Regional Sales Report: WEST Sees a Tech Surge

20 Jun Posted by in Swag Projects | Comments
Regional Sales Report: WEST Sees a Tech Surge
 

West: Tech Surge

West 4 Year Review

With tech and tourism driving growth, sales are up about 8%, from $3.9 billion to $4.2 billion.

The West continues to be among the better performing regions of the country, economically. Perhaps the strongest sector of the entire national economy, technology is, of course, headquartered in the San Francisco Bay Area’s Silicon Valley.

It drives a lot of growth – not just in Northern California, but other Western areas where it has significant operations, including Washington State, Oregon, Utah, Arizona and New Mexico. Startups in the software, biotech and med-device sectors secured 12% more venture capital in 2013 than 2012, a promising sign for continued strength in this sector.

Tourism, a major economic force throughout much of the West, is strong, with hotel occupancies up at least 3%, even in secondary cities, and average daily room rates bouncing up 5%. Entertainment businesses, their capital in Los Angeles, are sporting solid momentum, with television, feature films, commercials and Web programming all growing solidly in 2013.

 

THE COMEBACK

Though hard-hit by the Great Recession, a number of Western states have come back impressively. California, which had a budget deficit of nearly $60 billion three years ago, recently recorded a budget surplus. Output and employment gains in the state were ahead of national averages in 2013. Job growth in the region should rise 2% in 2014, bringing the unemployment rate, which has been high, to less than 8%.

Oregon proves that manufacturing in this country is not dead. Manufacturing as a whole made up 39% of Oregon’s gross domestic product, the highest percentage in the nation. And after high-tech manufacturing, it’s natural resources like farming, forestry and fishing that are among Oregon’s leading industries.

Utah’s economy is impressive. In February 2014, its unemployment rate was 3.9%, the first time it was south of 4% since the start of the recession; at the same time, the national unemployment rate was 6.7%. The state is creating jobs at twice the rate of the nation as a whole. In addition, it is ranked fifth in CNBC’s Top States for Business list, and seventh for Access to Capital.

Still, the West has some weaknesses – such as real estate that still has a way to go to reach pre-recession levels in much of the region, and states like California with persistently high unemployment. Even a fairly well-performing state like Washington had an unemployment rate in January 2014 that was only a shade below the national average – 6.4% versus 6.6%.

You get the idea; the West is doing pretty well, but still has some trouble spots. As Craig Nadel, president of Jack Nadel International, notes: “A few years ago, people were going down and dirty. Now they want a bit more flair. The economy is better.”

West Sales

THE HOT INDUSTRIES

“I can’t name a weak industry,” says Jim Everett, western regional sales manager at SanMar. “Business has been very strong. Tech companies continue to be strong. Medical is strong. Construction may not be as good as five years ago, but is good relative to a couple of years ago.”

Barbara Dowden, senior account executive at Sunrise Identity, finds Microsoft to be fertile ground. The software behemoth has been using promotional products to boost interest in products such as its gaming device, the Xbox. But Dowden also finds plenty of other tech-related companies in a buying mood, including mobile telephone carriers and computer gaming companies.

Some formerly rust-belt companies are showing signs of life, too. Memo Kahan, president of PromoShop, likes the auto sector. He recently finished some auto shows where the auto companies were giving out promotional items like bags. But the automakers’ use of advertising specialties is not limited to such shows – these companies are providing dealers with quarterly incentives to use as a means of attracting customers.

Craig Reese, Jack Nadel’s senior vice president, western region, is based in the Southern California city of Irvine. He reports that energy, including gas and oil companies, is showing a lot of interest in ad specialties. Health care is also strong.

One particularly hot area: companies that service larger companies in various industries. For example, companies that provide linen and other items to hospitals are strong buyers. “It’s the cottage industries that support the large industries that are buying again,” Reese says. “They are starting to spend a lot more money. These are pretty good-sized companies, but not as large as the national companies.”

Entertainment is, of course, a powerhouse industry in the West, particularly Southern California, and it is helping to drive advertising specialty sales. “We believe entertainment will always spend,” says Kahan. “They do what they do regardless of what the economy does.”

Nadel seconds this notion. Content providers and cable companies, he says, are good markets for his company, though he finds demand from the movie studios is somewhat weak.

Technology, as previously mentioned, also tops ad specialty buyers in this region. With the stock market’s run-up in 2013, tech companies have valuations that can be breathtaking. Twitter, which went public in November of 2013, has a market cap north of $30 billion. Five-year-old WhatsApp, based in Mountain View, CA, was largely unknown to Americans until February of this year when, to the surprise of seemingly everyone, Facebook announced it would buy the company for $19 billion.

To put this into perspective, in March, Safeway, which is among the top two supermarket chains, agreed to be sold to Cerberus Capital Management for $9.4 billion – about half of what WhatsApp received. Is it any wonder that tech companies have plenty of money to spend on advertising specialties? “We are doing very well in Silicon Valley,” says Nadel.

Other strong industries cited by Nadel: insurance, credit unions and manufacturers of makeup and cosmetics.

 

THE HOT PRODUCTS

Tech items get lots of attention, say several observers. Her hottest items are mobile phone chargers, says Dowden. In fact, chargers were mentioned by several observers as generating plenty of interest from buyers.

SanMar’s Everett says shirts, both woven and sports, with dual chest pockets, are currently hot. Polo shirts with button-down collars are making headway. “This is the first time I’ve seen this [button- down polos] in my 30 years in the business,” he says, still somewhat surprised by this product’s popularity.

Long-sleeve rugby shirts are also making a comeback, says Everett. Recently, while in a sports bar in Arizona, he saw on television the University of Arizona marching band – dressed in red-and-white rugby shirts.

Another hot product is fleece letterman jacket sets, which he says, “are coming on big time.” He also reports that fleece pullover hoodies with raglan sleeves and V-notch inserts on collars are popular, as are messenger bags that have tablet and computer pockets (previously, they had pockets just for laptop computers).

Felt bags for ladies and felt accessories, such as wine bags and briefcase-type bags, that can be sublimate printed, embroidered or have a heat transfer, offer a rich look at a relatively inexpensive price point. Also for women, tank tops with textured fabrics are popular, as are lived-in, washed out looks, especially for juniors.

Getting back to basics, writing pads and journals are selling well. “Everyone seems to be talking to their computers, but everyone has a need to write things down,” notes Kahan. “Journal books, anything journal-like, is a growing category. I don’t know if people are trying to be retro. It’s weird.”

Speaking of products that surprise even those who have seen it all, let’s include stylus input devices used with smartphones and tablet computers. “Styluses are still a viable option,” Reese says. “Personally, I think the finger is the best stylus. I’ve never seen anyone use a stylus in an airport or business meeting, but they are selling. People love to buy those.”

Kahan is doing well with drinkware. “Suppliers who just do drinkware were happy with their results last year,” he notes.

Hot products of the past few years, namely mobile, continue to give of heat, notes Reese. These include such items as cell phone cases and tablet cases and bags.

 

HOT TRENDS

Green is still big in the West. Instead of keychains, companies want to give out eco-friendly products such as vegetable and flower seeds, according to Dawn Hays, senior account manager at Sunrise Identity. “Customers are saying, ‘let’s do something different,’ which is why they are thinking of green products like seeds,” she says.

Value remains important. Customers are looking for a combination of quality, need and price, Everett notes, not just what is necessarily the cheapest. For this reason, he is seeing high demand for retail brands like Nike, Eddie Bauer and OGIO. “Customers find value in brand names though they command a higher price point,” he says. “They want to associate their company names with the brands.” As an example, a golf tournament might spend $65 or $75 for a shirt if it has a Nike logo.

Dowden is seeing bright colors – orange, green, yellow and the like – as a strong trend, as customers back away from the traditional black, navy blue and gray. Everett is seeing the same trend. “Juiced-up colors,” he calls them, including purples, neons and limes.

“Printing digitally is the biggest trend we have,” says Kahan. “It can be applied to almost any item and can make almost everything better.”

Innovative fabrics are gaining a great deal of attention. Tri-blends, tank tops with textured fabrics and extreme heathers have considerable traction in the marketplace, says Everett.

Laser imprinting on fabric is a recent technology that is changing how items are imprinted, notes Gary Murphy, owner of Image West.

Reese likes using Digimarc technology on various items. A kind of updated QR code, the user scans the Digimarc image with their smartphone and is immediately taken to a website. “This is taking a pedestrian item, like a bag or journal book, and giving it a tech spin,” he says. “It allows you to do more with what you have.”