TRENDS AND FORECASTS

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

A
lthough we are beginning to see glimmers of to the top of the chart as the primary
hope on the horizon for the economic forecast, target demographic for new product
development by vendors. Younger
the outlook for the year ahead remains cautious Baby Boomers are right behind;
as consumers continue to watch their spending. Yet, ven- Older Baby Boomers drop fur-
dors are more optimistic than they were a year ago. ther back, with Gen Y and Tweens
remaining in place.
of the vendors responding to Gifts retail customers. • Products designed with spiritual
& Decorative Accessories^ annual The downturn has been a wake-up or religious themes shot to the top of
Trends 8c Forecasts survey this year, call, causing vendors — and retail the trend list as consumers looked
nearly 60 percent indicated they merchants as well — to roll up their for comfort in their belief systems
expect their sales in 2010 to be better sleeves and take stock of their busi- and sought out product that reflect-
than in 200y. nesses, evaluating its strengths and ed those beliefs more.
This brighter outlook, was fore- weaknesses to see where changes • The Internet is growi ng i n impor-
shadowed in the second half of 2009 should be made to ensure its future. tance as a marketing and sales medi-
when we saw buyers at the summer This year's Gifts & Decorative um. Three-quarters of responding
markets with a more positive atti- Accessories' annual Trends & Fore- vendors have an online catalog, and
tude, a better handle on their finan- casts survey reveals some interesting two-thirds of those vendors allow
cial status, and placing solid orders shifts: retailers to place orders online.
by sticking to their budgets and • The Baby Boomer demographic The charts on the folk)wing pages
inventory needs. Vendors too have no longer reigns supreme as a target highlight the results of the survey
adjusted with new strategies and customer. The Baby Boomer demo- and provide, where applicable, com-
ideas to improve efficiency, visibility graphic has been split between Older parisons to previous years.
and build relationships with their and Younger, allowing Gen X to skip To page 68

www.giftsanddec.com • Gifts & Decorative Accessories

TRENDS AND FORECASTS
From page 67

Design Directions for 2010 TRACKING THE TRENDS: DESIGN DIRECTIONS

Percentage of vendors who say design direction is rising

Spiritual/religious themes, tops on the "in" list,
minus the percentage ivfto say design direction is fading have gained on Modern/contemporary looks this year.
Modern/contemporary,
^Heating up 2010 2009 2008 the hottest trend last year,
Spiritual/religious 36% 26% 22% has even slipped behind
32%
traditional themes for this
Traditional 22% 27%
year.
Modern/contemporary 29% 37% 43%
• Safari/adventure has
Retro 19% 19% 18% joined Asian and moved
Classical 13% 12% 13% to the top of the "out" list.
Coastal/cottage 6% 14% 19% • Americana has edged
up from near-invisibility

r Í Cooling Down 2010 2009 2008 I on the "out" list, to just

about making it onto the
Safari/adventure -23% -26% -30%
"in" list.
Asian -20% -14% 2% • ^
Lodge/cabin •17% -6% -1% Gifts of Faith Precious Moments
Tropical/island -14% -8% -4% license taps into religious themes.
Celebrity/pop culture •7% -5% 2% TRACKING THE TRENDS: COLOR SCHEMES
Americana -4% -16% •22% Earth tones have plummeted fntni the top spot in
Measured on a scale of I to 3, wilh I equal to 'fading, importance, taking third placethis year behind Brights
2 equal to "Same " and 3 equai to "Rising. " and Black and/or White.
• Neutrals, Jewel tones and Metallics round out the
list of color schemes deemed as either important or
very important.
• Paslels, Tropicals. Midtones and Primary Col-
Color Schemes ors scored the lowest ratings in terms of importance,
Percentage of vendors reporting color schemes as "Important ' with fewer vendors viewing them as either important
or "Very important" or very important. This same set of four color themes
2010 2009 2008 continue to un-impress as they have for the previous
Brights 64% 53% 50% three years.
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%
Pastéis 28% 21% 25%
Tropicals 26% 32% 33%
Midtones 20% 23% 30%
Primary colors 18% 31% 28%
Measured on a scale oi î to 5, with I equal to 'Not very important'
and 5 equal to 'Very important "

Bright colors top the "very important"

trend list fof 2010. A pop of bright color is
especially important ¡n fiome accents.

Gifts & Decorative Accessories • www.giftsanddec.mm

 D i s t r i b u t i o n Channels who are the vendors'customers?
Percentage of vendors
Projected as Distributing
fastest-growing through
channels, Most Ím'ííSPÍá'ÍPi'f channel the channel**
2010- 2009 2008 2007 2009 2008 2007

Gift specialty store 45% 34% 39% 87% 64% 73%

Direct-to-consumerie.g.cstatog/Tv/internet) 34% 10% 8% 7% 46% 39% 38%
Home accessories store 27% 10% 15% 12% 63% 57% 58%
Museum/"attraction"/soijvenir 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.. Targei. wal-Mari) 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/Phamiacy/Hospital/Convenience 4% <1% — — 8% — —
Park/Event/Fundraiser/Resort 3% — — 7% - —
' Percentage of vendors identifying as one of three cfiantiels showing the greatest sales growth lor 20 JO.
'* More than one response was allowed.

