No one knew just how bad it was going to get.

As COVID-19 spread across Canada’s provinces, emails stopped coming in and phones went silent at the country’s promo firms. While there was hope that the situation wouldn’t deteriorate as badly as it already was in the U.S., that hope was quickly dashed. The heady days of 2019 were officially over, and the North American promo market was headed for a generation-defining downturn, the likes of which it had never experienced before.

Streets were eerily empty as the government mandated that residents stay home, aside from trips to the grocery store and dog walks. That reality has improved for much of the country only in recent weeks, meaning that for many Canadians, their world for the past 15 months was limited to the four walls of their homes.

“We thought it would be over quickly,” says Nikki Sgro, a Toronto-based business development representative for HPG Brands (asi/61966). “As summer 2020 went by, we realized how serious this was. It was scary and unnerving. There was so much differing information, and no one really knew about COVID or the long-term implications.”

As of this writing, Canada has had more than 1.4 million positive cases and lost over 26,000 people. And while the actual number remains to be seen, early estimates indicate that more than 200,000 businesses will shutter due to long-term closures.

While each province managed its lockdown measures slightly differently, all eyes have been fixed on Ontario, the most populous. People there have been under nearly continuous lockdown and stay-at-home orders since October. At about eight months, it’s among the longest shutdowns in the world.

Finally, the government there is beginning a cautious three-phase reopening plan, but the economic and psychological damage has been done. “The prevailing feeling right now is exhaustion,” says Paul Wieleba, owner of multi-line firm {WE} Promotional Advertising in London, ON. “The market has changed so much, and there’s still incredible unpredictability. We don’t know from one day to another what’s going to happen. It’s hard not to be cynical, but the reopening plan is an iota of certainty when early on we didn’t have that.”

Now, the resourceful and determined promo firms of Canada are picking up the pieces and charting the path ahead, one they expect to look quite different from years past.

Where Things Stand
To the west of the country, Albertans are seeing some bright spots as the province reopens. In recent weeks, they expected a nearly identical strategy to neighboring British Columbia, which announced a four-step plan in May; they’re currently in Step 2 and awaiting the beginning of Step 3, which won’t be before July 1 and requires at least 70% of adults to have one dose of the vaccine. Sam Singh, president and CEO of Full Line Specialties (asi/199688) in Surrey, BC, told ASI Media recently that, while he’s happy to be eating in restaurants again, promo there is still awaiting the return of more events for full recovery.

Meanwhile, the Albertan Open for Summer Plan will begin on July 1, said Premier Jason Kenney on June 19. It’s going to be much quicker than British Columbia’s.

“We’re excited,” says Russell Bird, owner of The Promo Addict (asi/302225) in Sherwood Park, AB, and a competitive barbecuer who opened a retail shop during the pandemic. “We immediately sent an e-blast to all of our customers telling them to get their orders in. We wanted them to know that, because of demand, it was going to be difficult to get what they want if they waited until the last minute.”

Unfortunately, the smaller clients – those that ordered maybe a couple of times a year – have yet to come back. “Top customers are making the gears turn right now,” says Bird. “Our biggest clients are oil and gas, education and healthcare. We’re still seeing staff engagement items, some direct mail to homes and business from sports teams. Uniforming and team wear are coming back, but not a lot of giveaways and swag yet.”

Events this year are still an unknown, says Bird. While the Calgary Stampede is happening, the annual K Days festival won’t be because of a lack of adequate preparation time. Bird found out directly from organizers since they were in talks to provide promo for it.

“They might be allowed to have the event, but is it logistically feasible?” says Bird. “It’s still very confusing.”

To the east of Alberta, in Saskatchewan, spirits are high too as the province confidently moves to full reopening. Mike Yager, president of Spotlight Sport & Corporate Wear (asi/332753) in Humboldt, says they anticipate that will happen by next month. Private get-togethers like weddings are beginning again, but large-scale public events that normally take place during the summer aren’t there yet.

“Cities across Canada weren’t open enough, and these organizers won’t just do an event in Saskatchewan and leave, so other provinces are holding us back,” says Yager. “People are especially excited to get back into stadiums, but we’re not sure yet how many they’ll allow. The Canadian Football League has a schedule for the fall, so that’s promising.”

