.

We at Geiger will continue to monitor this situation and will utilize our own resources to the fullest to help steer our clients through the rocky 'inventory road' that lies ahead.

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Promotional Pens - A Very Effective Advertising Vehicle

In this edition, I'd like to champion the cause of promotional pens. And when I say 'promotional', I'm referring to the classic plastic pen that costs less than $.50. Sure, some will say 'People get a million of those' or 'You give out a pen and it goes right in the drawer'.....And while there may be some validity to those concerns, the ‘upside’ of promotional pens is too valuable to dismiss.

Cost Per Ad Impression- The Advertising Specialty Institute recently completed a study on actual cost per ad impression of the most popular promotional products...and it found that plastic pens actually have the LOWEST cost per ad impression of any promo item at $.002 per view. That's $.001 lower than even calendars.

And There’s More - Consider that the average plastic pen has 8 different owners in its lifetime. Pens are also the most remembered promo item (54% of owners, according to the study recall owning a specific pen and a whopping 84% recall the advertiser on the pen they currently own. And the study adds that the average pen gets used at least twice a day.

People Still Write- Yes, we’re in the age of Laptops, PC's, I-Phones and now I-Pad’s, but we all still need pens. Whether you’re jotting down notes, taking a message from someone calling the house or making out a grocery list, we all still use a ton of pens.

Puts logo in places other media can't reach- Do newspapers, the internet or billboards put your ad literally at a person's fingertips? Pens do. Branding Advantage- The pen itself can deliver a subtle message about your brand - i.e. is your company or product edgy, reliable, consistent, inexpensive, etc.....? Whatever your major selling point, here's usually a promotional pen available to match it.

3 of My Favorites-




Javalina- This pen from industry supplier, Hub Pen, burst on the scene a couple of years ago and has been so popular that it's spawned several different varieties, and tons of knock offs that frankly aren't as good. The real Javalina features a unique compressed ink delivery system that allows it to write far more smoothly than most pens - including many that cost a lot more than the Javalina. This year Hub introduced new 'Splash' color trims: Lime Green, Orange, Pink, Purple and Sky Blue. Cost with Geiger through June 30 - 250 @ $.40 each.




Rita Writer- This under the radar stick pen features the same compressed ink system as the Javalina, so it writes just as well. It also has a much larger imprint area than the Javalina or most other pens in the category. Available in white with a choice of 4 trim colors, the best feature of the Rite Writer is its $.25 cost.

Bic Clic Stic- This old standby makes the list because Bic’s graphic capability is the best in the industry. The vast majority of low end pens can still only be imprinted with one color – Javalina and Rita Writer included. Not so with the Clic Stic. Multiple imprint colors, tight registration – no problem. They also have a bunch of barrel and trim colors to choose from and there's even room for a web address or phone number on the clip (for additional cost). Bic has also introduced a new Easy Glide ink technology that’s similar to Hub’s compressed ink.

Cost @ minimum qty: $.48 ea.

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The Supplier Inventory Challenge

I've noticed a little problem with supplier inventories recently. I actually blogged about this situation back in September. And it's been occurring a little too frequently as of late.

Yesterday I placed an order for some dress shirts only to find out that some tall sizes are out of stock for the next 3 months. Got a pen order this week -- no stock in any colors till late May. Jacket order last week -- no stock in my client's desired color till end of JUNE. Notice a trend here...?

My take is we're slowly but steadily emerging from the economic meltdown of the Fall of 2008. Clients have ramped up their marketing considerably vs. a year ago and suppliers are busy once again. That's the good news.

Unfortunately, the slowdown of 08/09 coupled with the subsequent tight credit market forced suppliers to make some tough decisions -- like limiting inventories. They tried to project -- as they've always done -- which products would sell the best and they ordered from Asia accordingly. But business has picked up and some suppliers have been caught short -- and maybe weren't in the best financial condition to begin with thanks to the recession.

So what we're dealing with now is an environment where many promotional items -- a lot more than usual -- aren't available. And we as distributors have to make a lot more phone calls checking stock because (and trust me when I say this) people in my business absolutely HATE having to call clients back after an order is placed and be forced to say 'you know those _ _ _ _ _ you ordered yesterday? No stock till _ _ _ _ _.' Ugh.

We will however, get through this. And it's my job to either find alternative sources for out of stock products or show you ideas - to begin with - utilizing items that ARE available right now. That's where my experience and the great support we get through Geiger come into play. We WILL make it happen for you.

However on the supplier side of our industry I think we're in a shake out phase -- one that to me and many others -- was an inevitable byproduct of the 08 economic collapse and resulting recession. There's a reset going on in our industry that's going to cause some weaker vendors to reevaluate their long term strategies and some stronger ones to gain market share. We've seen it with the recent Bic/Norwood merger and the Corvest collapse and sale.

And I think there's more to come..... But be assured that given our collective experience and Geiger's position of leadership in our industry, we'll make sure your business rests in the proper stable hands.

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Ad Spending Improving

A little bit of encouraging news on ad spending - according to data released by Kantar Media, the advertising recession began to ease in the final two months of 2009 and preliminary figures from the first quarter of 2010, indicate many sectors are experiencing growth when compared against the same period of a year ago.

According to Knantar, total advertising expenditures fell 12.3% in 2009 to $125.3 billion as compared to 2008. Fourth quarter 2009 ad spending was off 6.0% against the same period a year ago, with nearly all media improving upon their January-September performance.

Given the restraint in consumer spending, it appears marketers have more confidence right now than their customers. As we get deeper into 2010, the pace of consumer activity will be a key determinant of the strength and durability of the advertising recovery.

Internet display advertising expenditures increased 7.3% in 2009, aided by sharply higher spending from the telecom, factory auto and travel categories. Free Standing Inserts achieved growth as well, up 3.0% as marketers targeted value-conscious shoppers with couponing programs.

National TV media continued to outperform the overall ad market. Cable TV expenditures dropped just 1.4%, helped by an expanding amount of commercial time. Network TV (-7.6%) and Spanish Language TV (-8.9%) each saw year-end improvement in key categories that lifted their results.

Print media were hit by large reductions across a broad range of advertisers. Measured ad spending in the Newspaper sector plunged by 19.7% in 2009. Sunday Magazine expenditures declined 11.0% and Consumer Magazines were down 16.6%.

Promotional product sales figures are not compiled on a quarterly basis -- just yearly -- and total sales for 09 were down about 25% industry wide. However, what I am hearing from suppliers - and my fellow sales reps - is that things appear to be on the upswing based on number of orders placed, requests for quotes etc.

So far, so good, but I'm curious about the impact of the health care issue, should Congress pass a reform bill this weekend.

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