Weather Backtracking and Backpacking the Economy
At one point a week ago about 65% of the United States was blanketed in snow. Parts of Florida have had snow and Dallas had serious issues with ice and snow prior to the game this weekend. Another big storm is on tap for the lower Great Plains and while this is interesting it does have a very negative net effect on the economy. If these storms were occurring around the holiday buying season it would have been enough to seriously hurt sales.
Luckily it is occuring at one of the slower times of the year for both retail and regular B2B commerce. We are just before the busy tax season where people are anxious to go spend their refunds, about a month ahead of the Spring buying season when retailers shift over clothes and at least a couple of months before most major companies devise their new year budgets. But the damage has been done and I have already noticed a downturn in inquiries. Last week I got to see the Discovery Sport Backpack for the first time. A customer was looking to order 8,000 pieces with imprint. They had an event scheduled for the school vacation week in April. The order went to our normal promotional distributor and artwork was submitted. We got back the proof and it was approved. Today the order was cancelled. April vacations are being cancelled all over the country because of all the snow days and in this case 50% of their intended audience had cancelled on the seminar. The net loss for our distributor is probably about 7k, and a few k for us. All for snow and ice significant enough to have schools cancelled in some cases for up to two weeks.
We are working to try to save the order by including some auto safety items in the backpack and having them mailed to registrants that have decided not to go. The fee is non-refundable so they are paying for it either way. We figured it would be a good gesture to put a safety blanket, flares and a few other things into the promotional backpacks and then drop send them to all the individual players. That way attendees still get something for their money and in the end everyone is happy. The problem is shipping costs can add up quickly and the organizer fully expects quite a few attendees are going to ask for refunds regardless.
We have found over the years that backpacks are probably the most durable of all promotional gifts. As we wrote about packing a backpack as a new spin on an old idea a few months ago we continue to find new and creative ways to package less expensive items in the backpacks. Over the years we have written many hundreds of articles introducing new and exciting products and expect that we will write at least one column daily at this point as we head into the heart of the new year. With the economy on the mend we expect to see the largest selection of middle of the year introductions since 2005.
When Shockwaves Make Marketing Impact
It has been a little too long since the last entry and we fully expect the pace to pick up this week. 2010 closed on a very favorable note for most promotional products suppliers and distributors and so far the new year has been strong. Companies are spending again but governments and educational institutions still are not spending at previous levels for promotional gifts. In time that will change but for now focusing on new products is the way to go.
When the economy was slow suppliers released very few good new products. Instead they added a few colors to existing lines. That has changed now that most see a rebound in the works. Leeds released over 400 new items though many are color changes. The Shockwave Messenger is part of a design focus that closely mirrors what is going on in the retail space. By adding features such as the bungee cord they have greatly increased versatility. Redundancy in design is also important which is why they use both velcro and zippers to secure the front pocket. Up until this year Leeds had always made a point to produce simple designs which in some lines like their coolers always hurt the look of the product. Now with a new design team their promotional Leeds backpacks have some flare, are well thought out and most of all functional.
The great question that remains for the remainder of this year is whether or not spending will ease from what are very robust early levels. Will sales continue to be as strong? ASI and PPAI have done multiple surveys that show most distributors seem to think sales will increase but not at a significant rate. Suppliers feel even more optimistic with many reporting double digit growth already this year. Oil prices that may be driven higher by unrest in the Middle East have the potential to put a serious crimp on strong growth. I expect to see steady but erratic growth as businesses only slowly rehire people for positions that have remained unfilled for a couple of years.
TSA Friendly Bags are Good News for Everyone
Someone that doesn't travel won't understand what I mean in the title. Those that travel will immediately understand after getting caught behind the guy unloading his giant laptop that is strapped seven ways to Sunday in a mega backpack. The difference in price is now pretty minimal so there is no real reason to go with the old school bags.
