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Strategy

How to Find Sales Success in the Retail Market

This rollercoaster of a market can offer plenty of buying opportunities.

Attention shoppers: The retail industry is sending mixed signals. While the industry fends off threats like bankruptcy filings, store closings and increasing online competition, the National Retail Federation (NRF) forecasts that retail sales in 2019 will grow 3.8%-4.4% to over $3.8 trillion, on top of a better than expected gain of 4.6% in 2018.

“We believe the underlying state of the economy is sound,” NRF President and CEO Matthew Shay stated in the February report, addressing the retail industry’s growth. “More people are working, they’re making more money, their taxes are lower and their confidence remains high.”

Five-Year Snapshot: The cyclical retail market suffered a sharp decline last year, walking back the gains it experienced the year prior when it was in the top 10.

That sentiment hasn’t translated fully to the promotional products industry. After nearly doubling its market share in 2017, the retail market for promo products fell by 64% in 2018. However, the need for promotional items certainly remains, and distributors can succeed by identifying the right clients in this topsy-turvy market. “We’ve seen substantial gains with our online and traditional retail clients, and believe that trend will continue, as both channels continue to fight for relevance with consumers,” says Terry McGuire, senior VP of marketing and vendor relations at HALO Branded Solutions (asi/356000).

HALO has seen a jump in client appreciation gifts among its retail clients. “It makes sense – providing a useful and memorable gift versus discounted pricing increases customer loyalty and allows a retailer to maintain price and profit margin integrity,” says McGuire.

“We hear all the time that retail is getting killed by Amazon, but the Amazon model doesn’t always work,” says Mark McCormack, owner of Identity Marketing Group (asi/229993). “We feel product drives experience, so if you provide a memorable experience you can convert a customer from a one-time sale to a lasting relationship.”

Top Tip If you’re working with a brand new retailer, take payment first, cautions Mark McCormack of Identity Marketing Group: “Don’t extend too much credit, as some of these retailers can move on quickly.”

Identity Marketing’s sales to the retail sector are up 15%-20% in the past 24 months, he says. “One area of strength is sales of unique logoed products for our retail clients to sell to their own customers,” says McCormack. The company also does a lot of incentive promos, such as providing a gift when someone signs up for a store card. “Retail clients are selecting nicer incentive gifts,” says McCormack. “They’re opting to buy fewer, but higher quality and more memorable gifts.”

In the past two years, retail has become a bigger part of Harper + Scott’s (asi/220052) mix of business, according to co-founder and President Jon Alagem. “As the retail sector has been declining, retailers are doing anything they can to get people in the door,” he notes. “That’s where we come into play. We help the customers understand their consumer and then design and produce a giveaway or gift-with-purchase to attract those customers.”

The distributor approaches design with a retail eye. “We design to a more elevated look, while still keeping pricing low for our client,” says Alagem. “As a result, we’ve noticed that our clients aren’t only giving away the products we produce, but also selling them at retail.”

Trendy tech products and retail-inspired items, like these wireless headphones (310), will always be a hit with consumers. Hirsch Gift (asi/61005); hirschgift.com