Increased Costs Downfall of Recycled Products
A little more than ten years ago when a major ASI supplier first introduced recycled products made from reclaimed rubber the industry collectively ignored the offerings. Although the brand name was nationally recognized there was very little interest in the products and within three years the offering had vanished from the product line. A couple of years ago recycled promotional items were again introduced into the mainstream corporate channel and almost instantly became a mega success. Several issues have come together to create a perfect storm that is blunting sales.
First consumers and distributors were burned last year with horribly underestimated inventories. With some manufacturers the Spring of 2008 saw entire lines back-ordered for the critical Earth Day celebrations. Other products had serious quality control issues including melted buckles and inferior fabrics. Distributors had to deal with both of these issues in unmet expectations on delivery or worse angry customers when the more expensive recycled products proved to be of lesser quality than their non-recycled counterparts. Adding insult to injury some industry players such as Norwood suffered through inclement weather and flooding at some locations only making the problems worse. Manufacturers rushed to address these issues and the lack of color choices for the 2009 season.
Which leads to the next problem - collapsing sales the result of the ongoing recession. Everyone wants to promote eco friendly options but when budgets are severely cut customers are left with two choices, spend less money or spend no money at all. Although there is nothing official yet released by the major suppliers a quick look at online inventories shows excess quantities and also demonstrated no shortages this year leading up to Earth Day. This is partially the result of the economy but also directly reflects the increased costs associated with these products. Recycled apparel has been a major dud by most accounts with end users not liking the feel of recycled shirts and fleece. Taking a look at second quarter sales from suppliers there is an abundance of recycled and organic items which would again indicate an overstock situation. Higher prices and the recession explain much of the decrease but an overall change in buyer behavior may be behind the shift. It is too early to draw any conclusions but the 2010 "green" season will likely determine the fate of recycled promotional products in general.
Manufacturers need to bring to market some sub $3 items in popular categories to help continue the shift to recycled items. They also need to source some in the USA versus bringing them all in from overseas factories. Given the state of the economy and particularly domestic factories United States sourcing would help sell recycled items.
Broder Bros.appears to have dodged bankruptcy. Although there is no official word as of tonight it would seem they secured the needed percentages to prevent their filing. This is good news for the industry as the recent filing of Norwood already had the industry on edge. Changes are already underway at Broder with Columbia being dumped from the product offering. Once they sell through the remaining inventory it will be the first time in decades that Columbia has no presence in the industry. Meanwhile Callaway has landed at Perry Ellis. Once Ashworth officially exited the business Callaway was left orphaned until the announcement was made last week.
We do have an update to the Major Retailer Provides Lessons in Poor Customer Service but will update that story Monday morning. Suffice to say the demonstration is ongoing.
Major Retailer Provides Lessons in Poor Customer Service
The economy is struggling and retailers are closing all across the country. The cost of acquiring a new customer continues to exponentially increase as retailers fight the battle of not only getting customers to choose their stores but to shop at all. Despite this one major retailer has demonstrated how not to provide customer service and how to lose a customer for life.
First a quick detour as we discuss some new custom coolers. There are many ways to keep your food and drinks cold. Some choose portable mechanisms such as the Gemline Party To Go Cooler which provides for storage of up to 32 cans. With a mega 16" opening even the largest of bottles or containers will fit easily. The less bulky Life In Motion Collapsible Cooler is also heat sealed and has a front zippered pocket. With a top grab handle and sporting PEVA lining it is a safe alternative to less expensive and less safe coolers promoted by some organizations. The limited size of the cooler will make it less popular with the beach crowd which is where the Life in Motion Cooler comes into play. With a huge 36 can capacity it can also hold about any size container. It is also useful in carrying bottles and has an attached metal bottle opener. When in doubt by a PEVA cooler as they do not contain PVC which requires the use of environmentally dangerous materials in production.
Equally dangerous is trusting a major retailer. Sears sells all manner and types of appliances including refrigerators. The recent purchase and subsequent disaster is a perfect case study in how not to conduct the servicing of a client. As an example a fridge is purchased for $170 and lasts exactly three months before the compressor fails. Under warranty for one year as part of the stores premium brand name the refrigerator is repaired. In order to facilitate the repair a technician is first sent to the location. A normal service call from the same company runs at least $125. The technician determines a compressor is needed. The cost of shipping the failed part and installing it runs over $300 per the slip. The part is installed and the refrigerator works for another month before failing under the same circumstances. Another service call is made at presumably a similar cost and another compressor is sent this time overnight. Compressors weigh a substantial amount so this was not an inexpensive shipment. The servicing technician determines the compressor is fine and instead believes another part has failed which is replaced. Total cost to date of repairs in terms of shipping and labor totals over $700 per the slips provide by the servicing firm. Customers suggestion that the refrigerator be replaced after the first failure are ignored. The customer believes there is no justification in repeatedly repairing a refrigerator that costs the store less than $150. After the second repair the refrigerators lasts approximately three days before failing yet again under the same circumstances. The local store realizes how fruitless the situation is and agrees to replace the item with the identical model. The customer has no problems with the identical model but new refrigerator. Total cost to the retailer is over $700 and in the end they ended up replacing the item and taking a dead loss of $150. But they also lost the customer for life but did manage to acquire enough bad will to steer dozens of customers away from the store for years to come. Somewhere along the line executives need to use some common sense and realize the costs of fixing an item repeatedly both in terms of loss of goodwill and hard costs far exceeds the costs of replacing an item and appeasing a customer. As the economy continues to contract retailers of all types are sharpening their pencils. The above example illustrates how an over zealous pencil pusher can inadvertently cost a company dearly down the road. Once a legitimate problem is identified and repeated attempts to resolve an issue have failed sellers need to find and provide alternative resolutions. As the saying goes in this case this particular retailer won the battle but lost the war. They held their ground and may have won the battle initially on getting an item replaced but lost the war in the end as not only did they end up replacing the item but all faith is lost in the business.
You can follow updates to this blog on our twitter page as well as reading previous articles such as Green Promos in time for Earth Day.