A year ago it was almost unheard of that promotional products suppliers were releasing real TSA friendly bags. At the time nobody really knew what that meant and there was a lot of confusion. As standards got set Leeds among others released checkpoint friendly backpacks that were designed to expedite the owner through security. Now they are stepping it up a notch with products that bring even more utility like the elleven wheeled TSA Compu-Backpack which has all the advantages of a regular backpack but also has wheels. So now instead of having to carry a wheeled duffel and then a backpack that holds your laptop you can put everything together in one. For a day trip on an airplane this is perfect as there is just enough room for a change of basic clothes while also leaving plenty of room for padding. The elleven series from Leeds has been a tremendous hit already as it mimics a lot of the finer qualities found in much more expensive bags right down to the texture of the material. Gradually as travel habits have changed so have the products being offered but overall there has been little change in the promotional backpack area. Gemline and Leeds continue to design, test and produce their own unique designs while others buy brand names and relabel.
Over the past twelve months we have covered a lot of topics on this page. As we head into the new year we expect that we will be firing out nearly daily updates to reveal new products, new brands and ideas to keep you informed. In the meantime take a look through the hundreds of previous articles to see if there is anything you would like us to write about in more detail.
When Deception Is Good – Biodegradable Cups
All over the country there has been news of plastic bags being banned from use or of taxes being placed on those types of goods. The reasons are simple really plastic bags that you carry from the store and then throw away are incredibly wasteful. They use up precious resources and then fill up landfills. They are not readily recycled and in fact I don't know of any place that does recycle them. The same goes for paper cups that the coffee shops give out when you buy a large cappuccino in the morning. You use them once and they get disposed of in the trash.
Now that isn't neccessarily a bad thing if they are already made from recycled paper products like newspapers. The thought is that you are reusing a product but in reality a lot of resources are spent to produce a cup, transport it to and from the retailer and into your hands. Why not try a reusable promotional cup that looks just like the paper counterpart? Gordon Sinclair based out of New York has brought two great products to market starting with the Not a Venti Cup which looks exactly like a large Starbucks coffee cup. From a distance you cannot tell the difference between the two but the benefit of the Venti Cup is that it is made from biodegradable materials and is fully reusable. It is top rack dishwasher safe and even if you only use it for a year it will save hundreds of paper cups and all the costs associated with producing them. At 20 ounces it holds a lot of coffee, enough to keep even a barrister happy.
The only thing about a cup that large is that it may not fit in regular corporate coffee machines. The large size will probably cause it to get jammed in the machine which is why the I'm Not a Paper Cup does very well in that niche. Similar to a small size that you would see at Dunkin Donuts it fits and is easily dispensed from almost all automated coffee machines. That makes it a great fit for a corporate campaign towards reusable goods. Biodegradable plastic will generally break down within three to five years in a landfill. That reduces the footprint left behind when the product has expired. As a new twist Gordon is offering inks that are also biodegradable which means they are made without toxic chemicals. As an added bonus both items are BPA free which greatly increases the safety especially for younger people that are prone to use giveaway tumblers.
Delivery can be expensive in promotional drinkware. About a year ago I ordered 500 pieces of a stainless tumbler and got a bill that was well north of $500. What buyers need to be aware of is dimensional weight which is how UPS and Fedex calculate shipping charges on larger boxes. They do not go by weight alone, if a package is above the standard size they use length and width as part of a formula that will greatly increase shipping costs. Always make sure you check with your promotional products vendor and ask for a quote that includes delivery. That way there can be no surprises and you are assured of seeing the bottom line up front and are not left holding the bag at the end. While you are at it ask your provider about charges for additional items shipped. In most cases you are agreeing to pay for up to 10% more goods than you ordered. By spelling it all out up front you reduce the risks to your budget and your reputation.
Will Holiday Buying Take Place in the Corporate Markets?
The great debate continues to rage on whether or not the promotional products industry will see the normal holiday buying. Last year was fairly robust with buying at levels not seen since the last good year of 2006. The traditional holiday bump would often equate to almost twenty percent of annual sales for many distributors. With growth what it was earlier in the year there were strong hopes that it would continue into the fall. Unfortunately it seems to be heading the other way with most suppliers reporting slowdowns beginning in October.
