Strategizing to Survive

8/8/2019 Strategizing to Survive

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IThe economic slowdown^forced many to take ahard look at theirbusinesses and focus ^on best practices andInnovation.BY JUDI FULBRIGHT AND CAR OLINE

A lthough we are beginning to see glimmers ofhope on the horizon for the economic forecast,the outlook for the year ahead remains cautiousas consumers continue to watch their spending. Yet, ven-dors are more optimistic than they were a year ago.of the vendors responding to Gifts& Decorative Accessories^ annua lTrends 8c Forecasts survey this y ear,nearly 60 percent indicated theyexpect th eir sales in 2010 to be betterthan in 200y.

This brighter outlook, was fore-shadowed in the second half of 2009when we saw buyers at the s um mermarkets with a more positive atti-tude, a better handle on their finan-cial status, and placing solid ordersby sticking to their budgets andinventory needs. Vendors too haveadjusted with new strategies andideas to imp rove efficiency, visibility

retail customers.The do wntu rn has been a wake-up

call, causing vendors and retailme rchants as well to roll up theirsleeves and take stock of their busi-nesses, evaluating its strengths andweaknesses to see where changesshould be made to ensure its future.

This year's Gifts & DecorativeAccessories' annu al Trends & Fore-casts survey reveals some interestingshifts:

The Baby Boomer demographicno longer reigns suprem e as a targetcustomer. The Baby Boomer demo-graphic has been split between Older

to the top of the chart as the p rimarytarget demographic for new productdevelopment by vendors. YoungerBaby Boomers are right behind;Older Baby Boomers drop fur-ther back, with G en Y and Tweensremaining in place.

Products designed with spiritualor religious themes shot to the top ofthe trend list as consumers lookedfor comfort in their belief systemsand sought out product that reflect-ed those beliefs more.

The Internet is growi ng i n imp or-tance as a ma rketing and sales medi-um. Three-quarters of respondingvendors have an online catalog, andtwo-thirds of those vendors allowretailers to place orders on line.

The charts on the folk)wing pageshighlight the results of the surveyand provide, where applicable, com-parisons to previous years.

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TRENDS AND FORECASTSFrom page 67

Design Directions fo r 2010Percentage of vendorswho say design direction is risingminus the percentage ivfto say design direction is fading

^Heating upSpiritual/religiousTraditionalModern/contemporaryRetroClassicalCoastal/cottage

r Cooling DownSafari/adventureAsianLodge/cabinTropical/islandCelebrity/pop cultureAmericana

20103 6 %3 2 %2 9 %1 9 %1 3 %6%

2010- 2 3 %- 2 0 % 1 7 %- 1 4 % 7 %- 4 %

20092 6 %2 2 %3 7 %1 9%12 %1 4%

2009- 2 6 %- 1 4 %

- 6 %- 8 %-5 %

- 1 6 %Measured on a scale of I to 3 , wilh I equal to 'fading,2 equal to "Same " and 3 equa i to "Rising. "

20082 2 %2 7 %4 3 %18 %13 %1 9%

2008 I- 3 0 %

2 %- 1 %- 4 %

2 % 2 2 %

Color SchemesPercentage of vendors reporting color schemes a s "Important 'or "Very important"

2010 2009 2008Brights 6 4 % 53% 50%Black and/or white 6 0 % 5 0% 6 2 %Earth tones 5 5 % 6 7 % 64%Neutrals 4 8 % 4 5 % 47%Jewel tones 4 3 % 4 1 % 46%Metallics 4 0 % 4 6 % 49%Pastis 2 8 % 2 1 % 2 5%TropicalsMidtones

2 6 % 3 2 % 3 3 %2 0 % 2 3 % 3 0 %

Primary colors 1 8 % 3 1 % 2 8 %Measured on a scale oi to 5, with I equal to 'Not very important'and 5 equal to 'Very important "

TRACKING THE TRENDS: DESIGN DIRECTIONSSpiritual/religious themes, tops on the "in" lis

have gained on M odern/co ntemp orary looks this yeaM o d e r n / c o n t e m p o r a r y ,the hottest trend last year,has even slipped behindtraditional themes for thisyear.

Safari/adventure hasjoined Asian and movedto the top of the "ou t" list.

