What consequences does Corona have for the promotional products industry?
Published on 07.04.2020
As Managing Director of PSI, Michael Freter knows the promotional products industry like no other. In an interview, he talks about the effects of the Corona crisis on the German and European market and praises the commitment and solidarity of many PSI members in this unprecedented situation.
What effects has COVID-19 caused on the promotional products industry in Germany?
The spread of COVID-19 has placed an enormous strain on our industry and we are very concerned about the latest developments. Orders are being cancelled or postponed and the majority of traders anticipate a loss of income over the next two months. The overall situation is precarious, but especially for small traders as it can cost them their livelihood. For their part, suppliers are taking the necessary steps to protect employees and are laying off staff or putting them on short-time working. Currently, everybody is trying to find a way of surviving the crisis.
How can this be transferred to Europe?
The impact has been similar throughout Europe and, I would suggest, even worldwide. In Italy and Spain, the economies have virtually come to a standstill and only companies essential for survival are still operating. One example of how global trade is currently being massively impeded is the exploding cost of air freight due to so many passenger aircraft being grounded. Before the corona virus crisis, it cost approx. € 4.00 per kg freight to transport goods from China to Germany. At the moment, you can pay as much as € 17.00 per kg. The prices of products that used to cost a few cents before the virus are now into double digits. Such developments are having a major impact on margins throughout Europe, resulting in a huge amount of pressure on our industry as a whole.
How is this expressed in figures?
If, as many fear, turnover in the advertising article industry nosedives during the next two months, this could lead to a double-digit percentage drop in overall turnover. This would mean an enormous loss in a market with a Europe-wide turnover of € 14 bn.
What is PSI doing to support the market during the crisis?
As the PSI network, we are currently providing our members and the industry as a whole with an enhanced range of services – with a daily news bulletin, concrete offers of help and other valuable assistance. We are passing on information about topical developments, offers of help and state subsidies in the form of a newsflash almost daily. We are also extending payment deadlines if someone is having liquidity problems due to a lack of orders. We are also currently offering products for free that we normally charge for, e.g. our Product Finder. We are also currently preparing a supplier availability list which will give traders a clear overview of which suppliers can currently provide what products. At the same time, we are also passing on any positive messages that we come across. Despite their own difficult situation, many of our members are also out there helping other people such as staff who work in hospitals or supermarkets. We are supporting this activity by spreading the good news to the market. After all, solidarity is something from which we all draw succour at the moment and examples like this give everybody hope.
What long-term effects will the crisis have on the promotional products industry?
A lot of things will never be the same again once the crisis is over. It is pretty clear that a lot of smaller companies will not survive. Digitalisation is currently playing to its strengths and keeping many different business models above water. Digitalisation definitely needs to become one of the core pillars of our business alongside our traditional operations In future. I see this as a great opportunity.