As usual, I am in Asia this time of year, and always disappointed to miss the trade shows in Atlanta and Las Vegas. I am staying very busy here having traveled to six different countries, but am happy to report that I have found the time for a haircut here in China. It was 39RMB, which converts to about $6.00 USD, including tip. My Dad would be so proud!
I received daily reports from the Atlanta Gift Market and am pumped up by the results! We had the biggest sales that I can remember, which is a confirmation that we are connecting with our customers, attracting prospects, and continuing to improve our service levels.
In addition to our results, I find it incredibly exciting that many other gift decor suppliers are showing positive numbers, as well. This is hugely important to all of us because retail needs a financially strong vendor base, and the suppliers need a diverse, successful independent customer base. When suppliers are successful, we will invest in product development, innovation, process improvement, and a multitude of other areas you have come to expect from us.
My associates tell me there was a very positive energy in our building at AmericasMart Atlanta that has been missing for a-while. With so much negative press about retail, we all should feel great about this. We are all making our own real news!
I am looking forward to digging in upon my return to find out what categories and items are driving our sales, and in my next message, I will tell you about them. Until then, please let me hear from you! I am receiving great comments, some in agreement and others sharing a different point of view, and each one of them is very much appreciated.
It doesn’t seem possible that we are winding down another year – It just can’t be! As is our most important company tradition, I would like to begin this message by saying “Thank You.” No different than when my grandparents founded The Gerson Companies over 75 years ago, we exist because of our customers and would like to extend our gratitude for our continued partnership. All of our associates, living throughout four countries, embrace our company core value of “Our Customers Matter” and work very hard to earn your business every day.
2017 Year At A Glance
As we all continue to navigate a quickly changing retail environment, we have much to be thankful for this year. We understand the challenges, and greatly appreciate your faith in The Gerson Companies to partner in your success. In 2017, our sales were even with last year, which is both a good news and bad news story. Every year, we set our goals to include sales increases over the previous year, no different than all businesses. So while we are disappointed, I can’t remember a year that seemed to be more challenging with so many changes to the retail landscape, and I have been working here for 35 years!
In 2017, we accomplished a lot together:
Giftbeat once again featured Gerson throughout the year as a favorite vendor among independent retailers. In its most recent November issue, Giftbeat published Gerson as retailers #1 choice for Seasonal/Halloween & décor.
Evolved and reorganized our Customer Service and Sales departments to focus on enhancing and improving the customer experience.
Reinforced our reputation as the leader in our industry by adding 1,828 new independent retailers to the Gerson Family of customers in 2017. Many new retailers were attracted to the company by Gerson International™ and our Lone Elm Studios® product lines, which achieved a combined 30.1% sales increase this year.
What To Expect in 2018
We will continue to be profitable and reinvest in support of our customers and The Gerson Companies’ future in 2018. Our plans are set, and I am very excited for what the next year will bring! We are introducing in a new brand, Flint Hills Studio™, more new innovative product at great pricing, and new technology to help grow our customers’ sales.
In 2018, our customers will experience:
Specifically designed technology to support our independent customers. G-Commerce, a new drop ship fulfillment program, will be introduced in January to offer an exciting, “no-risk” way to help our customers grow e-commerce sales and their brands.
Our new family members Darryl, Horace, Bella, among many others, will put a smile on your face and dollars in your cash register! Flint Hills Studio™, a beautifully crafted and exclusively designed product line, will debut in Atlanta and Las Vegas this January.
New and innovative designs in our seasonal product offering from Gerson International™ – the industry’s most popular and competitively priced seasonal décor offering. We are looking forward to GIL continuing its double digit year-over-year sales growth in 2018.
We have immense gratitude for our relationships with our customers, and look forward to continuing to improve and become more important to you this coming year. We appreciate the faith you have placed in our company by allowing us to support your business.
I am well into my 2-week long Asia trip and putting in a few travel miles. The cities I am visiting this trip are Hong Kong (to spend time in our offices and showroom located there), Shenzhen (to see our beautiful new factory showroom and meet with customers), and Shanghai (to work in the Gerson office and with our team). It’s been a productive trip, and I have about 4 days left before returning home!
I have two take-a-way’s from the trip thus far, and today I will address material and costing increases which continue to be the most discussing subject of concern with both our factories and retail customers. This blog is an update from my previous blog, “Why I’m Not Sleeping”, with more real time numbers to give readers a better feel for the current situation.
Price increases continues to be the hottest topic of conversation with our factories and our customers. It drives me absolutely crazy when I’m told our prices are going up without being supplied the specific reasons for those increases, so I decided to put together the numbers below in order to paint a clearer picture. These numbers include the primary component areas that our factories use in determining costs, and the percentage of change from 2016 to 2017.
As you can see, every single area shows a higher cost except for one!
To be even more of a downer on the current sourcing situation, the Chinese government has closed roughly 80,000 factories throughout summer and fall this year in order to address the growing environmental concerns. Less factories to source product means slower production time and less competition for these ongoing concerns.
