As Prices Rise Cotton A Logical Choice

Here we go again, Memorial Day is approaching and as it does gas and oil prices are going up.  In many parts of the United States gas prices have risen 30 percent since New Years Day.  So what does cotton have to do with oil prices?  Plenty when it comes to buying your convention or show items this summer.

A majority of the items you would normally buy for your next project are made from plastics of one type or another.  All of those plastics require the use of petroleum products in the actual construction process.  Cotton items typically do not, take for instance the Classic Cotton 6 Oz. Convention Tote which is made from all natural cotton.  Sure there are costs associated with operating the farm, manufacturing and transportation but oil based products themselves are not consumed in the product materials.  Taking this a step further the Classic Cotton 6 oz. Foldable Tote folds into a tiny footprint which will make the ultimate end user destination a little less expensive to reach.  Lighter versions such as the Leeds Cotton Convention Tote offer wide color choices and again offer some unique touches such as the mock rivets at the top of the bag. 

Although none of these items are purely organic they are a bit more earth friendly and oil friendly than pure plastic products.  The next logical step for domestic manufacturers would be to source non-organic cotton in the United States creating a Made in USA line of bags.  Whether this is the time to do that given the economy is debatable but with product planning taking years it would be nice to see some consideration being given to the idea.  As of right now little or not tote type products are sourced in the United States for this industry.  Slowly some of the lower end items are being brought back to the States but what may have been a more rapid transition is being delayed by the sales downturn.

Several industry suppliers have failed in one form or another in the past few weeks.  Most sources pin supplier sales at down 20-40% and as history has shown that is probably not the most accurate representation.  One of the industries largest suppliers appears to have avoided Chapter 11 last week but that has not yet been made official.  Another Top 5 supplier already filed earlier in the month although all signs point to their continued operation as they emerge from a Chrysler type arrangement.  Distributors are also vanishing at an alarming rate as with sales plummeting like they have there is only so much room in the marketplace.  Traditional web based business continues to flounder but traditional offline sales are amazingly strong as representatives that had previously called on clients have left their old employers.  Much like brokers in the financial industry this leaves the doors wide open for new distributors to get a leg up on business.  Despite what many people would think it is actually a fantastic time to make a concerted effort in traditional offline sales tactics.

As we discussed in keeping your coolers safe this summer and A Real or Fools Rebound the economy is making little headway.  Despite the more optimistic appearance to the unemployment numbers truth be told many have just given up.  Worse the numbers continue to be revised downward from previous months.  The recovery will be long and difficult.

Long Road to Recovery Getting Longer for Some

The continued run in the equity markets does little to help small to medium sized businesses in the United States desperately looking for credit.  With massive cuts still being made to credit facilities in the business and consumer sector overall spending ability of both groups has diminished.  Many firms will be able to recover as sales begin to increase during the summer but for many others the stranglehold of available credit is too much to bear.  Yesterday Norwood Promotional Products filed for Chapter 11 bankruptcy and with that two of the top five distributors in the industry are bankrupt or have plans for bankruptcy in May 2009.  With rumors swirling about at least one other major supplier the road to recovery for many just got longer.  What is even more troublesome is that distributors who have relied on these vendors will now have to attempt to establish credit lines with new vendors which is a tall order in this market.  Norwood blames a flood last year, the recession and inability to refinance debt as commercial paper markets are still very thin.  We do not expect this to be the last supplier to file.

Air travel has finally begun to level off after plunging for the past two years.  As travel begins to increase again this summer many business travelers will encounter tighter TSA restrictions that were not in place the last time they were on a plane.  To counter this suppliers have released TSA friendly products including the Aero-Safe Travel Kit which is compliant with guidelines.  The kit includes four bottles that allow someone to fill them with soaps, shampoos and other liquids while still being able to slip through screeners without having to dump your items.   The Aero-Fresh Travel Kit does essentially the same thing but instead actually includes shampoo, shaving cream and soap in individual packets of ten.   Both of these items get an imprinted on the front of the actual kit.    Another trend seen this spring is the increasing size of lighter laptops.  As a result customers now desire 17″ capacity which is why the Wenger Optimus Compu-Backpack provides the ability to carry a 17″ laptop while also including all of the features customers are looking for and some that they are not such as the carabiner which is a great addition.  Both this and the Wenger Transit Compu-Backpack have cell phone carriers on the backpack strap.  We would advise you to be careful in utilizing this though as out of sight behind your back is not the place you would want to place a highly valuable phone.    These are highly durable backpacks that carry the genuine Swiss Army brand name.  The travel kits are inexpensive and provide some real value.  People still have not adjusted to the changes in air travel regulations.  Handing a captive group of travelers either of these items will produce an immediate and permanent impact.

