Compass: Believers in Virtual

Josh Levy, CEO

As the U.S. returns to in-person events and gatherings, so too is Compass (asi/46170) – but selectively and discretely. CEO Josh Levy says the supplier is doing more small in-person events and sales calls, specifically in the Midwest and South. But it remains a big believer in video interaction with customers. “I’m a huge fan of virtual presentations,” Levy says. “Trade shows definitely serve a purpose, but I feel they’re overwhelming, and it can be like drinking from a firehose for distributors. Then attendees have to recall everything and look at their notes when they get back. On the other hand, a 20-minute Zoom presentation gets a captured audience, and we can share content with them that they can download to their computer and send to customers immediately.”

Sales were solid for Compass in May – up 300% over May 2020 (at the height of the pandemic) and also flat with May 2019. Anything having to do with the outdoors continues to sell well, including the company’s Mammoth brand coolers. “It seems people are extremely excited to be out this summer, but I think people are looking for a lot of small local trips instead of faraway trips that require air travel,” Levy says. “Everyone could use a high-quality cooler for the beach or camping trips.”

Levy says he’s optimistic for the rest of 2021. “But of course, there’s a new crisis with the supply chain issues. Once one crisis dies down, another pops up,” he says. “So, running a business is never easy, but we try to just address each crisis as best we can with a smart plan and good execution. What else can you really do?” – C.J. Mittica

Fairytale Brownies: Dealing With Delays

Eileen Joy Spitalny, co-founder

Phoenix-based Fairytale Brownies (asi/53518) hasn’t been immune to the supply chain issues affecting the entire promotional products industry.

Recently, the supplier had a gift box delivery delayed by two weeks, as well as delays with one of the major carriers and even a third-party pickup. As a result, the company ended up taking the order to a drop-off location. “We’re always willing to do what it takes for customers, but that can’t become a daily need,” says Eileen Joy Spitalny, co-founder of Fairytale Brownies.

As expected, Fairytale’s sales were down from the same period last year. But, compared to that time frame in 2019, the company is experiencing double-digit growth. Business is expected to pick back up in the fall thanks to the rush of holiday gifting. For that key stretch, the supplier plans on hiring more employees and will be introducing a couple of new treat flavors and packaging designs.

All employees returned to the office on June 1. “It’s been great, but also complicated as some team members would like some work-from-home flexibility,” Spitalny says. “So, we’re about to share with our company our new WFH policy.” – John Corrigan

Starline USA: Preparing for the Next Phase

Brian Porter, senior vice president of sales and marketing

Sales are robust at Starline USA (asi/89320; Canada, 89213), in Grand Island, NY, and Concord, ON. Brian Porter, senior vice president of sales and marketing, says that year-over-year numbers are up a whopping 200% as clients look to return to normalcy.

“Events are coming back, and it’s a new arena for sales that’s been closed for more than a year,” says Porter. “People are starving to get out and interact, and that will lead to a nice bump for the promo market.”

Of course, the rise in demand for promo is now hampered by ongoing logistics challenges. Porter predicts they’ll be a factor in getting goods to market at least through Q2 of 2022. To mitigate the chance of having disappointed clients looking for Q4 gifts, he says to impress upon them the urgency of ordering in the next month or so.

“Holiday orders need to be sourced and ordered by early in the third quarter,” says Porter. “If customers wait until early to mid-fourth quarter, they’ll be receiving product in 2022.”

Meanwhile, the Canadian market is finally showing some signs of life as reopenings continue, though it’s also experiencing supply chain delays. But Porter is optimistic about the coming months. The lifting of restrictions there is “long overdue,” he says, which will lead to a strong increase in sales in the third and fourth quarters. Already, the company’s Canadian sales volume is outpacing both 2019 and 2020.

As Starline gears up for a resurgence in travel and trade shows, Porter says he and his team will be even more judicious than before COVID, by taking a critical look at each event they attend to make sure it offers a healthy ROI.

