Welcome to Market Tracker. This is an updating resource compiling the latest news on coronavirus impacts and economic recovery for top vertical markets promotional products distributors sell into. The Promo Marketing team will update this post regularly with new information from each market as it becomes available, including promo-specific impact where possible. If you have market news or related tips, send to [email protected].
Updates: Week of August 10
Market: Events/Entertainment
• The Latest: Virgin Money Unity Arena, a pop-up concert venue in the U.K., is testing out a new outdoor concert model that uses 500 raised, separated platforms to ensure social distancing. Attendees, in groups of up to five, are assigned a platform and watch artists perform without coming into contact with other members of the crowd.
• Market Impact: The first event to try the model—a concert for musician Sam Fender—drew 2,500 fans and seemed to be a success, with pictures from the event showing organized social distancing procedures. To avoid crowds at food service areas, attendees can order food or beverages to their platform via an app, and distancing is enforced on arrival. While some concerts, like the now infamous Smash Mouth performance at Sturgis Buffalo Chip in South Dakota last weekend, are simply forgoing precautions altogether, this model could be one way to fast track a broader return to live concert events. The venue has already lined up several more performers for coming events, including Van Morrison and the comedian Bill Bailey.
Market: Events/Hospitality
• The Latest: The Democratic and Republican national conventions are both going mostly virtual this year, and that means notable economic impacts on the host cities of Milwaukee and Charlotte. These are just two of the biggest names in conventions, but the issue of in-person events being completely canceled or held online has been difficult for industries that rely on in-person attendance and traveling.
• Market Impact: The convention cancellations are a blow to the hospitality industry in the two cities. Former Charlotte City Councilman John Lassiter told the Charlotte Observer that the loss of the RNC could leave a $200 million economic impact on the city. One hotel owner was hoping for $250,000 in room revenue alone. The cancellations also hurt the vast merchandising ecosystems tied to the two events. Merchandisers who’d normally sell things like apparel and gifts related to the conventions now no longer have a clientele, much like those in college towns preparing for a year without football. Companies that would typically supply signage and other materials for the events will also go without that business.
Market: Entertainment
• The Latest: AMC Theaters is planning a phased reopening of its theater locations. Beginning August 20, the cinema chain will open around 100 of its 600 locations, showing classic films like “Grease” and “Ghostbusters.” It plans to open another 300 locations by Sept. 3 for the newly scheduled release of “Tenet” (see Week of July 20 updates below), bring its total to 400 theaters resuming operations.
• Market Impact: As we noted previously, losing “Tenet” indefinitely was a signal that the entertainment industry, specifically the film side, was not close to returning to action following extensive theater shutdowns. While there could still be delays in scheduled film releases depending on how the coronavirus situation changes across the U.S., a theater chain of AMC’s size ramping up for reopening is a major step toward revitalizing this market. It remains to be seen if the crowds will return, but AMC will look to entice some back with discounted tickets in its opening week, including 15 cent tickets on its first day back.
• Promo Focus: There are around 5,500 theater locations in the U.S. As these locations reopen, most will likely require a variety of products such as signage, dividers, hand sanitizer stations and PPE for staff.
Updates: Week of August 3
Market: Sports
• The Latest: A few universities and NCAA conferences have canceled their upcoming football seasons, but others are still planning on a football season, just with a few tweaks. Stadiums probably won’t be full of fans, and to limit possible exposure to COVID-19 among student-athletes, teams are figuring out ways to implement cloth face masks onto helmets and protective face masks. Major market schools such as Texas, Oklahoma and Iowa State have already announced that their players will wear cloth face masks of some sort.
• Market Impact: The sports world has been devastated by the pandemic, so any possibility of a season happening is good news for athletes, schools, fans and corporate sponsors. For distributors who count universities and college sports programs among their clients, this presents an opportunity to outfit whole teams in face masks, as well as all of the staff related to a football game—equipment managers, trainers, coaching staff and more. The mask just becomes another part of the uniform look.
