Episode 247: Forecasting the Future with Dan Pantano, David Nicholson, and Jonathan Isaacson

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew.

Over the past few years, we all know suppliers have navigated turbulent waters, but as our supply chain slowly strengthens, new challenges emerge. At Skew Camp, the leaders of three of the industry's largest suppliers, David Nicholson, Vice Chairman of PCNA, Dan Pantano, President and CEO at Alpha Broader Prime, And Jonathan Isaacson, chairman and CEO of Gemline, joined Katherine Graham, Common Cues co-founder and CEO, on stage to answer audience questions and discuss the state of the industry now and their perspective on the future. The spirited panel was a highlight of the event and included topics regarding the impact of inflation, the possibility of a recession and how to shape our decisions in light of it, the incredible automation and tech development suppliers are investing in right now, and the topic of distributor enablement, a term coined by David Nicholson that bodes well for our collective future. This is truly one of the most engaging and enlightening conversations about the current state of our industry and the strength of our future that I have heard in a while. Hi friends, I'm Bobby LeHew, Common Skew's Chief Content Officer. Before our episode, I want to mention that SkewCon, our in-person event held on Sunday, January 8th in Las Vegas, is sold out, but This year we are presenting SKUCON Virtual on Thursday, January 19th, that you can enjoy in the comfort of your own home or office. SKUCON Virtual is a deep impact event built for teams in that it allows high-level learning in a concentrated window of time. I say it's built for teams because it allows you and your team to have all the same experience regardless of location, and it's an opportunity to rally around shared insight and sales ideas that will help move your business forward. We're excited to bring the SKUCON in-person experience to a much wider audience of attendees through SKUCON Virtual, and in a way that inspires growth and meaningful connections for you and your team. You'll hear Michael Bungay Stanier talk about the 5 Question Leader, Nick Sassaris talk about Web3 and NFTs, and interviews and stories from the industry's most maverick thinkers. Head on over to skucon.com/virtual to register you and your team today. That's skucon.com/virtual. /virtual. Today's episode is brought to you by CommsCue, the work-from-anywhere platform that powers your connected workflow, enabling both distributors and suppliers to process more orders easily and dramatically grow your sales. To learn more, visit commescue.com. Now here's our interview from SKU Camp led by CommsCue's Katherine Graham and featuring David Nicholson with PCNA, Dan Pantano with Alpha Broader, and Jonathan Isaacson with Joline.

So we have an amazing panel up here of suppliers with a wide variety of topics that we are going to cover. So first, these men need no introduction, but I will do one anyway. David Nicholson, Vice Chairman at PCNA, Jonathan Isaacson, Chairman and CEO at Gemline, and Dan Pantano, President and CEO at Alpha Broader Prime. So we put together some, you know, really easy softball questions for them. First up, supply chain. Last year at SKU Camp, we had a very deep discussion on our supplier panel on this topic, with the conclusion essentially being that supply chain was a shit show and it was going to continue to be a shit show. So we're going to continue this topic now. Our deep dependence on China has been apparent for some time, but COVID really brought it home that we need alternatives. David, you gave an amazing presentation on this topic at SQCamp in Pittsburgh. Can you comment on kind of what has changed and how PCNA is managing risk in this area?

Yeah, so I think for those that were in Pittsburgh, this was 2019, right on the heels of the whole China tariff issue, and we thought that was a problem. Little did we know. So, but a lot of what I talked about was this, you know, our industry's reliance on China, and we We really, I think, however you want to feel about it, we have an industry that's grown up on the heels of China, our ability to source almost unlimited product with never a consideration about capacity and for many, many years decreasing pricing. And that really fueled this industry. And I think what the tariffs showed us, and I think what we saw during the pandemic, was that that was really a pretty fragile model. And one that wasn't particularly sustainable. And I think what we have seen without a clear solution is that relying on China for the next decade isn't going to be sustainable. You now have a host of new issues, so different leadership or a more aggressive leadership in China, geopolitical issues that have come to light, continuing human rights issues and things that are just going to make trading with China much more perilous than it has been throughout our history. Unfortunately, and this was the conclusion of what I talked about in 2019, and unfortunately not much has changed, is there's not a lot of great options when you look around the rest of the world to produce the types of products that our industry needs. And, you know, I think it's a challenge that all of us have to address. There's just not an easy solution.

