Strategy December 23, 2021
Project 2021: Ending the Year on a High Note
Despite ongoing supply chain and logistical issues, suppliers, distributors and decorators were pleased with the previous 12 months and optimistic about what 2022 holds.
It’s been an eventful year for the 10 participants in our ongoing Project 2021 series. Over the last 12 months, several have reported record-breaking sales, while others have seen prospects drying up. Supply chain snags, staffing shortages and other logistical issues have thrown monkey wrenches in what would otherwise be simple orders. Still, suppliers, decorators and distributors reported much to be thankful for and say they’re looking forward to more growth – and with luck, an alleviation of 2021’s challenges – in 2022.
All year long, ASI Media has been following the recovery of a cross-section of industry players across the United States and Canada – from one-person operations to Top 40 multinational firms. Each month, we’ve checked in to learn about their unique issues and celebrate their hard-won successes. This is the final installment of the series; you can read November’s edition here.
The Suppliers
Starline USA: Finishing the Year Strong
Brian Porter, senior vice president of sales and marketing
This year, despite uncertainty and a changing marketplace, has been good to Starline USA (asi/89320).
Brian Porter, senior vice president of sales and marketing, says the company is on track to finish December above what was a record December 2020 and up about 75% over the end of last year. In addition, Porter says the supply chain has been “fairly steady” over the past few months.
“With our cooler and drinkware gift kits, as well as homewares and lifestyle brands, we’re hitting it out of the park,” says Porter. “Our uni-ball brand, new for 2021, has been a nice surprise. It continues to be dominant among our product categories.”
Now that the omicron COVID variant is on the rise and events and return-to-office plans are on hold, “home engagement” items remain popular, including kitted bundles with a high perceived value, electronics and personalized products. Starline is gearing up to reveal new color palettes and additional cooler and drinkware items in the new year.
Porter predicts that 2022 will look a lot like 2021, as major companies could push the return to the office back until 2023 in many cases. “They need to continue to engage those remote workers and take care of the employees they have,” he says. “Hiring will also continue to be at the forefront. It’s about the presentation, more than just the compensation. It’s the overall feeling and welcome that new hires receive, and that will lean heavily on high-quality, branded, long-ROI products.”
A silver lining to the pandemic: The people of Starline were truly committed to keeping business going these past two years. “It continued to bring us closer together, from top to bottom,” says Porter. “We’ve been flexible and able to move and adjust with the market. This is the most cohesive and committed team I’ve ever worked with.” – Sara Lavenduski
Fairytale Brownies: Dealing With the Holiday Crunch
Eileen Joy Spitalny, co-founder
Eileen Joy Spitalny prides herself on her sales skills, but in 2021, the co-founder of Phoenix-based Fairytale Brownies (asi/53518) found herself getting much more hands-on than in the past – spending many hours on the shipping floor trying to meet customer demand amid staffing challenges and shipping issues. “In 2022, I do think I want to be a licensed forklift operator – something to have in my back pocket,” Spitalny jokes.
Despite the strangeness of the year, Fairytale Brownies is finishing up 2021 on a high note – anticipating more than 10% growth in the incentive sales channel when its fiscal year ends in January. After all, food gifts were named ASI’s product of the year. December orders and sales volume were up month over month and year over year. “Being a food company, this is our biggest order volume and revenue month,” Spitalny says.
Once the holiday rush has passed, Fairytale brownies will set its focus on initiating spring programs with clients. Spitalny also hopes to continue to grow the supplier, build relationships and add more online store partnerships. – Theresa Hegel
Compass: Going Above & Beyond Again and Again
Josh Levy, CEO
As everyone knows, even as the calendar flipped from 2020 to 2021, the extraordinary challenges facing businesses never stopped. That was certainly true at Compass (asi/46170). And given the hurdles, CEO Josh Levy was supremely proud of how his company responded.
“If anything, this year showed me how lucky we are to have such hardworking and dedicated employees,” he says. “I can say with certainty that every team member went above and beyond this year. I think that speaks to the culture we have here that so many of our employees would work overtime and do whatever they needed to in order to service our customers.”
The New York City-based supplier has been operating off a hybrid model with some employees working remotely and others in the office. That has made collaboration occasionally difficult. But digital has actually brought the supplier (which carries brand-name tools and higher-end outdoor products) closer to its customers. “I felt we were able to get a lot more face-to-face time this way as opposed to trade shows,” says Levy.
