Departments - May/June 2008

The Insider:
More Bang, Less Buck

Why Shouldn't You Rely on Retail for Incentive Merchandise?

By Emily Tipping

s you plan your reward or incentive program, you have many options for types of merchandise to include. You also can choose from a wide variety of suppliers to provide that merchandise, including incentive companies, manufacturer's representatives and more. Many of these professionals will act as partners—going beyond simply providing a product to offer added-value services, such as helping you figure out how to put together a program, as well as what to include as part of that program.

That's why it's fascinating that the recent U.S. Incentive Merchandise and Travel Marketplace Study released in fall 2007 by the Incentive Federation Inc. showed that while three-quarters (74 percent) of respondents from large companies went to promotional products and specialty distributors for their merchandise incentives, and nearly half (44 percent) went straight to manufacturers and premium representatives, another 31 percent went to the local retail store and bought their merchandise incentives "off the shelf."

If you're one of those program planners who's been heading to the local retail store to purchase products as part of your program, read on. The topic was explored in some depth at the recent Incentive Manufacturers & Representatives Alliance (IMRA) Conference, in a seminar for new entrants into the market. There in San Diego, several thought leaders explored the question in detail, offering up some thoughts on why incentive buyers should not turn to retail.

We followed up with two of them to flesh out the story. And the story is: If you go with retail, you're not getting your money's worth.

The Basics

The most basic issues to consider are whether you can get what you want, in the right amount and with service that actually caters to your needs.

"If you go to retail, who's going to be the salesperson who's going to work with you?" asked Gary Slavonic, president of IMRA and a partner with Carrollton, Texas-based Premier Incentives Inc., a manufacturer's representative that serves the special markets channel of distribution. "Is it going to be a part-time employee who might not know that much about the product?"

What's more, if you're planning to ship your rewards to multiple recipients in a variety of locations, you're better off with a manufacturer's or premium representative or an incentive house, as their drop-shipping capabilities give them a lot more flexibility than the local retail chain.

"If you need 10 televisions drop-shipped to 10 locations, or 20 televisions drop-shipped to 10 locations, can retail do that?" Slavonic asked. "The answer is, probably not."

Of course, we all want to know the bottom line, which is what effect all of this will have on our budgets. Here again, you're better off avoiding retail.

"The bottom line boils down to price," said Joe Zanone, senior vice president, Special Markets, Movado Group Inc. "If you work with a premium division with a company with branded product, you're always going to get a better price than retail. You're not doing your company any favors by going to retail."

The Total Package

Beyond service and price, there are other considerations, especially if you want to provide a reward that is truly motivational. If you decide to reward several of your top-performing employees with an iPod, for example, wouldn't it be much more powerful to also provide a set of noise-cancelling headphones so they can tune out the noise of the train on their commute, as well as $20 to spend on iTunes? Or if you want to provide a gift to five of your business's top customers, wouldn't it be great to send a complete surf and turf dinner, along with a couple of bottles of wine and some designer glasses?

"A lot of times we might take, say, a camera and bundle it with an additional memory card and maybe a different case," Slavonic explained. "Our suppliers can bundle that and ship it out as one package. For retail, that would be pushing their capabilities."

In addition to offering a more complete motivational package, incentive suppliers can also help you with personalization, customization and co-branding, if those are options you're looking for.

You also may find you have a better selection of hotter new products if you eschew the retail store in favor of an incentive dealer.

"You have to look at volume," Zanone explained. "Retailers may not have the number of pieces in their system that you're looking for."

And if you're not sure what you're looking for, going with an incentive house or other expert in the market can help you learn about the newest, most exciting products on the market.

"Usually if we have a chance to work with an end user, we can help show them trends—what may be hot in the market—whereas if you go to retail, it may not be the current product on the floor," Slavonic said. "And chances are, what the salesperson on the floor's looking to do is sell what he's got stock of."