Promo and the Post-Lockdown Reopening

Last updated: 06-24-2020

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Promo and the Post-Lockdown Reopening

Counselor spoke with distributors in three states that are among the furthest along in their coronavirus reopening efforts to understand how the promo products business there is faring.

America has started to emerge from coronavirus-induced economic and social hibernation. Still, with reopening strategies largely left up to individual states, the nature and particular timing of each state’s emergence has varied. What’s more, paths to reopening have the potential to be diverted, affected by factors that include potential resurgences of COVID-19, which some areas could already be experiencing.

Against this backdrop of uncertainty and opportunity, promotional products distributors are trying to get on with business.

To get a sense of how things are going, Counselor spoke with distributors in three states that are among the furthest along in their reopening efforts – Georgia, Florida and Texas. The idea was to understand how the promo market is faring in each area and how industry firms have been adapting. The picture that emerges isn’t just a snapshot of the business climate in each locale; it’s also a potential predictor of how things will go across the country as states everywhere press deeper into creating their new normal.

GEORGIA: Sales Picking Up Georgia was the first state to allow businesses to reopen after the COVID-19 shutdown.

Hair salons, gyms, barber shops, tattoo parlors and bowling alleys were permitted to open on April 24 with social distancing guidelines. Dine-in restaurants and theaters followed a few days later with certain restrictions. “You’d never know we’re still in a pandemic,” says David Weintraub, CEO of Norcross, GA-based Pinnacle Promotions (asi/295986). “I was in a Cuban restaurant with every other table full and the only people wearing masks were the servers. You get the sense that people have had enough of the lockdown and are ready to move forward.”

Promo firms are ready to move forward, too, as their clients gradually resume communication and plan their reopening strategies. Although personal protective equipment (PPE) has been the most requested product during the pandemic, distributors say orders have stabilized over the past couple weeks. “We’re starting to see much less PPE and more regular promotional products orders, such as bags, drinkware and padfolios,” Weintraub says.

Although masks, hand sanitizer, neck gaiters and face shields have dominated ESP searches since March, distributors say the demand for PPE has weakened as supplies become more accessible. “We’ve already seen a dramatic drop in pricing for masks,” says Jim Owen, president of Alpharetta, GA-based Swag Promo LLC (asi/340491). “People talking about a branded mask being a new fashion statement is great, but I don’t see it as a long-term trend. I’m more bullish on T-shirts and caps and regular promotional apparel.”

Pivoting to PPE has kept sales streams flowing during the COVID-19 crisis for many promo firms, including Top 40 distributor American Solutions for Business (ASB, asi/120075). Jay Harman, regional manager of ASB’s Southeast sales and distribution team, says his team has sold between $7 million and $8 million in PPE in Georgia since March 10. “Now these [PPE] sales are slowing and there’s a bit of uncertainty of the future,” Harman says, “but we remain confident that we’re satisfied with the end result because we created more accounts and contacts than ever before while building great relationships through transparency, quality products and kitting and distribution services.”

Other distributors have a similar view – that PPE hasn’t simply been a bandage for companies hemorrhaging money, but has also opened the doors to new, potentially long-term relationships. Several distributors, including Atlanta-based Proforma Expansion Marketing (asi/300094), have reported converting mask buyers to purchasing traditional promotional products. “We’ve been prospecting like never before and now the pipeline is picking up with projects, marketing ideas, direct-mail campaigns and even a new polo look for one client,” says Mike Beckman, president of Proforma Expansion Marketing.

While large and medium-size clients are ramping up their advertising, smaller customers are still hibernating, says Jordy Gamson, CEO of Atlanta-based The Icebox (asi/229395). “Everything is dragged out now,” he says. “Our industry has had this sense of urgency for so long and now it’s been replaced with a sense of uncertainty. We’re cautiously optimistic about business going back to normal, but the emphasis is on caution.”

Despite the relaxed restrictions across the state, many companies have yet to resume operations, leaving promo firms dependent on marketing dollars from companies trapped in a wait-and-see mentality. “Should corporate offices remain closed throughout the year, this will have a huge impact on our business structure and will potentially translate into staff reductions,” says Wendy Neubauer, president and CEO of Johns Creek, GA-based The Corporate Shop (asi/169059). “However, we remain optimistic that COVID-19 will wane over the summer months and that the country will be better equipped to handle the virus as we approach fall.”– John Corrigan

FLORIDA: An Uneven Recovery On the Panhandle, Emily Davila’s apparel decoration/promo products business is struggling. In the Tampa area, Kelly Moore’s one-woman ad specialty distributorship is thriving. And in Miami, Chris Ferriter is grappling with uncertainty, asserting it’s too soon to say what comes next for the economy in his locale and his promotional products distributorship.