For 2022, Levy is generally optimistic. “I do think we will get back to more in-person events, although it doesn’t look like it will be this winter. I think demand for promotional products will continue to be strong and at some point the supply chain issues will ease. Hopefully sooner than later,” he says. “It would be nice if the tariffs were removed or reduced. It seems like that issue has totally been forgotten. But I think you have to be optimistic because being pessimistic doesn’t help if you’re trying to be a leader. – C.J. Mittica
The Distributors
Custom Logos: Closing in on a Record-Breaking Q4
Jeff Golumbuk, co-founder/owner
Custom Logos (asi/173183) is ending the year with a bang. Bookings in December, though slightly behind November, stayed strong, nearly doubling 2020 sales and totally eclipsing 2019 numbers, according to Jeff Golumbuk, co-founder and owner. He adds that the numbers add up to the best quarter Custom Logos has ever had in its 32-year history.
Overall, Custom Logos is anticipating a 12% increase over 2020 numbers. “That’s pretty incredible, considering our PPE sales have all but disappeared,” Golumbuk says. “We feel it’s a good sign, as our core business has more than replaced the PPE chunk that was significant for us in 2020.” PPE accounted for about 15% of Custom Logo’s business in 2020, according to Golumbuk.
COVID continues to be an issue for the distributor. “We have very strict protocols in place, and on any given day, we have 5% of our staff unavailable to work,” Golumbuk says. “It puts a great strain on our production process, creating the need for a lot of overtime to make up for lost hours.”
Looking forward to 2022, Custom Logos is planning to expand its facilities, and is already putting the finishing touches on another acquisition that will be effective Jan. 1 and should increase its revenue by about 5%, according to Golumbuk. – TH
Jack Nadel International: Ending a Roller-Coaster Year on a High
Craig Nadel, president
Now that we’re at the end of 2021, let’s get to the classic benchmark of any company’s year: How does Craig Nadel, president of the CA-based Top 40 distributor Jack Nadel International (asi/279600; JNI), anticipate its sales will compare to 2020 and 2019? “We have a March, not December, year-end financial reporting structure, but we will be ahead of 2019, which, of course, is well ahead of ’20,” says Nadel. “We’ll be about 8%, I think, ahead of ’19 and 35% ahead of ’20, counting the March year-end being the nine months of the year before.” Nadel adds that he thinks promo sales will also perform well in 2022. “With the economy being good and unemployment so low, I think business will be really strong.”
Of course, one variable in the marketplace on everyone’s mind continues to be the ongoing challenges involved in untangling the supply chain. “I think it’s about the same as it was a month ago,” Nadel says. “To me, there won’t be a ‘fix’ – it won’t just be better one day; it will be a slow process because there are a lot of issues. The ports will probably clear up – if not completely at least they’ll get much better – in February and March when Chinese New Year happens, and not much new product is shipped. However, that’s only one of the bottlenecks; it’s quite difficult to forecast, and a lot of things enter into it. If the COVID situation gets much better, people will start using more services and fewer products and it will help with the supply chain. For example, one reason for all the supply chain issues is there’s a greater demand for products and a reduced demand for services like hotels, concerts, dinners, etc. Americans aren’t spending way more in total than they were, but the spend has shifted to products from services. If COVID settles down some, it will probably shift back and that should help the supply chain issues. I’ll make a wild guess that things will level out and be measurably better by next summer.”
Regarding the current state of orders and client buying, Nadel points to high-end branded outerwear as a hot item among promo purchasers. “Of course, the biggest short-term goal is to have all these open orders due to inventory shortages get done, if possible,” Nadel admits, adding that his top goals for JNI in the next year include a total rebrand of the company, scheduled for January, and a relocation of its headquarters. “We’re going to move to Culver City, CA, hopefully in the summer.”
And when asked to look back over the year that was 2021, and what leadership lessons he’s learned, Nadel is introspective. “This year has been pretty good, and it was ‘20, or the nine months of 2020 after COVID hit, that were really painful,” he says. “You know I love my John Wooden [the legendary college basketball coach] quotes, and one of them is, ‘Don’t let what you can’t control interfere with what you can control.’ I think it was important to focus on the company’s core business and needs and not worry too much about a COVID surge, or whatever rules the government – federal, state or local – would require. They are what they are, and we just have to deal with them. We can’t control them, but we can control how we work.” Then Nadel, ever the optimist, offers a prediction for 2021’s soon-to-be-released North American promo sales numbers: “My guess is the industry’s 2021 sales will be about where they were in ’19 – well ahead of 2020.” – Michele Bell
Whitestone Branding: Finishing Off a Fantastic Year
Joseph Sommer, owner/founder
Joseph Sommer is buzzing with entrepreneurial energy.
