Retail Oriented

When Andrew Graham joined retail brand Marine Layer (asi/68730) in 2016, the San Francisco-based company worked in a direct-to-consumer sales channel, with no experience in the promo industry.

That is, until someone at Facebook reached out and wanted to order 8,000 Marine Layer T-shirts. “Facebook knew our brand had a following, but for us, trying to execute the order was difficult,” says Graham. “I joined Marine Layer at the tail end of that order, and it didn’t go entirely as planned. The printing was slightly off color, and communication with the client was challenging. At the time, no one at Marine Layer had customer-facing experience; we didn’t know how to be a vendor.”

As Graham delved into the Facebook order, he was intrigued by this new channel and in the process, connected with a Facebook contact who formerly worked for a promo distributor. “She educated me about the industry, and how we could fit into this market,” says Graham. “At the time, we didn’t see any premium brands in this space, and there wasn’t much of a sustainability push. However, we strongly believed there was an appetite for what we had.”

Marine Layer isn’t the only retail brand to make that realization. Once upon a time, notable brand names in promo were few and far between. Not so anymore. “Ten years ago, it seemed retail wasn’t interested in promo,” says Jenny McIntyre, EVP of sales for Franklin, TN-based Blink Marketing (asi/141424). “They associated the industry with ‘trinkets and trash.’ However, as the industry has become more sustainable and proven to be good brand stewards, we’re attracting increasing retail interest.”

A desire for retail brands in promo has really picked up speed in the last five years. “Demand for the hot retail brands is like a snowball going downhill, faster and faster, driven by an emphasis on sustainability as well as a desire by customers to thank or show appreciation using the best brands out there,” says Anthony Fullenkamp, inside sales manager for Links Unlimited (asi/67617), which carries over 140 retail brands.

The sentiment carried through last year, when industry growth slowed and buyers began to readjust their pandemic-era inclination for high-end goods (see “The Price is Still Right” sidebar). “Retail was gangbusters in 2023 for us,” says Sharon Schiffelhuber, director of national accounts for Beacon Premium Brands, the premium retail division of Top 40 supplier HPG Brands (asi/61966). Beacon offers nearly 30 high-end brands, including Citizen, Kate Spade and Stanley. “The demand is coming from whatever the influencers are doing or retail is pushing. The companies buying from us are across the board. They’re not just Fortune 500 companies. They have money to spend, but instead of buying 3-4 items throughout the year, they go big and perhaps spend double on a nice speaker or a dopp bag,” she says.

The sentiments are the same on the distributor side. “The universal principal among our customer base is they want quality products and they want retail brands they have heard of,” says Jeremy Parker, co-founder of Swag.com (asi/287954) and founder of Swag Space. “We often add products to our site based on customer requests.”

“A big change in recent years is that our trusted suppliers have built relationships with the brands, and now I can get 90% of the retail brands I want from my suppliers.” Stacy Garrett, Ideation (asi/229699)

“The end-user buyers are changing, as are the purchasing teams for our suppliers,” says Trevor Hyssong, director of business development for Blink Marketing. “Demographics are definitely a factor; age is a big driver, and so is consumer behavior as the end-user favors quality over quantity. Retail brands offer a social stance and social marketability, and can be a status symbol. Brands are not just selling for functionality, but also want to show they’re hip and know the TikTok generation.”

Stacy Garrett, VP of sales and marketing with Ideation (asi/229699), used to steer away from working with retail brands through traditional promo channels. “I had to go direct to retail for the products. I couldn’t get them from normal promo industry suppliers, so it was time consuming, and there were supply and decoration issues,” she says. “A big change in recent years is that our trusted suppliers have built relationships with the brands, and now I can get 90% of the retail brands I want from my suppliers.”

That shift has recalibrated the expectations of distributors, end-buyers and end-users. Retail items were once hard to find, or only available through incentive programs. “As our suppliers optimize relationships with retail brands,” says Hyssong, “the wall between incentive goods and promo goods is going away.”

Once the exception, retail brands in promo have quickly become the standard. Their presence is the product of hard work by established industry suppliers who forge relationships and manage all the variables. Here, we peek behind the curtain to show what it takes for a retail brand to come into promo and thrive.

Accelerating the Learning Curve

In a few cases, retail brands discover the promo industry and venture in on their own. Increasingly though, top suppliers are the essential go-between: educating and ultimately guiding retail brands to success within this space. Why? “Many retail brands are unfamiliar with the promotional products channel despite its substantial size and its potential to be a significant business opportunity for them,” says Saadia Bryant, vice president, marketing, product and design for Gemline (asi/56070).

Gemline has aggressively brought countless retail brands into promo, including Stonewall Kitchen, Govino, Be Home, Cleer and others in the past two years. “Our role is to help them understand how this channel can complement their existing direct-to-consumer, business-to-business and retail operations,” Bryant says. “Once the brand grasps the potential and synergy, convincing them becomes much easier. Importantly, our track record demonstrates our ability to assist both established and challenger brands in growing their businesses.”