“We’re being very deliberate,” he says. “We’ll never go back to pre-COVID standards. We’re evaluating every event and confirming the effort will result in business. If we can increase the bottom line, we’ll be there.” – Sara Lavenduski

Rowboat Creative: Reveling in ‘Some Extremely Large Deals’

Lucas Guariglia, owner

Momentum that began to build last month in the events space picked up apace in June for Rowboat Creative (asi/313715). The Chicago-based decorating firm is scaling up programs well into September, according to owner Lucas Guariglia. “Larger-scope activations are really where we shine in being able to handle everything under one roof,” he adds.

Business in general has been on the upswing for Rowboat this month, and Guariglia says the company is in the process of finalizing “some extremely large deals,” which will take June bookings to further heights.

In addition to live events, Rowboat has been working on a collaboration between a successful designer and the shoe company New Balance that Guariglia says “will surface soon.” The shop has also been working closely with the band Twenty One Pilots on merch and custom pieces for music videos. “They have a huge tour coming up that’s going to turn things up for them and the merch game,” Guariglia says.

Apparel basics are trending, particularly in earth tones, which was a surprise to Guariglia. “Summer usually brings out all the bright colors, but there have been a lot of neutral tans and creams,” he notes. Besides apparel, Rowboat has had a spate of client requests for custom molded products.

As orders to continue to ramp up, Guariglia says Rowboat has been having hiring struggles, like many businesses across the country. “We’ve been very conscious about not falling into reactionary hiring,” he adds. “It’s crucial to ensure that our teams are led by the best of the best, as opposed to just filling voids.” – Theresa Hegel

Rockland Embroidery: Optimistic Despite Staffing, Inventory Challenges

Andy Shuman, general manager

Business was trending upward for Rockland Embroidery (asi/83089) in June, though the Topton, PA-based shop is experiencing many of the same inventory and staffing issues that are plaguing the promotional industry as a whole.

High-end garments continued to be popular with the contract decorator’s distributor clients, according to Andy Shuman, general manager. The only snag is that it’s dependent on distributors being able to find inventory, which isn’t always a given, he adds. Another big trend, Shuman says, is the “resurgence of event-based business – from Little Leagues and family reunions to large corporate in-person events.”

Despite being busy, Rockland Embroidery is finding it difficult to grow its staff to meet the increased demand. “Our existing staff is absolutely outstanding,” Shuman says. “Hiring and up-staffing seems nearly impossible at the moment.”

Though the challenges are plenty, Shuman remains optimistic about the second half of 2021. “Inventory shortages, transit delays, staffing issues across the board and price increases will certainly play a role in making business difficult,” he says, “but even with those challenges, I believe the strong rebound will continue.” – TH

Full Line Specialties: A Gradual Return

Sam Singh, president and CEO

The team at Full Line Specialties (asi/199688) in Surrey, BC, is cautiously optimistic ahead of the summer and fall sales seasons. President and CEO Sam Singh reports that sales for the first half of June now match those from exactly a year ago, which Singh says was a banner year for the company thanks to PPE sales and value-added services.

British Columbia is currently in Phase 2 of its reopening process, which allows for indoor dining (Singh just enjoyed his first restaurant meal with family in nearly a year), outdoor gatherings with up to 50 people and leisure travel within the province. Team sports are starting to release their upcoming seasons and employees can begin to return to communal offices.

“This has helped with the general morale, but there’s still a lot of mental damage to be undone,” says Singh. “And until events are fully back, we feel there will be some headwinds for the Canadian promo industry leading into the traditionally slower summer season.”

Singh’s team continues to see demand for warehousing, kitting and fulfillment; in fact, year-over-year e-commerce business is up 54%. Clients are buying again for Q4 needs, which is great news for promo (and much earlier than in previous years). But Singh is concerned about ongoing supply chain disruption and hiring challenges, and how those realities will affect orders in the coming months.

