Welcome to the New Year! I am Erik Mickelson, and I have been the operations manager at Northwest Custom Apparel since 1997. Having spent some time reflecting on the industry’s trajectory in 2024, I’m here to offer my insights and predictions for the future, mainly focusing on the decorated products business. Let’s explore the significant changes and strategies for navigating these evolving times.
The Economic Slowdown and Its Impacts
As we enter 2024, the most pressing issue we face is the economic slowdown. Post the vibrant holiday season, we’re witnessing a rapid deceleration. The root cause? The depletion of COVID relief funds like PPP, ERC, and EIDL. Many businesses, having relied heavily on these grants, are now facing the harsh reality of depleted reserves and looming EIDL loan repayments. This financial crunch leads to widespread panic and a strained cash flow across various sectors.
The Pitfalls of Commodity-Driven Pricing
Pricing your work is the industry’s shift towards commodity-driven pricing strategies. This approach becomes prevalent in slower economic periods and is particularly detrimental as we enter the year’s slowest quarter. Companies desperate for business resort to deep discounting, a strategy that, while temporarily appealing, spells long-term disaster.
Labor Availability and Cost – A Growing Concern
Another critical factor reshaping our industry is labor availability and cost. Two main reasons contribute to this challenge: the ongoing demographic decline and inflationary pressures. The scarcity of potential employees and the rising labor costs create a perfect storm, impacting pricing strategies and overall business sustainability.
DTF Printing: A Game Changer in the Industry
The final, yet significant, shift is the rise of direct-to-film (DTF) printing. This method has gained immense popularity for lower quantity orders, aligning with the 15-year trend of decreasing order sizes. DTF offers a viable alternative to direct-to-garment (DTG) printing, challenging traditional screen printing with its high setup costs and labor-intensive processes. With labor shortages and escalating costs, DTF’s efficiency and cost-effectiveness make it an increasingly preferred choice.
Embracing Change and Finding Opportunities
In times of economic difficulty, it is important to remain optimistic and open to new ideas. Successful companies can adapt and innovate in response to changes within their industry. My upcoming article will discuss strategies to help your business survive and thrive in these transformative times. Watch for my next article to explore these strategies in depth.