“Education about working with retail brands falls on us,” says Shelley Renning, vice president of merchandising for SanMar (asi/84863), which offers a number of retail brands and partnered with Brooks Brothers at the beginning of 2023. Renning says it’s important to share with retail brands what the specific needs are in the promo channel (things like consistency in color and the need to hold inventory) as well as be good brand stewards for distributors. “Our sales team is well-versed in the vision and intent of our brands, and it’s important for us to communicate that to our distributors,” Renning says.

“In nearly every case, we reach out to brands to bring them into promo,” says Liz Haesler, chief merchandising officer for PCNA (asi/66887), which offers a number of top brands, including Herschel, Sony, JanSport and Stanley. The supplier conducts webinars and trains its sales team to learn the brand and its products and uphold their guidelines. “We have proven to many of our brand partners we’re a source of incremental revenue growth for them, which doesn’t cannibalize their existing business,” adds Haesler. “As our brand relationships strengthen, and volume growth is achieved, we’re able to offer our customers more depth and assortment in these brands.”

“Our role is to help retail brands understand how this channel can complement their existing operations. Once the brand grasps the potential and synergy, convincing them becomes much easier.”Saadia Bryant, Gemline (asi/56070)

The foundation for success starts with identifying the right retail brands to partner with. Vantage Apparel (asi/93390) looks for “well-known, trusted brands with a clear and positive brand identity, that meet the needs of our distributors and clients,” says Lauren Cocco, director of merchandising. Vantage partnered last year with Old Navy and Gap and offers other brands like Greg Norman and Polo Ralph Lauren.

Links Unlimited looks for the “top of market” products in each category among popular retail brands, says Fullenkamp. “We do our due diligence when considering bringing a brand in,” he says, “and ask the brand for their best sellers; then our brand team selects what we will stock.”

There are many other important considerations for bringing in a retail brand. They include:

1. Decoration. When evaluating a retail brand for Gemline’s portfolio, the company takes into account “foundational criteria like inventory availability and the product’s ability to be decorated,” says Bryant. “We conduct thorough decoration testing to guarantee the delivery of high-quality products and decoration to our customers.” Cocco of Vantage Apparel echoes those sentiments: “Customization capability is critical. We usually discuss logo placement when we partner with a brand. It’s part of the initial discussions.” J. America (asi/62977), which carries Spyder and Nautica, will move retail logos to secondary positions to allow the co-brand to take up prime decoration locations. Jaclyn Owdom, director of brands at J. America, notes the company might add inside zippers for ease of decoration on outerwear.

2. Price Point. Even though retail brands historically are more expensive, “it’s also important to offer a variety of price points within the retail brand category,” says Cocco. From a price perspective, the brand needs to be a fit both in the marketplace and within a company’s offering. At J. America, “With a premium niche brand like Spyder, cost must be considered, and for a mass brand like Nautica, the blanks are more affordable to everyone while still offering a high-quality item,” Owdom shares.

3. Sustainability & ESG. “Eco/sustainability is our number-one criteria, as well as a corporate responsibility commitment when selecting brands to partner with,” says PCNA’s Haesler. At Gemline, “we increasingly seek to partner with brands that align with our values and demonstrate a commitment to corporate social responsibility,” says Bryant. For example, Gemline collaborated with Out of the Ocean, known for using reclaimed ocean plastic in their products, and VSSL, which partners with Communitas, a not-for-profit organization that serves young people with special needs in assembling their goods.

4. Cooperation. Brands that offer product images, promotional materials and anything else that simplifies the selling process are also considered, Cocco notes. On a broader level, the brand needs to be open to expanding its product line and exploring new markets, says Cocco, noting some brands want to focus on their existing customer base.

All these considerations put the onus on suppliers to choose the “right” retail brands. The most comprehensive education and communication is all for naught if the brand doesn’t do its part. “We work side by side with our brands to ensure freshness and relevance as well as deep inventory levels,” says Haesler. “If the brand hasn’t updated variety in our markets, or isn’t able to ship to us consistently, they won’t be around very long.”

Hurdles to Success

While there are obvious benefits to selling retail brands into the corporate market, there are also many challenges and hurdles, such as product pricing, inventory availability, product selection and communication.

“Retail brands like to maintain the integrity of the brand, regardless of where and to who it’s sold,” says Owdom. “There may be markets that retail brands won’t want to have their marks co-branded with. Also, depending on the brand, fashion colors may not be as popular in the promo market as basic black, even though they add a nice pop of color at trade shows.”

The subject of inventory is always a question that needs to be addressed upfront when potentially partnering with a brand. “An obvious challenge for the promo industry is that retail brands need to be present at the retail level to be successful, so that market will always be highest priority to the brand,” says Garrett.

“Retail typically gets first allocations, and that will always be the case when the volume is as substantial as it is,” says Paul Hirsch, CEO of Hirsch (asi/61005), which offers nearly 60 brands.