“We’ve been pitching clients on booking holiday orders now,” says Singh, who adds that logistics, warehousing and manufacturing clients are doing particularly well at the moment. “We’ll keep the goods here since we have the real estate and we’ll release it on the date of their choice, ensuring their budget is spent with us. We’ve had good success with this so far.” – SL

Jack Nadel International: Halfway Back to Normal

Craig Nadel, president

Officially at the halfway point of 2021 and on the tail end, by most accounts, of the pandemic in the U.S., Craig Nadel is breathing a measured sigh of relief. “This year is getting better and better, and it looks like our June sales will exceed our June of 2019,” says the president of CA-based Jack Nadel International (JNI; asi/279600), the Top 40 distributor his uncle and father started.

He sees growth areas in the construction, freight and logistics markets, and, of course, events. “There’s a huge, pent-up demand for them,” he says. “We’re finally doing our President’s Club award trip in late September and most of our people are very excited to get together.” Nadel points out that when looking at hot markets overall, “it’s always easier to look at the rearview mirror and note what clients have done well this past year rather than out the windshield to see what’s coming.”

Two areas he’s not so optimistic about are the issues with shipping and inventory and the economy overall. “The situation with supplier inventory levels is quite bad and doesn’t seem to be getting better, and, in fact, might be getting worse,” Nadel says. “Most suppliers are pretty good about being transparent, but a few have been bad about it. The economy is a complex subject, and there’s a fear inflation will be coming to the economy overall and not just our part of it with the promo market. We’ve seen some price increases for sure, and I suspect our industry will be reflective of the general U.S. economy.”

Regarding the hottest of hot topics that has many leaders of U.S. companies scratching their heads, Nadel concedes that bringing people back to the office for work is a quandary. “So far, so good as we’re a few weeks into Phase 2 of back to work,” he reports. “Phase 1 was voluntary for almost everyone, and about 60% of the people were coming to work. Phase 2 states that everyone needs to be in the office at least two days a week, and it’s been pretty smooth. But we do have some people who don’t want to come back, yet next month the plan is to be 100% back. There are some people who want to keep working from home, and it’s a problem since we want to be a work-from-the-office company. We believe that’s the most conducive environment for creativity and collaboration, when colleagues are together. We’re going to work with a few of them, but in the end, we may lose a few good people as a result.”

Given all the ransomware and cyberattacks in the news, what steps has JNI taken to shore up its own tech? “It was one of the reasons we changed systems, going live right before the pandemic started which was terrible timing in hindsight. Of course, who could have foreseen the pandemic?” Nadel asks. “We’re almost completely in the cloud with companies that should reduce the risk … and we’re doing training with our people too.”

Over the next 12 months, Nadel predicts that inflation and supply chain issues will probably remain, but overall the economy and JNI’s business will be on solid footing by the end of the year. “I think it’ll be better than pre-pandemic sales by the fall,” he says. “We’ll see.” – Michele Bell

Moore Promotions: Stock Issues Hurting Sales

Kelly Moore, owner

Promo distributor Kelly Moore doesn’t beat around the bush: The inventory shortfalls suppliers throughout the industry are experiencing have been causing friction with clients and, in cases, costing her sales when the particular product a customer wants simply isn’t in stock.

“Some clients are getting extremely exasperated and mad at me for not being able to come through for them when once I was always able to pull rabbits out of hats,” says Moore, the solo-operating owner of independent Florida-based distributorship Moore Promotions (asi/601617). “I’m hopeful that the stock issues get better, and I won’t be losing so many orders through no fault of my own.”

Stock shortages arising from importing challenges that promo executives say are largely beyond suppliers’ control have been an issue throughout the industry, as ongoing COVID-caused disruption plagues global supply chains.

A related issue Moore and other distributors say they’re experiencing is longer lead times for orders. It’s often a result of a complex combination of factors that can include everything from lack of adequate labor at supplier firms, to transport backups at domestic carriers.