Translation is still a shit show.

Yeah. What I will say, I think one of the positives coming out of the last 2 years is that it has strengthened supplier supply chain. It's forced us to look much differently at resilience and redundancy and how we think about managing inventory and things that I think will be benefits as we move forward. We still have to figure out China though.

So one of the topics that came up consistently in our discussions leading up to this panel was around the terminology that David, you coined called distributor enablement. So to paraphrase, how can you as suppliers provide tools, resources, or internal processes and technologies to help your distributors be successful and sell more product? Dan, I'll throw this one at you. If suppliers usher in a better client experience, the opportunity costs this frees up for both supplier and distributor is enormous. We all need to be spending time kind of adding more value as opposed to doing manual things. How do you see this impacting the future of the industry?

Well, that's really what, as a supplier, that's what we do, right? We're an enabler, and I view it as, you know, you all are distributor customers, are the front end and you generate the demand. You should be focused on that, right? Creating a great client experience. What you shouldn't be focused on, which I think you probably spend too much time on today, is the backend and fulfillment. And our job as a supplier is to do the fulfillment, make that as seamless, as frictionless as possible with as much transparency and visibility as possible. So you're spending your time on innovation, creativity, and solution selling. So our focus is to enable, once you create that demand, to make the fulfillment of that demand as seamless as we possibly can for the customer. And we try to do that also, not just what we do with Cometscue and how we're connected with you, but what we do on our website, the visibility that we can provide our customers with the data, the information on where orders are, how to find product, just to make that as seamless as we possibly can, and that'll allow you more time to go out and sell.

Jonathan, the most recent ASI State of the Industry report showed a downward trend in supplier accuracy and on-time orders. Can you share what kinds of investments Gemline's making in the business to create stronger process? I'm not going to try to throw Gemline under the bus on this one, but—

You notice that the short guy got the hard question and the other guys got the The easy questions. There has been a very interesting confluence of events that all the suppliers have been dealing with. Slamming doors. It's not just the supply chain, but people are dealing with labor issues. There's, there's a host of issues that people are dealing with. Every supplier at some level is dealing with the same issues and Even your smaller suppliers, decorators, are dealing with the issues. The decorator business model used to be low-cost labor pushing things through inexpensively. In a time of labor scarcity, that doesn't work so well anymore, which is one of the reasons that you're struggling there. There is certainly consolidation in the supplier area. You can look around to the people you're dealing with and who you used to deal with before, and the reason is all the investments that need to be made at the supplier level in order to be able to provide the services that everybody here is talking about. Investments in supply chain, investments in services. And what you're going to see is increasing automation between suppliers and distributor platform. There is a reason that you have affiliated with Commons view. It's because you go onto a platform and you have the technology, and that technology is going to enable us to support you in a different way. And by getting the information in a more frictionless way, it's going to allow us to service you better. And within all of our plants, there is going to be, I think, an explosion of automation over the next few years that's going to be quite dramatic. Likely going to be a very different business 5 years from now. And we'll leave that hanging dead right there.

Catherine, I would just add one other piece to the distributor enablement because I think these guys said it well in terms of the transactional piece that we have to solve. I think the other piece that is a supplier that we think about is that the end buyer today needs more than just the product. They want to understand the brand. They want to understand the Sales call. Where's my order?

Can't make that up, can you? Right.

But the buyers, the buyers that you're, you're in front of today, they really want to understand who they're buying from. They want to understand the story behind the brand. They want to understand, is it being sourced responsibly? It is our job to give you that content that information, you can, you can better tell that story. And I think we've not done a particularly good job as an industry in providing that content. We've largely been providers of product. And I think that has to change. And I think, you know, a lot of what we talk about in terms of enablement is providing that type of information, that background, so that not only can you transact more easily, but I think even more importantly, you have a story to tell about the products.