Americana has edgedup from near-invisibilityon the "out" list, to justabout making it onto the"in" list. ^

G i ft s o f F a i th P r e c io u s M o m el i c e n s e t a p s i n t o r e l i g i o u s t h e m

TRACKING THE TRENDS: COLOR SCHEMESEarth tones have plummeted fntni the top spot in

importance, taking third placethis year behind Brightand Black and/or White.

Neutrals, Jewel tones and Metallics round out thlist of color schemes deemed as either important overy important.

Paslels, Tropicals. Midtones and Primary Colors scored the lowest ratings in terms of importancewith fewer vendors viewing them as either imp ortanor very important. This same set of four color themecontinue to un-impress as they have for the previouthree years.

Bright colors top the "very important"trend list fof 2010. A pop of bright color is

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D i s t r i b u t i o n C h a n n e l s w h o are the vendors'customers?Percentage of vendors Projected asfastest-growingchann els, Mo st m'SP'Pi'f channe l

2010- 2009 2008 2007 2009

Distributingthroughthe channel**2008 2007Gift specialty store

Direct-to-consumerie.g.cstatog/Tv/internet)Home accessories storeMus eum/"attraction"/soijvenir storeDepartment store {e.g., Macy's)Florist/garden center/nurseryDiscount department store (e.g.. Targei. wal-Mari)Stationery/card shopBookstoreCraft/Toy/Hobby shopDrug/Phamiacy/Hospital/Convenience

34%27 %16%14%14%13 %11%9%5%4%

45%10%10%

5%, 5 %

7%1%4%3%3%

< 1 %

34%8%15%4%6%7%3%7%4%2%

39%7%12%5%4%5%4%6%3%1%

87 %46%63%54 %33%51%15 %53 %45%36%

8%

64%39%57%41%29%42%16%42%36%25%

73%38%58%53%36%48%20%48%39%22%

Park/Event/Fundraiser/Resort 3% 7% - ' Percentage of vendors identifying as one of three cfiantiels showing the greatest sales growth lor 20 JO .'* More than one response was allowed.

WHO ARE VENDORS' CUSTOMERS? More ih.in rour-l'iflh.s of the responding vendors

distribute through gift specialty stores, more than anyother c han nel. Nearly one-half of vendors also identi-fied it as their most important channel for this year;more than one-half are projecting gift stores will beiheir fastest-growing channel ahead in 2010.

Nearly two-ihirds of vendors distribute throughhome accessorie.s stores, while about one-half usemuseum or attraction outlets and stationery/cardshops. Direct-to-consumer sales outlets {the Internet,catalogs and TV shopping), along with bookstoresmake up i he next group of popular distribution chan-nels, each used by more th an two-fifths of vendo rs.

Interestingly, it's the direct-to-consumer channelvendors think will be one of the top fastest-growingdistribution channels for 2010.

PRODUCING FOR THE CUSTOMERThe primary consumer targets tor the develop-

ment of new products are Gen X members and theyounger group of Baby Boomers; almost one-half ofvendors say they target these demographic groups.

Older Boom ers, now 54 to 63 years old, and GenY, currently 15 to 33 years old, are targets for aboutone-third of vendors.

Producing for the CustomerNearly three-quarters of vendors say their customers ask themto develop products not typically represented in their line.The consumer targets for these new products include:Percentage of vendors responding

Gen X: 34 -44 yrs. oldYounger Boomers: 45-53 yrs. old

Older Boomers: 54-6 3 yrs, oldGen Y: 15-33 yrs. oldTween: Ages 8-12

Latino/HispaniiAfrican American

Asian

11%tNearly 5 0 % of the vendors are asked to developspecial products for either Gen X or theYounger Boomer age groups.

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TRENDS AND FORECASTSFrom page 69

Products and Price PointsPercentage of vendors producing

Home accent pieces 20094 9% 200845 % 200742%

Projected ne tchange t o

pr ice po in ts,2009-2010*

2 3 %Holiday decorCandles/candle accessoriesFrames/desk accessoriesGarden decorStationery/greeting cardsTabletopProducts fo r kidsCollectiblesBaby/infantJewelry/fash ion accentsPersonal care/aromatherapyOther

45%36%32%29 %29 %28%25 %23 %22%20 %17%15%

39%25%23%24%21%30%14%21%20%18%12%

32%24%21%26%21%25%21%20%

19%10%

13 %- 1 4 %

5%13 %

5%-4 %-6 %4%

-8%4 %3%

13 %Other included: Sentiment gifts, travel accessories, gourmetchocolates, souvenirs, texti les a nd bedding, and housewares'Net change: Percentage of vendors reporting price points to behigher minus those reporting price points to be lower fo r 2010.

VENDORS A N D SALES EXPECTATIONSCo mp aring their 2 009 sales with 20O8's, a net

37 percent say their sales will be lower this year, mothan the net of 29 per-cent of vendors whorepor ted thei r 2008sales were down from2007's.

Vendors are evenmore hopeful this yearthey will regain whatthey've lost with a netof 59 percent expect-ing sales for 2010 tobe better than in 2009.Last year, a net of 28percent expected their2009 sales would begreater than in 2008. Holiday (;

category with a more vendoproducing seasonal Item

WHAT'S NEW Vendors plan to Introduce a median of four ne

collections or lines in 2010, about the same numbas they have repo rted over the last several years.

The majority of vendors plan to introduce abothe same number tir more new collections or lines i2010 than they did in 2009.

What 's New?Numb er of riew collections or tinesvendors plan to introduce in 20105% 3 %

26-99 100 or more

How m uch do you reduce your existingproduct line-up w hen you introducenew collections or lines?

. ^ K 20% or m ore1 1 %

15%-19 ,99%

2 0 %10%-14 ,99%

Not at all

3 7%1%-9.99%

_ . . . of vendors plan to introduce one or m orenew col lect ions or l ines in 2010; the median is four.

The majority of vendors reduce their currentproduct assortment by less than 1 5 % wh en

they introduce new collections or lines.

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TRAC KING THE TRENDS : LICENSES While the overwhelming majority of vendors

adm it to carry ing licensed p roduc ts, it's not reallya big deal to them. Three-fifths say licensed firod-Lut.s makes u p less than U) percent of their p roductassortment.

Artists/illustrators, fashion designers, book/movie characters and sports/collegiate remainlicensing favorites with nostalgic licenses vying toioin the bunch.

Book and m ovie characters moved up from thewannabe group last year to join the front-runnersthis year.

THE NEWEST MARKETPLACEThis year almost three-quarters of vendors

have catalogs online, edging up from the morethan two-thirds last year. Of those with an onlineciitiilog, two-th irds allow retailers to place orderslor goods online too.* More than two-fifths of vendors sell directly toconsumers online, generating a median of 10 per-cent of their lotal revenues. Vendors expect thatpercentage to grow to 15 percent in 2010.

For the more than one-half of vendors who donot sell directly toconsumers throughthe Internet, nearlyt wo - t h i r d s t h i n kit's not likely theywill do so. However,more than one -

quarter are sti l lconsidering whatthey will do aboutonline sales toconsumers.

T o page 7 2

Use of the Internet by vendors tobetter serve retailers is increasing.

Important 2010 LicensesPercentage of vendors reporting licenses a s"Important" or "Very important"

2010 2009 2008Artists/il lustrators 4 4 % 42% 44%Fashion designersBook/movie characters

4 0 %3 9 %

4 3 % 5 0%3 8% 4 0 %

Sports/collegiateNostalgicAdventure/liiestylePop charactersHistorical/Americana

3 9 %3 7 %2 9 %2 8 %2 0 %

3 9%3 8%3 6%32%2 2%

3 9%4 0 %42%36%2 1 %

M e a s u r e d o n a s c a le o f I t o 5. w i t h e q u a l to' N o v e r y i m p o r t a n t ' a n d 5 e q u a l t o 'V e r y i m p o r t a n i '

Vendors and the Interne t:The Newest MarketplaceVendors' online presence continues to change2009 20087 4 % of vendors have an online catalog 6 8 %6 3 % of those with an online catalog can place orders online 6 2 %6 1 % Net of vendors saying the number of retailers 5 9 %

ordering online increased in 2009 over 2008.P e r c e n t a g e o f v e n d o r s r e p o r t i n g th e n u m b e r o f r e t a il e r s o r d e r in g o n l in e w e r e h i g h e rm i n u s t h o s e r e p o r ti n g th e n u m b e r w a s t o m r t h a n in 2 0 0 8 .

Vendors using Internet to sell direct to consumers20094 4 % of vendors currently sell directly to consumers

through the Internet20083 8 %

For those vendors currently selling directly to consumers, the percentageof their total revenues generated from online consumer salesmedians medians1 0 % 2009 5% 20081 5 % Projected 2010Plans fo r adding online sales to consumers5 6 % of vendors currently DO NOT sell direaly to consumers through theInternet, decreasing by six percentage points from a year earlier.Plans for adding online direct sales to consumers in ...

Not likely at allStill cons ideringVery likelyWill use Shopatron or otheraffiliate m arketer

20106 2 %2 8 %

8%2 %

20094 5 %2 8 %2 7 %

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TRENDS AND FORECASTSFrom page 71

Best Practices

StrategiesIN ADDITION TO asking vendorsabout sales, distribution and trenddirections, Gifts & DecorativeAccessories also asked about thebest practices they have employedto help them cope during thesedifficult times. Some answersvk'ere good c om mon sense, somewere difficult choices to make andothers fbrv^ard-thinking. Here'sa selection of those strategies thatcross many sectors.

COST CONTROLS Questioned all costs. Studied

break-even points and cast off allprofitless activity

Cut expenses by going to afour-day work week, [imple-mented] "just -in-time' inventorycontrol; put a tight watch on allspending

Laid off departm ents th at arenot needed

Reduced contract or part-timelaborCONCESSIONSTO CUSTOMERS

Extended value as a supplier toheip customers our lifeblood survive

Offered freight concession s,discoun ts, term s, special events,no minim ums, etc.

MARKETING/SALESTECHNIQUES

Got more editorial coverage bymaking sure to submit product forconsideration, which paid off withcoverage in key trade publications

Increased bran ding a nd visibil-ity throug h increased ad vertisingand press

Improved product knowledgeand sales techniquesPRODUCTS ANDPRODUCTION

Provided new lines and designsfor reps to sell, with ma rketingbehind them in an otherwise quietmarket

Invested in innovation : newprod uct, new line extensions, newcolor options. New exciting pro d-ucts thrive in any economy

Improved production capabili-ties

Stayed focused on findingproducts that are both functionaland fun without the high price tagINVENTORY

Pared down num ber of Unes;expanded those doing well Stocked best items in anticipa-tion of last minute reorders

Liquidated slow sellers sooner

CUSTOMER CONTACT Talked m ore with customers to

find out their concerns and howwe can help m ake things easier forthem

Be visible! Worked more withroad reps and custoiiers

It's not business as usual; basicand trad itional avenues of busi-ness are not working. Shows arelackluster and not cost-effective.Vendors have to go to their cus-tomers directlyPRICES AND MARGINS

Offered products at key pricepoints so there is som ething foreveryone's budget

Studied competition to makesure our prices were in line

Added produc ts at lower pricepoints with low or no m inim um sELECTRONIC MEDIA

Made use of social media Facebook, Twitter, etc. [as]low-cost advertising

Social Networking: Linkedinand the groups within this net-work are a great help for bouncingoff ideas, ma king contac ts andbeing plugged into the overall stateof my sectors

Used the Interne t an d socialnetworking to grow sales andvisibility

GDA Trends and Forecasts Survey, 2009About the survey...Vendors of all types and descriptionsresponded to the Gifts & DecorativeAccessories' annual survey of manufac-turers. Tiie survey was fielded duringSeptember and October and close to200 manufacturers responded by fax or

to the online version of the survey.One-third of the responding ven-dors had sales of less than $500,000.Another two-fifths had sales between$500,000 but less than $5 million. Theremaining more than one-quarter of therespondents had annual saies greater

than $5miilior).Research specialist Judi Fulbright(336-605-1092), of Gifts & DecorativeAccessories' Market Research depart-ment, directed the survey effort v^ithspecial assistance from Cynthia Myers,database coordinator, and DaphneGarland-McLean, research specialist.

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