Discover the evolution and the most relevant changes that occur in the promotional products industry with MyMakito.
We tell you the most relevant data of what is happening in the industry at every moment of the year, always with verified and updated information. If you want to be at the forefront of innovation, learn about the latest trends and grow in the industry, don’t miss any episode of this series.
Situation of the Sector and Forecasts for the Second Semester
With the arrival of the year 2021 we can transmit for the first time an optimistic and positive message based on the recovery of the promotional products market.
Throughout this article, the latest report on the market situation corresponding to the first quarter of 2021 will be analyzed, along with the variation in sales, the current indicators, the leading indicators, the trends by categories of product, the great challenges facing the industry in the short term and, finally, the three great lessons that this report leaves us.
The demand for health care products has decreased since the last report, while all other categories have seen their demand increase.
Variation in Sales
During the different semesters of 2020, we appreciate how the peak of the pandemic affected each of the product groups of the industry to a greater or lesser extent. It is in the first quarter of 2021 when for the first time we see a real recovery both for distributors or claimants and for suppliers or wholesalers.
Printing shop billing remains negative, although it improves compared to two of the three readings, and agencies are placed in neutral for the first time. In short, for the first time we clearly see a net growth in sales since the pandemic began more than a year ago.
A reading above 50 indicates business activity is rising while a reading below indicates the opposite – index tracks sales, pre-tax profitability, employment and prices.
- Index: first time that index has been above 50 since the research began.
- Sales and prices: driven mainly by increasing sales and prices across the industry (with indicator values of 62% and 52,8% respectively).
- Employment: more companies are reporting employment increases than decreases for the first time in this research. (14,8% reporting increases vs. 12% reporting decreases).
- Profitability: pre-tax profitability continues to lag (pre-tax profitability is rising for 29,6% and falling for 33,3%).
In this case, activity is monitored in terms of budgets, new orders and business confidence, and any value above 50 anticipates growth and shows positive. In the October 2020 report it already showed 55.7%, and today the value already shows a tremendous recovery above 70%.
This means that this report that anticipates the “current indicators” allows us to predict that the report for the second quarter of 2021 will reinforce growth and positive values.
Trends By Product Category
It is essential to analyze the demand for products by category, and in recent months it had been seen that it focused on healthcare or protection products, technology and drinkware.
In this case, we have practically all the products above 50, which indicates growth. The only one that suffers a blow in terms of demand and suffers a slow slowdown is healthcare, although it still remains at 47.3%.
Finally, the tradeshow and events sector, the one most affected by the pandemic by far, although still below 50, triples its growth.
The latest trend data by product category allows us to see practically data very similar to those in the pre-pandemic era, which translates into a normal demand for promotional products.
Biggest Challenges Of The Industry
Companies were asked to report what have been their greatest challenges during the pandemic. The most common response was the “Decreases in demand” that will likely cease in the following months.
Supply disruptions, shipping issues, increases in consumable/substrate prices, and employee shortages will likely be the challenges that last as inflation rises throughout the recovery period. The reduction in demand will disappear, which can be seen in the indicators and in the reactivation of the economy.
The biggest challenges according the analysis results are:
- 74,1%: Decrease in demand for our products/services.
- 74,1%: Supply disruptions/difficulty obtaining materials, consumables, substrates, etc.
- 74,1%: Shipping issues (rising costs, delivery delays, etc.)
- 67,6%: Constant uncertainty; don’t know what’s next.
- 50,9%: Government shutdowns of clients.
- 34,3%: Shift in demand towards products/services that we previously did not offer.
- 33,3%: Cash flow shortages.
- 26,9%: Increases consumable prices.
- 22,2%: increases in substrate prices.
- 19,4%: employee shortages (illness or quarantine requirements.
- 9,3%: Other.
- Be prepared for rising costs as the economy continues to recover: increasing costs must either be passed on the customers or profit margins will be depressed.
- If you pivoted to healthcare products, it might be time to pivot back: demand in this product category should continue its decline as the market returns to its pre-covid form.
- In depth article on how covid is breaking the industry’s supply chain: to read in-depth article on how COVID is disrupting the industry supply chain and what steps to take during the recovery phase click here.
Three Great Lessons That The Report Leaves Us
- Index of current indication shows growth for the first time since the research began.
- The index of leading indicators points to even more growth in the near future.
- Respondents highlighted the biggest challenges faced throughout the pandemic. Decrease in demand for products and services. Supply disruptions/difficulty obtaining materials, consummate, substrates… Shipping issues (rising costs, delivery delays…)
In short, it is very important not to forget the lessons of the pandemic and take on those challenges that we have pending in this reconversion.
In any case, the first months of the year 2021 leave us very good news after such a long time.