Industry Update - The Post Pandemic Era Both a Boon and Challenge

This continuing series of articles about what is happening in the rewards, recognition, loyalty, and gifting fields reveals the good side of people, enormous growth, enduring supply chain challenges, and the increasing involvement of promotional distributors in the business of selling brands. 

 

Business is booming in the rewards, recognition, and loyalty business, held back only by the supply chain and logistical challenges. This series of interviews continues to affirm numerous opportunities and challenges for the industry based on interviews with senior management at master fulfillment, incentive, and gift card companies. 

 

“What has amazed me most is how patient our customers have been with the supply chain issues,” says Dennis Zimmerman, Vice President of Business Development, Special Markets of MAS, Inc., a master fulfillment company in Cleveland. “A surprising number of buyers understand the situation, even though they don’t like it. It’s a strange situation. Any one product can have its own problem based on the origin of various components. You can’t just blame the maker of the blender, because it might simply be one part that is unavailable. This has exposed how fragile our supply chain is. Just in Time is great until you have troubles. There are 10 problems on everyone’s Just in Time list.” Today, he adds, “Having stock is king.” He says that companies have become quite aware of the supply chain issue and are ordering further ahead, and that the demand for decorating and personalizing awards continues to grow. MAS is a master fulfillment partner for Weber and has experienced brisk demand for both undecorated and decorated items. Because Weber is a US manufacturer, it can respond better to the supply chain issues, he points out, but multiple factors also affect various products and various times. 

 

Surge in Interest From Promotional Distributors 

 

John Costelli, President of Castle Merchandising Inc., a master fulfillment company in Garden City, NY, agrees that customers are generally very understanding. “Almost no one is complaining. This stinks of course, but they are very open to our coming back with an alternative item. No one giving us pushback.” 

 

The supply chain issue is very selective, he goes on to say.  “Some items are affected more than others. We’re somewhat shielded by because sunglasses and handbags aren’t affected by chip shortages.  Many electronics items are impossible to get a handle on. Products involving stainless steel are backed up, but some other categories in housewares are easier to find.” Other challenges, he says, are freight costs in general and the need to use air freight at times because of ocean backups. “Now the air freight people are out of capacity. Thankfully, we pre-ordered a lot of goods.” 

 

His company has also seen an “enormous growth in demand from promotional distributors. Their clients are demanding brands. They are looking at items for retail value. We still have our private label sunglasses and watches, but people want Ray-Ban, Costa, and fashion watches.”

 

Growin in his business, he continues, is being driven by “huge demand to not only retain employees and attract new employees. Our business has exploded this year. We’re seeing more events. People are trying to get back into that mode. At some of them, it’s as if Covid never happened,” though he adds that many were held outdoors over the summer. “Companies are ordering earlier. I suspect we’ll see a much earlier bump this year. We’re already seeing signs of it.” 

 

He reflects: “The pandemic changed the culture of business, how we go out to eat or stay home or cook. Almost everyone I speak to says their lives have improved by not having to commute each day, and the employers I speak to have zero dip in productivity. Maybe this isn’t so bad, people are thinking. We’re still going to have an office, but it’s never going to be the same as it was before.”

 

As for what’s hot, he says, “the housewares category increased in a big way last year and even through the course of this year. Home goods, cooking utensils, spice racks, pots and pans, popcorn sets; also Uggs blankets, socks, and clothing--things that made people comfortable at home.” He says more of his incentive, recognition, and loyalty companies now rely on his company for drop-shipping through electronic communication for efficiency and accuracy.” Other growth areas, he says, include customization, being driven by the Ember line of electronic mugs his company has brought to the corporate market. See RRN: Castle Offers Ember Temperature Controlled Mugs to the Corporate Market. Online gifting is also hot. "This is a response to the work-at-home phenomenon and virtual meetings. Companies need virtual catalogs.” 

 

Rob Ludwig, Jr., Sales Manager at master fulfillment company National Incentive Brands (NiB), agrees that gifting is an enormous growth area. “Specialty gifting is growing fast and that’s only going to continue. In fact, NiB that just launched a new Gift Gallery program in response to increased demand that provides options for both live and virtual gift selection.”  Jim Dittman, Managing Director of Next Level Performance in New Brunswick, NJ, likewise has seen significant growth in employee gifting and responded with a Lunch on Us gift card service.

 

While there are many positive signs that business is coming back, there remains much uncertainty, observes Matt Frye, Chief Executive of CardNow.com, a gift card platform enabling activation on the spot via a smart phone application. Because he has information on which types of companies are using his company’s gift cards, once people start using the product for gifting, 70 - 80% have continued to use it. The main applications are organizations in:

• Health and Wellness—General Practitioner, Orthodontists, Dentists, Home Healthcare, for employees and patients.

• Non-profits, shelters and community centers for fund-raising.

• Real estate, for incentives and gifts.

• Direct sales / Marketing (party planners, party chef, Tupperware, etc.)

• Other segments are office managers/administrators for gifting, legal and paralegals, and high-income, highly active stay-at-home mothers.

He says the use of his company's cards in the events business is coming back, especially because of  the need to maximize attendance or exhibit visits. "There's no need to have any active cards on the show floor," he explains. "They can be activated via a smart phone in the desired amount whenever the exhibitor wishes to give one out."