Yeah, there's obviously been a tremendous kind of rise in the desire for sustainable product and to be able to understand kind of not only the story behind those, and, and, you know, each of you done amazing things in bringing in brands that reflect that. Um, do you want to speak a bit to Proud Path in terms of what—

Yeah, and I think we, we recognize that, that sustainability, you know, no secret to any of you, that that was going to be a major component of what your clients would be looking for. And we, we also recognize it's a very complex issue to tell a story about because sustainability means a lot of different things, whether you're talking about product sourcing, supply chain. And CrowdPath was really an opportunity for us to create a platform not only for PCNA, but hopefully for the industry to help make better sense of not only the products, but supply chain and the sourcing and all the pieces that go to a truly sustainable platform. And We just launched it. It's something we're very, very excited about. But again, it's, I think, a very good example of when we talk about enablement, how can we create a, a program or a platform that makes it very easy for you to go to market, tell that story to your customers.

So COVID brought an interesting opportunity on the supplier front to bring a lot of simplification. And one of the things that has happened is a significant reduction in SKUs, sometimes in decoration methods. To just make it easier to transact. Dan, do you want to speak to kind of the why and the how of that?

Yeah, specifically around SKU reduction, just to give you an example, at Alpha Broader, and this is probably 2 years ago, we had 105,000 SKUs. Well, when you think about— it's a shitload of SKUs, right? When you think about the basic t-shirt, the G200, I think at one point at its peak, it had about 87 colors. So you got 87 colors, you got 2XL through 6XL in some cases. That's a lot of SKUs. So we've really been working hard, and this probably goes back 5 years ago, with, with all of our major suppliers, major manufacturers, really rationalize the SKUs. And we've made some progress. We're down about 80,000 SKUs now. And still, I think there's an opportunity to reduce that. But when you think about what happened in 2020, with the pandemic and all the supply chain constraints. When you have 105,000 SKUs that you're trying to support with inventory, if you're a manufacturer and you have 20,000 SKUs that you're trying to support, it is really hard to do that. And as production ramped up, what we've seen over the last year and a half, and thankfully so, is our manufacturing partners really focused on their core SKUs. And the SKUs, if you look at our SKUs, I mean, there's a handful of SKUs there's like 10, almost 10 styles that drive 30 or 40% of our revenue. And so, and our manufacturers look at their business that way. So when you're ramping up production and you can focus on a core set of SKUs to drive your volume, that really helped them get back in shape. And now if you look at where we're at from an inventory perspective, right now we're at, you know, at 80 or 90% fill rates on those core SKUs. And a year and a half ago we're at 30 or 40%. So we've made tremendous progress. And I think the manufacturers now realize the benefit of having a reduced set of SKUs. So I think going forward you're going to continue to see that. And I think what you're seeing now in the supply chain is we're starting to fill holes. So when you start to get the ancillary styles, ancillary colors that are lower volume, you're starting to see manufacturers now catch up and start producing those. But I think SKU rationalization is still got a long way to go in this industry. And that doesn't mean when you're rationalizing SKUs that A lot of people think, you know, well, that's— we're gonna have less to sell, less choice. I think the more efficient we are at managing SKUs and inventory in the supply chain, the more innovation we can have. You can afford to do it. You're spreading working capital and capital costs across fewer products. You can afford to invest in more newness and more innovation. So I think actually it's gonna be a really good thing for this industry, but I still think we've got a ways to go.

Do you think that there's risk?

There's, there's a lot less risk having fewer SKUs. I think there's, you know, there's risk around innovation and creativity. I don't think so because you still need newness for growth. And I think it enables, I think the manufacturers enables companies like ourselves to be more creative. You have, you have more bandwidth to do it. You have more working capital dollars available to invest in newness and innovation.

So we've seen a lot of product innovation in the industry actually coming from outside the industry, you know, retail brands that are being brought in, particularly on the sustainability front. Do you think that there is risk to us as an industry if we are relying upon that innovation externally? David, I'll throw that at you.

I don't think so. I agree with Dan. I think, you know, our ability to more effectively manage our inventory allows us the ability to bring in new partners. We think that's additive to the industry. And I don't know that it necessarily replaces what we need to be still developing ourselves within our private label efforts. But I think, you know, one thing we've found is that, you know, particularly around sustainability, our brand partners are much further ahead. You know, the retail industry, the outdoor industry is just much further ahead in terms of having a really credible sustainability story and our ability to then bring that into this industry hopefully is of value for you. So I don't think that it poses a long-term risk. I think it is additive. I think it's beneficial for the industry and I don't think it takes away from suppliers' reliance on their own need to still innovate airlines.