The economic miracle that is now an economic mirage for so many continues to fluctuate with each day.  On one hand there is positive news in terms of some bottoming in housing but on the other hand we have news that our major banks are still needing more money.  To our eyes that is terrible news as it will mean continued cuts in available credit which will only produce more “Norwoods” on both the distributor and supplier side of the industry.   About all anyone can do is continue to work hard to distinguish yourself from the competition by either putting some thunder into your message or by providing exceptional service.  The military uses a term “make it rain” when they call in the proverbial cavalry and that is where many businesses are today.  Sadly many will probably fall in the coming months.

Catching the Chill on the Rebound

I could not think of anything else to give for a title today and this one seemed to encompass a couple of notable news stories ranging from the spreading virus to the approach of Summer 2009.  This day marks many firsts which includes the first major failure of an American automobile manufacturer which in and of its own is groundbreaking but it is also being shadowed by the looming spread of a potentially pandemic virus.  Both have the ability to land a heavy body blow to the economies of the World and truth be told none of us yet know how it will play out.  We are approaching the tipping point as the economy has certainly begun to rebound but both of these situations have the ability to stop any recovery.   As of lunchtime today approximately 236 cases have been confirmed and will use our frequent writings here as a barometer tracking the spread.

With the grim news out of the way we will now switch to the chill portion of today’s rambling.  It is late Spring and with some scorching heat now occurring in parts of the region we are seeing a sharp uptick in searches for insulated items.  As a result we have rolled out the Contemporary Six Pack Cooler at an ultra aggressive price point.  We like the solid construction and attractive looks of this product over that of other brands.  It does not have the flimsy feel of lesser competitors.  The Gemline All Sport Cooler II is a remake of a popular earlier model from the same manufacture and like all of the cooler products from this brand feature safe PEVA lining.  We still sell items made from PVC as the FDA among others say they are safe but are glad to see a major vendor pulling away from incorporating these volatile materials.  Gemline has extended an existing line with the Vertex Cooler  which has been an annual best seller.  This particular item features there class leading logomagic which allows for easy dual branding.  The ability to use dual logos has been a huge selling feature this season as it allows customers to split costs.  Another opportunity for budget pruning exists when new less costly products are released such as teh Bungee Six Pack Cooler which we are using as a dual function product by stuffing a water bottle in the package.  We expect the trend towards bundled goods to continue as it gives the best dollar value on a weighted scale.

As many have heard by now industry giant Broder Brothers is threatening to declare bankruptcy next month if creditors do not relent to their demands for changes in terms.  This is much the same as what happened today with Chrysler but unlike that case investors would be wise to renegotiate with them versus taking a potentially much more severe hit.  The problems in securing financing continue for many of these firms and really they have no choice apparently.  Any failure of such a large firm would send terrible ripples down through the supply chain as many small embroidery shops would be left scrambling to find new suppliers that are willing to extend credit.   Investors seem to continue reflecting upon good times long gone instead of realizing we are in a much different economy.

Subtle Ways to be more Earth Friendly

With Earth Day 2009 having come and gone it is now time to look forward to the intervening twelve months and more closely examine other ways we can all minimize our impact on the environment.  By now we are all aware of the benefits of switching to fluorescent light bulbs providing they do not contain mercury, the advantages of upgrading to a more fuel efficient vehicle and the obvious advantages of recycling.  What is often not discussed are the other less dramatic ways for which we can reduce our impact.

