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Retailers Pivot as Pandemic Cancels Customers’ Events and Orders

By Julie Rogers (jrogers@AwardsPersonalization.org)

 

Successful professionals share their advice for ensuring your business stays healthy during efforts to stop COVID-19

(March 2020) When coronavirus first spread in China, it was feared the disease would potentially put a crimp in manufacturing of products for our industry’s busy season. Now, amid a pandemic, our worries have shifted.

Suppliers can produce the goods we need to, but will there be enough demand from retailers’ customers as events are cancelled and large gatherings are banned to limit the virus’s reach?  

“Two weeks ago, I would have said, ‘This is a bunch of hooey. This is going to blow over,’” Bill Collier of Arch Engraving said on Friday, March 13. But now, as a result of the virus’s spread, “every hour on the hour, you’re finding more and more stuff going on.”

That includes unprecedented measures by the American government and private sector. “Our industry, like others, will be badly impacted by this pandemic,” said Mark Case, owner of The Finer Line in Itasca, IL. “Schools, sports, big corporations are all feeling this hit. That’s impacting us. We need to pivot and pivot quickly.”

Seasons have been suspended for most professional sports leagues and college competitions, including March Madness. Many public and private schools, from early education through university level, have closed. Conventions, which often include the distribution of personalized products like ad specialties and awards, have been cancelled or suspended.

With event cancellations come the cancellations of orders for awards, promotional products, and other personalized items that would have been used at the event. “I’m not worried about the virus. I’m worried about the business impact,” said Sam Varn, owner of Awards4U. “From a business perspective, when people freeze and stop buying and stop spending, everyone suffers in the long run.”

The situation has been changing quickly, and everyone knew businesses would be affected, but not to what extent.

“We saw it coming, but when the sports and events started getting canceled, that is when it woke everybody up,” Varn said. “And that was when everybody realized the impact. With the NCAA March Madness getting canceled and just thinking of the impact on everything. It just starts rippling down in a dramatic way.”

EFFECT ON SALES

“So far as of today, (Friday, March 13) our cancellations have been very minimal, probably under $1,000,” said Varn, whose Tallahassee, FL, business serves customers throughout the state and nation. “We have a number of prepaid orders that total about $100,000, and we’re hopeful that they will not cancel. But the biggest immediate impact seems to be a drop in sales. Our orders coming in have dropped.”

The Finer Line serves a mostly corporate clientele, including international customers. As a result, Case said they started to feel the effects of COVID-19 “probably 3–4 weeks ago. We do some international trade shows for our clients, and we export products. We started to see trade shows being canceled. I was concerned. Now, within the last 2 weeks we’ve seen the impact domestically. We’ve seen it drop 14 percent overall. Others have been hit worse, and it will get worse.”

Case’s corporate clientele has helped shield him from some of the worst of the changes so far, but “everyone is being impacted. My heart goes out to some who were hit hard. It’s like the spigot just got turned off.”

Collier’s Arch Engraving in Fenton, MO, had experienced a few cancelations as of Friday as well. It emboldened Collier to ask a customer who was placing an order if they had a sense of whether the event might be canceled.

Going forward, Arch Engraving may ask more customers about the likelihood of event cancelation. (For instance, events that require travel, gather a large number of people, or have elderly participants are likely to be canceled.) The question will have to be posed carefully and handled different with customers who are new vs. long-time loyal clients.

“If it’s likely to be canceled, we may wait a bit longer than usual to place our orders,” Collier said. “We’d offer two options if it ends up being canceled.” One option has Arch Engraving store the customer’s materials for the rescheduled event, while the other has the materials be sent back to the supplier. Retailers looking at the second scenario should consider if there are fees associated with restocking.

Each business will have to decide how to handle the order cancellations that are coming. A policy can create a clear path on how to proceed in these situations, though one size won’t fit all. A clear path is welcome as everyone’s situation changes quickly. “The uncertainty is unnerving,” Varn said. “Florida State’s seasons all are over. We work a lot with Florida State. Their graduation is in April, and we don’t know how that’s going to turn out.”

DELAYED BUSY SEASON?