In Quebec, promo demand is steadily returning as vaccination rates remain steady and cases drop to a nine-month low. Premier François Legault announced this week that the entire province will move into the green phase of its plan on June 28, which allows for larger gatherings. That’s great news for Stéphane Maurais, president of Alco Prevention Canada (asi/30166) in Laval, QC, who says demand is steadily returning, particularly for their breathalyzers.

“People are celebrating the reopenings,” he says. “I can see a lot of blue sky for our single-use breathalyzers moving forward, so we’re optimistic.”

But the future is still very uncertain in neighboring Ontario, the country’s most populous province and a virus hotspot. On June 11, it finally entered the first of a three-phase plan, which, among other restriction lifts, finally allowed nonessential retail to open its doors at 15% capacity and reopened restaurant patios (with a cap of four people to a table) after eight months of nearly consecutive lockdown orders. While the province has reached high enough vaccination rates to move into the third phase weeks ahead of schedule, officials have yet to commit to a timeline.

Distributors are beginning to quote again, anticipating growing demand in the coming months, but still, “people are confused and stressed,” says Wieleba. “There are still so many restrictions. It’s mentally taxing. We’ve had more time in lockdown than any other province. But we’re hopeful. We were able to pivot to PPE and now more traditional promo is coming back.”

Even with those bright spots, there are concerns about the future of many small firms across Canada and, subsequently, the suppliers and distributors that normally serve them. “This has been devastating for small businesses,” says Sgro. “So many are going under. There are ‘closed’ signs everywhere.”

Jamie McCabe, president of London, ON-based McCabe Promotional Advertising (asi/264901), says his team was able to “make up ground” over the past four months, and there’s a renewed push to really get to know their best clients to better serve them moving forward. But it’s going to take some time to get back to a semblance of normalcy.

“The industry is certainly hurting right now,” he says. “May and June have been busy, but I’ve been telling my team to try to capitalize on the good part of the year that’s coming up in the fall. Programs and ship-to-home are booming right now, though we did just have someone ask about shipping 900 boxes to one location. We can definitely do that.”

It’s especially hard for the sales and marketing professionals that populate promo, says Shaun Lichtenberger, president of Brand Blvd (asi/145124) in St Catharines, ON, and a past Counselor Best Place to Work. “There are so many personalities in this industry that just aren’t meant to be caged,” he says. “They couldn’t do anything for so long, and it wears on people.”

Fortunately, the recent reopening measures in Ontario have allowed Brand Blvd to start welcoming people back to the office, and they’re eager to return. In fact, the company was about to open a brand-new building just as COVID hit last year, so returning employees are finally able to enjoy their new digs. “They want to see people and hear voices, and we’re excited to get back,” says Lichtenberger. “We’re very close as a team and we want to see each other.”

Lingering Challenges to Recovery
As the Canadian and U.S. promo markets try to get back to business, supply chain disruption – marked by sky-high raw material and container costs, disappearing inventory, lengthy delivery delays and staff shortages – continues to put a damper on recovery.

Fortunately, domestic manufacturer Redwood Classics Apparel (asi/81627) in Toronto maintains deep inventory of raw materials and components, says Kathy Cheng, founder and president. With promo demand drying up quickly last spring, she and her team were able to create premium face masks when supplies were critically low across the country. That led to the #MadeForGood campaign, which distributed coverings to needy populations through a giveback component.

“We were able to donate to our country and the people who needed protection the most,” says Cheng.

A year later, Cheng says they’re still contending with arrival delays of raw materials that her team needs to produce apparel. If the component comes from the U.S., it’s staffing shortages that are slowing things. Overseas orders come with more logistics issues. “Other people’s backlog is aggregated to us,” she says. “The risk is lower for us, but we still need to replenish the ingredients and we’re working through that now.”

Meanwhile, Sgro and her team are meeting returning demand for more traditional promo as best they can, in particular cooler bags for employees returning to the office as well as outdoor event attendees, who also want yoga mats, blankets, camping chairs and drinkware. Demand for personalization is high right now as a way to avoid accidental sharing. She says she also expects sanitizer to remain popular, especially for events (which make up 80% of her company’s business). But the supply chain has put a damper on full recovery.

