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Back to the Future

New year, new opportunities. And, as always, no one knows for sure what’s going to happen. Welcome to the modern world.

Back to the Future

Insights Again Turns to Experts to Forecast What Awards and Personalization Association Members Should Expect in the Upcoming Year, a Difficult Proposition Amid the Pandemic

By Brian Stanley

(Originally published in the January/February 2022 issue of Insights.)

New year, new opportunities. And, as always, no one knows for sure what’s going to happen. Welcome to the modern world.

Insights talked to four experts in an attempt to find out more about what to expect in 2022. We’re sharing advice from an economic analyst, a small-business mentor, an industry supplier with a focus on forecasting, and a personalization retailer who is also a business coach.

They’re sharing their insights to help you navigate this year more easily so that you can be ready to solve anticipated challenges and take advantage of upcoming opportunities.

THE BIG-PICTURE ECONOMY

 

Chris Kuehl, managing director of Armada Corporate Intelligence, expects this year to be somewhat less volatile than the previous two. “2020 was an unprecedented recession—not unprecedented in the length or depth, but in the cause. As a result, 2021 had explosive growth as everyone tried to make up for lost time,” he explained.

Generally, the economy affects most businesses in the same way— whether you have 1,000 employees or one; it’s the scale that varies. Kuehl expects the high growth rates of the overall economy will continue through the early part of 2022 and wane as the year continues and interest rates rise.

“One of the biggest effects of the pandemic was that routine problems became much more evident, like labor and material shortages” Kuehl said. “Even without supply chain issues, in the past, America has been able to outsource inflation, but as production moves back to the United States, higher prices result.”

Kuehl’s analysis shows maritime shipping is getting better, which is the start of unclogging the supply chain, but there remains a bottleneck at ports as goods are transferred to trucks. But that also will improve in early 2022.

“Producers are still waiting for sustained demand. ‘We think we have everything we need on a ship right now’ so more orders now might leave them oversupplied as more shows up,” Kuehl explained. “Companies have already had to advance order for more than they used to.”

The pandemic also saw the labor force reduced as workers in the Baby Boom generation accelerated their retirement plans and as parents, mostly women, were forced to stay home with their children and are unlikely to return, Kuehl said.

“Smart businesses are understanding the labor situation is an ongoing challenge,” Kuehl said. “There aren’t just rehires and filling positions of those who aren’t coming back, but you have to pay more for retention of employees— another challenge of controlling inflation,” Kuehl said.

But could be an advantage for small businesses over industry leaders.

“Small companies generally have a better relationship with their employees. Even when they can’t give substantial salary increases, they’re going to be more sensitive to (someone’s) family situation or schedule and that can go a long way in retention,” Kuehl said.

“I think by the middle of this year, we’ll be in a reset when (interest) rates go up, everyone will take stock and that’s when the economy will be the most settled it has been in a while,” Kuehl said. “We’ve gotten the wild cards for 2 years in a row that have driven people nuts.”

Chris Kuehl is a managing director and cofounder of Armada Corporate Intelligence. Begun as a competitive intelligence firm, grounded in the discipline of gathering, analyzing, and disseminating intelligence, Armada now offers strategic advice to business executives, merging our fundamental roots in corporate intelligence gathering, economic forecasting, and strategy development.

Kuehl is Armada’s economic analyst, chief economist for the National Association for Credit Management, and the economic analyst for the Fabricators and Manufacturers Association. He is the chief editor for the Business Intelligence Brief, distributed all over the world by business organizations and one of the primary writers for Armada’s Black Owl Report. He makes approximately 100 presentations each year to business and industry associations in the US and overseas.

Learn more about Armada at armada-intel.com and its publications at armada-intel.com/paypal.

THE PERSONALIZATION INDUSTRY

 

You can’t forecast the year for the personalization industry without also looking at larger external factors, like electrical issues in China and the cost of child care, according to Scott Sletten, CEO of JDS Industries.

Sletten acknowledges the last two years have shown how quickly situations can change expectations in two months, but the more knowledge any business owner utilizes, the better their forecasting ability. Sletten spends time each day reading, researching, and monitoring national and international news sources. To get more information, he reaches out to contacts and vendors who are on the ground close to situations he’s monitoring to find out how accurate media reports are.

“The more you know, the more you can have some idea what’s going to happen—or what you think is going to happen,” Sletten said. “I try to triangulate from multiple news sources to figure out what’s really happening and what’s current.”

As a result, Sletten’s forecasting tends to be eerily accurate, something that has been appreciated by JDS’s customers and Awards and Personalization Association member companies with whom these expectations are shared.

