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News March 04, 2020

Promo Industry Preps for US Coronavirus Outbreak

Firms brace for the health threat and a feared economic downturn as reduced travel, trade show cancellations and disease spread heighten concern.

By  Christopher Ruvo

As confirmed cases of COVID-19 proliferate in the United States and countries around the world, domestic promotional products companies are preparing to bulwark their businesses against the rising health threat and bracing for possible fallout from feared erosion of economic activity.

Coronavirus Outbreak

At Nashville, TN-based distributor On Promos powered by Proforma (asi/300094), Kimble Bosworth and her team have established a contingency plan to keep the business running in the event that a virus-related emergency is declared. “We have also reached out to customers to understand how their businesses will be affected and to determine whether we need to make operational adjustments to accommodate them,” Bosworth told Counselor.

Don't Miss: Counselor’s comprehensive coverage of the coronavirus’ impact on the promotional products industry. Head here for more articles, videos and podcasts.

Bosworth has equipped employees with computers to work remotely. On Promos will enable its team members to conduct remote/virtual visits with clients, if isolation and travel restrictions are necessary. “We have plenty of supplies at our office and homes to take necessary precautions recommended by the Centers For Disease Control: antibacterial wipes, hand sanitizers and soap/supplies for frequent hand washing,” Bosworth said. “In a worst-case scenario, our company benefits package includes provisions for taking care of employees during short-term disability leave to get more serious care for any illnesses.”

Customer-facing preparation includes “limiting imports to customers, if they request that,” Bosworth related to Counselor. “We are including multiple options in all product searches to prepare for potential inventory issues and keeping those items stored in our project management software in case we need to access them further along in the sales process.”

Elsewhere, Top 40 distributor PromoShop (asi/300446) has long had a business disruption plan in place. The Los Angeles-based firm is ready to implement it.

“The operations today are scalable to accommodate work from home easily,” Kate Alavez, PromoShop’s chief operating officer, told Counselor. “All phones are VoIP and can transfer easily to offsite locations. Our teams have access to log in securely from home environments to replicate the feeling of being in the office. In addition, we have a team of specific onsite responders to bring us down to a skeleton staff in the office to run core operations. These members would be the people who would receive mail/checks, send out necessary shipments, maintain IT needs and keep an in-office presence.”

Preparations are also underway at Ohio-based Top 40 distributor Kaeser & Blair (asi/238600). “We have had a complete ‘scrub down’ to disinfect the entire office complex, including all fabric cubes,” Gregg Emmer, vice president/chief marketing officer, told Counselor. “We have hand sanitizer stations and disinfectant wipes available for daily touchup.”

Emmer noted that K&B already has employees that work remotely. The practice could be extended if coronavirus containment measures necessitate doing so. “Our technology infrastructure makes it possible for most employees to work from home if necessary,” he told Counselor.

Beyond prepping internally, suppliers and distributors are instituting practices to reduce chances of employees being exposed to novel coronavirus through travel. “We have suspended all work-related employee travel, including a trip planned for three employees to visit clients this week,” Jamie Stone, president of Seattle-based distributor Gifts By Design (asi/205947), told Counselor. Stone added: “Our employees have remote login capabilities and access to all of their files, so we can all work from home if we need to. However, that would affect our ability to fulfill our clients’ online company store orders.”

Similarly, Seattle-based Top 40 supplier iClick (asi/62124) is reducing all domestic travel for its sales team. “We’re limiting travel to only the events that we deem to have the highest ROI and are most important for customers,” President Jeff Hall told Counselor. “The national reps will be encouraged to drive to regional events, rather than take public transportation,” he continued. “All travelers will have the opportunity to decline travel even to an event that we decide to attend.”

iClick is also making concerted daily efforts to keep equipment and surfaces disinfected, and requiring anyone with cold or flu symptoms to work from home until they are symptom-free for 24 hours. “We are set up so that all of our administrative staff – sales, customer service, art, accounting – can work from home,” Hall told Counselor. “The difficulty will be with our production team as they have to be onsite in order for us to process and ship orders. We are currently working on a plan of action for our production team.”

