Strategizing to Survive
The economic slowdown forced many to take a hard look at their businesses and focus on best practices and innovation.
By Judi Fulbright and Caroline Kennedy -- Gifts and Dec, 12/1/2009 12:00:00 AM
Although we are beginning to see glimmers of hope on the horizon for the economic forecast, the outlook for the year ahead remains cautious as consumers continue to watch their spending. Yet, vendors are more optimistic than they were a year ago.
Of the vendors responding to Gifts & Decorative Accessories' annual Trends & Forecasts survey this year, nearly 60 percent indicated they expect their sales in 2010 to be better than in 2009.
This brighter outlook was foreshadowed in the second half of 2009 when we saw buyers at the summer markets with a more positive attitude, a better handle on their financial status, and placing solid orders by sticking to their budgets and inventory needs. Vendors too have adjusted with new strategies and ideas to improve efficiency, visibility and build relationships with their retail customers.
The downturn has been a wake-up call, causing vendors — and retail merchants as well — to roll up their sleeves and take stock of their businesses, evaluating its strengths and weaknesses to see where changes should be made to ensure its future.
This year's Gifts & Decorative Accessories' annual Trends & Forecasts survey reveals some interesting shifts:
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The Baby Boomer demographic no longer reigns supreme as a target customer. The Baby Boomer demographic has been split between Older and Younger, allowing Gen X to skip to the top of the chart as the primary target demographic for new product development by vendors. Younger Baby Boomers are right behind; Older Baby Boomers drop further back, with Gen Y and Tweens remaining in place.
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Products designed with spiritual or religious themes shot to the top of the trend list as consumers looked for comfort in their belief systems and sought out product that reflected those beliefs more.
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The Internet is growing in importance as a marketing and sales medium. Three-quarters of responding vendors have an online catalog, and two-thirds of those vendors allow retailers to place orders online.
The charts on the following pages highlight the results of the survey and provide, where applicable, comparisons to previous years.
Tracking the Trends: Design Directions
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Spiritual/religious themes, tops on the "in" list, have gained on Modern/contemporary looks this year. Modern/contemporary, the hottest trend last year, has even slipped behind traditional themes for this year.
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Safari/adventure has joined Asian and moved to the top of the "out" list.
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Americana has edged up from near-invisibility on the "out" list, to just about making it onto the "in" list.
Design Directions for 2010
Percentage of vendors who say design direction is rising minus the percentage who say design direction is fading
| Heating up | 2010 | 2009 | 2008 |
|
Measured on a scale of 1 to 3, with 1 equal to "Fading," 2 equal to "Same" and 3 equal to "Rising."
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| Spiritual/religious | 36% | 26% | 22% |
| Traditional | 32% | 22% | 27% |
| Modern/contemporary | 29% | 37% | 43% |
| Retro | 19% | 19% | 18% |
| Classical | 13% | 12% | 13% |
| Coastal/cottage | 6% | 14% | 19% |
| Cooling Down | 2010 | 2009 | 2008 |
| Safari/adventure | -23% | -26% | -30% |
| Asian | -20% | -14% | 2% |
| Lodge/cabin | -17% | -6% | -1% |
| Tropical/island | -14% | -8% | -4% |
| Celebrity/pop culture | -7% | -5% | 2% |
| Americana | -4% | -16% | -22% |
Tracking the Trends: Color Schemes
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Earth tones have plummeted from the top spot in importance, taking third place this year behind Brights and Black and/or White.
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Neutrals, Jewel tones and Metallics round out the list of color schemes deemed as either important or very important.
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Pastels, Tropicals, Midtones and Primary Colors scored the lowest ratings in terms of importance, with fewer vendors viewing them as either important or very important. This same set of four color themes continue to un-impress as they have for the previous three years.
Color Schemes
Percentage of vendors reporting color schemes as "Important" or "Very important"
| 2010 | 2009 | 2008 | |
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Measured on a scale of 1 to 5, with 1 equal to "Not very important" and 5 equal to "Very important."