Enter several new coolers this spring that are “unleaded” unlike thousands of similar products being sold.  Most major manufacturers sell coolers with PVC lining.   PVC is simply put Polyvinyl chloride otherwise known as one of the most valuable chemical compounds worldwide in terms of revenue and sales.  PVC lined coolers are everywhere but they do have a hidden danger.  To make PVC soft and flexible companies must add either Phthalate plasticizers or in some cases even some variations of lead.  Phthalate safety is widely debated at this time but there is little doubt we are better off without it in coolers that we later store our children’s drinks within.  This spring we have introduced a series of coolers that do not contain these compounds chief among them the Compact Six Pack Cooler which not only uses the much safer PEVA lining but is a striking value.  Available in multiple colors it provides a safe alternative for your next corporate outing and one that you can actively promote.   Likewise the Sofia Cooler Tote offers extraordinary function and power of design while excluding the dangerous chemicals that may contaminate coolers from other brands.   Right now there are very few manufacturers promoting PEVA lining because so few offer it.  Because of the clear benefits it is safe to assume that if the product you are looking at does not glowingly advertise the use of non-pvc components it probably still contains those compounds.   At that point you have to weigh the value of the product versus potential dangers of use.

The Vector Tote is new to the market this April and features a sharp vector angle design that is not something commonly seen previously.  This helps as giving it to your potential or existing client likely won’t evoke the “not another one of these” type responses as it is unique.   We like the design overall and expect it to sell well heading into summer.  A little bit more modern in terms of design and flare, the Groovy Tote minimizes frontal distraction providing maximum impact for your logo or tag-line.  With very little to distract the eye and a large billboard area it presents some exciting branding opportunities particularly for those utilizing the four color process printing offered.   Both of these items are made from durable forms of polyester which provide significant weight to strength benefits and also take well to being decorated.

The economy continues to slowly push forward and with Ford recently announcing they did slightly better than expected it is clear the assurance programs being offered are bringing in sales.  As discussed in Assurance Programs and How Little We Have Learned the real question will be have we just further delayed the inevitable?  We have already begun to see the dead cat bounce with some indicators clearly pointing to the rebound we have seen in the markets being a simple bounce but as of yet whether it is a real or fools rebound remains to be seen.  With each day the market stays up one would have to believe the market has turned.  Indeed we would like to believe we are all now seeing an increase in economic activity at least for the time being.

A Real or Fools Rebound

The happy dance days are here again if you watch the financial news networks.  Each week we hear more about fundamentals and the economic strength of the economy.  Last week wild projections were once again made on the price of oil suggesting a serious climb.  No mention was made that the expert quoted had oil prices pegged three times higher than actual just six months ago. 

The positive psychological impact is undeniable though as buying activity continues to steadily increase.  The first quarter was a disaster for many in the promotional industry with widespread reports of distributor and manufacturer sales being down as much as 50 percent.  To counter the turn there are many deals available including the Enterprise Pique Polo which is far above the entry level golf shirt you would have seen a year or two ago at a local convention.  Featuring three buttons and made of cotton this polo looks beautiful with your logo emblazoned across the front or back.  For the more budget conscience this same manufacturer offers the Vantage Velocity Cotton Pique Polo for a little less but as it turns out with the nature of the market the far superior Enterprise is available at nearly the same price point.  Vantage makes a premium product under the name Vansport Tournament Double-Tuck Pique Polo which includes sophisticated moisture management in the actual 65/35 cotton/polyester blend.  The entire Vansport line is considered the upscale version of traditional Vantage shirts with the major difference being the material.  As you move up their line you get into softer and smoother materials including shirts that wick moisture away from the body similar to much more expensive brands.

Shirts can provide an inexpensive incentive during these difficult times but even apparel sales are struggling badly.  The industry is typically dominated by apparel sales with close to fifty percent of the entire industry business being done out of this category.  The tshirt segment has been so saturated over the years that the impact of a custom t-shirt can be muted.  Think about it, when was the last time you really bothered to look at what was on a shirt?  This is where product placement is critical in selecting an item people actually care about and will wear outside of mowing their lawns or taking their dog for a walk.  If you give them a five dollar shirt that shrinks to the point of being one of those form fitting body shirts after two washes will anyone ever see your message?  Worse will the boss that ordered the purchase of those shirts ever come back to you again?  We see this quite frequently, you can always tell who ordered the cheap shirt when everyone is walking around with shirts tight to the bicep.  You are almost guaranteed that someone thought they could skimp on the shirt price as the samples they looked at fit.  The manufacturers will argue that nobody followed the washing instructions which usually require the cheap shirts be washed in cool water and only dried on low or medium.  Nobody ever follows those instructions and what you end up with is a frustrated customer or client.  What we like about the entire Vantage line is that the products are solid quality and do not shrink or fall apart like the bargain brands.  As we talked about in putting some thunder into your message it is critical that you select products that others will deem valuable. 

