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Wearables Business

End-user demands getting more sophisticated

End-user demands getting more sophisticated – promotional products

Jeff Rundles

Byline: Jeff Rundles

In the promotional products industry, there is a lot of talk about product because in almost every case that is how this business is manifest. Yet, underneath the veneer of wearables, pens, mugs and the other specialized and logoed products that become the face of the industry, the real industry, at its heart, is one of relationships and solutions. Down there, at the core, the most important thing to understand is not the nuts and bolts of day-to-day business – although that is certainly important – but rather who is buying the products and services.

In other words, the end-user is all important.

There are, of course, as many end-user stories as there are end-users, and each one would no doubt tell a tale that would be useful to any other practitioner in our business.

Wearables Business, however, went looking for a few insights into today’s end-user, and through conversations with many PPDs, industry practitioners and end-users has come away with some interesting perspectives on where our industry is today and where it might be heading. This magazine tends to look at the industry through the narrow window of wearables, although here the emphasis was broadened to some extent. What was discovered, predictably, was that one person’s rosy outlook is another’s dour prediction. In the end, however, the most important lesson is that end-users are getting ever more sophisticated about the use of promotional products, and promotional wearables, in their branding efforts. What this may mean for promotional practitioners is that they will need even more information and more creativity to stay competitive in the years to come.

Taking promotions further

A good example of the growing sophistication required by industry practitioners comes from The Beanstalk Group, a New York City-based organization with offices in several U.S. cities and in Canada and the United Kingdom. At one level the company is a promotional products distributor, through its Promotional Merchandise Management Division. In this arena, the company features an amazing, wide array of products available to its clients and potential clients that would be recognizable to just about any PPD in the business. For instance, in its Product Lines area on its website, The Beanstalk Group details hundreds of products, beginning with at least 19 listings for Ash City.

But the Beanstalk Group is also a firm that handles licensing programs on behalf of its clients, as well as retail management where required. This is an agency that takes the basis of the promotional products industry one step – or perhaps two or three steps – further.

Wearables Business encountered The Beanstalk Group through its Irvine, Calif. office, which is in the same location as one of its main clients, the Ford Premier Automotive Group, which includes such noted Ford-owned car lines as Land Rover, Jaguar and Aston Martin.

Ross Roberts is an account manager for The Beanstalk Group who works exclusively on the Ford Premier Auto Group in Irvine, with an emphasis on promotional products and merchandizing. Roberts reports that at Land Rover, for instance, the main promotional product line they use is apparel “because that is mostly what they need.”

He notes that at Land Rover, dealer personnel are required to wear Land Rover Gear apparel on the showroom floors, and this gear, which The Beanstalk Group developed, is also available for sale to Land Rover customers and enthusiasts. Roberts says some of the promotional apparel items are sourced through such companies as The North Face, but much of it is custom-made for the company.

“Sometimes I use a stock item, and sometimes I am cutting and sewing,” says Roberts. “Land Rover is one of the few lines that is in the clothing business.”

However, there will apparently be more cutting and sewing in the near future as Land Rover is in the process of creating its first apparel collection, and is launching a new catalog in September.

“They (Land Rover) don’t really make a lot of money (on apparel) in the current form,” says Roberts. “But we think they could be if it’s priced right.”

Roberts notes that the Land Rover Gear apparel line, which includes such things as sport coats, ties, woven shirts, polos, fleece, outerwear, and pants, was developed to say something about the brand.

“What we’re looking for in the apparel is quality, functionality – the ability to use the stuff for what they use the vehicles for,” he says.

The power of the channel is potent, according to Roberts. He notes that Land Rover holds a series of events, called the G-4 Challenge, where competition between enthusiasts using the Land Rover vehicles is key. For these events, his firm developed a limited selection of G-4 gear in Europe for events held over there. He says he offered some of it on a company intranet to 150 U.S. Land Rover retailers to support G-4 efforts here and “I got close to 500 orders in the first two days.”

Branding importance

This sense of the growing importance of branding to a company and its image may have far-reaching effects on a wide spectrum of promotional products industry practitioners, from the PPD to the supplier.

A good case in point is the Gerber Products Co., the company encompassing the famous brand of baby food and related products. Mack Jenks, the director of merchandizing and marketing for the firm, says Gerber uses a variety of promotional products in its operations, for everything from polo shirts and windbreakers for staff people attending national sales meetings, to incentive products intended to bolster a relationship with its customers: mothers-to-be and mothers of very young children.