Market: Retail
• The Latest: According to analysis from Bank of America, apparel retailers that rely on back-to-school shopping season are in for a rough ride. The analysis found that, with few U.S. schools holding fully in-person classes, Americans will likely spend less on clothing during what is typically a busy season for stores like The Gap, American Eagle and Urban Outfitters. “Kids will likely dress more casually for virtual learning than they would to attend class in-person,” the report found. “Because of these factors, we expect the key back to school shopping period of late July through early September to be very soft.”
• Market Impact: Apparel retailers have already been hit hard during the pandemic, especially those that primarily operate brick-and-mortar stores in malls or shopping centers. Several large apparel retailers, including Brooks Brothers, J.Crew, JCPenney, Neiman Marcus and Lord and Taylor, have filed for bankruptcy in the last few months, and more are likely to follow with consumer spending tanked and many physical store locations across the U.S. still unable to fully reopen.
Market: Hospitality
• The Latest: The Wall Street Journal reported that U.S. hotel companies are increasingly turning to tech solutions as they look to attract guests. These include digital room keys operated via smartphone and room-based voice assistants like Amazon’s Alexa that allow guests to request more towels, lower the lights or turn on the TV without needing to touch surfaces.
• Market Impact: According to the Wall Street Journal, data analytics firm STR reported that hotel occupancy fell to 22 percent in April now stands at around 48 percent. That’s down from 60 percent in February, pre-pandemic. Making guests feel safe is critical in bringing them back and filling rooms, and tech solutions like these are a promising first step. The hospitality industry faces an uphill climb, losing 4.8 million jobs since February, according to the U.S. Bureau of Labor Statistics.
• Promo Focus: Promotional products companies commonly supply key cards and staff uniforms to hotels. If adopted long-term and across a large portion of the industry, tech solutions that cut down on key cards—or automation that reduces staff numbers—could impact those sales. Reducing the number of physical touchpoints in a room might also mean hotels require fewer pens or branded stationery items. However, there are likely other product categories, such as no-touch keys and personal health and safety items, could potentially make up the difference. In any case, this market’s promo buying needs could change dramatically moving forward.
Updates: Week of July 27
Market: Sports
• The Latest: So far, 30 NFL players have voluntarily opted out of the NFL season due to the looming threat of COVID-19. The league’s top executives have stressed that, so far, the plan is to continue the NFL season as scheduled, albeit without a preseason.
• Market Impact: Even if the season starts on time as planned, variables remain. Will fans be allowed in the stadium? That would cut into promotional giveaways for fans. If players start testing positive like in Major League Baseball right now, would the season keep going? It’s hard to imagine training camp would happen in front of fans, too, which already takes one branding event out of the season.
• Promo Focus: Obviously, if the fans aren’t allowed in the stadiums, franchises will need new ways to deliver products to season ticket holders and fans. This could include drop-shipping items and holding events outside of the stadium. But the NFL’s commercial reach also extends far beyond just the stadium, and co-branding efforts would likely take a big hit.
Market: Trade Shows and Events
• The Latest: CES, the consumer electronics mega-show held every January in Las Vegas, announced that it will not hold an in-person event for 2021 and will move to an all-digital format. “Amid the pandemic and growing global health concerns about the spread of COVID-19, it’s just not possible to safely convene tens of thousands of people in Las Vegas in early January 2021 to meet and do business in person,” said Gary Shapiro, president and CEO of the Consumer Technology Association.
• Market Impact: At 2.9 million net square feet, CES is the largest trade show in the U.S. and more than double the square footage of the next largest trade show. In 2019, the event drew more than 107,000 attendees and 4,550 exhibitors, according to Trade Show News Network. The move to all-digital is an enormous blow for promo businesses that would normally supply apparel, products, displays and other items for exhibitors, but it’s also a bad sign for the events market overall. Kicking off 2021 with a fully functioning CES would have been a symbolic return to business for the trade show industry. Instead, it’s a reminder that large-scale in-person events are a ways off.