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| Brights | 64% | 53% | 50% |
| Black and/or white | 60% | 50% | 62% |
| Earth tones | 55% | 67% | 64% |
| Neutrals | 48% | 45% | 47% |
| Jewel tones | 43% | 41% | 46% |
| Metallics | 40% | 46% | 49% |
| Pastels | 28% | 21% | 25% |
| Tropicals | 26% | 32% | 33% |
| Midtones | 20% | 23% | 30% |
| Primary colors | 18% | 31% | 28% |
Who are Vendors' Customers?
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More than four-fifths of the responding vendors distribute through gift specialty stores, more than any other channel. Nearly one-half of vendors also identified it as their most important channel for this year; more than one-half are projecting gift stores will be their fastest-growing channel ahead in 2010.
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Nearly two-thirds of vendors distribute through home accessories stores, while about one-half use museum or attraction outlets and stationery/card shops. Direct-to-consumer sales outlets (the Internet, catalogs and TV shopping), along with bookstores make up the next group of popular distribution channels, each used by more than two-fifths of vendors.
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Interestingly, it's the direct-to-consumer channel vendors think will be one of the top fastest-growing distribution channels for 2010.
Distribution Channels
Who are the vendors' customers?
Percentage of vendors
| Projected as fastest-growing channels, 2010* | Most important channel | Distributing through the channel** | |||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||
| * Percentage of vendors identifying as one of three channels showing the greatest sales growth for 2010. ** More than one response was allowed. |
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| Gift specialty store | 57% | 45% | 34% | 39% | 87% | 64% | 73% |
| Direct-to-consumer (e.g. catalog/TV/Internet) | 34% | 10% | 8% | 7% | 46% | 39% | 38% |
| Home accessories store | 27% | 10% | 15% | 12% | 63% | 57% | 58% |
| Museum/"attraction"/souvenir store | 16% | 5% | 4% | 5% | 54% | 41% | 53% |
| Department store (e.g., Macy's) | 14% | 5% | 6% | 4% | 33% | 29% | 36% |
| Florist/garden center/nursery | 14% | 7% | 7% | 5% | 51% | 42% | 48% |
| Discount department store (e.g., Target, Wal-Mart) | 13% | 1% | 3% | 4% | 15% | 16% | 20% |
| Stationery/card shop | 11% | 4% | 7% | 6% | 53% | 42% | 48% |
| Bookstore | 9% | 3% | 4% | 3% | 45% | 36% | 39% |
| Craft/Toy/Hobby shop | 5% | 3% | 2% | 1% | 36% | 25% | 22% |
| Drug/Pharmacy/Hospital/Convenience | 4% | &1% | — | — | 8% | — | — |
| Park/Event/Fundraiser/Resort | 3% | &1% | — | — | 7% | — | — |
Producing for the Customer
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The primary consumer targets for the development of new products are Gen X members and the younger group of Baby Boomers; almost one-half of vendors say they target these demographic groups.
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Older Boomers, now 54 to 63 years old, and Gen Y, currently 15 to 33 years old, are targets for about one-third of vendors.
Vendors and Sales Expectations
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Comparing their 2009 sales with 2008's, a net of 37 percent say their sales will be lower this year, more than the net of 29 percent of vendors who reported their 2008 sales were down from 2007's.
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Vendors are even more hopeful this year they will regain what they've lost with a net of 59 percent expecting sales for 2010 to be better than in 2009. Last year, a net of 28 percent expected their 2009 sales would be greater than in 2008.
