Key Takeaways
- Suppliers are easing persistent cost pressures by diversifying supply chains, improving forecasting and adopting more agile sourcing strategies.
- Transparent communication and collaborative cost management help suppliers preserve customer value.
Throughout the 2020s, price pressures for promo suppliers has been a major worry – concerns that haven’t eased moving into the second half of the decade. In fact, new snags like inflation and economic ramifications from the war in Iran are complicating what was already a complex sourcing landscape. Tariffs too continue to have a real influence, even if they’re not dominating the headlines like a year ago.
“Cost pressures are very much alive,” says Kevin Walsh, president of Counselor Top 40 supplier Showdown Displays (asi/87188) and a member of the Counselor Power 50. “The noise has died down, but the bill hasn’t.”
He points to the steel and aluminum tariff that imposes a 25% duty on imports regardless of country of origin as one example of the challenges suppliers face. “There’s no geographic work-around there,” he adds.
Cost of Doing Business
In a year where high import duties were the dominant point of discussion, it’s no surprise that tariffs and sourcing-related costs emerged as the top profitability concern, cited by more than 40% of suppliers.
Greatest Price Pressures for Suppliers
Costs for resin and other petroleum-based raw materials have increased, driven in part by instability in the Middle East and broader energy market volatility, says Scott McFadden, chief financial officer of Counselor Top 40 supplier Bag Makers (asi/37940). Freight costs, both domestically and internationally, have also been inconsistent, he adds.
“There are all of these inflationary pressures along the way as well,” says Rachel Newman, president of LAT Apparel (asi/65948), pointing out that commodities like cotton have been increasing in price.
“The unexpected is normal now, and pivoting has become part of the definition of success.”Bridget Dahlgren, Crystal D (asi/47759)
Optimistic and resourceful, suppliers haven’t let market volatility impede business, developing a slew of strategies to help ease the burden. Chief among those efforts has been supply chain diversification.
“We’ve seen over time how quickly things can move across logistics and shipping routes, and how that can flow through into costs and timelines,” says Eric Simsolo, president of Counselor Top 40 supplier Next Level Apparel (asi/73867). “A dynamic supply chain that allows you to adjust without putting capacity or quality at risk is worth the premium.”
Counselor Top 40 supplier Sunscope (asi/90075) started diversifying its supply chain in earnest after the pandemic. “Five years ago, we saw the writing on the wall,” says Dilip Bhavnani, chief operating officer. The company quickly pivoted from 99% of production in China to only about 40%.
Bhavnani has set up offices in Bangladesh, India, Vietnam and Cambodia. The supplier is also considering branching into Myanmar. In its retail division, Sunscope has moved some production to African nations as well. “We’re just going wherever makes sense logistically,” Bhavnani adds. “You have to be nimble.”
Split Results
Supplier profit margins ticked up last year, but that experience wasn’t universal, and larger suppliers in particular took a notable hit. That tracks with what Showdown Displays (asi/87188) experienced: namely, that the Counselor Top 40 supplier didn’t share in the margin expansion the industry as a whole reported. “Scale can be a liability when cost pressures hit,” says Showdown President Kevin Walsh. “Smaller, nimbler suppliers may have more flexibility to reposition quickly.” Rachel Newman, president of LAT Apparel (asi/65948), is skeptical that suppliers had any kind of significant margin increase in 2025, considering tariffs and inflationary pressures. “Sales may have been up, but your margin percentage was probably flat or down,” she adds.
Average Profit Margin - Suppliers
Nearshoring operations to facilities in Mexico or Latin America – or partnering with vendors that operate in those regions – has been a boon for many suppliers. “Working with production partners closer to your key markets can create more stability and flexibility across the board,” Simsolo says.
Nearshoring also has other benefits, including shorter lead times and leaner inventory requirements, he adds.
Another way suppliers can mitigate cost pressures is through “proactive inventory planning” and “putting a greater focus on forecasting,” McFadden says.
“Continuing to invest in our large inventory has helped us smooth out some of the volatility and avoid reacting to every short-term increase,” he adds.
Sunscope has taken positions – locking in contracts to buy raw materials in advance at a fixed price – on components like resin as a strategy to help control costs and keep pricing consistent, Bhavnani says.
Showdown Displays has been exploring innovation at the component level. “Our product development team,” Walsh reveals, “is continuously exploring alternative base materials because sometimes the best way around a cost problem is to rethink what you’re building with.”
Indeed, tackling pricing concerns should be something the whole team is involved in, says Bridget Dahlgren, executive vice president of sales and marketing at Crystal D (asi/47759). “Getting participation from everyone is key,” she adds. “This isn’t just a leadership issue: It’s a business-wide issue.”
Wellness Check
Supplier health remained flat from 2024 to 2025, falling short of its initial projection of 3.47. Even though they took a hit on margins last year, larger suppliers were healthier than their smaller counterparts. “The flat industry health score reflects uncertainty more than a lack of demand,” says Eric Simsolo, president of Counselor Top 40 supplier Next Level Apparel (asi/73867). For 2026, suppliers project a more robust health score of 3.59. While there are still external business risks, Simsolo says, “I don’t think the industry is on a long-term negative path. I think we’re in a more selective, more disciplined market where the best operators can still grow.”
Industry Health – Suppliers
Clear communication and customer education are crucial. Creating a custom product, Bhavnani says, can take a long time, start to finish. Once you add in sea shipping, time to market becomes a significant factor. Shipping out of China on a fast vessel takes around 11 days. But shipping out of Bangladesh, for example, which doesn’t have the established shipping infrastructure that China has, could take at least 45 days, he says. “So, if somebody wants to save money, they’ve got to plan well in advance,” Bhavnani adds. It’s important to lay out all the options and explain costs and timelines.
Josh Gerads, brand manager at awards supplier Crystal D, agrees that transparency matters, and helping a customer “value-engineer” the right solution early helps avoid surprises. “Sometimes the best solution isn’t a cheaper award; it’s a smarter award,” he states. “Adjusting size, material, decoration method, packaging, personalization approach or shipping plan can preserve the emotional impact while keeping the project within budget.”
Overall, when dealing with price pressures, suppliers say it’s important to stay agile and open to change. “What we’ve learned,” Dahlgren says, “is that the unexpected is normal now, and pivoting has become part of the definition of success.”