Still, Sletten warns that factors that go into these predictions are changing more quickly than Insights can go to print. In fact, between our interview and the writing of this piece, Sletten’s omicron-variant predictions had already happened.

Today’s personalization industry has most retailers buying the products they need from suppliers when their customers order them rather than stocking up for a season, as was done years ago. This model has suppliers predicting product need, manufacturing based on those predictions and storing the products in warehouses near their customers for quick shipping. Needless to say, this model depends on both sales data accurately informing suppliers’ predictions for need and on the supply chain functioning at optimum levels. Neither situation is ideal right now.

The sales data suppliers depend on to ensure they have the right mix of products that retailers need has been skewed by pandemic-altered demand and supply-chain issues. That will affect how suppliers buy and, in turn, what retailers can get for their customers in future years.

“If sales are good on something now, it might not be that the item was really popular. Maybe that’s what is in stock right now, when the inventory is king. Whatever you’ve got, people are having to be very flexible right now,” he said. “Things that did sell well this year because we could get them, does that mean they’re going to sell well next year if the products they really wanted are available again—or will sales really drop back? Conversely, all these things we couldn’t sell, but would have if we had them, how much more do we order?”

“It’s what I call noise in the system. It’s not as simple as ‘I sold 8,000 this year, so next year I’m probably going to need 9,000.’ It’s not simple this year because there’s so many dynamics you have to look at,” he explained.

Global supply chain issues remain a major concern, too, prompting JDS to start a quarterly supply-chain update newsletter for customers last year with personal letters and analyses from Sletten. His transparency and honesty take some of the sting out of unavoidable inventory shortages and shipping delays affecting everyone.

Going domestic isn’t a curative to eliminate overseas shipping, port, and transportation delays. About 40% of JDS’s offerings are domestically manufactured, but those factories are struggling to deliver the quantities JDS. Two large factors in this challenge are supply-chain issues related to raw materials and the U.S. labor shortage.

There isn’t one group to “blame” for the labor shortage. When government relief and unemployment programs ended in many states, there wasn’t “a rush of 2 or 3 million people coming back to the workforce,” he said, dispelling the idea that the shortage is due to people who don’t want to work.

“A lot of people have chosen to retire early, and there are people still at home due to safety reasons. They don’t feel comfortable going to the office yet,” he said. “There are people who are very concerned about childcare, not just from a safety perspective, but from a cost perspective.”

He also mentioned the stock market’s performance, which has allowed some older workers to feel that they can afford to take a break until the employment and the workplace are less unpredictable.

How do you solve the labor shortage when the “missing” employees are disparate groups with various reasons not to be employed right now? Some of them probably won’t return, Sletten predicts.

“I think there are some structural demographic changes that have happened that probably aren’t going to change back in many cases,” Sletten said.

Some domestic vendors have rebounded well while others can’t catch up with demand, due to the labor shortage and increased demand to offset overseas supply interruptions.

“When big vendors like JDS want more product, these manufacturers just don’t see how they’re ever going to dig out of this situation,” he said.

Despite some signs of improvement, the supply chain hasn’t recovered to the point that people hoped it would.

“Costs are still sky high for shipping container rates. It’s just horrible,” Sletten said in December. “The earliest you might see some reduction in rates is going to be late spring to early summer, and that’s only if demand decreases and the amount of shipping decreases somehow. Keep in mind how much pent-up need and demand for inventory there is right now, because everybody is running out of stuff.”

With suppliers still paying top dollar to get product to the U.S., retailers should still expect to have to pay more for products than they have in the past.

“I’m not anticipating a lot of things to come down next year,” Sletten said. He shares retailers’ disappointment in this forecast and noted that it’s not what he’d hoped for either. “I think a lot of us thought things would be normalizing by now.”

Scott Sletten is president and CEO of JDS Industries, one of the largest suppliers in the personalization industry. Sletten’s parents, Darwin and Jane, started JDS as a retail operation when Sletten was a child. They switched from retailing to wholesaling and grew the business, with Sletten continuing to increase JDS’s size and product range when he took over. Today, JDS Industries distributes worldwide from more than 1.3 million square feet in 14 warehouses across the U.S. Learn more at jdsindustries.com.

THE SMALL-BUSINESS OUTLOOK

 

Lorraine Wardy, SCORE Chapter Chair for Orange County, CA, is a certified mentor with SCORE, a nonprofit that helps entrepreneurs start small businesses, grow their companies, and achieve their goals. In 2022, as always, Wardy will be helping business owners in the U.S., though they are again dealing with a potentially unprecedented year.