WHO ARE VENDORS' CUSTOMERS?

• More ih.in rour-l'iflh.s of the responding vendors
distribute through gift specialty stores, more than any
other channel. Nearly one-half of vendors also identi-
fied it as their most important channel for this year;
more than one-half are projecting gift stores will be
Producing for the Customer
Nearly three-quarters of vendors say their customers ask them
iheir fastest-growing channel ahead in 2010.
to develop products not typically represented in their line.
• Nearly two-ihirds of vendors distribute through
The consumer targets for these new products include:
home accessorie.s stores, while about one-half use Percentage of vendors responding
museum or attraction outlets and stationery/card
shops. Direct-to-consumer sales outlets {the Internet, Gen X: 34-44 yrs. old
catalogs and TV shopping), along with bookstores
Younger Boomers: 45-53 yrs. old
make up i he next group of popular distribution chan-
nels, each used by more than two-fifths of vendors. Older Boomers: 54-63 yrs, old
• Interestingly, it's the direct-to-consumer channel Gen Y: 15-33 yrs. old
vendors think will be one of the top fastest-growing
distribution channels for 2010. Tween: Ages 8-12

Latino/Hispanii 11%

PRODUCING FOR THE CUSTOMER

The primary consumer targets tor the develop-
ment of new products are Gen X members and the
younger group of Baby Boomers; almost one-half of
African American

Asian
t
Nearly 5 0 % of the vendors are asked to develop
vendors say they target these demographic groups. special products for either Gen X or the
• Older Boomers, now 54 to 63 years old, and Gen Younger Boomer age groups.
Y, currently 15 to 33 years old, are targets for about
one-third of vendors.
To page 70

www.giftsanddeccom • Gifts & Decorative Accessories

I TRENDS AND FORECASTS
From page 69

Products and Price Points VENDORS AND SALES EXPECTATIONS

Percentage of vendors producing Comparing their 2009 sales with 20O8's, a net of
Projected net 37 percent say their sales will be lower this year, more
change to
price points, than the net of 29 per-
2009 2008 2007 2009-2010* cent of vendors who
Home accent pieces 49% 45% 42% 23% reported their 2008
Holiday decor 45% 39% 32% 13% sales were down from
Candles/candle accessories 36%
2007's.
25% 24% -14%
Frames/desk accessories 32% 23% 21% 5%
• Vendors are even
more hopeful this year
Garden decor 29% 24% 26% 13%
they will regain what
Stationery/greeting cards 29% 21% 21% 5%
they've lost with a net
Tabletop 28% 30% 25% -4% of 59 percent expect-
Products for kids 25% 14% 21% -6% ing sales for 2010 to
Collectibles 23% 21% 20% 4% be better than in 2009.
Baby/infant 22% 20% — -8% Last year, a net of 28
Jewelry/fash ion accents 20% 18% 19% 4% percent expected their
Personal care/aromatherapy 17% 12% 10% 3% 2009 sales would be
greater than in 2008. Holiday (;•
Other 15% — — 13%
category with a more vendors
Other included: Sentiment gifts, travel accessories, gourmet
chocolates, souvenirs, textiles and bedding, and housewares producing seasonal Items.
'Net change: Percentage of vendors reporting price points to be
WHAT'S NEW
higher minus those reporting price points to be lower for 2010.
• 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.
• The majority of vendors plan to introduce about
the same number tir more new collections or lines in
2010 than they did in 2009.

What's New? How much do you reduce your existing

Number of riew collections or tines product line-up when you introduce
vendors plan to introduce in 2010 new collections or lines?
5% 3%
26-99 100 or more

.^K 20% or more Not at all

11%
15%-19,99%

37%
20%
1%-9.99%
10%-14,99%

The majority of vendors reduce their current

_ . . . of vendors plan to introduce one or more product assortment by less than 1 5 % when
new collections or lines in 2010; the median is four. they introduce new collections or lines.

Gifts & Decorative Accessories • www.gifisanddec.com

 Important 2010 Licenses
Percentage of vendors reporting licenses as
TRACKING THE TRENDS: LICENSES "Important" or "Very important"
• While the overwhelming majority of vendors 2010 2009 2008
admit to carrying licensed products, it's not really Artists/illustrators 44% 42% 44%
a big deal to them. Three-fifths say licensed firod- Fashion designers 40% 43% 50%
Lut.s makes up less than U) percent of their product Book/movie characters 39% 38% 40%
assortment. Sports/collegiate 39% 39% 39%
• Artists/illustrators, fashion designers, book/ Nostalgic 37% 38% 40%
movie characters and sports/collegiate remain
Adventure/liiestyle 29% 36% 42%
licensing favorites with nostalgic licenses vying to
Pop characters 28% 32% 36%
ioin the bunch.
Historical/Americana 20% 22% 21%
• Book and movie characters moved up from the
wannabe group last year to join the front-runners Measured on a scale of I to 5. with í equal to
'Noî very important' and 5 equal to 'Very importani'
this year.

