The frustrations hitting the promo community have less to do with promotional products and their impact on consumers and more to do with external factors on business. Stable demand but shrinking profitability have been an increasing trend lingering into 2026. • Nearly half (49%) of suppliers and 30% of distributors reported margin declines over the past year. Cost pressures are adding up, and more than half of companies (56.8%) have identified tariffs and duties as their biggest margin challenge, along with rising freight expenses (54.3%) and reduced client budgets (50.6%). • This is also creating operational pressure, as 30% of suppliers report an increase in rush orders. • With economic pressure still elevated, margin relief is not expected in the near term. Trend 1 Demand Is Stable, But Margins Are Tightening Across The Industry Prediction Margins will remain tight in 2026, and efficiency will become a firm’s most important advantage. We have seen in 2025 that buyer behavior is shifting, and those patterns are likely to continue as long as the external pressures remain. • 60% of buyers cut quantity first when budgets tighten. • Only 11% cut customization • Consumers judge value by durability (70.4%), design (65.2%) and material quality (58%) When demand remains stable and protecting margins is the goal, small improvements to efficiency can have measurable impacts. From strengthening pricing discipline to automating repetitive administrative tasks to streamlining quoting and order-entry workflows, all of these become essential to compensate for external factors. “As costs rise and expectations grow, efficiency becomes the new path to profitability,” says Alok Bhat, market economist and PPAI’s research and public affairs lead. Tariffs/duties Freight/ logistics costs Client budget cuts Price competition Compliance costs Source: 2025 Distributor Sales Volume What factors are impacting your margins? 0% 15% 30% 45% 60% 3.1% 44.4% 50.6% 54.3% 56.8% 42 • JANUARY 2026 • PPAI Must Read | 2026 New-ish Trends
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