Wardy said one of the most important things a small-business entrepreneur should consistently examine, especially now, is what customers are buying or what services are being utilized.

“While many things have changed, some have not. Small entrepreneurs are providers of goods and services. That hasn’t changed. But what has changed is the way we deliver those goods and services to our customers. Once you discover the delivery method your customers and clients prefer, go after it aggressively,” Wardy said. “It’s important for small business owners to think about new ideas that ultimately make it easier to purchase and use your products and services. Being innovative is essential. There are normal times and not so normal.”

Whatever this year has in store, Wardy believes a steadily aggressive business model will be the best approach, with the focus always being sales and revenue. She suggests utilizing different gimmicks and unique ways to get client or customer attention.

“Some businesses are overstocked, some are merchandise deficient, but either way, making the sale is the most important,” she said. She suggested gimmicks like “offering a limited promotion to inspire a sense of urgency, club-like subscriptions where it merits, auto shipping, or free shipping.”

If a business owner hasn’t already done so, 2022 is the time to grow your physical and virtual marketplace.

“I have seen brick and mortar operations that were not online and finally took the plunge, and their business tripled overnight,” Wardy said, “(and) online stores that tried brick and mortar and pop-ups. They found that sometimes being in front of the customers in-person activated their online and physical locations as well.”

Lorraine Wardy is a certified mentor with SCORE, the nation’s largest network of volunteer, expert business mentors. As the SCORE Chapter Chair for Orange County, CA, this experienced businesswoman is available to help small-business owners with business plans and startup assistance; international trade; marketing, public relations, and sales, operations; product development and manufacturing; and strategy and planning.

SCORE is dedicated to helping small businesses get off the ground, grow, and achieve their goals. Since 1964, the nonprofit has provided education and mentorship to more than 11 million entrepreneurs through the generous support of the U.S. Small Business Administration (SBA) and the selfless contributions of more than 10,000 dedicated volunteers. Learn more at SCORE.org.

A RETAILER’S VIEW

 

The supply-chain issues are definitely being felt down the line.

“We have the same frustrations with buying materials as everyone in this industry,” said Bill Collier, owner of Arch Engraving. “It seems stuck where it is, with little to no improvement, but happily it doesn’t seem to be getting worse. Of course, it all could change by next week.”

Collier has changed some of Arch Engraving’s processes to try to compensate. “We’ve started stocking more of our most-needed materials and recommending substitutes to our customers,” he said.

Still, Collier expects Arch will grow sales in 2022. After writing off 2020, Arch finished 2021 just slightly below 2019 sales—an enviable position for many companies.

In addition to improving the business’s numbers, Collier is using this time to position Arch Engraving for growth: literally and figuratively.

“We feel good about our pace of recovery. We’re adding space to our main production facility. We bought it in 2015 when we acquired a competitor’s business and building. Our production space is jammed, and we’ll double the space it currently occupies.” Collier said. “Also, we purchased a CNC router and look forward to using it to add to our production capabilities in 2022.”

Despite the uncertainty of the world, Collier’s goals for 2022 are relevant with or without a pandemic: focus on providing great service and quick turnaround times.

“That’s not a change from prior years and has nothing to do with Covid or the supply chain issues,” he said.

Entrepreneur Bill Collier is a personalization retailer and a business coach, consultant, speaker, and author. He purchased Arch Engraving in 2003 and sold his first company, BC Group International, to focus on the new business. He became sole owner in 2010 and put the company in growth mode, acquiring Stiern Laser in 2015 and Major Promo Group in 2017.

He now operates Arch Engraving out of two retail showrooms, serving a growing customer base that includes large corporations, small businesses, nonprofits, schools, hospitals, sports teams, and individuals. Arch celebrated its 50th anniversary in 2018. Arch Engraving was named Veteran-Owned Small Business of the Year for 2019 by the Small Business Administration’s Eastern Missouri district.

Collier is the St. Louis-area coach for The Great Game of Business® (GGOB) Commonly known as “open-book management,” GGOB is based in Springfield, MO, and is known and practiced worldwide.

Learn from Collier at the International Awards & Personalization Expo in Las Vegas, NV. He will present “Develop Your Business Gameplan” at 4:30 pm Tuesday, February 22, at the expo. The session is a fast-moving overview of your business’s financial and operational numbers, with loads of tips to help you and your team move them in the right direction. Awards and Personalization Association members can attend this session for free by registering for the expo at AwardsPersonalization.org/TradeShow.

To learn more about Arch Engraving, visit archengraving.com, and go to http://www.greatgame.com/st to learn more about Collier’s business coaching.

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