And well he should be.
The owner/founder of Whitestone Branding (asi/359741), a distributorship with New York City roots that now has a remote workforce around the country, says the firm is about to wrap up its greatest year ever with a massively successful fourth-quarter performance.
“We’ve already doubled our sales dollars invoiced this quarter compared to Q4 2020,” Sommer says. “I think we’ll end with a 125% increase.”
When 2021 concludes, Sommer believes Whitestone Branding’s sales will have topped 2020’s tally by 85% to 90%. “It’s been a tremendous year,” he says.
In the fourth quarter, Whitestone has scored repeated success orchestrating holiday gifting initiatives for eager clients. “Budgets seem to have increased because there has been less business travel, entertainment and meals,” says Sommer. “That means more to spend on gifts.”
What’s driven the full-year upsurge in sales? Sommer has a few ideas.
“We have a robust team that was able to make the customer journey for our clients as smooth as possible, while navigating inventory shortages and price increases,” he says. “Our team has grown as well, almost doubling in size. We’ve grown with our growth, so to speak, which was a big help to our performance.”
Still, Sommer admits managing the expansion can be an issue – albeit one Whitestone is meeting. “Our challenges are really all internal,” he says. “We’re doing our best to support our growth with the right staff appointments and also the right organizational restructuring.”
On the eve of 2022, Sommer predicts that the promo products industry will experience more consolidation next year. He anticipates that Whitestone could even make a strategic acquisition of a smaller distributor – one in the $2 million to $5 million annual revenue range. Sommer feels firmly that the distributorship’s sales will continue to soar.
“If we hit our safety revenue goal in 2022, our growth would be 50%, and I would be surprised if we fell short of that,” Sommer says. “We’ve got the staff in place to support our goals, and I’m very optimistic we’ll achieve them.” – Christopher Ruvo
Full Line Specialties: Big Sales Despite Supply Chain Challenges
Sam Singh, president and CEO
It’s shaping up to be a strong finish to 2021 for Full Line Specialties (asi/199688) in Surrey, BC. Despite considerable headwinds – such as supply chain delays and natural disasters that hit the province in recent months – December sales are three times what they were in December 2020. While sales are slightly down this month compared to last month, “November was one of the strongest Novembers we’ve ever had,” said President and CEO Sam Singh.
Comparing total sales for the year to 2020, Singh says Full Line is approximately 25% ahead. “Last year was strong due to PPE,” says Singh. “This year, those sales have drastically declined. But we’re still expecting the global shortage of goods to affect most industries in 2022.”
Now, with the omicron COVID variant threatening full reopening and large-scale returns to the office, Singh says Full Line is expecting fulfillment and drop-shipping to continue to be in demand next year, much of it including branded apparel and drinkware. But the company is still awaiting full recovery of the supply chain, which has improved slightly in recent weeks. “Things are starting to open up slowly, and goods are flowing again,” says Singh. “We’re at least getting the essentials, like milk, back onto store shelves.”
While Singh is preparing for supply chain issues to persist into 2022, the challenges faced these past couple of years have prepared his team to be able to work through it together. “We’ve learned to be a lot more nimble, open-minded and patient,” he says. “We now know that patience, cooperation and motivation are very important to building a successful team for the future.” – SL
Moore Promotions: ‘It’s Full Force Ahead’
Kelly Moore, owner
Kelly Moore is ending 2021 on a high note.
The solo operating owner of independent distributorship Moore Promotions (asi/601617) says that a surge in sales over the last month has her fourth-quarter 2021 revenue on pace to surpass the tally she generated in the same three-month period the prior year.
While a definitive final number remains up in the air, Moore reports that the increase could be in the neighborhood of 40%. It’s a far cry from how things were looking in mid-November, when Moore shared that sales were down for the quarter about 12%.
