Every 18 months, the industry waits with bated breath for the annual release of the Counselor State of the Industry, a huge compilation of industry stats compiled by the award-winning Research & Editorial team at ASI Media. After pouring over the 2020 stats, we’ve put together a list of the takeaways that might affect your business the most.

Staffing

• Last year, 41% of promo suppliers had to lay off employees.
• There was a sharp rise in the percentage of suppliers who laid off workers last year – companies that are now struggling to refill those openings.
• Unlike many distributors, suppliers had to keep workers onsite and on the production floor during the pandemic. As a result, a greater percentage of suppliers than distributors are concerned about their employees’ well-being.

Margins

• Dried-up sales of promotional products led to decreasing order sizes – a trend most pronounced with small distributors.
• The average order size for distributors in 2020 was $941, down from $1,241 in 2019.
• Margins dropped to their lowest levels in five years in 2020. The biggest reason why was the pivot to PPE and hand sanitizer, which were sold at margins distinctly below industry norms.

E-Commerce

• Even with a surge of digital buying in retail, e-commerce sites for promo companies did not measurably increase in 2020. But those levels did maintain, preserving a jump in e-commerce that occurred in 2019.
• 50% of distributors in 2020 said that they are concerned about Amazon posing a significant threat to their business.

Made in the USA

• While made-in-the-USA searches spiked to historic highs in April of 2020, they saw a decline in Q1, but they still remain more popular than in 2019.
• 76% of distributors in 2020 said they prefer to purchase products that are made in the USA, up from 60% in 2019.
• The top five U.S. states/territories for overall made-in-the-USA ESP searches:
  1. Louisiana
  2. Washington D.C.
  3. Maryland
  4. Virginia
  5. Rhode Island

Sourcing

• 58% of suppliers reported that they actively explored sourcing from new countries in the last 12 months due to the uncertain trade situation with China.
• Most suppliers and distributors that source directly are importing from China, but a growing percentage are importing from other countries in addition to China.
• 84% of suppliers anticipate that it will be challenging in the future to set prices due to tariff uncertainties.
• 63% of distributors are greatly concerned about tariffs in 2021.

Markets

• The top five highest-selling markets in 2020 were:
  1. Healthcare
  2. Education
  3. Government
  4. Nonprofit
  5. Construction
• The largest distributors benefited the most from the government’s promo windfall.
• Retail is on the upswing (both e-commerce and brick-and-mortar).
• Hospitality (restaurants, travel and lodging) suffered a decline.

Kitting Trend

• For the first time in the State of the Industry, Counselor asked distributors if they offered kitting. The findings reveal that about a third of distributors offer the service, but that’s far more prevalent among large distributors.
• Would a difficult year affect the additional services that distributors offer? Yes and no. Graphic design, printing and marketing are about as prevalent as in previous years. Meanwhile, company stores and warehousing, while popular with buyers, suffered double-digit percentage point drops each due to the cost of running these services.

Products 

The top 10 product categories that were searched in ESP in 2020:

1. T-Shirts
2. PPE (Face Coverings)
3. Drinkware
4. Headwear
5. Polos
6. Sanitizer
7. PPE (Other)
8. Bags
9. Wearables (Non-Shirts)
10. Desk/Business Accessories

 

PPE

• The largest distributors, with revenue of $5 million and above, were 45% more heavily reliant on blank PPE over decorated.
• Even in the great PPE rush last year, roughly four in 10 suppliers did not offer PPE of any kind.
• Small, medium and large distributors alike sold masks in relatively equal proportions to their business. But with other PPE items, the large companies were more actively sourcing and selling.

Supply Chain 

• Shortage: Product shortage is a big concern. 89% of suppliers say it will be challenging to set prices due to supply chain disruptions.
• 14% of order arrivals were late in 2020. Nearly 30% of orders required a 5-day turnaround or less.

Sales

• Challenges:
  • Increasing the size of customer base
  • Remaining profitable under pressure to cut prices
  • Retaining best customers
• Client retention has dipped each of the last two years. In 2020, distributors with revenue of $5 million and over kept 81% of clients compared to 72% for distributors $100,000 and under.
• The number of orders per distributor dropped during the pandemic. The median number of orders was around 300 in 2020.

What are your thoughts on this year’s SOI? Drop us a comment on our social pages!