The differing scenarios encapsulate the current status of the promotional products market in Florida, the nation’s third most populous state of more than 21 million people. The market is patchy, the recovery to date uneven, with a firm’s sales results influenced by everything from its location in the 65,755-square mile state to its client portfolio to its ability to have pivoted to selling PPE.

“Overall 2020 has been exhausting and I think it will continue to be,” says Danette Gossett, owner of Miami-based Gossett Marketing (asi/212200).

Led by Republican Gov. Ron DeSantis, Florida has advanced one of the most aggressive reopening efforts of any state. The first phase of reopening began on May 4, when many other states were still in full lockdown mode. A second phase of reopening, with more relaxed restrictions on social distancing and business operations, began on June 5, except for the counties of Miami-Dade, Broward and Palm Beach, which were the hardest hit and remain in phase one.

“Restrictions have started to lift, but we haven’t seen much traction with ordering as people are more concerned with business continuity and survival at this point,” says Ferritter, vice president of business development at Miami-based SoBe Promos (asi/245603). “I’m still very much up in the air as to when demand will come back and what markets will be the ones to bring that demand.”

Moore, owner of St. Petersburg, FL-based Moore Promotions (asi/601617), says the business environment in her Gulf Coast town near Tampa is “not too bad. … Things seemed to bounce back to almost the way they were.”

Helped by sales of PPE, an especially large order and the addition of new clients, Moore recorded her best May ever for sales. Her biggest buyers have been hospitals and mortgage brokers/real estate firms, but she’s also had success of late selling significant-sized orders to school districts, an orthodontic customer, first responder outfits, and even an equestrian show organization. Yes, there’s been strong desire for PPE, but Moore says there’s been a noticeable rise in demand for promo products, including everything from sunglasses for schools to fanny packs for firemen.

“As soon as a mortgage client opened, they reordered 5,000 Bluetooth speakers, while one of my hospitals ordered 5,000 more mugs for their new hires,” says Moore. “Those clients are thriving and, as such, so am I.”

Mike Brugger, president of Top 40 distributor Fully Promoted (asi/384000), also had positive news to report, noting that the firms’ Florida franchisees on the whole have seen business pick up amid the reopening initiatives. While noting that PPE sales helped keep revenue streaming during the height of the pandemic, Brugger says promo products and branded apparel are back on the radar of Fully Promoted franchisees’ end-buyers.

“There’s demand for staff shirts as people come back to work and need new uniforms,” he says, adding that the construction, service and restaurant industries have all shown increased interest in promo. “Sports and events are still very quiet, but ‘welcome back’ gifts and staff appreciation gifts are big right now.”

Elsewhere, Gossett says an immediate challenge to her Miami firm’s sales efforts is simply determining which clients/prospects are open and which are not. Even so, she reports that sales opportunities beyond PPE are starting to rear.

“Some are looking for more work-from-home-ideas or team motivation ideas for remote work because that now seems to be a more long-term prospect than many thought initially,” Gossett says. “We will be working with clients to add more online stores to make it easier for their employees to get what they need working remotely, more direct-mail programs and more collateral materials.”

Gossett Marketing has already had notched a few notable victories on the direct-mail front, including creating a branded popcorn movie night kit that a client celebrating its founding anniversary will send to the homes of its 650 employees.

Davila’s Who Dey Prints & Embroidery (asi/355771) in Panama City, FL, which is on the state’s Panhandle, wouldn’t mind an order or two like that. Davila admits business has been down and is still slow – a consequence of local economic fallout tied to COVID-19 and 2018’s Hurricane Michael, a devastating storm that rampaged through her area.

“Some businesses were still financially recovering from Hurricane Michael and were barely back open when COVID happened,” Davila relates. “It could put some of my customers out of business permanently.”

