New Year: The start of the year that is about to begin. A holiday created by calendar companies who don't want you reusing last year's calendars!
I suspect that the majority of us are thrilled to see 2024 in the rearview mirror and are eagerly anticipating this new year. And this year also marks the start of a new administration in the White House. Whether you like or dislike our President, as 007’s James Bond said about martini’s, the next four years are going to be shaken, not stirred!
According to research from Promotional Products Association International (PPAI), the top 100 distributors and suppliers are anticipating significant growth in 2025. You can expect this to be a year where opportunities and challenges abound and below are areas likely to most affect your business.
Growth - 45% of the top 100 distributors and suppliers in the promo industry expect significant growth in 2025 of between 6% - 15%, while only 2% expect minimal growth. Alok Bhat, PPAI’s Market Economist has no doubts the industry will grow and notes, “The question isn’t just how much we will grow, but how we will strategically achieve and leverage this growth.” Distributors say entry into new markets, growing their current customers business, and adding sales personnel will help propel their revenue. Suppliers are looking to expand their product offerings, increase decoration capabilities, and find new customer segments. Grow or die is an old business maxim and your challenge in 2025 is finding ways to manage growth and generate more revenue.
Tariffs - President Trump uses tariffs to punish those countries he feels aren’t playing fairly, to raise revenue, and to encourage reshoring manufacturing to the U.S. Tariffs are a tax on goods coming into our country and with so many of the products in our industry coming from China, these tariffs will be felt in the products we buy. According to PPAI, 80% of suppliers view these as a potential disruption to their business models. While reshoring and nearshoring (manufacturing in the U.S. or at least closer to home) could help, this doesn’t happen overnight. Now is the time to talk with your customers about how tariffs could impact their purchases and to search for alternative solutions, possibly products made in the U.S. The good news (if there is any) is all suppliers who purchase from China are in the same boat, which means distributors buying their products will all feel the same pain. Consider putting tariff language in your quotes as well. Something like, “This quote does not include any tariff adders, but if tariffs are applicable at time of your order, this price may require adjustment”.
Diversify Sourcing - For the moment, the new administration is focusing their tariff vitriol on China. Sourcing as many products as possible from countries other than China is one way to at least temporarily bypass the tariffs. India, Mexico, Vietnam, Indonesia, and South America are on their way to having the infrastructure and resources to compete with China. And while the cost of goods will most likely be higher, buying products made in the U.S.A. can give you the benefits of reduced shipping times and supply chain resilience. Chances are the majority of your purchases this year will still be products made in China due to the nature of our industry, which could mean increased pricing from the tariffs. Making the effort though to find alternative sources will benefit your bottom line in the long run and open up future opportunities.
M & A - One of the consequences of tariffs could be increased mergers and acquisitions to achieve greater buying power. Last year, the biggest M&A’s were S&S Activewear acquiring alphabroder while distributor iPROMOTEu acquired the AIA Corporation. Industry consolidation is expected to continue into 2025 as companies look to increase their purchasing power and resources. And these M&A’s aren’t limited to the U.S. as companies like Geiger, Myron and Overture Promotions acquired companies in Europe to expand their footprint and revenue. Private equity has invaded our industry, and their deep pockets are driving much of the M&A we see. There will always be room for the smaller players in the industry, but they will have to stay focused, nimble, and strategic in order to compete with the behemoths being created through M&A. Despite these concerns, 51% of PPAI’s top 100 distributors and 46% of their top 100 suppliers believe industry consolidation will have limited or no impact on their business. What say you?
Labor - One-third of industry suppliers are concerned with labor and workforce challenges this year according to PPAI. Generational shifts in how employees look at work is creating headaches for employers, as is the shift to work at home since Covid. 46% of industry companies say finding qualified candidates is one of their biggest challenges, along with the fierce competition for those who are skilled. Applicants “ghosting” interviews is a complaint often heard from companies looking to hire, as is the lack of loyalty. The promo industry has always lagged behind when it comes to trends, and companies that aren’t updating their technology and operations will have a harder time finding qualified employees and keeping them. Training, innovation, and a nurturing culture will work to attract candidates, along with competitive salaries and benefits.
Artificial Intelligence - AI will most likely be the biggest game changer in business since the Internet. While a majority of promotional product suppliers and distributors say they are using or will be using AI to up their game, a lack of information and expertise in its implementation is a barrier. Phil Gergen, CIO of the Koozie Groups says, “If used correctly, AI can help any role in your organization be more efficient and successful.” But with limited bandwidth and resources, companies struggle with how best to use this amazing resource. Start small and learn how AI can help one area of your business where you may be struggling. That could be marketing, social media content, your website, sales presentations, innovating new products, or understanding trends that affect your business. AI is here and it’s going to rock our world in ways we can’t even imagine. President Trump just announced a $100 billion partnership between Oracle, SoftBank, and OpenAI to build huge data centers to expand AI here in the United States… and that’s just the start. AI is one of those technologies that will affect every area of our lives, so the time to get on board is now to find ways it can help grow your business.
Given all the opportunities and challenges this year has in store, it’s sure to be a tipping point in how business is done. Despite all the technological advancements, remember you’re still dealing with humans. Take the advice from the late Steve Jobs who said, “You’ve got to start with the customer experience and work backward toward the technology, not the other way around.”
The world is moving faster and faster, while seemingly getting smaller and smaller with today’s technologies connecting us as if someone on the other side of the world is sitting right next to you. Despite the uncertainty, the future is exciting, but it will require resiliency and adaptability to keep up. Hustlers know this, and 2025 will be a year to set yourself and your business apart. Stay focused, adapt to the changing landscape, and know your vision can make a difference in your world.
Steve Woodburn started hustling early in life, landing his first on-air radio gig when he was just 20 and spending the next 20 years as a DJ, news anchor, talk show host and traffic reporter. He found the promotional products business totally by accident (as do most) working 29 years on the distributor side and five as a supplier. Steve won multiple sales awards along the way and volunteered his time with his local association, the Regional Association Council (RAC) and served on the PPAI Board of Directors. He's currently the Chief Adventurer of Marvelous Moosey Adventures, a company he and his wife created, and pursues acting, writing and voice-over work. Connect with Steve on Linkedin or via email at successnow09@gmail.com