Yeah, I'd just add, I mean, to me, when you think about retail brands on the apparel side of the business, it really just, it fits what we want to do from an assortment perspective. You want to have a good, better, best. And I think there's a place for each one of those depending on the opportunity that our distributor customers are trying to close. And there's times where the end client is actually telling you the specific brand they want, which you have that retail brand that helps, but a lot of times they're looking for the right solution and it's not always a retail brand. And, you know, it could be a private brand, it could be, you know, one of the more basic products that are out there. I mean, kind of the end use case really dictates the right product to offer.

There's also the dirty secret of the industry, which this is a great time to talk about it because we've led up to this. The reality is that many suppliers in the industry pre-COVID were buy-sell suppliers. They'd go to Hong Kong, walk a trade show, find some stuff, and voilà. Everybody's selling Mason jars in Vegas and you wonder who sent out the memo about Mason jars. The 3 people up here, we all have very different business models between each other, but together we have very different business models than everybody else because we approach the market very differently. Every one of us has a development setup organization back at the plant where we're developing, and we also have the ability to deal with brands. Brands, there's very few companies in this industry that are set up to be brand stewards. And that's why all the brands tend to agglomerate into certain suppliers because it's difficult. And these things naturally go together because the processes are similar in terms of what we do. And so this will be a change in the industry with COVID China will not open anytime soon with their dynamic zero COVID Policy, and it's going to change the nature of how innovation happens, but innovation will definitely happen.

Jonathan, what do you feel are the biggest barriers to growth right now in the industry, both from a supplier perspective and a distributor perspective?

There aren't really barriers to growth. I, I got into trouble a number of years ago. I gave my first talk and everybody accused me of doom and gloom when I showed people data that— you remember this— that said that the industry is mature. And the point was, even in the mature industry, you can innovate and find growth. And, um, I'll give you two great examples. Um, one is the car business, which is Tesla is growing in a very mature business. The car business has been mature for a long time, and they're growing really quickly. What I wouldn't want to be is a tier 1, tier 2, or tier 3 auto supplier because there are 30,000 parts or so in a typical car, there's like 1,300 in an electric car. And if that's too many, then I don't remember the actual number. And so if you think as a distributor in a mature business, or maybe there's a downturn in the next few years, who knows, there will be industries that continue to do exceedingly well even in a downturn. The people who are supplying the electrification of the country. Whoever is in that vertical is going to continue to do very well no matter what. And in every downturn, there are industries that do really well, and there are parts of businesses that do very well. During COVID who bought? HR. Who didn't buy as much? Sales and marketing. So if you were selling— if you're selling a trucking company and they can't find truckers, what are they doing? They're turning to us to solve a problem. So the people who are gonna do well during whatever time comes are the people who understand that we're not selling products, we're solving problems. And that's true on the supplier side and it's true on the distributor side. There's always opportunity out there.

I do think one of the barriers to growth is this is still a difficult industry. It's difficult for us and we live it every day. It's also difficult for our clients, um, which creates two issues. One, it typically is more expensive than it should be to buy our products. And two, it limits the access and ease at which we can go out and attract new, new, new, either new industries, new verticals, or parts of the market that really aren't buying promotional products today. And I'll give you two examples of boards of smaller companies that I'm on. If they buy promotional products once a year, it would be a lot. And it's purely because it's just not something front and center. Them. And, you know, they're not large enough that necessarily you're gonna focus on them, but I do think our ability to solve this transactional issue creates the ability to go out and serve a much broader market. And today I think we're missing that.

Which is a great segue into technology and digital transformation. So all of you are making significant investments, you know, in this area. And I think it could be a good opportunity for each of you to speak to this. Dan, you guys are doing some amazing innovation with robotics in the warehousing and the warehouses. Do you want to speak to that first?