So what has happened? It is probably a culmination of things with first and foremost there being a major drop in economic activity. The stimulus has totally run the course now and that money has flowed through the economy. Second it is likely partly due to over worked staff not having the time for non-essential activities. Let's face it buying promotional items is not the first and most important task of a lot of these businesses. There are roughly eight million fewer workers out there now than a few years ago and that's a lot fewer workers to buy your products. About the best thing you can do is put new products in front of customers. A month ago we were handed a Latitudes Foldaway Shopper Tote when we were attending a show for business managers in New York City. The logo of the company was placed on the outside of the bag. There were two inner bags, each was stuffed with another item. In one was a blanket tote, in the other a box of chocolates. I know Gemline doesn't make food so this was obviously a well thought out promotion where they sourced from several different manufacturers. They brought 500 totes to the convention, they were gone in two hours. That is a pretty incredible return rate and one that was most impressive for this business climate.
Why was the tote so popular? Gemline has a great brand name but that likely had little to do with it. Instead it was a gift that customers could appreciate it and one that they can use outside of their professional lives. A foldable and reusable tote is eco-friendly which is important and that also makes it much easier to store them when not in use. To this day promotional products totes remain one of the most popular categories and are still a big seller even around the holidays. Consider combining your tote purchase with another item such as a box of chocolates or even a wine opener. Just be certain that whatever you send is packaged properly so it does not get damaged.
Pack on Back A New Spin For Old Products
The first backpack made an appearance in the promotional products market about two decades ago. It was primitive by todays standards with weak straps, thin construction and bulky. That was the major trend for a decade as manufacturers focused on more popular niches like portfolios and clothing. It took the sports craze of the last decade to really get things flying in the right direction. Now backpacks and totes are a prominent part of almost any marketing effort.
We had a new focus arise as air travel became more difficult and that was airline safety. Last year there was a rush to airport safe bags but there was quickly a marketing problem. Just because the backpack is TSA friendly that does not mean you will fly through checkout. It is up to the person that works for the TSA. So we are seeing manufacturers change the classification of new bags. When the new High Sierra Outbound Deluxe Compu-Case hit the market last week the terminology is gone with regards to checkpoint status. There is no word yet that is conclusive but it seems this is because complaints were coming in when people were getting stuck in long lines. So what have they done with the new version? It is instead classified as conforming to the required standards while all the other features are thoroughly listed. The High Sierra quality is highlighted and the new features they have added like the cushion zone padded compartment which means a laptop can be dropped from a low height and still be okay.
The biggest problem this year with these backpacks wasn't issues at the airport. The problem facing distributors was lack of inventory. The factory that produces High Sierra bags was way behind and the shipping containers east from Asia were jammed. For months there were no product available even when the item had just been released. These new backpacks appear to have plenty of inventory but that could change quickly. All High Sierra Backpacks are produced in the same factory that ship to the corporate market. They are well built, rugged and puncture resistant. They all have durable padding on the shoulder straps and often on the regular carry straps. They all have the signature High Sierra branding on the bags. The only complaint we have ever heard is that the zippers could be heavier duty but that is likely not a problem with the zipper but instead too much weight being put inside the packs.
The promotional products industry is not seeing the normal holiday bumps. Most vendors report sales are flat when compared to previous months. Gone is the larger 5-15% sales increase that came with the holidays. Some feel it is just delayed, most believe it's not coming this year.
The Party Ends for Carnival Cruise Lines
You have to wonder how a cruise ship that just went into service two years ago can end up adrift in the middle of the ocean. But that was the nightmare scenario for a couple of thousand passengers as the ship became disabled off the southwest coast of California. A fire apparently in the engine room was able to knock power out to the ship and surprisingly the ship became entirely unable to function.
The Splendor was commissioned in early July of 2008. She is the second largest ship in the Carnival fleet and is truly massive in person having seen her berth last Summer. The Splendor was originally designed for another cruise line but they were unable to take delivery and Carnival snatched her up at a bargain. As it was designed for overseas travelers it incorporated a giant spa that takes up two forward decks. In fact it is the largest they have ever floated. The ship is able to hold just over 3,000 passengers depending on the configuration and almost 1,200 crew meaning it carries nearly the same number of people as an average aircraft carrier. Three days ago a crankcase apparently split on a generator causing a fire. Why the fire was unable to be contained to the generator section is unknown as it took several hours to put the fire out. The result was all generators were knocked out cutting power to the entire ship. Propulsion was also disabled and the ship was adrift. It is very fortunate that no tropical cyclones were coming through at the time. So what does Carnival do now?
