All posts tagged: #inventory

The Branded Merch Revolution Happening Right Under Your Nose

HuluNetflixKFC. Little Caesars. Papa Johns. Chipotle.

What do they each have? 

Swag(ger). 

And lots of it.

The swag revolution is real. To wit: Aldi’s dropped a merch collectionAldi’s. The grocery store. The discount grocery store. 

And over the summer, Panera Bread wanted to increase soup sales in the off-season so they did what any self-respecting big brand would do, they wrote a press releasel aunched a branded swimwear line featuring … soup

From solo brands to indie brands to major brands—everyone is getting in on the merch game. 

And it’s not just the low-end of the food chain. Brands ranging from your once-a-day Dunkin’ to your once-in-a-blue-moon Ritz Carlton are raging about merch. 

Example? If you’re a Fortnite fan, you can play the game for free, but if you want a Fortnite+Balenciaga t-shirt, you’ll have to shell out $475 for it unless, of course, you prefer the $725 hoodie

And the collabs (oh, so many collabs):

Justin Bieber x Tim Hortons merch.

Chipotle x Carhartt merch.

Popeye’s x Megan Thee Stallion merch.

McDonalds x pretty-much-everyone merch (BTS, J, Balvin, Saweetie, etc.) 

Ten years ago, if you dropped someKFC crocs on your audience, you’d inherit a kingdom: pallets upon pallets of patriarchy who rule the warehouse forever because they ain’t budging a damn inch. But today, KFC merch flies.

And speaking of patriarchy, Taylor Swift broke records with her new album Red and the longest song to hit #1 (‘All Too Well’) as swifties flocked to buy out the stock of the famous “F— the Patriarchy” key chain mentioned in the lyrics (as well as virtually every piece of Red merch on her site). 

In fact, “band merch,” long a staple of the music business, has recently exceeded even its own bounds: Kanye’s ‘DONDA’ event broke records for the highest-grossing US tour in history based solely off of merch sales

And streetwear examples abound. Kith and Madhappy, two upstart streetwear brands eyeing the Supreme empire, both dropped branded “Curb Your Enthusiasm” collections

Let’s not forget gazillionaires like Elon Musk, who continues to use merch to provoke just about everybody (his latest: the Tesla Cyberwhistle). 

Authors are in on it too. Salley Rooney (hailed as the first great millennial novelist) announced her third novel through influencer kits, sent to folks like Lena Dunham and Lucy Dacus. Her new book included an entire merch roll-out campaign, complete with umbrellas, t-shirts, bucket hats, and tote bags. 

And speaking of totes: How about that New Yorker Tote bag? The one so hot it’s now in the hands of over half-a-million people (and counting), the tote that became more of a status symbol than a $10,000 Hermés bag, the tote so damn popular that it led Vice writer, Sam Wolfson, to pen this clever homage

“Famous tote bag company The New Yorker has become so successful that they also now produce a weekly magazine filled with investigative journalism, restaurant reviews and satirical essays.”

(Brilliant).

But perhaps most astonishing is how the worlds of streetwear and fashion have elevated branded merch to, not just a new level, but an entirely new game. When White Castle celebrated its 100th birthday, they enlisted Liberian-American fashion designer Telfar Clemens (whose brand Telfar is upending the fashion world for its inclusive stance and brilliant designs) to design their uniforms, which include all unisex designs of T-shirts, polos, aprons, visors, and do-rags. (Shout-out to our very own Telfar-obsessed Aly Brunton who noted this for us). 

Merch has become so popular that books are even being written about it. A24 films released a book celebrating a boom era of promotional movie merchandise, and the famous Japanese writer Hauraki Murakami, whose book sales exceed 2.5 million copies, recently released a new book celebrating his favorite t-shirts.  

If you haven’t noticed, the world of branded merchandise is in the middle of one of the biggest evolutions since Michael Vasilantone created a multi-color garment printing machine in 1960 to screenprint slogans on t-shirts. 

Over the past few years, virtually every major publication, from Forbes to The New York Times, has written about merch. Sometimes it’s negative, such as the Fast Company article written by our friend Liz Segran, It’s time to stop spending billions on cheap conference swag. (After Liz’s article, commonskuresponded and also asked Liz to join us for a podcast chat and as aguest speaker at skucon). 