• Promo Focus: Some companies forced into virtual events, like YouTube and Microsoft, have found creative ways to deliver promo items to attendees, like shipping gift boxes ahead of the event. Others that went virtual, like San Diego Comic-Con, similarly found ways to keep merchandise a main component. Still, none of these are close to the size and scale of CES, so it will be interesting to see if and how the event’s would-be exhibitors use promotional products to reach virtual attendees.
Market: Education
• The Latest: According to the most recent analysis from the Chronicle of Higher Education, 23.5 percent of colleges and universities are planning for mostly in-person classes in fall, while 24 percent are planning for online-only classes and 16 percent for hybrid classes. But these plans are rapidly shifting, throwing many schools’ reopening plans into disarray.
• Market Impact: As we covered in earlier weeks (below), schools planning on in-person classes have invested in a variety of promotional products as part of their reopening strategies. But some schools that said they would open for in-person classes have since reversed course, and a full 27 percent of schools still have not determined how they will hold classes. For most schools, it’s a problem of safety versus revenue, as more than 6,300 coronavirus cases have already been linked to to U.S. colleges, but students may be unwilling to pay full tuition for online-only classes. As with most markets, uncertainty seems to be growing rather than abating.
Updates: Week of July 20
Market: Education
• The Latest: The University of Virginia spent $400,000 on welcome back kits for students returning in the fall. Each kit includes two masks, two bottles of hand sanitizer and a no-touch tool in a drawstring bag. The university ordered 25,000 of the kits.
• Market Impact: Clearly, the university is forging ahead with plans to reopen for in-person classes, which could set an example for other colleges and universities on the fence about how to proceed. Even for schools planning on all-virtual or hybrid models in fall, this kind of kit could be an integral part of full reopening efforts down the line. At minimum, it’s an indication that some number of schools will look to resume in-person operations.
• Promo Focus: The kits include a number of promo staples and were fulfilled by Bright Ideas, a promotional products distributor company based in Troy, Virginia. If more schools end up going this route, it opens the door to potentially large promotional products orders and could restore some order volume to a market facing a number of question marks for promo distributors.
Market: Consumer Packaged Goods
• The Latest: According to the Consumer Brands Association (CBA), the consumer packaged goods industry saw 9.9 percent year-over-year growth in May compared to May 2019. That represents a 4.1 percent increase from April.
• Market Impact: Driven by stay-at-home orders and increased grocery buying, the consumer packaged goods industry surged early in the pandemic, with 21.1 percent year-over-year growth in March. That growth has since stabilized, but it remains significantly above last year’s. The CBA believes demand for consumer packaged goods will remain elevated for the duration of the pandemic, making the industry one of the few to see sustained growth as the economy falters elsewhere.
Market: Entertainment
• The Latest: After pushing back the release date multiple times, Warner Bros. announced that it would indefinitely delay the release of “Tenet,” the big-budget summer blockbuster from can’t-miss director Christopher Nolan. Disney has already pushed back the release of “Mulan,” originally scheduled for March 27, to August 21, but it appears likely it will delay it once again—especially as major theater chains like AMC continue to push back their reopenings.
• Market Impact: With theaters closed for months and prospects for reopening now worse than they were a few months ago, most major movie studios have pushed their releases to 2021. “Tenet” and “Mulan” were supposed to be the films that reignited the industry and brought the masses back to the movies, so the former’s indefinite delay quashes optimism about theaters getting back to business any time soon. As for the broader entertainment market, most film and television productions have not yet resumed filming, leading industry groups to continue lobbying Congress for additional aid.
Market: Education
• The Latest: As part of its reopening plan for fall, Rice University in Houston purchased four temporary structures and five open-sided tents it will use for classes, meetings and study areas.
• Market Impact: The move reflects a strategy designed to move university functions outdoors where possible to increase spacing and ventilation. This could be a viable model for warm-weather schools to resume in-person instruction and act as a blueprint for other colleges and universities. Rice said the buildings will be lighted and climate-controlled, which means even schools in cooler regions could potentially replicate this model.