Still, she’s starting to see a few breaks in the clouds. Construction and lawn care clients are ordering screen-printed shirts and embroidered hats. There’s also been a bump in inquiries and orders from other clients, including Bay County retailers that are ordering logoed shirts, though not at the rate they normally would.

Florida promo pros aren’t universal in their predictions for how sales will fare for the whole of 2020. Brugger, for instance, expects an overall increase for franchisees and Gossett is set on making her numbers. Others think revenue can only decline compared to 2019. Most plan to persist.

“2020 is unlike anything we’ve seen before, but we’re always optimistic about the future,” Davila says. “We take the hard times as they come with the hope that there’s something better on the other side.” – Christopher Ruvo

TEXAS: Playing It Safe In Texas, mandatory shutdowns across the state – the country’s second largest in terms of population, with almost 30 million residents – began in mid-March. Noel Garcia, managing director at Top 40 distributor Boundless (asi/143717) in Austin, said officials announced closures right around spring break, so many employees went straight from vacation to their home offices and have remained there since.

Austin is home to the annual SXSW music, arts and technology festival; the shock announcement of its cancellation in early March was a harbinger of the mass cancellations, and subsequent drying up of promo sales, that were to come.

Boundless has since decided to keep employees at their remote offices until September. They’re not the only ones.

Under the Open Texas Plan, Governor Greg Abbott announced reopening in a series of relatively brisk phases. Phase 1 began on April 27, with the expiration of the state’s stay-at-home order, followed by a second phase on May 18, when businesses were allowed to open to 25% of the workforce as long as social distancing remained in place. In early June, Abbott moved the state into Phase 3, which allows all businesses to operate at 50% capacity, among other measures. Still, even though businesses are starting to reopen and restrictions are lifting, many companies are playing it safe by maintaining remote workforces, Garcia says.

Richard Lopez, director of sales at RiverCity Sportswear (asi/309087) in San Marcos, says it’s “been a tough few months,” after large events were canceled and their accompanying high-quantity orders disappeared. Now, clients have much smaller marketing budgets, though fortunately, they still recognize the importance of promo.

“We’re doing all we can to help out the community while also recognizing that we’re one of the businesses that was affected,” says Lopez. “We’ve donated or sold heavily discounted PPE to some local groups, we’re offering free spec art to clients and we’re also doing T-shirt fundraisers for businesses.”

Meanwhile, in Dallas, road and foot traffic is starting to build again as businesses open back up, though everyone is still required to wear masks, says Lexi Fiegener, director of strategic accounts at the Dallas office of Catalyst Marketing. For now, though, sales of traditional promo products are still largely on hold.

“We definitely have a long way to go before we get back to where we were pre-pandemic,” says Fiegener. “We’ve had success in the PPE space, and I’ve started to get a few requests for appreciation and welcome-back gift ideas.”

Bob Lilly, president and CEO of Bob Lilly Professional Promotions (asi/254138) in Dallas, says PPE orders have made up between 80% and 90% of sales these past two months. However, starting in June, the company has seen more quote requests for traditional hard goods, apparel and caps. “Our online sales have been slow the past three months,” says Lilly, “but the past two weeks are up 25% to 30% from their bottom.”

Dallas’ shelter-in-place order went into effect on March 22, but Bob Lilly Professional Promotions was deemed essential, which meant the firm could have a daily staff of four in the office, down from 20. Since June 8, they’ve been bringing more people back to the office on limited and flex schedules. As of this writing, the company now has almost half its employees back in the office, and is starting to fill more orders for backpacks, caps, apparel, drinkware, UV phone chargers and screen cleaners.

Garcia says the pivot to PPE has been a boon for his team (in fact, May was his best sales month in several years). Meanwhile, his usual clientele of hospitality, oil and gas, high tech, retail and healthcare are experiencing varying degrees of business recovery. “We’ve already seen an uptick in retail, high tech and certain segments in healthcare,” says Garcia. “Tourism and hospitality will be slower.”

With uncertainty remaining as to what the coming weeks and months will look like, Fiegener says PPE is a sure bet, particularly as businesses communicate with their customers again. “They’re asking for masks, social distancing tools and sanitizer stands,” she says. “Outdoor signage lets potential customers know from the road whether or not a location is open. Anything a business can do to keep their customers informed of their current policies and reassure them that their customers’ safety is important to them will have a big impact on whether they start seeing foot traffic.” – Sara Lavenduski


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