Or, articles like The New York Times report, The Cotton Tote Crisis (“How did an environmental solution become part of the problem?”). An article published by the very same New York Times that sells not only one branded tote on their site but twothreefourfivesixseveneightnineteneleventwelvethirteenfourteen different tote bags. 

[Sidenote: There are touchpoints in those articles we (and many conscientious sellers in the merch business) agree with, such as the abuse of wasteful, mindless spending and its harm to our environment, which we will address in subsequent posts].

But it seems we notice and react to negative news (understandably) more so than realizing the revolution happening right under our nose. 

Branded merch is not just ubiquitous, it has become a cultural staple evolving to a higher form of identity, self-expression, and art, commanding headlines and sparking brand obsession like never before. 

The positive news about merch vastly outweighs the negative. Articles abound, such as If You Notice Branded Merch Everywhere, You Are Not Alone—Here Is Why (Forbes); What Your T-Shirt Says About You (The Atlantic); How Supreme-Style Merch Drops Took Over Corporate America(Medium); Why Does This Simple Hat, Worn by Emily Ratajkowski and TimothéeChalamet, Keep Selling Out? (Vogue).

An exercise: Take a hobby of yours, any passion you have, and see if you can’t google a merch connection. Own a Peloton? Merch. Ted Lasso fan? Merch. Even a book-nerd like me can make a merch connection. Recently, I resubscribed to The New Yorker just so I could get the swanky new green tote bag, and I noticed that The Paris Review dropped a merch line just so this idiot could shell out ten times the cost for a T and a tote. See? Merch. It’s a brilliant exercise to see, not only how far merch has come, but how impactful merch is for every single brand

Anna PaczkowskaThe Branded Merch Revolution Happening Right Under Your Nose
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Crisis or Opportunity?

China is a manufacturing powerhouse. Known as “the world’s factory,” China is the world’s largest manufacturer in terms of output. The country’s GDP reached $17.7 trillion in 2021, up $3 trillion from 2020. This year, China is targeting to grow another 5.5%.  

Outside of textiles, nearly every promotional product comes from China—or has components from the country. China’s speed, low labor rates and strong manufacturing capabilities have made it a global manufacturing hub and the go-to source in the promotional products industry. 

China is the world’s second-largest economy behind the United States and its most populous nation with 1.4 billion people. But the country is changing rapidly. So is the relationship between China and the U.S.—and China and the world.

Is the promotional products industry ready for what comes next?

Tumultuous Times

Doing business in one of the world’s most dynamic countries has become increasingly complicated. First came the China tariffs in 2018, leading the world’s two largest economies to engage in a bitter trade war. Some economists say the U.S.-China trade war could go on for years. 

The United States currently imposes a 25% tariff on approximately $250 billion of imports from China and a 7.5% tariff on approximately $112 billion worth of imports from China, according to the Tax Foundation. Chinese tariffs on American products are about 20%. Before the U.S.-China trade war, U.S. tariffs on Chinese goods were on average 3.1%, while China’s tariffs on American goods were about 8%.

While meant to punish China for its unfair economic policies, the tariffs that were started by the Trump Administration ended up harming the U.S. Multiple studies have shown that U.S. importers and consumers have primarily paid for the tariffs.

"We're paying the bill and it's hurting our earnings" - quoteBen Zhang, president and CEO of Greater Pacific, says his company builds the tariff into the prices he charges distributors. His distributor clients then do the same with their end-buyer clients. “Who eventually pays the price? Not China factories—American businesses,” Zhang says. “We’re paying the bill, and it’s hurting our earnings. We’re suffering.”

After the tariffs came COVID-19, causing economies to grind to a halt. Since the beginning of the pandemic in 2020, China has instituted a strict zero-Covid policy to crush outbreaks and chains of transmission. The central government enforces large-scale lockdowns, mass testing and international travel bans as part of its zero-Covid strategy. 

China’s strict approach over the past two years has created numerous bottlenecks in the global supply chain, with factory shutdowns and logistics closures. However, experts doubt the country will change its strategy. In March, China locked down tens of millions of people as it experienced its largest Covid outbreak in two years. With the world seemingly turning a corner on the pandemic following the Omicron variant’s global spike this winter, China’s shutdown affected 19 provinces, including Shenzhen, which is key to supply chains because of its ports.

In the wake of the debilitating trade war and pandemic came supply chain snarls that entangled the world. Every aspect of the global supply chain was upended, from the factories manufacturing items to the cargo ships to transport the goods to backlogs at ports to unload the shipments. 

