PPAI Magazine January 2024

Must Read | Outlook 2024 Identifying The Industry’s Weaknesses In Outlook 2024, promotional products professionals have identified several pivotal limitations of the industry that can prevent further growth. While some of these weaknesses have plagued the promo market for decades, others have become more visible in recent years. By addressing these areas for improvement within their businesses, promo firms can work toward solutions that will benefit not only themselves, but the overall industry. Here are the weaknesses most commonly outlined by both distributors and suppliers: 35% | Rapid Technological Change Both suppliers and distributors agree that embracing technological innovations like AI is necessary to stay competitive in the digital era. “Technological improvement will help some of the industry’s shortcomings,” says a distributor. “Adoption of technology, especially generative AI, is happening at a very fast pace, and younger generations are more in tune with it,” a supplier adds. However, one-third of PPAI 100 suppliers and 22% of PPAI 100 distributors have experienced no significant impact after implementing AI, according to PPAI Research. The majority of respondents (63% of PPAI 100 distributors and 60% of PPAI 100 suppliers) report a lack of AI expertise as their most significant barrier. Meanwhile, Denham claims that AI is overhyped. “While there will be some winners who figure out how to use AI sooner than others, it’ll be a distraction for most players if they spend too much time or energy on it,” he says. “Tech is important, but adopt the tech that’s proven before you chase the next big thing.” 21% | Price Competition & Value Perception Intense price competition, especially from online retailers and direct-toconsumer sales, can erode margins and devalue the perceived worth of promo products. It’s vital that promo firms avoid the race to the bottom, maintaining pricing befitting of their quality service. “We need to shift the conversation from price to value,” Denham says. “We create more value with our medium than any other form of advertising.” 19% | Supply Chain Management The pandemic exposed how inefficient supply chains and reliance on overseas production can lead to delays and increased costs for all members of the promo industry. “COVID has highlighted our heavy reliance on importing promotional products from other countries, particularly China,” a responding distributor says. “Distributors and, most likely, end users will eventually shift everything overseas, cutting out the entire U.S. industry,” adds a responding supplier. “PPAI should continue to protect the domestic supply chain as much as possible.” Although many firms have established alternative sourcing methods to diversify their supply chain, there have been other issues this year that posed potential logistical nightmares: • More than 340,000 UPS workers were ready to go on strike if the shipping giant hadn’t come to terms on “the most lucrative agreement” Rapid Technological Change Price Competition & Value Perception Supply Chain Management 35% 21% 19% 15% 11% Key Weaknesses Perception Of Poor Quality Sustainability Concerns 66 • JANUARY 2024 • PPAI