Concerns for the U.S. Economy and Promo Sales
Worries that novel coronavirus could drag down economic activity and even trigger a recession in the U.S. have intensified over the last week, a point evidenced by stock market upheaval and a federal interest rate cut.

The concern has corresponded to a belief among health officials and political leaders that COVID-19 cases could start popping up throughout the U.S. That, combined with the growing number of cases abroad, has led to acknowledgement that “social distancing” practices could be used in the U.S. Such practices entail people staying home, not patronizing restaurants and retailers, not attending entertainment events, and canceling plans to travel, all of which can drain gross domestic product in an economy that’s driven by consumer spending.

It’s already happening in some places. NBC reported that foot traffic has been notably light in Seattle, where one local described the usually vibrant city as a “ghost town.” The reality of canceled events and less shoppers is hurting business locally, at least for some retailers, NBC reported. As of this writing, all nine COVID-19 deaths in the U.S. had occurred in Seattle’s state of Washington.

“The industry and the U.S. economy are in for a few tough months ahead while this plays out,” said Stone, whose Seattle-based Gift By Designs is experiencing headwinds. “We’ve already had two large employee incentive programs – which had been planned and booked for months – canceled or postponed due to fear of the coronavirus.”

Bosworth’s On Promos hasn’t yet felt strong negative business effects – and has even experienced an uptick in purchases of hand sanitizer for spring and summer events, as have other industry firms. Even so, she noted that “there’s been a drop in requests for imported products, which will definitely have an impact on the industry. If travel is restricted, and more and more events begin canceling, that will have a more serious impact.”

To Bosworth’s point, the list of trade show and conference cancellations is growing. And just like some promo firms, major companies outside the industry are announcing travel restrictions, Salesforce, for instance, recently suspended all nonessential travel for its nearly 50,000 employees.

As for events and trade shows, organizers of the largest North American housewares trade show, the Inspired Home Show 2020, canceled the event, which had been planned for March 14 to 17 in Chicago. Supposed to be held in California, Natural Products Expo West was postponed. Expected to bring some 100,000 people to Barcelona, Spain, the large technology industry conference Mobile World Congress was canceled. Facebook, Google, Microsoft and Adobe also announced plans to cancel, alter or withdraw from various upcoming conferences.

“We anticipate that some industry tradeshows along with large corporate meetings will be canceled or significantly reduced in size, both from a concern about the virus and the economy itself,” Hall told Counselor. “An associated reduction in gifts and giveaways will likely impact our industry.”

Still, industry executives cautioned against getting lost down a rabbit hole of fear. They said it’s important to hope for the best, plan for the worst and continue to execute on a day-to-day basis, especially as economic impacts haven’t yet been major for many distributors and their clients. “We have not seen any reluctance on the client side to continue to do or open new projects,” Emmer told Counselor. Even if there is a decline for a time, “the reality is that most so-called ‘lost income’ is simply delayed transactions. When this ‘season’ is over and new cases of coronavirus go down, things will get back to where they were and likely surpass that point quickly. This has been the history of economic cycles.”

Alavez, of PromoShop, believes the next two weeks will be pivotal in establishing how the COVID-19 outbreak will unfold for promo and the U.S. economy in the months ahead. “We are seeing increased COVID-19 testing standards roll out so inevitably awareness of additional cases will crescendo over the next several days,” Alavez said. “The severity of the cases and the pace of the disease spread will identify where we are with regard to the state of business over the next few weeks. For now, we expect business as usual while keeping a cautious eye on the economy and the global impact of this virus.”

COVID-19 originated in Wuhan, a city of 11 million people in China, around the turn of the year. The virus has since spread to every continent except for Antarctica. While infection rates are declining in China, the number of confirmed new cases is accelerating around the world, including the U.S. As of this writing, novel coronavirus has killed about 3,200 people. Most of the deaths have been in China. Worldwide, there were nearly 93,000 cases. The cases are spread across more than 70 countries and territories.