Yeah, we're— I mean, to your point, it's been the biggest area that we've invested in over the last 5 years has been technology. And we continue to do so. And a lot of times, I think, as a company, we've always thought about innovation as, you know, what do we do externally with our products, with our solutions? And, you know, a little over a year ago, as the labor environment really started to get difficult in their distribution centers. Our VP of operations, a guy named Ron Wittebort, was basically tasked with go out and can we solve and, you know, spent time with 4 different automation companies and ultimately found the right partner, a company named Locus based in Boston, which has really cool, say, robots. It's not like a talking robot or walking robot, but it really transformed, or I should say is transforming because we're in the middle of the rollout as we speak. How we pick product in our distribution centers. And I don't know how many folks have been in an apparel warehouse before. Not many. But we have— basically, the way we pick product in apparel warehouses is we drive what we call mules, these little, basically electric-powered carts, and you load them up with boxes and you basically pick by order. So you get an order, you drive around the warehouse, and you pick however many different items you have for that order. And that's basically the standard process that's been used in this industry, probably at least for a couple decades, you know, well before my time. And what Ron was able to find with this robotic solution is a completely different approach where the robots are coming to our pickers. So we now have employees, we just rolled this out in April in Harrisburg, we just rolled it out in Chicago in August, and we've got our Fresno facility going in a couple weeks and we'll have a whole network done by the end of first quarter. And basically the robots bring the orders to the picker. So our pickers now stay in certain defined areas within the distribution center and they're not driving around like mad people picking orders. And it's driven our efficiency up 40% in those facilities. But what's the most amazing thing, it would take us 2 to 3 weeks to train a new employee. On how to pick orders, how to navigate the warehouse. And literally now we can get a new employee up to speed in 2 to 3 days. But literally they're productive in 2 or 3 days. And, you know, for most folks running a warehouse, unfortunately there's a lot of churn, right? You're hiring a lot of people. They go to the next warehouse company that's paying them a dollar more an hour. So it's really, really difficult. And this has enabled us to make folks that we're hiring and bringing in more productive, and it's a better environment. If you've ever gone in one of our DCs with the mules, I mean, there's horns beeping. It's, it's, I wouldn't say it's chaos, but it is crazy. And it's, and there's a lot of safety risk and this is a much safer environment. It's quiet. So it's really helped us on the retention side. So that's been a big area of investment for us. And again, this is one of the things that, you know, as I mentioned before, is an enabler. The better we can get at picking orders, the better quality we can have, the more efficiency we can have, you know, the more that you can, you know, time you can spend selling to the customers. The other, the other big area that we've invested in heavily is our website. So we're going to be launching a new website in Q1 that's basically going to take our Primeline website and our AlphaBroader website, combining it as a single website. You can order blank apparel, decorated apparel, decorated hard goods from a single website. I want to order on the web to be able to use the web to do that. And it really enables us to have a platform. Then we can do things like kitting and packaging as we've got combined facilities now that have hard goods and apparel together. So really ties our vision of what we've been working on over the last 4 or 5 years. So those are the big technology investments that we're making in the business.

Jana, take it away, gentlemen. I could go into a lot about what Gemline is doing. I think the bigger issue for all of us is that, and I think Dan went through it, there are going to be these large waves of technology that transform the business, whether it's in decoration and the way the warehouses are run, the way that the orders are interacted or how artificial intelligence helps you to select things. I know a lot about the robotics technology that he's talking about and some of the other stuff that's been going on. There is a lot of stuff around Boston. This stuff is remarkably transformational. And if you think about it in the big picture, it's why you're getting larger and larger suppliers because the investments around this stuff for all of us, just massive. And so, you know, I think, you know, you've covered a lot of it. We're all doing stuff, but there's not a large supplier that's not shoveling money into technology in a very, very significant way.

Yeah, I just highlight one area Jonathan mentioned because I think it's, in my mind, one of the biggest opportunities as suppliers to really innovate within this industry. It's the decoration. The move to digital decoration. And if you looked at probably any of our plants 5 years ago, you know, we were screen printing the same way we were 30 years ago. That has changed radically. And you'll see, I think we're going to be north of 50% of our output will be some sort of digital format. And ultimately what that means, I think, for this industry is that you now have the ability to produce reduce setup costs, produce better quality, multicolor logos, really in a way that you just never could envision under the traditional printing methods. And so to us, I think we see this transformation, particularly around decoration, is really unlocking again something that I think will transform this industry.