• Promo Focus: The open-sided tents Rice purchased are significantly larger than most available through traditional promotional products channels, but there may be opportunities at other schools for smaller tents and canopies if more functions move outdoors. Rice also said it plans to purchase camping-style folding chairs for students to use in these spaces, making branded or unbranded chairs and other outdoor products a possibility for education customers.
Updates: Week of July 13
Market: Events/Entertainment
• The Latest: Live Nation, the major entertainment company and events promoter, launched a series of outdoor drive-up concerts called Live From The Drive-In. The three-day events took place in St. Louis, Nashville and Indianapolis on July 10, 11 and 12 and allowed fans to watch from their cars as artists like Brad Paisley and Nelly performed.
• Market Impact: With its dependence on crowded, mostly indoor venues, live music and entertainment is one of the hardest-hit markets with the shakiest timeline for recovery. Rather than waiting around, Live Nation is looking to adapt and exploring ways to resume some kind of event activity.
• Promo Focus: The Live From The Drive-In series included a merchandise component in which fans could preorder T-shirts, hats and other gear online and have it shipped to their homes before the event. Live Nation also equipped event staff with masks and placed hand sanitizer in restrooms. The event also included the usual banners and other outdoor signage.
Market: Retail
• The Latest: Retail sales rose for the second straight month, increasing 7.5 percent in June after an 18.2 percent increase in May.
• Market Impact: Sales were better than expected, driven by the clothing, electronics and appliances, and home furnishing categories, but the pace of recovery slowed from May. Also, many retailers announced permanent closings in the last few months, while stores like JCPenney and Pier 1 Imports have filed for bankruptcy. Various factors, including resurging coronavirus cases and a consumer spending dropoff as additional unemployment benefits come to an end, could further dampen the retail market’s recovery, so all eyes will be on July’s reports. But, for now, the sales increases are an encouraging sign for the sector.
Market: Restaurants
• The Latest: The National Restaurant Association sent Congress a “Blueprint for Restaurant Revival” outlining various measures it believes are necessary to stabilize the industry. The recommendations include a targeted relief fund for smaller restaurants/chains, payroll tax relief and another round of Paycheck Protection Program funding and eligibility.
• Market Impact: According to Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, the industry has lost more jobs and revenue than any other industry. While restaurants across most of the U.S. had been able to reopen in some capacity, surging coronavirus infections have forced some 100,000 restaurants to shut down again in the last two weeks, Kennedy said in a statement. Additional relief from the federal government would help restaurants weather the latest storm and remain in business to reopen down the line.
Market: Tech
• The Latest: Several large tech companies are delaying return dates for office workers where possible, keeping employees remote for longer than previously anticipated. Axios reported that Snapchat, which originally said staff would begin returning to offices on Sept. 1, recently extended remote work through Jan. 4. Meanwhile, Bloomberg reported that Apple is “pessimistic” about a return to the office for its staffers in 2020.
• Market Impact: Office staff remaining remote has some ripple effects, especially for local businesses like restaurants that depend on large numbers of workers coming and going daily. That aside, the tech industry has managed the transition to remote work fairly well overall, with relatively minimum disruption compared to other industries. Extending work-from-home periods should not negatively impact the industry.
• Promo Focus: Delayed returns to office work, though, could change the industry’s promotional products needs. While many companies across industries are issuing welcome-back kits containing branded masks and other health and safety products for returning workers, extended remote-work periods complicate things. On the other hand, this might mean more opportunities for work-from-home kits or similar promo buys if these periods extend into 2021.
Market: Hospitality
• The Latest: In a syndicated segment that ran on Nextar Media Group’s local television stations nationwide, Chip Rogers of the American Hotel and Lodging Association said more than 8,000 U.S. hotels could close by September without federal assistance. Texas Republican Congressman Van Taylor and 105 other members of Congress wrote a letter to the Treasury Department requesting immediate assistance, while Taylor says he is planning to introduce legislation that will help the hotels industry long-term.
• Market Impact: It’s unclear what Taylor’s plan entails or if it will even pass, but any assistance that prevents hotels from closing their doors permanently would obviously have enormous impact on this vertical market and help restore promotional products sales into this segment sooner rather than later.