“The 15- to 20-day lead times I’ve experienced with my favorite suppliers have been a challenge,” confesses Moore. She adds that she’s adapted by “shifting a huge portion” of her business to Top 40 supplier Polyconcept North America (PCNA; asi/78897), which she says is “doing 24-hour service with no problems.”

Following a strong April in which monthly year-over-year sales doubled, Moore had been hopeful that her second quarter 2021sales would increase relative to the same quarter the prior year. It’s now uncertain if that will happen.

In May 2020, she had her best month of sales for that year, thanks to robust revenue from PPE. PPE sales were essentially nil this May, and Moore wasn’t able to make up the ground with sales of traditional promo items. June is trending to finish roughly equal to last year.

Still, Moore is upbeat. Of late, she’s been scoring successes with a wide variety of new clients, from bars and musicians to pet-sitting services. She also recently enjoyed working on a project that entailed creating a fully custom stress toy and keychain of a college client’s mascot.

“People want to spend,” Moore says. “I’m receiving a slew of RFPs for big events in 2022, as clients have already started to plan for next year.” – Christopher Ruvo

Custom Logos: Now Hiring

Jeff Golumbuk, co-founder and owner

Although business has picked up significantly for San Diego-based Custom Logos (asi/173183), disruptions in the supply chain continue to prevent a full recovery to pre-pandemic levels.

“While goods are still hard to find, we have a great advantage in that we can still provide quick turnaround by adjusting our production schedules to match our clients’ needs,” says Jeff Golumbuk, co-founder/owner of Custom Logos. “We’re also suggesting customers place their holiday orders now in order to secure product for the season. Again, due to our warehouse and full-service capabilities, we’re able to store orders, which gives us another leg up in the marketplace.”

With business improving, Custom Logos is currently hiring. Golumbuk anticipates increasing staff by 10% in the next six months. And with all employees back at the office, morale has been at an all-time high, he says.

“We have many new babies in the Custom Logos family and have enjoyed having them here as well,” Golumbuk says. “Our rules for kids in the office are the same as for dogs: All are welcome as long as you are responsible and pick up after them.” – JC

Whitestone Branding: Record Sales, But Big Challenges

Joseph Sommer, owner

In the second quarter of 2021, Whitestone Branding (asi/359741) is smashing company records. June is on pace to be the New York City-headquartered distributorship’s first-ever seven-figure sales month. Revenue for Q2 is more than double what it was in last year’s Q2 when COVID-19 restrictions decimated business.

“I think we’ll see more of the same in the second half of the year – growth, and lots of it,” says Joseph Sommer, owner/founder. “As the country reopens, more and more companies will plan in-person events and in-person meetings, and they’ll be looking to make a big impression. I don’t see this slowing down.”

For all the positive results and optimism, however, Whitestone is contending with issues beyond its control that most every distributor is confronting, as supply chain disruption causes inventory shortfalls and order fulfillment delays.

“The success isn’t coming easy, as our industry is facing major production and stock issues,” says Sommer. “Lead times with our biggest suppliers are more than double what they are in normal times and stock is spotty across the board. Shipping also isn’t delivering as advertised, which is creating friction in the process.”

Furthermore, Whitestone Branding is facing challenges when it comes to growing its team. “As business grows, we need to add more people to our company,” says Sommer, whose workforce is remote and situated in different parts of the United States. “It’s not a challenge finding those people, as much as it is getting them acclimated and actively helping.”

For all that though, Whitestone is engineering significant success. An especially encouraging sign? Event planners are coming back into the mix in a big way, planning for autumn events – a boon not just for Whitestone but for promo as a whole, Sommer says.

“I think customer appreciation is going to be huge as the year goes on,” Sommer adds. “I see a big holiday season, with lots of small businesses gifting clients and showing appreciation to staff.” – CR