You're going to hear a lot of words like transformation. It is very easy to stay rooted in what was done in the past. And what you're going to hear from us is that there is a very different world that is coming that is going to be technology-enabled on 1,000 different fronts. And just keeping abreast of it and being ready to shift your business model as this change comes, because it's coming whether we like it or not. Is really important. Factoid, we don't have a competitor left in the business from the time I bought Gemline. Every one of them is gone. And I like to think I'm not that old. I'm that old. Yeah. And I could say names like Hazelhead, Manco, Arbag, Fabrico, names that if you're shaking your head, you also watched Gilligan's Island as a kid and The Love Boat and other crappy shows. Because there were only a few channels, not 1,000. You couldn't watch, you know, Below Deck, name your location. So change does happen in a lot of different ways. It happened in media, it's happening in cars, it will happen in this industry. And just getting an understanding of it, getting comfortable with it, will help you arrange your business model because it's going to unlock enormous amounts of opportunity for those who see it and are able to leverage it, harness it.

So given that opportunity, do you think we are moving fast enough? Are we investing enough? Are we setting the bar high enough?

It's hard. You know, the early movers, sometimes you end up throwing a ton of money into just an endless pit. And this is a, you know, you're making decisions on stuff that the technology that David's talking about, there is chemistry on the back end. I mean, one of our brands is Moleskine. I think most of you know that, that we've bring to market, we had to deal with their paper supplier all the way up at the source because they coat their journal books with some very unique coating and stuff doesn't adhere to it very easily. There was a chemistry problem to be solved. And so you can put a piece of equipment in that may or may not work. You have to redo all your processes. I think there is a tension between moving quickly enough and being careful enough about the technology that you're putting in. There are enormous amounts of robotics companies doing what Dan just paid a lot of money for one robotics company to do, and a bunch of them are going to flame out. And if you look at Amazon, their Amazon Robotics, it doesn't matter who it was, it was a Boston company. And their idea is they actually, the picker stands there and they bring the whole cabinet to you. If you've seen it, it's quite amazing. And that's one form of technology. There are going to be others and it's going to move very rapidly. So if you pick the wrong platform, there's a French word for that, which is it's a really big bummer because you're on a technology anchor that is quite distressing. So I think we're moving. Some of us will be, some of us won't. And the reason I brought up all those competitors is that will have those competitors And suppliers that aren't able to shift at the right speed will end up going away. Darwin exists in this, friends. Not all those companies will be around in 10 or 20 years from now. Just the way it is.

So a couple of years ago, we were worried about tariffs. Two years ago, we were continually worried about COVID Now we've got inflation, recession. There's like no end of boogeymen apparently that are going to come at us. What do we need to be thinking about, worried about? How do we plan for, in an uncertain environment, to continue to have success as an industry?

You ask what we're worried about?

All of us?

Yeah.

What we're worried about? Or how we think about all the ongoing challenges and continue to be innovative, nimble, and successful, given that there seems to be no end of boogeymen.

All right, I'll take it.

Oh, you want to go, Marlene? I'll just say what I'm more— I don't really get too fixated on— worrying about stuff 3 or 5 years out. I mean, I think in the immediate future, I mean, what I'm most concerned about is a recession. I mean, I think it's going to happen. I think it has to happen. I think we all know what's going on with the economy and inflation and interest rates. The only way to get that under control is you have to slow demand. And so I think we all should be thinking about our businesses. I know we are. And are we prepared for that? What does that mean? How do we brace ourselves and try to have a soft landing, and hopefully it's not an extended or a significant recession, but I do think it's coming at some point in the latter part of this year into next year for sure. And I think, as I think about what's happened in this business, and we have been through, to your point, Kathryn, we've been through so much change. We've spent the last year and a half trying to get inventory, right? We've given our manufacturers a year's plus worth of POs. Now all this inventory is coming in. We've got a lot of inventory, our manufacturers have a lot of inventory, and now demand is going to slow. And we've had, what, multiple price increases. And so we've got really high-priced inventory. We're probably going to have too much of it. And we all have to be, you know, really mindful about managing our business so we try to have a soft landing. We don't find ourselves over our skis with too much inventory in the pipeline. And that's, I think, a lot of our manufacturing partners, at least on the apparel side, are really starting to kind of think that through. And I think we're smarter, we're definitely more connected with our manufacturers than we've ever been, you know, because of what's happened over the last couple years. And I think we're going to do a good job of managing it. But that's what I'm worried about. I think that's a 2023 kind of issue. I don't know if it'll, you know, drag beyond that. But, you know, let these guys opine on some of the geopolitical issues, uh, in China. But that's what I worry about.

