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The credit crunch could finally be starting to take its toll on the UK promotional merchandise market, a Sourcing City analysis for early 2008 has revealed.
The latest industry statistics from Sourcing City indicate that up until June this year the turnover within the promotional merchandise market was maintaining steady growth and following a similar growth trend to last year, with plenty of new start up companies. However, during early June the mood in the market was beginning to change, said Sourcing City. "Distributors appeared mixed in their views on the current market, some felt the enquiry levels had gone ‘quiet', whilst others indicated that their activity was still relatively busy," it claimed.
"Naturally, local sales focus and customer sector profiles have an influence on these statements. However, several promotional merchandise suppliers have indicated that the market seems to be slowing, and although the start of the summer holidays could have been a factor, it was felt the slowdown was not following normal market seasonal cycles."
According to Sourcing City, mid year also saw a number of established distributor companies cease trading, owing significant sums to trade suppliers.
"There is certainly a feeling in the market that more closures may follow in the second half of the year, involving both distributors and suppliers," it said. "Another potential problem the market faces is the nervousness of suppliers to extend or even maintain large credit terms. Suppliers will feel the need to tighten their credit terms to minimise their risk of exposure. This in turn may cause credit availability and cash flow pressures for distributors."
However, according to the survey environmentally friendly promotional products are bucking this current market mood with dramatic growth.
The environmentally friendly product group had the highest net increase in CT Enquiries (+23,868), the third largest CT Enquiries net growth (54%) in the top 10 themed groups during January to June (compared to the last six months of last year).
In the top 10 themed groups the growth trend was only bettered by travel products and sports goods, which could be expected due to their seasonal nature. Environmentally friendly products featured highly in the top 10 most popular and top 10 fastest growing individual products.
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