For the all-important mothers market, Jenks says, Gerber uses as incentive products “things mothers use for their babies.” These have included an inscribed baby spoon, bibs, “onesie” baby outfits, and even a picture frame shaped like a jar of baby food with the inscription attached “My Gerber Baby,” intended as a desk accessory.

“Sometimes they have a practical use and sometimes a keepsake use, or both,” says Jenks. “But just about everything we do – we don’t buy things off the shelf. We figure out a way of making it exclusive for us.”

To source such exclusivity, Jenks says he’s “been in the business long enough where I know people.”

Gerber also uses a promotional marketing company, Chicago-based TSMGI (The Specialty Marketing Group, Inc.), that has developed a catalog of promotional items, including “pens, mugs, T-shirts, sweatshirts, caps, things for your desk.” TSMGI also recently put together 20 different specialty items to commemorate Gerber’s 75th anniversary. Jenks explains that people throughout the Gerber organization order things from the catalog through TSMGI for immediate delivery.

Trading down, trading up

The Beanstalk Group’s clients and a company like Gerber represent the larger end of the promotional market, in that they are generally very large companies with sophisticated market apparatuses. While many PPDs in the industry chase such business, the truth is that most end-users are smaller firms and organizations with somewhat less demanding challenges. Here the news is more of a mixed bag at mid-year 2003.

Wearables Business contacted a representative of one of the industry’s larger mills to see if the firm had conducted any end-user research of late. Turns out that such a study had just been completed, although the data had yet to be fully tabulated. Requesting anonymity for the firm until a more detailed accounting of the important study is ready in perhaps September, the representative did offer some insight.

“We have determined that the entire industry is trading down,” this mill representative says. “Where a couple of years ago they were buying a $10 item, they are now buying a $5 item.”

This representative adds that an interesting aspect of the preliminary data shows that while dollar volumes are down, unit sales, particularly in apparel lines, seem to be holding up and even increasing.

“Some of it is because T-shirts are going for 81 cents,” the mill representative says. “Still, the apparel market continues to grow. (Apparel) units are growing perhaps faster than other products in the promotional products business.”

This study surveyed PPDs and sales representatives of major industry wholesalers, as well as a cross section of end-user buyers, the mill representative says.

Taking directly with a few PPDs and industry sales practitioners, Wearables Business discovered a wide range of reaction to where end-users are today.

Don Robinette, a principal in the Denver-based distributorship ProCorp Images, says he sees end-users right now as being “tight-fisted.

“I mean, they are spending it begrudgingly,” he says. “I had a 400-piece jacket order and then the headquarters came down and said ‘No spending.'”

Robinette says he has heard from others in the industry that things are getting better, but his experience on that score is limited.

“This year, 2003, is just a little better; last year was dreadful,” he says. “Some people feel it’s getting better, but for every company loosening up, there are four (companies) still on budget restrictions. We have to be more creative, sell more value where pricing is the top concern. We’re selling more trinkets and trash, lower-cost, lower-priced stuff. People who were buying more expensive things for trade show handouts two, three years ago are now buying 95-cent pens.”

In the apparel arena, Robinette – whose firm maintains a number of web-based company stores on behalf of clients – says the lower-priced trend is particularly prevalent. When the sites were launched over the past few years, he says, clients selected prominent brand-name shirts selling retail for $50 and more, but now they aren’t selling.

“For these website programs, two, three years ago people wouldn’t think twice about spending 50 bucks for a polo shirt,” says Robinette. “Now, they are buying the $25 shirt or they are buying pens. We have to go back and re-price or re-merchandize these sites because the stuff is not moving.”

Not everyone, however, thinks times are so tough.

Bob Davis, a principal in the Denver-based PPD Specialty Incentives and a former president of the Promotional Products Association International, has seen his business turn up this year.

“Wearables would be the leader of it (the turn-around),” says Davis. “We see people buying higher-priced merchandise. All of it is market driven: the economy is coming back, and our order count is up.

“In our company,” he adds, ” we run three-year comparatives and we are now exceeding 2001 – last year we were way down – and 2001 was better than 2000. Our order count is way up and it started in February.

“I think there’s more confidence out there,” Davis offers as explanation. “Just last week I got an order for 125 Swiss Army gift certificates for $150 each for an employee incentive program. That was just not happening last year. There is confidence that companies can influence the marketplace (with promotions) and they need to do something.”

Davis adds that for many of his clients, orders are up because “they are out of everything.

“They need to have a closet for promotional products, and the closet is empty,” he says.

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