One side comment to Dan's comment, I think The other thing that we think about is in every other recession we've been through, there's been a migration down in price point. Um, I think we're particularly vulnerable right now because there's been this massive shift to higher-end product brands, result of promotional products that weren't going to other things that they traditionally spend on. I think there's a real question around what is the end buyer behavior and what changes and what stays consistent with what we've been through over the last 2 years. And I don't think any of us know, but there's certainly a risk that we're going to go through another whipsaw of products that were hot a year ago are no longer what people are looking for when times get a little bit tougher.

Are you saying we're going back to stress balls?

Let me actually take the stress ball thing actually, because I damn well don't think going back to stress balls. Um, let me, let me give you the counterargument to this, and David might be right, which is we just spent a little while talking about sustainability, and then you talk about stress balls, which are terrible for the environment to make and terrible for the environment to dispose of, and not a lot of utility. And I'm sorry to any stress ball maker out there, no offense made, but the reality is that we should be brand stewards for our end-user customers as well. And to the extent that we're good brand stewards for them, we're gonna sell them the right product that's gonna rep— that's gonna elevate their brand and help them build the kind of community that they want within the people that they want to impact. And I think it's gonna be almost impossible to match the sustainability piece with the price thing, because for all of us, we're all investing money into sustainability. It is a huge and difficult investment. And you're, you can't, I think the time of selling really low-priced BBC items, the top brands, I just wonder how long that's going to last. And I actually look at all this stuff a little bit differently. I only really worry about one thing. And we only really worry about one thing because there's only one thing that we can control, which is the quality of the people that we hire. Everything else comes out of the quality of the people in the organization. And if we're going to get the technology enabled, if we're going to get the processes reorganized into a digital world, it's all about the people that operate within the organization. And our ability to win or lose is going to singularly hang on our ability to hire the right people in the organization. If we screw that up, everything else goes to hell. We get it right, we win. And that's what we spend our time thinking about.

Yeah, and I would just offer maybe— it's all very noble, Jonathan. And I think you're right. There will be brands, end-user brands that aren't going to return and I think are going to stay true to wanting to do the right thing in terms of what they buy. This is a big industry though. We serve a very wide and diverse set of end buyers. I don't know how big that segment is. Hopefully some of that sticks around, but at least we're thinking about what if it doesn't.

David might be right. We might be back to stressful.

I'm not suggesting stressful. I'm saying if someone was spending $150 on their employee gifts last holiday season, You know what, they may be now spending $50. And what do we have that fits within that $50 budget?

And let me tell you why we both can be right. The reality is that we sell an enormous amount of market segments out there, and each market segment is going to perform differently in a downturn. There are some segments that are immune to a downturn. There are some segments that are going to turn down really quickly. And part of this depends on who you're selling and what kind of programs you're selling into. And I don't mean to say that there's going to be no low-end part of the business. In 2008 and '09, there was a dramatic turndown in price. That was all anybody was interested in. I just don't see it being the same place, you know, 15 years later where it's all going to hinge on price. If we're wrong on that bet, then we will be punished for it. And we've made bad bets and we've been punished for them before. But we will make a bet, and we'll just have to be quick enough to make some changes if we make a wrong bet. And somebody else agrees with me on this bet. But so it really depends on your market. I just, I don't, I think there is a risk that, that the price points go down, but I don't, I'm not sure we're going to see something like we saw in 2008 and 2009. So in a lot of ways, we're probably both right depending on the segment. Thanks.

Thank you all for the time, for being open.

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