Promotional Products Industry Concerned by Omicron Promo Execs Weigh in on Omicron
Even with minimal impact to business so far, the fast-rising COVID variant could exacerbate supply chain disruption and complicate return-to-office plans and onboarding.
Omicron is causing complications and concerns about things like more supply chain disruption in the promotional products industry, but so far the highly transmissible variant of COVID-19 hasn’t impacted sales.
That’s the word from leading promo executives, who told ASI Media that business has remained brisk in the last month since omicron emerged as a variant of concern. That suggests that clients have, so far, decided not to tighten marketing budgets over worries related to the variant. Last week, omicron accounted for 73% of new COVID cases in the United States.
“We have not seen any impact upon our sales due to omicron as of now,” says Jo-an Lantz, CEO/president of Top 40 distributor Geiger (asi/202900) and a member of Counselor’s Power 50 list of the promo products industry’s most influential people. “Fourth-quarter sales have been very strong, including the last couple of days.”
Zack Ottenstein expressed similar sentiments.
“We haven’t experienced any significant impacts from omicron at this time,” says Ottenstein, president of Top 40 distributor The Image Group (asi/230069). “We believe omicron will lead to some drag, but our business is strong.”
“I believe the economy and our industry will not suffer a meaningful downturn as a result of omicron.”Marc Simon, HALO
Meanwhile, Marc Simon tells ASI Media that “we are not seeing an impact from omicron on our business.” Simon, a Power 50 member and CEO of HALO Branded Solutions (asi/356000), promo’s largest distributor, says that early in the pandemic the distributorship created a business-resiliency plan that continues to help guide through challenges like the latest variant.
“We are well-prepared,” says Simon. “At least as importantly, we believe our customers are also well-positioned to not only survive but to conduct operations without missing a beat. Therefore, I believe the economy and our industry will not suffer a meaningful downturn as a result of omicron.”
Concerns & Complications
Nonetheless, some executives are concerned that the spread of omicron could exacerbate supply chain disruptions that have plagued promo throughout 2021. Those disruptions – from port congestion and labor shortages to reduced factory productivity and much more – have contributed to ills like inventory shortages and higher product prices in the industry.
Some executives worry that the possible reintroduction of societal restrictions here or in important overseas production centers like China could intensify the supply network woes.
“I am concerned about how unpredictable the omicron impacts may be,” says Nancy Schmidt, a Power 50 member and CEO of Top 40 distributor AIA Corporation (asi/109480). “On the one hand, additional restrictions and downtime could worsen production and supply chain pressure and contribute to increased inflationary factors. However, the opposite could be true: Omicron could slow consumer activity, delay purchases, allow factories and overwhelmed ports to work through backlogs, and potentially weaken inflationary factors. We are in unprecedented times. We must be adaptable and agile.”
China has been swift to introduce lockdowns following COVID flare ups, which can affect production at factories from which North American promo firms source their products. To date, indications from President Joe Biden and Dr. Anthony Fauci are that federal-forced societal closures are not in the cards in the U.S.
Even so, fallout from potential omicron issues like more labor shortages resulting from workers being off the job in quarantine, either here or abroad, could potentially further slow supply lines.
“We’re still seeing significant delays in product arrival due to the first wave of COVID,” says Rhyen Campbell, contest strategist at Top 40 supplier Cap America (asi/43792). “Our concern is that this new wave will further complicate these existing issues.”
“The resilience of our industry is inspiring. I am optimistic that we will overcome whatever unexpected obstacles come our way, including omicron.”Jo-an Lantz, Geiger
Additionally, omicron stands to delay return-to-the-office plans for promo companies and clients across industries, executives say.
“Some firms had plans for their employees to reenter the workplace after the first of the year,” Lantz says. “These plans have been postponed. Our plans were to reenter at the end of the first quarter of 2022. We will have to wait and survey the landscape as we get through January.”
“Omicron will keep offices closed longer,” opines Craig Nadel, a Power 50 member and president of Top 40 distributor Jack Nadel International (asi/279600). “One result of that for our industry is more drop shipments, which are expensive and more work to do.”
Executives note that the emergence of omicron presents a challenge for various aspects of internal operations at promo companies and beyond. These include everything from potential increased health-care costs to scheduling and training issues, to the mental health of employees and their ability to function at their highest level amid COVID fatigue and anxiety.
“We believe the biggest impact will be the continued strain on the workforce,” says Ottenstein. “The rollercoaster ride of back to the office and quarantine limits productivity. For managers, it’s impossible to plan and schedule, especially in production facilities. Most importantly, the additional stress and burden at home weighs on all of us. Across the industry, companies have hired new people in droves. Omicron will make successfully onboarding and integrating them even more difficult.”
Larger employers in promo are also facing omicron in light of a federal vaccination-or-testing mandate that requires workers at companies with 100 or more employees in the U.S. to be fully vaccinated against COVID-19 by Jan. 4, 2022, or to submit to weekly coronavirus tests to confirm they don’t have the virus. The mandate affects about 80 million private-sector workers.
“We have to be ready to test non-vaccinated employees,” shares Lantz. “That creates a complicated administrative process, challenges in procuring tests, and increased costs to do business.”
Despite omicron’s challenges, promo executives had a generally upbeat view about business heading into the new year.
“Omicron will hopefully be short-lived – a 30- to 60-day event – and not presage another more intense variant for the mid-year and/or end of next year,” says Ira Neaman, a Power 50 member and president of Top 40 supplier Vantage Apparel (asi/93390). “We can’t overreact or underreact. Both have significant adverse impacts.”
Lantz believes that business in the first quarter of 2022 will outpace the performance seen in Q1 of 2021. “The resilience of our industry and its ability to quickly adapt is inspiring,” she says. “I am optimistic that we will overcome whatever unexpected obstacles come our way, including omicron.”