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Here Today... Still Here Tomorrow

Warren Shoulberg -- Gifts and Dec, 1/11/2011 5:44:23 AM

Warren Shoulberg, Editorial Director So, there's another year about to start and all many of us Can Say is Thank Heaven: We've had just about enough of the one just ending.
     Whoever would have thought it could have possibly turned out the way it did?
     This year started out with such promise, with visions of a robust economic recovery, ongoing change in our national government and reduced tensions around the world.
     Instead, the Great Recovery to the Great Recession hasn't quite worked out, and business conditions are pretty much no better than they were this time a year ago. At the national political level, the country is as divided as it's ever been and the new year promises to be even more divisive.
     All of that said, I think anyone running a business these days needs to stop a moment and give themselves a small figurative pat on the back: You made it through another one. Despite unprecedented times and conditions, you and your company have survived to start another year.
     What kind of year will it be? This we do know: The bill is finally about to come due for raw material cost increases. Vendors and retailers alike have managed to absorb the added cost of producing products through some squeezing of already well-squeezed margins, some subtle and not-so-subtle de-specing of products and a bunch of good old fashioned smoke and mirrors.
      It's hard to believe there's anything left in the industry's bag of tricks. Anything with cotton or polyester in it, anything that is made of petroleum derivatives and anything that comes from Asia by boat - in other words, pretty much everything - is going to go up in price in 2011. How sellers and buyers deal with it will be the biggest single factor impacting business next year.
     There will also be the inventory issue. Even as the supply pipeline gets increasingly longer, stretching into corners of the world that had never seen a purchase order before, retailers are asking - make that demanding - vendors carry more inventory for them... so they can carry less. While raw material costs go up and down, the new dynamics of inventory management represent a fundamental change in the way business is done.
     Vendors are going to need to continue to make enormous investments not just in stock, but in the systems and facilities needed to manage that process. This may finally be the tipping point for larger suppliers to gain market share in the still highly fragmented gift industry.
     Lastly, retailers will need to continue to walk that very precarious tightrope of offering price-sensitive promotional goods while at the same time giving their customers those special products they will go out of their way to buy. So, congratulations: You're still here. And good luck over the next year.
     We're reminded of a great Lily Tomlin quote we recently heard: "It's going to get much worse before it gets worse."
Let's hope the much worse is over.

-Warren Shoulberg, Editorial Director

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