Zhang says that while it used to take about a week to get freight once it arrives in the port, it may now take months. And once a shipment clears customs, there may not be a truck driver to transport the goods. This leads to a domino effect. Suppliers like Greater Pacific can’t bill distributors for undelivered freight. Distributors can’t bill their clients. And end buyers purchasing promotional products must wait several months—time they often don’t have—to get their goods in hand. 

Companies shipping products from China are shelling out substantially more than they did pre-pandemic. Zhang says that a typical 40-foot container from China used to cost $3,000-$4,000, but now costs anywhere from $18,000-$25,000. “It’s unbelievable, but we have to pay it. We have no choice,” he says.

Brennan Mulligan, founder and CEO of California-based Skyou, has never seen anything like it. “Everybody says it’s unprecedented, but it applies in this case,” he says. “Everyone was blindsided.”

Pivoting To Closer Shores

Anna PaczkowskaCrisis or Opportunity?
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Industry Reaction: Corporate Gifting Market May Be Much Larger Than Previously Known

According to a recent study conducted by Coresight Research, corporate gifting has swelled to previously unrealized levels since the onset of the pandemic in early 2020.

A 2018 estimate placed the market at $125 billion, but the newer study finds it to be far more robust, an estimated $242 billion in 2021, and likely to swell to over $300 billion by 2024.

Naturally, promotional products distributors and suppliers specializing in corporate gifts are excited to hear the updated estimates, and say the new numbers are reflective of the uptick in business they’ve experienced since many office workers began to perform their duties remotely starting in the initial quarantine period, leaving their employers seeking ways to keep them feeling engaged and appreciated.

“During COVID, companies were trying to stay connected with staff,” says Pat Barry, executive vice president of sales at Austin, Texas-based distributor Boundless. “That has continued with a greater emphasis as companies are now are looking to retain staff and attract new employees due to record low unemployment.”

The new estimate comes from a survey of 300 corporate gift buyers across companies up to $30 billion in revenues. “The first thing we set out to do was determine the actual size of the corporate gifting market,” Kevin Payne, vice president of corporate marketing at study sponsor GiftNow, told Forbes. “We felt it was bigger than previous estimates, but how much bigger we didn’t know. We also believed it grew extremely fast over the past year and the study confirmed it. Corporate gifting is growing faster than the rest of the gifting market.”

The study was conducted in May and released in June. It includes ample information relevant across the entire promo industry, including gifting trends and key data on the purposes of corporate gifts and the types of gifts most frequently sought.

Corporate Gifting Infographic

Distributors say the remote work trend and rising transience in the workforce have increased the importance of gifts being particularly thoughtful, rather than compulsory or routine.

“Overall, our clients are using moments to unleash the power of human connection and deepen their relationships, which in turn increases retention,” says Hillary Feder, MAS, president of Hopkins, Minnesota-based distributor Hillary’s. “Two years ago, people just wanted to get something into their employees’ or clients’ hands to say ‘I am thinking of you.’ Today, we are working more strategically with them to step back and look at the big picture.”

Both Boundless and Hillary’s won PPAI Pyramid Awards for exceptional gifting programs in 2021.

“A thoughtful corporate gift includes knowing where people are, where their heads are at, what is keeping them up at night,” Feder says. “There is a ‘thinking investment’ to land on the right products. You need to know your client, their company brand, values, culture and voice. Know who will be the recipients—it is not one-size-fits-all, even in bulk gifting. It might mean a couple of different options if you are going to implement authentically and with heart.”

As for the specific items corporate gifters are looking for, gift cards—both physical and digital—lead the way, making up 37% of all gifts, with 51% of study participants including gift cards in their programs. Everyday branded products, gift baskets, edibles and apparel still represent large segments of the marketplace, but electronics and elevated branded merchandise are on trend. Barry says clients are looking for “brands, brands, brands.”

Anna PaczkowskaIndustry Reaction: Corporate Gifting Market May Be Much Larger Than Previously Known
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More Manufacturing Slowdowns as Chinese Factories Face Power Plant Shutdowns, Electricity Rationing

Chinese factories have been working hard to keep up with global demand as they recover from complete COVID-related shutdowns in China’s manufacturing sector, both earlier in the pandemic and more recently.

sixtwentysixMore Manufacturing Slowdowns as Chinese Factories Face Power Plant Shutdowns, Electricity Rationing
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