“It’s difficult to fill the larger orders,” she says. “It’s like going back in time, especially with programs. We used to tell them to order only what they needed and hold no stock. Now, they better order extra and hold onto it because we’re not sure what inventory will be available.”

The return of the usual promo items is encouraging, but the psychological effects of long-term shutdowns remain. “We’ve been excited to open up and then there’s another lockdown, so we’re skittish and trigger-shy,” says Sgro. “Distributors are constantly quoting right now, and there’s more competition than ever.”

Although Saskatchewan is making strides in its reopening process and many clients are ready to start purchasing again, Yager says it’s been challenging to expand their customer pool. While they were looking forward to recovery in the second or third quarter, it’s been moved back to the third or fourth, he says.

“We’re going to customers who normally buy from us, not brand-new prospects, and they didn’t buy last summer so they still have stuff in boxes that they haven’t used yet,” he says. “So, they’re not ready to buy. Those that are purchasing have much smaller order sizes than normal.”

Yager says he did receive a few small orders recently for regional teams’ sports jerseys, an improvement on 2020 when he had exactly zero. But supply chain delays are a lingering concern.

“It’s important to keep the dialogue going with suppliers and customers and always offer them alternatives,” says Yager. “One of our clients waited six months for sweatpants last year. Situations like the Suez Canal blockage help us explain to customers what’s going on.”

Meanwhile, the ongoing Canada-U.S. border closure to nonessential travel (now until July 21) has been a source of tension for those who rely on cross-border travel and commerce. Although the Canadian government says it will ease some quarantine requirements in the coming weeks, long-term lack of business in tourist-heavy areas like St. Catharines – about 20 minutes west of Niagara Falls – has been challenging to recovery.

“U.S. tourism here is nonexistent,” says Lichtenberger. “Officials are going to delay the border reopening as long as they can, so we’re thinking by the end of July-ish. Families that live across the border haven’t seen each other since they closed it last March. But we’re very aggressive on vaccinations here, so we’re looking forward to a strong end of summer into Q4.”

Looking Ahead
In the short term, Yager says he hopes supply chain issues will start to resolve themselves as the world strikes its post-COVID balance, barring any new strains or spikes in cases. “It’s still a dire situation in promo,” he says. “Everyone’s just trying to grab as many clients and orders as they can. We’re not at 2019 numbers yet, and government subsidies are still keeping a lot of companies alive. But normalcy feels more real here now.”

Meanwhile, in Ontario, movement toward Step 2 (based on vaccination rates) continues, but the next phase won’t begin before July 2. Sgro fears there’s a chance they could see case counts increase and shutdowns begin again.

This is the “hang tight” year, says Lichtenberger, as the province moves slowly and cautiously toward reopening. “I’m worried about smaller companies in general,” he says. “How long can they hold on? Government subsidies are beginning to wane. We’re seeing who survived and who didn’t. But being able to sell to U.S. customers does help our mental state and reminds us we’re not far behind.”

Also to be considered is the long-term impact on the industry. Cheng is confident that current supply chain upheaval will lead to more demand for domestically made items, which aligns with her company’s brand and mission.

“Younger consumers now want to know where a product came from, its quality and the impact of a brand,” she says. “What we represent – supporting local and diversity – is so relevant now after the year we’ve had. It’s sustainability, which is people, planet and profit. Companies will have to look at more sustainable business models. We’ll have to bring value, not sell on price. We’re elevating the industry and there are real positives to that.”

Firms will be forced to add value if they weren’t already, says Wieleba. “We’ll see more strategic partnerships between suppliers and more M&A as distributors consolidate with other distributors and marketing agencies,” he adds. “This past year really showed that we’re more than ‘swag slingers.’ We brought so much value. There’s more awareness now of our capabilities, like sourcing PPE. Competition will grow.”

If it wasn’t clear before that just selling product based on price would soon go away, COVID, and the competitiveness it spawned, made that more obvious than ever.

“The days of the order-taker are gone,” says McCabe. “The days of the transactional sales rep are gone. We need to be proactive partners. Those that take the time to build deep relationships with clients will get through this more quickly.”

It’s a new era in promo that’s been a long time in coming, but that COVID accelerated forward, says Cheng. “Embrace the reset,” she says. “It’s debilitating to those who are resistant or don’t have the appetite to evolve. But the world is evolving whether we like it or not.”