The awards and personalization industry has traditionally had a “busy season” in the spring, in which retailers and suppliers get a crushing number of orders in a short period. Busy season may require hiring extra help and working nights and weekends, but a good busy season can put a retailer in the black for the year.

When coronavirus threatened Chinese factories, retailers worried that suppliers wouldn’t be able to fulfill their orders for newly launched products during busy season. Big-name suppliers like Marco, PDU CAT, and JDS assured retailers their products were stocked in U.S. warehouses and that their Chinese factories would be back to work soon. That’s exactly what happened.

But that may not be enough to maintain the traditional busy season if the events that demand this glut of products are canceled or delayed until later in the year.

Many event organizers hope to reschedule their events, as decorated-apparel show Impressions has done by moving their March event to October. Others have simply had to cancel, as NBM did on the second day of their Texas show on Friday, March 13.

Even event organizers who intend to reschedule until coronavirus is under control may not be able to do so.

“When they start rescheduling, the facilities may not be available,” Collier said. “That could mean some events never happen, and they wait and decide to blow it off and do it the next year.”  

Events that are moved to after the pandemic will change the nature of the traditional busy season in the awards and personalization industry. “It may spread the revenue out,” Collier said. “It’ll be spread out and not in a busy season.”

Whether revenue from these delayed orders is lost or simply realized later in the year hinges on how soon this pandemic is contained.

“It depends on when we come back,” Collier said. “That’s key.”

REVENUE & STAFF

Awards and personalization retailers don’t get successful without being able to forecast, plan long-term, and change those plans on a dime as situations change. While everyone hopes that the virus is under control quickly, business owners aren’t gambling on it.

“We’re strategizing what to do,” Varn said of his business. “How are our reserves going to last? What are our options?”

Arch Engraving is doing the same strategizing. “We’re looking for ways to conserve cash across the board. With staff, we’re going to say, ‘For now, let’s tighten our belts,’” Collier said. Going forward, overtime hours will require prior approval, and Arch Engraving could delay for a year the planned addition of vision benefits for employees. “We’ll probably put that on the backburner this year,” he said.

At The Finer Line, Case and his marketing team started work last week on marketing plans for products that could be marketed to the new norm, with the public staying home. “We’re not going to be able to make up for all of this lost revenue, but I promise you if you do nothing, it will be worse,” he said.

At Awards4U, “our contingencies are to conserve cash,” Varn said. Public safety will be a priority, of course, as will paying vendors. Varn is hoping to avoid layoffs, should these effects prove lasting. “Employees at all levels, from myself on down, are taking pay cuts or reduction in hours. We’re looking at eliminating any unnecessary spending, from some paid subscriptions and online services to traveling—things like that. Anything that we do keep, we need to make sure we can afford it now and 6 months from now. We’re looking at anything we can cut without getting into our core operations.”

Varn likens this situation to the recession that hit the industry hard from 2007–2009 and had effects that lingered after. “We spread the pain around, so to speak, so we can keep everybody. Everybody suffers a little bit, and no one suffers a lot. The staff is a family, and you try to treat them as a family. We have limited resources so we have to endure this thing as best we can,” Varn said. “We got through the recession in 2009 with a 20% drop in sales by doing the same thing. We did not lay anyone off. We won’t be replacing anyone if they leave, at least not immediately.”

Case also wants to avoid layoffs. “I highly encourage people not to lay people off,” he said. “I never want to lay anyone off. The cost of hiring and training someone new is higher than waiting this out.”

Collier worked with his staff of 13 regarding how they should move forward. “I sent an internal message asking for feedback on what we should be doing for ourselves, our customers, just to keep the business healthy,” Collier said. Staff’s input will help inform the company’s actions and reactions.

“Our lunch-table discussion today was about ‘what if you get it yourself? Can you afford to be off for 2 weeks?’” Collier said. “That’s one thing we’re going to look at: How far can we go—and how far will we go—helping people financially if they have to be off for 2 weeks?”

(The Families First Coronavirus Response Act that was pending in Congress on Monday could make that discussion moot by providing 2 weeks of sick pay to American employees who contract COVID-19, but both its status and effects aren’t yet determined.) No matter what, business owners could face some ugly decisions. “There’s just a lot,” Varn said. “It’s not a lot of fun.”

