After more than a decade of constant growth, North American promotional product distributors have seen their sales dive at levels they haven’t experienced in the past. Fueled by the COVID-19 pandemic, promotional product sales dropped 44.4% year-over-year (y-o-y) in Q2 2020, per new data from the Advertising Specialty Institute (ASI).
The drop in sales began in the first quarter of the year, with a 4.9% y-o-y decline that seems modest in hindsight; in Q2, as more live events, trade shows and concerts were canceled due to the pandemic, promotional goods sales plummeted even further. Indeed, some 9 in 10 (89%) distributors saw their Q2 sales decrease over the prior-year quarter, with just 8% able to say that their sales had actually grown on a year-over-year basis. ASI’s Counselor Confidence Index, a metric that measures “distributors’ financial health and optimism,” dropped to a low of 54 – far below the previous low of 79 registered in 2009 during the great recession.
The distributors at both ends of the scale – the smallest and largest – have been hit hardest by the drop in sales, with small distributors reporting a decline of 47.5% y-o-y in Q2 and large distributors’ sales falling by 47%. Medium-sized distributors weren’t spared the impact of the pandemic, seeing average Q2 2020 sales decline by 40.2% over 2019.
This decline in sales comes after several years of growth. Most recently, Q4 2019 sales were up 5% y-o-y. And, total sales for 2019 reached a new high of $25.8 billion.
Unfortunately, distributors are not optimistic about a quick recovery, even though some have taken advantage of the burgeoning market of PPE products and in doing so mitigated some of the potential for an even larger drop. All in all, distributors project that annual sales will decline by 34.9% over 2019.
Last year, a survey by Marketing Charts found that 5.5% of US adults reporting that promotional products had influenced them to purchase a product or service during the prior 6 months.
About the Data: Results are based on the Advertising Specialty Institute’s Distributor Quarterly Sales Survey.