After the Great Recession of 2008, many of the brands active in the incentive, rewards, and recognition market effectively shut down the divisions and outsourced the business to master fulfillment companies, whose businesses have generally grown as a result. While the industry’s associations, the publishers of RRN, and others have worked with leading promotional products organizations such as the Advertising Specialty Institute and the Promotional Products Association International for decades to train distributors on the benefits of selling incentive and recognition programs, only about 7% sell these types of programs, according to industry surveys.
Kansas City Steaks, another retail brand exhibiting at the show, likes the corporate market “because 70% of our business is at holiday time,” explains Paul Ghekas, Director of Sales. “The corporate market gives us more exposure throughout the year, since our products make great gifts for just about any occasion, including length of service, events, birthdays, work anniversaries or other celebrations. We can provide customization and personalization that helps distributors provide value to their clients and generate a profit at the same time.”
Echoes Matt Burdette, Director, Corporate Sales and Marketing, at Omaha Steaks, “We have been doing this show for years because Omaha creates great experiences and distributors are able to get good margins for providing our products to their clients. As a premier brand, there’s nothing more important to us than our brand story, and we believe that’s what sets us apart. We are not a product one can buy in grocery stores and our gifts create an experience at every touchpoint. The corporate market is a very important channel to us.”
New retail brands at the Brand pavilion included Zojirushi vacuum-insulated bottles and containers and QFX Electronics.
Despite the compelling benefits of selling brands instead of non-retail products for gifting and promotions, ad specialty distributors are only slowly warming up to the sale of brands, according to both brands and distributors interviewed. But there are indications that this could change. While informal, off-the-record interviews with distributors found no one at the show who said they were focusing on brands, many said they did use brands when their customers demand them. “Brands are just a small percentage of our business,” is a common refrain, along with, “I really don’t know that much about how to make money with brands.” Distributors express a concern about “low margins,” even when it is pointed out that the average sale for a gift program with brands is as much as 10 times or more greater than a promotional product sale, according to data from the promotional products and incentive associations.
At the same time, distributors acknowledge that the growing negative public relations related to promotional products represents a threat that brands could potentially help offset.
Glenda McCarthy-Gaspar, President of Proforma SI, a distributor in Canada, is an advocate for the use of retail brands. “The longevity and value of promotional products are contingent on their quality. Customizing brand-name products incentivizes recipients to keep gifts and elevates your brand by association. These businesses did not attract success by mistake, and their name carries a story of influence, esteem, and, most importantly, quality. Such attributes spark the growth of our clients’ brands.”
From the standpoint of Guy Achtzehn, President of The Marketing & Sales Group in York, PA, a long-standing incentive representative, “It’s a matter of education. When the incentive and distributor marketplaces effectively merged, we never focused on educating distributors on the power of brands, we focused on incentive and recognition programs. There’s a certain small percentage of distributors who will handle incentive programs and that’s it. There are many more who can understand and help their clients benefit from the power of brands.” Achtzehn believes that distributors will have no choice but to focus on brands, “Because their clients are more and more interested in perceived value. Look down the aisles of this show, and often the distributors themselves are wearing brand-name apparel. That’s what recipients want. Companies are already cutting back on giving away promotional products for various reasons. Brands have greater value because people keep and use them.”
Paul Gordon of Rymax sees more distributors getting into the sale of brands versus non-retail brands, “but it’s the old 80-20 rule…The 20% of the go-getters will seize the opportunity first.” Gary Slavonic, President of Top Brands, another leading master fulfillment company says, “We are seeing some gains every year, but there’s still a lot of education to do about the use of brands in business, event, and promotional gifting.”
Agrees Micah Van Der Tuig, Director of Special Markets for O’Rourke Sales Company, another leading fulfillment company, says, “I see evidence that distributors are selling more retail brands, but we have a long way to go.” Van Der Tuig agrees, though, that brands have an increasing interest in this market and that it’s important to educate them on effective practices.
For Links Unlimited, this year’s PPAI show was especially productive, says Scott Kooken, President, “Because we focused on our event-gifting program that features the world’s best brands, and because we educated distributors before the event on what they would find at our booth.” He believes that there is significant room for growing the use of brands in business, event, and promotional gifting through distributors and that it’s a matter of education on the power of brands, the benefits to their clients, and the economics for their own business.” He also sees more brands interested in the corporate market, and believes they need to become well educated about making the right decisions related to whom they work with to ensure both growth an the protection of their distribution channels.
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