Cases are skyrocketing, especially in Sun Belt states – areas where the promotional products industry produces some of its strongest sales.
Americans may be done with COVID-19, but it’s not done with Americans.
As the second quarter of 2020 closes, coronavirus cases are surging in areas around the country, and that’s starting to have an impact on the promotional products industry.
Distributors and suppliers were starting to see sales of traditional promotional products tick up modestly from their lows in late March and April – a result of reopening measures taking hold, thereby allowing economic activity to begin to return.
However, promo’s tentative turn toward recovery has now been thrown into question as the number of newly confirmed COVID-19 cases surges around the country, placing strain on testing capacity and some hospitals, and prompting officials in more than a dozen states to pause or rollback efforts to reopen their economies.
Authorities documented a record 45,255 infections in the United States on Friday, June 26, while another 39,000 or so cases were confirmed on Sunday, June 28. Nearly 40 states are on an upward trajectory with infections compared to June 8, according to data from Johns Hopkins. With the rate of positive cases per test-performed rising in at least 22 states within the last week, health officials say the increase in reported cases isn’t just a result of increased testing.
Perhaps especially troubling for promo, surges are happening in southern states that include Florida, Georgia and Texas. The South is promo’s strongest region for sales.
“We’re both disappointed and concerned regarding the recent COVID bloom in Texas and other areas that pushed forward with reopening their economies,” said Bob Lilly Jr., president and CEO of Dallas-based Bob Lilly Professional Promotions (asi/254138).
Texas has rolled back reopening efforts, including forcing bars to close again as the U.S.’s second most populous state experiences one of the most severe COVID surges in the nation. From a sales perspective, Lilly said his distributorship had seen a rise in quoting activity, but now with the virus running rampant and reopening stalled he fears that economic activity could nosedive again.
“The uptick in cases is happening so fast that I don’t believe we’ve felt the full negative impact it will have,” Lilly said. “We expect a bumpy ride for the remainder of 2020, with the only lasting recovery coming in the form of a significant treatment option or vaccine.”
As of this writing, Arizona was the state experiencing the greatest increase in new COVID-19 cases per 100,000 residents. That’s prompted Chandler, AZ-based Stowebridge Promotional Group (asi/337500) to take additional internal precautions to protect employees, said President Kathy Finnerty Thomas.
“We have hands-free soap dispensers at every sink, we all wear masks unless we are in a room alone, and we have both a temperature gun and oximeter (measures oxygen saturation) so if anyone is feeling the least bit off, they can check, as many don’t realize that those with COVID can have very low oxygen saturation without even feeling shortness of breath, which quickly leads to pneumonia,” said Finnerty Thomas.
Trying to stay nimble, Finnerty Thomas said Stowebridge has been searching for and finding opportunities, despite the difficulty presented by mounting coronavirus challenges. “We’re very busy helping our customers get masks,” she said. “We’re also creating lots of kits and new products to help our customers accomplish what they would have been doing this year with conventions, recognition trips and events.”
Still, there’s no denying promo firms in Arizona are taking a hit as a result of the virus and its recent outbreak.
Betsy Andrade, executive director of the Arizona Promotional Products Association (AzPPA), said the tumultuousness of the business environment has most of the organization’s distributor members – mainly companies with one to 20 employees – living with a deep sense of uncertainty. “It’s a ‘wait-and-see’ attitude – ready to sell when demand for promotional products begins to return, but not knowing when that might be,” Andrade said.
Noting that AzPPA has served as a COVID-related business information source for members, Andrade said the coronavirus surge in the Grand Canyon State has made it impossible to hold the organization’s major regional trade show in August as had been hoped.
“Arizona is not ready to allow large gatherings yet, and at this point in time we are still limited to groups of no more than 10 individuals at a time, so of course we have had to postpone this focal point event for our association,” Andrade said. “Right now, we’re evaluating options available to us, including limited scale in-person and/or virtual show platforms. We hope to be able to bring some type of gathering, probably in a virtual, online format, to our membership before the end of the year.”
After Arizona, Florida is the state enduring the steepest incline in new COVID-19 cases per 100,000 residents, breaking and then breaking again records for new daily infections in recent days. While Gov. Ron DeSantis has attributed some of that to increased testing, the soaring daily numbers are impacting the operations of Florida promo distributors and their clients.
“Many of my clients said they would reopen in late June or early July and now that is being delayed due to the spike in cases. They are still working remotely,” said Danette Gossett, owner of Miami-based Gossett Marketing (asi/212200). “As a company, we are also keeping people working remotely a little longer. We hope to have people back in the office by some time in July.”
Gossett said officials in Miami-Dade County have made it mandatory to wear masks in public. “We’re reaching out to all our clients again to offer them imprinted masks and other options,” she added.
Meanwhile, Gossett said she has seen a rise in customers requesting quotes for products that aren’t related to personal protective equipment (PPE), with those clients desiring items for fall programs. Still, the recent increase in coronavirus cases could potentially put at least some of that business in jeopardy.
“It’s definitely a fluid situation and we are constantly trying to come up with new ways for our clients to reach their customers and employees to keep their brand top of mind,” said Gossett.
Currently, Florida’s neighbor to the north, Georgia, is among the top 10 COVID-surging states.
“The surge impacts are multifaceted,” said Georgia-based Jay Harman, regional manager for Top 40 distributor American Solutions for Business’ (ASB, asi/120075) southeast sales and distribution team. “We’re lucky that we haven’t had a positive case of COVID among our staff, but we have suffered staff being out while being tested for COVID in our distribution centers and kitting facilities.”
Jordy Gamson, CEO of Atlanta-based The Icebox (asi/229395), said it’s too early to tell if the increase in COVID-19 cases in Georgia will have a lasting effect on business. He said The Icebox’s national accounts have been “coming back to life,” while local customers “seem to be following safety protocol that you would expect from major corporations.” Even so, there are some potentially troubling red flags – like the restaurant owner client who had to close one of his high-end locations after a server tested positive for COVID-19, possibly exposing multiple other staffers as well.
“A surge is generally not a good thing for our industry,” said Gamson. “Sure, the demand for PPE will remain strong, but the competition on selling PPE has caught up to meet demand; it’s not the windfall it was back in April and May.”
Such sobering evaluations have promo pros in Georgia – and elsewhere – preparing to adapt as best they can.
Said Harman: “There is a cliff ahead for the economy and the promo side of business – many venues and events have been canceled as we all know. The impact will be felt well through end of 2021 or beyond. Better reinvent yourself again.”