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Strategy

15 Predictions For 2017

Forecasting the future of everything from regulations to ad spending to technology.

It’s that time again. There’s a chill in the air, holiday decorations are about to go up and I’m sitting down to make predictions for the next 12 months. Full disclosure: some of my picks are backed by stats, others by common sense, but a few come from a total gut feeling.

1. No recession just yet. Cyclically speaking, the U.S. is overdue for an economic downturn, but I don’t see it happening in 2017. The Fed’s easing policies aren’t going anywhere for a while and inflation is tame for now. Barring a major negative world event, the U.S. economy will grow by about 2.5% next year. It’s 2018 that people should worry about.

2. A wave of deregulation. President-elect Donald Trump will chip away at financial regulations that became a hallmark of Obama’s two terms. Even if Dodd-Frank survives, many of its excessive provisions will not. Also, expect the corporate tax rate to dive – as it should.

3. The minimum wage shoots up. Several states passed Election Day measures to boost worker pay, and a large-scale federal jump sure seems likely. Polls show about 70% of Americans support a hike, and politicians are falling in line behind that sentiment. I understand why businesses hate the idea of a $15/hour minimum wage, but that’s where the nation is headed.

4. Gen Z rises. As soon as we all start to understand what millennials want, there’s a new customer in town: the under-16 crowd. Marketers, especially at retail, are already working to figure out how to appeal to this tech-obsessed group that NFL CMO Dawn Hudson calls “the five-screen generation.” By 2020, Gen Z will make up 40% of the U.S. workforce, giving them increased buying power.

5. Ad spending goes flat. Coming off a record year driven by digital, there’s little chance for an increase. Remember, 2016 spending was pushed higher by the presidential election and the Olympics. Next year will be markedly different, and brands will turn cautious in Q3 and Q4 as economists warn of a 2018 downturn.

6. Marijuana will go mainstream. Whether you agree with legalizing marijuana or not, let’s not pretend this is strictly a referendum issue. Marijuana is a tax revenue generator. If the entire country decriminalized cannabis, states would collectively rake in an estimated $3 billion in related taxes. Targeting dispensaries can yield big sales for distributors.

7. Paid paternity leave passes. The U.S. is absurdly far behind the curve on this benefit versus the rest of the world. Trump, along with many on the other side of the aisle, are in favor of expanding paid paternity leave. Will the Republican-led Congress join in the effort? I say yes.

8. Drones stay grounded. Sure, the FAA finally released drone guidelines in 2016, giving hope that unmanned deliveries will become a thing. And, Amazon is already aggressively touting its soon-to-be Prime Air drone service. But I think there are still too many logistical and safety concerns for drone deliveries to begin in earnest next year.

9. VR arrives. One of the highlights of the ASI Power Summit this year was a virtual reality lounge where attendees could experience immersive VR demos. The lounge was a huge hit. I realize VR headsets are expensive, but Sony is already lowering the price point. Watch VR pop up in promotional trade show booths by mid-2017.

10. Vistaprint, not Alibaba, will lead disruption. If you’re watching for an immediate web-based threat to distributors, look to the Netherlands, not China. Holland-based Vistaprint offers one-piece minimums and incredibly fast delivery of promo items. Vistaprint’s U.S. team is well-positioned to sell promo products, while Alibaba is focusing cash elsewhere.

11. Tech will bounce back. For the last three years, promo product spending among tech firms has been dropping, now representing just 3.8% of industry sales. I think the slide is over. As suppliers offer more brand name premiums, tech firms will start buying again. A niche to watch closely: “smart home” products.

12. A supplier gets burned. I hate this one, but I can’t ignore it. I hear suppliers say it’s only a matter of time before a huge power bank recall happens within the promotional products industry. Some batteries are just bad quality and even tight controls can’t prevent all problems.

13. Sustainability stays in neutral. For years we’ve been told that millennials were going to lead the eco-friendly revolution, forcing companies to make sustainability a core value. It’s time to stop believing. Gen Y is like every other generation in this way: price matters most. They aren’t paying more for a “sustainable” promo product. The “eco” niche won’t dry up, but no boom is in sight.

14. Wellness remains well. On the other hand, as health insurance costs increase, companies will continue to dump serious cash into wellness programs. Currently, the average U.S. company spends about $700 per employee to promote healthy behavior. That number will only go up. Distributors should approach every company they can to develop wellness incentive and reward campaigns.

15. Perks will perk up. With rep splits tilting in favor of employers, companies will have to offer more perks to offset reduced pay. Flexible hours, extra vacation and tuition reimbursement are three benefits salespeople crave.