“Since then, everything has been way above my expectations,” says Moore, who’s based in St. Petersburg, FL. “I had some key large orders come in. It’s thanks, in part, to lots of great budgeting that has made many of my clients need to spend their ‘dollars’ before 2022.”
Moore gets the sense that clients are returning to “business as usual. I feel many clients really missed their branded merch and have been on a spending spree to make up for it.”
The picture on Moore’s full-year sales is coming into focus, too. The promo entrepreneur likes what she sees. “I’m confident sales will surpass 2020,” she says.
The success has been hard won. Moore confesses that she’s been experiencing burnout, due to the stress of supply chain disruption affecting her ability to provide the kind of white-glove service her clients had become accustomed to from her.
“I’ve struggled with never-ending anxiety over whether I would miss a deadline because of the issues suppliers have been having,” she says, referencing things like inventory shortages and longer production times that have resulted from COVID-related challenges.
Moore continued: “I feel if suppliers had stepped up their game as much as distributors have, things would be much better. A lot have, but many more haven’t overcome their internal struggles. Overcoming these obstacles has been daunting for me. I’ve had to place a lot of focus on my mental health and, in turn, that’s helping me cope with all these issues.”
Additionally, Moore has made it a strategic focus to shift her business away from what she describes as suppliers she can’t trust to others she believes will come through for her. “Finding key suppliers and then honing my relationships with them has been essential,” she reports.
Looking ahead to 2022, Moore feels optimistic.
“As far as I can tell, it’s full force ahead,” she says. “I’m astonished and grateful that our industry has fared so well during these very trying times.” – CR
The Decorators
Rockland Embroidery: Running at Capacity Into the New Year
Andy Shuman, general manager
December has been an “extraordinarily busy” month for Topton, PA-based contract decorator Rockland Embroidery (asi/83089), according to Andy Shuman, general manager. “We’ve been running at or near production capacity for several weeks … and it looks like that will remain the case well into January,” he adds.
That busyness translates into a stronger year overall compared to 2020, in terms of sales. However, profitability in 2021 is a trickier prospect due to cost increases of consumables and the many logistical challenges that have cropped up this year. “In this environment of delayed product, incorrect shipments and shipments coming from various warehouses across several days, each order requires more ‘touches,’ which drastically increases production time and costs across the board,” Shuman says.
Still, he adds, Rockland has gotten creative about finding new ways to navigate the logistical challenges and improve performance. “I’ll take that as a win that’s not necessarily isolated to December,” Shuman says. “But adding holiday volume into the mix has certainly magnified the small successes.”
In 2022, Rockland hopes to continue growing its staff to meet increased demand and build upon existing relationships with clients.
Shuman says he’s indebted to the professionalism and dedication of his staff in 2021. “Without their hard work and without the relationships, cooperation and patience of an incredible group of clients, the past year would not have been possible,” he adds. – TH
Rowboat Creative: Sailing Ahead With High-Value Orders
Lucas Guariglia, owner
For Chicago-based Rowboat Creative (asi/313715), 2021 has been one of the strongest years ever. “The value of orders is way up, and the amount of hand-holding is way down,” says Lucas Guariglia, owner. “We’re continuing to sharpen our approach to which client we on-board and which might not be the best fit for our facility.”
December sales were up 40% compared to November, and while the number of sales in the last month of the year was down compared to the same timeframe in 2020, the dollar value of each order surpassed 2020, according to Guariglia. “This is due, in part, to smarter positioning and helping better guide programming for value, as opposed to tons of smaller orders with less value,” he adds.
Fulfillment and kitting programs continue to show strength, and Rowboat has been working to “evolve and escalate” them, expediting the process to meet the seasonal rush. The decorator has been working on a very large-scale production and kitting program for Indeed with one of its partners. And it’s also scaling up a program with McDonald’s that will roll into 2022. Rowboat is working with several large restaurant groups, helping them rebrand and develop creative merchandising programs.
In 2022, Rowboat plans to continue refining its process to be as lean and efficient as possible. The decorator is also moving forward with the expansion of its offices into the Southeast. “Calculated growth has always been our main thing, and we’ll continue to move that way,” Guariglia says.
Despite all the challenges of 2021, Guariglia says he’s proud not only to be a leader of his company, but also to be a prominent voice in the industry at large. “We’ve all seen how easily things can be wiped out, but as creatives at heart, we will always find a way to create something out of nothing,” he says. “You just have to keep going and challenging yourself.” – TH