Products and Price Points
Percentage of vendors producing
| 2009 | 2008 | 2007 | Projected net change to price points, 2009–2010* | |
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Other included: Sentiment gifts, travel accessories, gourmet chocolates, souvenirs, textiles and bedding, and housewares
*Net change: Percentage of vendors reporting price points to be higher minus those reporting price points to be lower for 2010. |
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| Home accent pieces | 49% | 45% | 42% | 23% |
| Holiday decor | 45% | 39% | 32% | 13% |
| Candles/candle accessories | 36% | 25% | 24% | -14% |
| Frames/desk accessories | 32% | 23% | 21% | 5% |
| Garden decor | 29% | 24% | 26% | 13% |
| Stationery/greeting cards | 29% | 21% | 21% | 5% |
| Tabletop | 28% | 30% | 25% | -4% |
| Products for kids | 25% | 14% | 21% | -6% |
| Collectibles | 23% | 21% | 20% | 4% |
| Baby/infant | 22% | 20% | — | -8% |
| Jewelry/fashion accents | 20% | 18% | 19% | 4% |
| Personal care/aromatherapy | 17% | 12% | 10% | 3% |
| Other | 15% | — | — | 13% |
What's New
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Vendors plan to introduce a median of four new collections or lines in 2010, about the same number as they have reported over the last several years.
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The majority of vendors plan to introduce about the same number or more new collections or lines in 2010 than they did in 2009.
Tracking the Trends: Licenses
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While the overwhelming majority of vendors admit to carrying licensed products, it's not really a big deal to them. Three-fifths say licensed products makes up less than 10 percent of their product assortment.
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Artists/illustrators, fashion designers, book/movie characters and sports/collegiate remain licensing favorites with nostalgic licenses vying to join the bunch.
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Book and movie characters moved up from the wannabe group last year to join the front-runners this year.
Important 2010 Licenses
Percentage of vendors reporting licenses as "Important" or "Very important"
| 2010 | 2009 | 2008 | |
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Measured on a scale of 1 to 5, with 1 equal to "Not very important" and 5 equal to "Very important."
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| Artists/illustrators | 44% | 42% | 44% |
| Fashion designers | 40% | 43% | 50% |
| Book/movie characters | 39% | 38% | 40% |
| Sports/collegiate | 39% | 39% | 39% |
| Nostalgic | 37% | 38% | 40% |
| Adventure/lifestyle | 29% | 36% | 42% |
| Pop characters | 28% | 32% | 36% |
| Historical/Americana | 20% | 22% | 21% |
The Newest Marketplace
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This year almost three-quarters of vendors have catalogs online, edging up from the more than two-thirds last year. Of those with an online catalog, two-thirds allow retailers to place orders for goods online too.
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More than two-fifths of vendors sell directly to consumers online, generating a median of 10 percent of their total revenues. Vendors expect that percentage to grow to 15 percent in 2010.
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For the more than one-half of vendors who do not sell directly to consumers through the Internet, nearly two-thirds think it's not likely they will do so. However, more than one-quarter are still considering what they will do about online sales to consumers.
Vendors and the Internet: The Newest Marketplace
| Vendors' online presence continues to change | ||
| 2009 | 2008 | |
| 74% | of vendors have an online catalog | 68% |
| 63% | of those with an online catalog can place orders online | 62% |
| 61% | Net of vendors saying the number of retailers ordering online increased in 2009 over 2008. | 59% |
| Percentage of vendors reporting the number of retailers ordering online were higher minus those reporting the number was lower than in 2008. | ||
| Vendors using Internet to sell direct to consumers | ||
| 2009 | 2008 | |
| 44% | of vendors currently sell directly to consumers through the Internet | 38% |
| For those vendors currently selling directly to consumers, the percentage of their total revenues generated from online consumer sales | ||
| medians | medians | |
| 10% 2009 | 5% 2008 | |
| 15% Projected 2010 | ||
| Plans for adding online sales to consumers | ||
| 56% of vendors currently DO NOT sell directly to consumers through the Internet, decreasing by six percentage points from a year earlier. | ||
| Plans for adding online direct sales to consumers in ... | ||
| 2010 | 2009 | |
| Not likely at all | 62% | 45% |
| Still considering | 28% | 28% |
| Very likely | 8% | 27% |
| Will use Shopatron or other affiliate marketer | 2% | |
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