From PPAI - the promotional products industry's largest, not for profit organisation.
The branded merchandise industry is gearing up for a potentially transformative year in 2025, with growth expectations running high across both distributors and suppliers in the PPAI. The data from PPAI Research reflects optimism for significant growth despite a tumultuous 2024, underlining key strategies for achieving this growth and navigating ongoing challenges.
Sales Growth Projections and Key Strategies
Almost 45% of PPAI distributors anticipate a 6%-15% growth in 2025, while another 34% expect a more modest 1%-5% increase. A similar trend is seen among suppliers, with 45% predicting a 6%-15% growth and 38% targeting 1%-5% growth.
The primary growth strategies identified by both groups are noteworthy:
Suppliers are focusing heavily on expanding product lines, with 82% of PPAI suppliers emphasizing this as a key growth strategy. Other priorities include enhancing customization capabilities (46%) and entering new markets (41%).
Distributors, on the other hand, are primarily focused on entering new markets (53%) and increasing their sales personnel (33%) to drive growth. Rising client budgets (28%) also remain a crucial factor for distributors' growth strategies.
Industry Consolidation
The 2024 M&A activity — such as S&S Activewear’s acquisition of alphabroder and iPROMOTEu’s merger with AIA Corporation — has raised the prospect of continued consolidation in 2025. About 35% of suppliers expect increased competition from larger firms, indicating concerns over market dominance and the intensifying competitive landscape. However, only 12% of distributors share this view, with many remaining focused on growth strategies rather than consolidation threats.
Interestingly, over half of distributors (51%) and 46% of suppliers see industry consolidation as having little to no impact on their operations, suggesting that some players believe they can still thrive despite larger competitors. Moreover, 37% of distributors and 16% of suppliers view consolidation as an opportunity for growth through strategic acquisitions.
Diversifying Sourcing Strategies
In light of evolving trade policies — especially with the potential impact of tariffs on imports — sourcing strategies are shifting. A significant number of suppliers and distributors are considering new regions to diversify their supply chains:
Suppliers are increasingly looking to Southeast Asia (excluding China), with 49% identifying it as a key sourcing region for 2025. India and Mexico are also gaining prominence, chosen by 27% of suppliers each.
On the distributor side, there is a strong interest in Mexico (49%) and Southeast Asia (43%), with South America and India also appearing as potential sources.
A notable trend is the rise in domestic sourcing, with 46% of distributors planning to focus more on Made in USA products, reflecting a desire for supply chain resilience and faster shipping times.
Advocacy Priorities
Regulatory issues and challenges in the workforce continue to be significant concerns for both distributors and suppliers in 2025:
Suppliers are particularly focused on sustainability compliance (41%), while labor and workforce issues (33%) also remain a key priority.
Distributors, on the other hand, are more concerned with labor and workforce challenges (42%), and sustainability compliance (24%) remains a secondary priority.
The potential regulatory changes, especially concerning tariffs and trade policies, are prompting both distributors and suppliers to reassess how they navigate these shifts. The focus on flexible regulatory frameworks remains crucial for smaller businesses to maintain competitiveness in an evolving market.
Looking Ahead to 2025
The promotional products industry stands poised for robust growth in 2025, fueled by strategic expansion into new markets, product lines, and sourcing regions. However, the potential challenges posed by industry consolidation, changing trade policies, and workforce issues require careful navigation. As Alok Bhat from PPAI noted, the question is not just how the industry will grow but how it will strategically achieve and leverage this growth in a competitive and ever-evolving landscape.
original article: