NARSI -- Promotional Products Industry Jeff Brown President, Polyconcept North America – Hard Goods Division Global Head Product Development March 2, 2016

1

Polyconcept is the world’s largest supplier of promotional products, operating on five continents and selling to over 100 countries around the globe. With main offices in the US, Europe, Hong Kong, Canada and China, the company supplies a wide range of promotional, lifestyle and gift products to several hundred thousand companies ranging from small enterprises to global corporations, through a network of advertising specialty distributors.

Polyconcept International Markets (PCIM) was formed in September 2013 to streamline sharing of knowledge and resources between Polyconcept’s international partners. Via PCIM, all partners around the world benefit from convenient access to the continually refreshed portfolio of strong brands and competitive sourcing ability developed by Polyconcept North America and PF Concept Europe. PCIM works directly with Polyconcept’s Global Supply Team, a network of established and trusted suppliers powered by Polyconcept on all continents. So wherever you are, there is a Polyconcept partner who can give you access to our complete range of brands and services.

2

3

Oasis Russia

Kazakhstan

Mexico Singapore

Colombia

Australia South Africa

4

“We are witness to a seismic change in consumer behavior. Any company sitting here today that embraces the status quo as a business proposition … is literally facing a collision course with time. Navigating the seismic shift will continue to be very, very difficult for me.” Howard Schultz CEO Starbucks

5

6

7

8

Demographic Shifts • Expectations of 24/7 access to information and seamless, multi-channel experience • Empowered buyers – more self-sufficient, less brand loyalty • Less reliant on traditional hierarchical structures; favor more open, flexible networks for work, communication, etc. •

48% of B2B buyers are aged 18-34 – up from 27% in 2012

•

Buyers under the age of 35 are 131% more likely to make online corporate purchases than those over 35

•

94% of B2B buyers report that they conduct some form of online research before purchasing a business product

9

Globalization

• Ease of access to new markets and customers has redefined historical supply chains • Universal payment systems, logistics networks and communications allows for direct-to-manufacturer interaction • Product trends and innovation are now ubiquitous • Increased demand and expectations for global fulfillment solutions

10

Market Dynamics

• Fragmented supplier and distributor landscape with limited scale/size • Closed channel structure - follows traditional, linear hierarchy

• Relative low investment/adoption of technology – inefficient networks • Mismatch of age/capabilities to support next generation of end-buyers

11

Industry & Market Trends – ASI 2015

12

Growth Opportunity drives Structure

13

What drives our success • External inputs    

Consumer trend analysis Retail trend analysis Category trends in retail Competitive/brand analysis

• Internal Inputs  Category performance review – what is working/not  New Product launch review – what is working/not  Assortment review/planning – pricing, customer lifestyle, product overlap  Internal brand performance review 14

Customer Profile Boards

15 15

2016 Inspired Design

16

What drives our success • Focus  Design briefs  Sourcing opportunities  Development factories/Vendor Panel review opportunity

• Intelligent inventory investment • Launch Frequency

17

PCNA Global Color Chart PCNA GLOBAL COLOR CHARTS CORE RED & MAROON

TRIMARK

LEED’S

BULLET

PF

358- TEAM RED / ROUGE 19-1761 TCX PANTONE 187C

PANTONE 186C 18-1763 TCX RED

PANTONE 186C 18-1763 TCX RED

PANTONE 186C 18-1763 TCX RED

369- VINTAGE RED / VIEUX ROUGE 19-1656 TCX PANTONE 20 1C

PANTONE 187C 19-1761 TCX GAME DAY RED

384 - MAROON / MARON 19-1617 TCX PANTONE 50 5C

PANTONE 195C 19-1726 TCX GAMEDAY MAROON

PANTONE 20 2C 19-1656 TCX MAROON

PANTONE 20 2C 19-1656 TCX MAROON

PANTONE 20 1C 19-1557 TCX ROTATE RED

PANTONE 222C 19-24 28 TCX BURGUNDY

PANTONE 222C 19-24 28 TCX BURGUNDY

PANTONE 20 0 C 18-1761 TCX W ENGER RED

PANTONE 4 85C 18-1561 TCX ROTATE BRIGHT RED

ATTENTION: Pant one reference numbers are for reference ONLY. Light reflect ing from fabric w eave may appear different depending on light ing condit ions. Please use act ual sample for any logo embellishment reference or precise color mat ch reference.

18

Other topics • • • •

Entering Markets What excites me Challenging economies Characteristics that win

19

20

Key Industry Trends • Slower Growth Industry with pressure on margins throughout the channel, new avenues for growth • Demographic shifts – distributors getting older while end buyers getting younger • Digital transformation – transparency of pricing, access to information, informed buyers, use of aggregators • Importance of data, knowledge, “more” to create value for all • Greater access to products – direct sourcing, internet transparency

• Industry consolidation – suppliers, distributors 21