Suppliers can do their part to massage those inventory concerns. “If a brand expects strong demand, they may tell us in the first couple of months of the new release that we can’t launch that product in the corporate market until the supply and demand equal out,” says Fullenkamp. “We won’t launch until we know we have inventory in hand.”

Industry suppliers work closely with the brand to forecast demand and inventory needs, to avoid overstocking or understocking, says Vantage Apparel’s Cocco: “It’s important to have an effective inventory management system in place to facilitate that balance.”

J. America circumvents the inventory issue as the exclusive licensed supplier of two retail brands to the promo industry – it designs, develops, manufactures and stocks all the styles it offers. “We don’t pull stock from the retail brand’s inventory,” Owdom explains, “thus what they offer has no bearing on supply.”

“Most distributors find selling retail brands is profitable, as the average dollar value of the order tends to be higher.”Shelley Renning, SanMar (asi/84863)

Retail brand pricing is also a major consideration. “Retail brands generally cost more, and in some cases could be double,” says Schiffelhuber. Beacon does offer good, better and best options within their brand portfolio to appeal to a variety of budgets. In some cases though, clients may opt for a more affordable non-brand item that looks similar to the brand name. “Margins on retail brands are lower than for promo,” she adds. “Most of the promo industry offers a ‘D’ discount on retail brands, and a ‘C’ discount on promo items so the distributor sales rep makes less on retail brand sales.”

It’s a different ball game when selling retail brands. Fullenkamp notes that “in the past year we’ve seen a new trend emerging where some distributors have revised sales comp plans that reflect the margins offered by retail brands, as a way to encourage their sales team to prioritize selling retail brands, even when they offer a lower percentage of margin compared to traditional promotional items.” He says distributors are removing or adjusting their threshold for paying out a percentage of the margin when retail goods are sold.

Still, despite the shrunken margins, “most distributors find selling retail brands is profitable, as the average dollar value of the order tends to be higher,” says SanMar’s Renning.

Adds Haesler: “Margins can be a deterrent if you only look at gross margin percent, but if you look at gross profit, it’s a very profitable business.”

Also, the price gulf isn’t as wide as it once was. In recent years, suppliers have had to increase prices due to supply chain issues, COVID, and shipping costs so the prices for the house brand products have risen too. “Sometimes the differential between the private label product and the retail brand is incremental, so it makes sense to go for the brand name,” says Hyssong.

Two additional challenges worth noting: Lead times for restocking can sometimes be lengthy, or at least longer than in-house options. “Many of our retail brands have over 12-month lead times,” SanMar CEO Jeremy Lott told ASI Media in November in an article about supplier overstock issues.

Also, sometimes distributors are competing with a brand that offers customization on its own site, or a big box store or Amazon that offers quick free delivery and no-questions-asked returns. “People are used to getting things quickly,” says Schiffelhuber. It’s important to recognize and convey to customers that these are all totally different channels. “Still, the end-user of a customized promotional product is willing to wait if they get exactly what they want,” she says.

Communication Is Critical

An initial partnership between a retail brand and an industry supplier is the wedding. Everything after that is the marriage – a relationship that requires work and needs attention to thrive. Regular communication with the retail brand is essential, but the level and frequency of that communication varies brand by brand. “Some want monthly calls with us, others want quarterly or bi-yearly… It depends on the resources on their end,” says Fullenkamp.

Vantage Apparel’s regular communication with its retail brand partners consists of weekly and monthly reporting that include sales, client feedback and data, what products are selling best, and style and color rankings. Product lines are reviewed annually or bi-annually, depending on the brand, notes Cocco.

PCNA has had many of its retail brand partners attend its national sales meeting, and provided the brands with time on and off stage, both for training purposes and relationship development. “Our brand partners have also appeared on our ‘Plugged In’ webinars for distributors,” says Haesler. “It helps to hear the stories of the brand from the brand itself, especially when it’s a founder. Their stories are memorable and meaningful.”

Beacon Premium Brands has an inside team that works exclusively on retail brands. “They know the brands inside and out, and have designated reps at each brand they communicate with and update regularly,” says Schiffelhuber.

Communication with the end-user is also important. “When we look at new product trends just hitting the market, we start a conversation with our clients ahead of time to make them aware that newer retail items are coming, but we also reinforce that we have core retail items available as well,” says Blink Marketing’s McIntyre.

Blink Marketing managing partner Carolina Junghans says it’s important to listen to what the client’s goals are before recommending any particular product, no matter how on trend it might be. “For example, is the end-user going to do a mass drop-ship around the country? Then maybe the super popular Stanley Quencher drinkware won’t be the right choice, as it’s heavy and will be expensive to ship. In that case we would recommend something smaller and lighter,” she points out.

All together, a strong connection between retail brands, suppliers and distributors creates a scenario where everyone wins. “The brands we have the most success with recognize our channel is valuable and they don’t undercut us,” says Garrett of Ideation. “My clients place meaningful orders the brands recognize and appreciate. I lean toward brands that have made a commitment to, and stayed in the industry.”