Although the current situation in China is causing our prices to increases here in the United States retail market, the good news is that China is taking an important step toward making this world a better place to live in, which is absolutely vital. Even better news is that we have put together an absolutely beautiful Fall and Holiday Gerson International™ 2018 product collection for you. I cannot wait for you to see and experience it!
I look forward to hearing from you, and as always, your comments are appreciated.
It’s a fact that I am just not a great sleeper. But lately, my already disturbed sleeping patterns have grown worse to the point where I just cannot get a good night’s rest!
My hope with this blog is that I can offer insight into Gerson world, and share with you current issues that have an affect on our mutual business. And although I rarely get good sleep, the cause of my current dilemma is a result of occurrences across the world in China. You would never think that something happening so far away could cause challenges for us, but this is the world we live in.
The biggest challenge for those sourcing in China (like Gerson) used to be so simple: How and where to find the best product from season to season. But now that has really shifted in such a way that designing and finding exciting products is the least of our challenges, and the bulk of our work really begins afterwards. In 2017 – specifically the last 6 months – factories in China have begun experiencing impactful changes to their businesses, which in turn affects importers like Gerson, our customers, and ultimately, the U.S. consumer.
The four areas which have the potential to increase pricing and challenge future deliveries are:
Labor: Many of our products are hand-made, and the younger workers coming into the labor market in China are seeking work environments such as tech companies and newer, more automated facilities. Thus factories are having a tough time finding enough qualified and dedicated workers, which drives up labor costs.
Environment: The Chinese government has their version of the U.S. Environmental Protection Agency (EPA), called the Ministry of Environmental Protection (MEP), which has recently begun making a concerted effort to improve environmental conditions throughout the country by the end of 2017. In order to meet their goal, the MEP is currently inspecting and closing thousands of factories that do not conform to their environmental standards. This is challenging deliveries of product being imported from China, as well as driving up costs because factories must invest in equipment to conform.
Packaging: Costs in this area have risen 30% in the last 6 months, and this is on top of price increases in 2016. Shipping cartons, product displays and tagging are all significant components in production of product coming into the U.S.
Currency: Like any other currency, the Chinese Renminbi (RMB) fluctuates against the U.S. dollar. And this year, Chinese factories are losing 3-5% on the exchange rate. As a result, Chinese factories are passing along price increases of 3-5% to cover this gap. (It’s interesting to me that when the currency works in their favor, price decreases are rarely offered..)
The effect of these four obstacles in China both challenge future delivery dates and create price increases which we always try hard to negotiate against. And although this quadruple ‘whammy’ is exceptionally tough to manage, our company strategies are aimed at minimizing the effect they will have on us, and in turn, our customers.
Communication is one of our company’s primary goals this year, and we are committed to sharing information with our retail partners and associates. I believe it is more important that we communicate our plans so that our customers understand and know we are always committed to work hard on their behalf to navigate these choppy waters.
We all have challenges in our respective roles in the world of retail, and supplyingWOW product priced competitively and delivered as promised, is our challenge and responsibility. We don’t want The Gerson Company to ever be responsible for anything less than a great night’s sleep!
On that note, even with the growing obstacles these days in navigating sourcing in China, I realize how small these challenges are compared with the millions of people whose lives have been turned upside-down by the hurricanes. Our thoughts and prayers are with those suffering, and we are hopeful their lives will return to normalcy in the near future. We want all our customers to know that we are working closely with our many customers who are scrambling to re-open their businesses in the affected areas.
Thank you for your time, and always feel free to reach out to me with your questions and comments!
We are just finishing up our Spring and Summer 2018 Gerson International seasonal program, and it’s a good time to begin reflecting on the results. First, and most importantly, thank you to all our customers for having the faith in Gerson to supply your inventory for the coming season!
We do not know our final sales numbers yet, but it looks to be very positive. Our overall sales will be up, and orders received by customer compared to the year prior looks very good as well, which is a metric we watch very closely. I was very proud of our seasonal product offering and pricing for Spring and Summer 2018, and we were given credit for this by our repeat customers and the many new retailers who joined our family this year. We have been working hard to improve our customer experience, which I believe also helped our numbers for the season. Though we still have improvements to make, I am encouraged by our customer feedback.
An initiative of The Gerson Company this year is to improve communication with company associates and with our customers, and our company blog is a great way for me to personally connect with all of the Gerson family. I would love to hear back from anyone who might feel passionate about the subjects I address, or would like to suggest interesting topics you want more information about.
Even with all the changes our industry is going through, at the end of the day, this is still a people business. We want those connected to us to feel good about our company, and this blog will hopefully help by providing a little more insight into our thinking and company direction.
My contact information can be found below, and I look forward to hearing any feedback and ideas that will lead to a stronger partnership with us.
firstname.lastname@example.org / Direct Line: 913.535.7252