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The Industry Responds

By Staff -- Gifts and Dec, 12/1/2008 12:00:00 AM

In the November issue, Gifts & Decorative Accessories assessed the state of the economy. Now several industry leaders speak to its impact on their own businesses and the gift business as a whole.

Trip van Roden, president Wellspring, York, PA

It could change a lot. Right now our business has not been affected much. Most of that is because we have relatively inexpensive consumable products that we have reliably shipped for a lot of years. So we have been fortunate to still have sales increases. But it will affect everybody; it is certainly a time when consumers become cautious. And when consumers become cautious, everyone becomes cautious. I don't think it's anything specific — just credit issues or just housing prices or just the price of fuel. It is a combination of our industry just going through change. I don't think anything that's going on right now is really all that new for the gift industry. All the things that are difficult right now in the economy have already been difficult in the gift industry for the last three years. By all reports, independent retailers have been declining for the last five years and that is our customer base. It is a very good time to know your business well and your core values. My personal feeling is, the place to look for change is internally, not externally. Because we can't control the external environment but we can control the people we hire, the value we deliver to our customers.

Frederic Contino, president, Midwest, Cannon Falls, MN

Obviously this economic downturn has had an effect on the whole industry. What is happening today is a function of the economic climate and the credit crunch. It is unfortunate because I felt we saw the beginning of a resurgence of the independent retailer. We have seen [more of] an effect on some product lines than others. We have seen more softness in certain categories. I don't want to be someone who creates a problem [by specifying which ones]. I don't necessarily think that all the changes are permanent changes. I think they have to do with how the sell-through was last year — in general, not ours. What this economic climate has done is take out the stores that are not properly capitalized, that were not at the top of their game when it comes to customer intimacy and merchandising.

Peter Day, chairman, Oak Patch Gifts, Eugene, OR

We've felt some softening of orders on a same item/same customer basis. Not so much the number of orders, but the size. It's hard to tell how much is due to changes in actual sell-through versus retailers wanting to run conservative on inventories until the full economic picture unfolds. We're hearing anecdotally that business is slow for many retailers. Many of us [vendors] operate with a line of credit to fund seasonal cash requirements: i.e., to build inventory prior to major shopping seasons. The line is renewed by the bank every 12 months. This year, when they come up for renewal, many small to mid-size vendors are going to find tighter lending limits, stricter covenants, and lower collateral-base formulas. That affects how much we can buy/build, overall staffing levels, etc. Some vendors may not get renewed at all. On the demand side it's hard to say which factor is having the biggest impact. Consumers are getting hit on all levels: their monthly expenses for food and fuel are up, their net worth in their house and retirement account is down, their ability to spend beyond their income using credit is gone, and they're fretting about job security. That combination doesn't bode well for impulsive, “gifty” products. By definition nobody has a line in the family budget for impulse items. They're wants, not needs.

Doug Cofiell, vice president, GHTA, Grand Rapids, MI

It already has had an impact. It is a rough year; it just cuts into active people within the organization. [The state of the economy] should really help [lead more people to become active in the GHTA], because so much change is going on. But it is hard to get people to think of that when times are tough.

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