Luckily almost every passenger has reported that the crew did an admirable job in terrible circumstances. Unlike the airline stewardesses that behaved terribly when planes were stuck on the tarmac the front line Carnival Cruise Lines crews helped to mitigate the damage. The company has already announced that passengers will get a full refund, be reimbursed for travel and get a free cruise. That's great for all of those involved, but it won't do much to repair the damage among the general public. Carnival will need to start on a major publicity campaign much like Toyota did last year as the recalls hit one by one. They will also need to find a plausible reason for what happened. Simply saying it was a fire won't get the job done as these ships are supposed to be almost fire proof at this point. They face many of the same consumer confidence issues that the new Boeing 787 and Airbus 380 are suffering from as both have had major issues. The last thing any transportation oriented company wants is concern over the safety of their vehicles.
That said the traveling public has a short memory. If Carnival sets out with an extensive media campaign designed to explain what happened, welcome people back and more importantly offer an incentive the business should build back. That is the hope, as right now it's all they have got to fall back on while the airwaves are filled with pictures of their ship being towed helplessly back to port.
Bright Lights Good Business Big City
Next week marks the traditional beginning to the corporate gift buying season. There are several directions purchasing agents will go this time of year with one being the tired old items, the other new and functional items that will be used by the original recipient and others. With the downturn in the economy a couple of years ago one of the most immediate changes was to corporate gift buying. Higher end brands fell out of favor as the banking industry crumbled in favor of more reasonable gifts.
This is where we are today with the focus being on multi-purpose marketing efforts. Instead of giving a luxury brand buyers are encouraged to give out middle tier items that can be regarded as having a purpose. That can be said for the Icarus LED Flashlight which has all of the key requirements, it can be used in the home or around the office and comes neatly packaged. It can be used for personal safety reasons or in the event of an emergency or disaster and can still be given away at a trade-show or event. With the price in the middle of the spectrum it would not carry the same "how much did they spend on this" question that would surround some leading national brands. In short it hits the sweet spot without going over the top. The last thing anyone wants to do with such high unemployment and tighter budgets is to give the perception that they are insensitive to the plight of many.
We talked about giving flashlights as gifts in an earlier piece. It really has become one of the number on items over the last few seasons and we expect that to continue in the weeks and months ahead. Unlike last fall there is plenty of stock so with any luck inventory issues will not arise as they did last November. The slowing economy should also help in that regard.
We did suffer an outage over the past weekend. It was related to a problem with the DNS servers and it raised some interesting security issues that have since been resolved. We all appreciate your patience.
The Gap Revives The Brand Without Making a Change
The internet is buzzing right now about the power of social media. A few weeks ago the Gap announced plans to change their logo. For years they had the logo we all remember that was on every bag and tag we ever got from them while shopping. They decided to change it up and for a brand that was not doing all that well in recent years and had begun to fall from a position at the top of a chain a firestorm ensued. The net result was an unbelievable amount of free publicity and a lot of bloggers and social media types taking credit for the reversal.
It is far more likely that the GAP used the opportunity to get their brand out in the wild again. Twenty years ago the company was the darling of people everywhere. After a couple of decades the love had begun to fade. When the Gap announced they were reverting to their old logo there was immediately a bunch of articles written about the power of social media. A quick check of the headlines shows that there are several thousand news stories in the last few days about the story. At a few hundred dollars a press release that is millions saved on free publicity. Most major news stations carried it on television and it made the major financial newspapers. Yet unlike most other major launches there are no reports of the new logo being in the wild in the form of shirts, pens or other trinkets. Usually at least a few of these items will get out there long in advance of the launch. Ebay has nothing and neither does the other major buying service. It makes for some interesting speculation as to whether or not the entire situation was deliberate and much like the old Coke new Coke fiasco from the 1980's part of a plan to put the brand back on the evening news.
The Gap had watched sales drop by about 12% in 2008, 3% in 2009, and sales were trending negative again in 2010. However there are reports that sales have been brisk since the news broke about the change in logo. The timing was also not a coincidence and allowed them to gain maximum exposure just prior to the fall sales season. Brilliant really but it probably had nothing much to do with consumer reaction to the logo as it did in creating buzz for the company.