We will see in the upcoming week whether the economy is roaring or whimpering back to life.  We still do not know the answer even though our original piece was written weeks ago.   Despite the terrible economy there are still many unique opportunities in the economy and what it mostly comes down to is capitalizing on the existing situation through hard work that is both more efficient and better directed than your competition.

Commerce Goes Off The Cliff

October 24th may mark the day that the modern economic and financial crisis peaks.  It is so vicious this morning that all futures trading had to be stopped as electronic firewalls were breached.   Listening to the talking head experts they are still proclaiming a turnaround but you have to begin to wonder how much of this is more of these experts covering positions. 

One commenter on the longest running business network is being blatantly honest.  He continues to comment this morning that in the last thirty days most of his sources show demand falling off incredibly.  We talk to our suppliers and customers on a daily basis and all of our suppliers are telling us it has gotten very slow very quickly.  Some items will still continue to sell, promotional pens for one should continue to do very well as the price point befits the market.  Digital photo frames and other products will still have a market on the business side.   From the consumer standpoint stores like Costco should continue to do well or at least better than average. 

There is still talk of a jaw dropping rally.  It is difficult to believe anything is sustained with the world economy heading rapidly into a deep recession if not depression.  How many times in equity market history have we seen a substantial recovery during an economic downturn?  Are experts giving out this information just to soothe themselves or to facilitate the liquidation of their positions?  Each time they tell the public the bottom is near we have a day like today where it really appears a total collapse is about to occur.

Another topic being left on the back burner is the situation in the credit markets.  It is finally spilling from Wall Street to Main Street.   The tightening of credit between institutions is now resulting in the reduction or elimination of credit lines on the consumer side.  This can trigger a tsunami of rate increases and credit score decreases as credit card companies chase the balance down.  If you are unfamiliar with that term it literally means you owe $2,000 on a $5,000 limit that your bank reduces to $2,100.  You pay it down $200 and they reduce your limit $200 always keeping you close to your limit which hammers your score.  This in turn is seen by your other creditors as unseemly and they may raise rates or lower limits only furthering the cascade.  Any talk of a rebound needs to be weighed against the fact that billions of dollars in consumer spending is being eliminated on a weekly basis.  To those on Wall Street or on the TV giving us advice that are comfortable in their multi hundred thousand a year jobs there is no basic understanding of what is really happening.  The effects are catastrophic which is why oil demand fell 4.6% again despite sharp drops in oil and gas.  People are losing the ability to finance the economy incredibly rapidly and nobody seems to be paying much attention.  The engine that powered this entire economy the last decade was credit.  At first institutions stopped lending to one another which still had little effect in real terms on Wall Street.  Starting about a month ago the first few consumer lenders began more aggressively cutting limits.  It has now spread to most all lenders and is accelerating as they curtail lines prior to the busy holiday season.

We all hope for a recovery later in the day today to the markets, if it ends up down 500+ points the psychological effects will probably continue to hammer the markets lower next week.  If that happens the initial stages of the holiday buying season will be a disaster and that will seal the fate of the world economy.  There is really nothing left for the Government to do as they have exhausted all of their potential interventions in what history may view as plugging the leaks in the financial ship with chewing gum.

Hope Is Springing Eternal

It’s probably not any solace to those that saw their retirement funds get clobbered last week but so far overseas markets are mixed and Dow futures are now up after being sharply negative earlier in the weekend.  This may not hold throughout the day and let’s face it the last trading day saw a 1000 point swing on the Dow so chances are the volatility will continue.

On the economic side of things it was shocking today to see that gas has fallen almost 50 cents a gallon between my last two tanks.  It’s unprecedented and just makes no sense given what everyone was saying just a few months ago about higher oil prices being here to stay.  With demand so far down will consumers flock back to gas guzzlers at the highly discounted prices or have we learned our lesson?

The larger question this week will be whether or not we have a return to more normal economic activity or whether or not the new norm is what we’ve grown accustomed to in the past few weeks.  One retailer indicated today their business is down 30% over year ago levels and more than 25% in the last two weeks.  We haven’t seen a drop yet but most everyone else we talk to is reporting slow sales.