NEW MESSAGING

At The Finer Line, the marketing staff changed gears to promote sales of branded products that will be of use during the pandemic.

“Think about what’s happening. People are staying home, so what can we do to market to that?” Case said.

He proceeded to rattle off literally dozens of products that can be personalized that would be useful despite social distancing efforts. They include items employees can use while working from home, like electronic accessories, relaxation products, and noise cancelling headphones, as well as items related to health and hygiene, like yoga mats and diffusers.

Because necessary traveling is likely to be done by car instead of airplane, Case’s staff will promote items useful for car travel, such as car charges, phone mounts, bluetooth speakers, tire gauges, water bottles, jumper cables, first-aid kits for travel, and coolers for food.

“These are all areas we can brand and decorate,” Case said. “We started on this plan last week, and we’re going to push it out this week.”

These products will be promoted to the corporations Case’s company serves. As corporations send employees to work for home, they can send branded items to make the situation easier, show that they still care, and send a message such as “be productive, stay fit, and stay sane.”

“Our best success is with marketing and HR. Corporations are getting in front of this, too. They might jump on this and say, ‘Yeah, we need a morale booster. Brand these items and send them out to employees.’”

Because people are staying home, “we’re drop-shipping orders directly to the end user,” Case said. “That comes at an expense to the corporations, but they can say, ‘We’re not having this event, but we’ll send this directly to you.’”

LOOKING FORWARD

Varn has good advice for other retailers based on his years of success in the industry, ones that are likely to build hope in a rapidly changing environment.

“This is a time to reach out to your customers and emphasize that you want to be their partner. So even if things are tight, encourage them to continue with recognition at some level. You have to establish a partnership—a relationship—as much as you can,” he said.

“Be conservative. Maintain your relationships because you want them to come back when the dollars get better. Work with them because they’re going to be in the same boat, so try to be compassionate with people who need to cut costs. With their restricted budgets, you might be able to help them.

“The people who owe you money, try to find a way to work with them. We have a lot of receivables out there that … we don’t know if they’re going to get paid, so we’re willing to work with them with time or in some cases reductions, whatever it’s going to take to get something out of nothing,” Varn said.

“The biggest thing is: keep lines of communication open with your staff, your suppliers, your customers, and if everyone knows what’s going on, they will understand. If you have this code of silence and suddenly you spring something on them, that’s just not going to go well. Communication is key. And that is top to bottom, the supply chain, the customer supply, the whole nine yards.”

Many of these lessons are ones Varn learned weathering the recession, and there’s no reason to think that the pandemic’s effect could be as sustained. Even after the devastation of the recession, the economy and industry improved.

“People shifted their buying habits to less expensive awards and in many cases they never went back. That was a little bit problematic,” Varn said. “It came back. The economy has been strong for the past several years. We were up in 2019 and over the past 2 months, March has been up incredibly.”

Case also is positive about weathering this challenge.

“It’s like with the stock market,” he said. “You can get excited about the stock market going lower if you’re constantly investing. ‘I’m buying those shares at a lower price point.’ Be optimistic.”

How can you invest in your business right now? In addition to pivoting products and messaging, Case suggests setting yourself up to be ready to go as the economy recovers after the pandemic.

“Use this time—if you’re slow, and it is going to slow down—to work on the things you’ve been putting off: reviewing pricing, counting inventory, cleaning up the production area, updating the showroom, checking your equipment, and creating or updating your employee handbook.

“These are thing a lot of companies don’t do but should. They say, ‘I never have time.’ Well, now you do.”

The event, sports, and school cancellations will hit bottom lines hard, but Case reiterates that they are necessary for the greater good. “Some people feel that this was a gross overreaction to the situation. I might have been in that camp for about 5 minutes, but if we do this now—we shut it down—we will come out the other side much quicker. This is all in our best interest. Do it hard. Turn it off for 2–3 weeks.”

During that time, you can get your business ready to recover lost revenue.

“This will end. We will get through this,” Case said. “On the other side, it would be nice to have this stuff done and be ready and raring to go.”

Additional reporting by Danielle Leber (dleber@AwardsPersonalization.org)

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