Vendors and the Internet:

The Newest Marketplace
Vendors' online presence continues to change
THE NEWEST MARKETPLACE 2009 2008
This year almost three-quarters of vendors 74% of vendors have an online catalog 68%
63% of those with an online catalog can place orders online 62%
have catalogs online, edging up from the more
61% Net of vendors saying the number of retailers 59%
than two-thirds last year. Of those with an online
ordering online increased in 2009 over 2008.
ciitiilog, two-thirds allow retailers to place orders
lor goods online too. Percentage of vendors reporting the number of retailers ordering online were higher
minus those reporting the number was tomr than in 2008.
* More than two-fifths of vendors sell directly to
consumers online, generating a median of 10 per-
Vendors using Internet to sell direct to consumers
cent of their lotal revenues. Vendors expect that
2009 2008
percentage to grow to 15 percent in 2010.
44% of vendors currently sell directly to consumers 38%
• For the more than one-half of vendors who do through the Internet
not sell directly to
consumers through For those vendors currently selling directly to consumers, the percentage
the Internet, nearly of their total revenues generated from online consumer sales
two-thirds think medians medians
it's not likely they 10% 2009 5% 2008
will do so. However, 15% Projected 2010
more than one-
quarter are still Plans for adding online sales to consumers
considering what
56% of vendors currently DO NOT sell direaly to consumers through the
they will do about Internet, decreasing by six percentage points from a year earlier.
online sales to
Plans for adding online direct sales to consumers in ...
consumers.
2010 2009
To page 72
Not likely at all 62% 45%
n
Still considering 28% 28% 3
tr
Very likely 8% 27% n

Use of the Internet by vendors to Will use Shopatron or other

better serve retailers is increasing. affiliate marketer 2%

www.giftsarddec.com • Gifts & Decorative Accessories

TRENDS AND FORECASTS
From page 71
Best Practices
Strategies
IN ADDITION TO asking vendors
about sales, distribution and trend
directions, Gifts & Decorative
Accessories also asked about the
best practices they have employed
to help them cope during these
difficult times. Some answers
vk'ere good common sense, some
were difficult choices to make and
others fbrv^ard-thinking. Here's
a selection of those strategies that
cross many sectors.
COST CONTROLS
• Questioned all costs. Studied
break-even points and cast off all
profitless activity
• Cut expenses by going to a
four-day work week, [imple-
mented] "just -in-time' inventory
control; put a tight watch on all
spending
• Laid off departments that are
not needed
• Reduced contract or part-time
labor
CONCESSIONS
TO CUSTOMERS
• Extended value as a supplier to
heip customers — our lifeblood
— survive
• Offered freight concessions,
discounts, terms, special events,
no minimums, etc.
GDA Trends and Forecasts Survey, 2009
About the survey...
Vendors of all types and descriptions
responded to the Gifts & Decorative
Accessories' annual survey of manufac-
turers. Tiie survey was fielded during
September and October and close to
200 manufacturers responded by fax or
Gifts & Decorative Accessories • www.giftsanddec.com
MARKETING/SALES
TECHNIQUES
• Got more editorial coverage by
making sure to submit product for
consideration, which paid off with
coverage in key trade publications
• Increased branding and visibil-
ity through increased advertising
and press
• Improved product knowledge
and sales techniques
PRODUCTS AND
PRODUCTION
• Provided new lines and designs
for reps to sell, with marketing
behind them in an otherwise quiet
market
• Invested in innovation: new
product, new line extensions, new
color options. New exciting prod-
ucts thrive in any economy
• Improved production capabili-
ties
• Stayed focused on finding
products that are both functional
and fun without the high price tag
INVENTORY
• Pared down number of Unes;
expanded those doing well
• Stocked best items in anticipa-
tion of last minute reorders
• Liquidated slow sellers sooner
to the online version of the survey.
One-third of the responding ven-
dors had sales of less than $500,000.
Another two-fifths had sales between
$500,000 but less than $5 million. The
remaining more than one-quarter of the
respondents had annual saies greater
CUSTOMER CONTACT
• Talked more with customers to
find out their concerns and how
we can help make things easier for
them
• Be visible! Worked more with
road reps and custoiîiers
• It's not business as usual; basic
and traditional avenues of busi-
ness are not working. Shows are
lackluster and not cost-effective.
Vendors have to go to their cus-
tomers directly
PRICES AND MARGINS
• Offered products at key price
points so there is something for
everyone's budget
• Studied competition to make
sure our prices were in line
• Added products at lower price
points with low or no minimums
ELECTRONIC MEDIA
• Made use of social media
— Facebook, Twitter, etc. — [as]
low-cost advertising
•Social Networking: Linkedin
and the groups within this net-
work are a great help for bouncing
off ideas, making contacts and
being plugged into the overall state
of my sectors
• Used the Internet and social
networking to grow sales and
visibility
than $5miilior).
Research specialist Judi Fulbright
(336-605-1092), of Gifts & Decorative
Accessories' Market Research depart-
ment, directed the survey effort v^ith
special assistance from Cynthia Myers,
database coordinator, and Daphne
Garland-McLean, research specialist.
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