Trade Shows Exhibiting Some Strain
By Tom Ryan
With companies in cost-cutting
mode, trade show attendance is expected to take a major hit in 2009. Some
evidence came last week when news arrived that Apple was pulling out of
the Macworld Conference & Expo
and Quiksilver was exiting the Action Sports Retailer show.
Apple said January will
be the last time it will exhibit at Macworld in San Francisco, and its
CEO, Steve Jobs, will not deliver his legendary keynote address as he has
for the past 10 years. Philip Schiller, Apple’s senior vice president of
worldwide product marketing, will take his place.
Apple had launched iMac,
iTunes and the iPhone at the conference. But the company noted that
it has been scaling back on trade shows for years and has many other ways
to get the word out, including its stores and website.
"Apple is reaching
more people in more ways than ever before," Apple said in a statement, "So
like many companies, trade shows have become a very minor part of how Apple
reaches its customers."
Apple’s pullout prompted
Sam Diaz, senior editor at ZDNet, to speculate on whether the
"Internet’s next victim" would be the trade show.
"Think about the
outreach tools that companies have at their disposal these days," wrote
Mr. Diaz. "Webcasts have become online events where people from around
the globe can attend without booking a flight, hotel room or restaurant
reservations. Viral videos are being produced by companies to showcase
their products and technologies in real-world environments. Brand names
are creating loyal followings via ‘fan memberships’ on social
networking sites such as Facebook. And, increasingly, there are smaller
intimate shows that cater to crowds with specific interests – conferences
dealing with social networking, cloud computing, open source and more.
Those shows reach the audiences they want to reach and the bank doesn’t
have to be broken to participate."
Meanwhile, Quiksilver
Inc. is pulling its Roxy, Quiksilver and Raisins brands from the Action
Sports Retailer (ASR) show this January in San Diego, although its DC Shoes
brand will be exhibiting.
"With retail sales
off 30-60 percent, including action sports specialty, the entire market
is feeling the reverberating effects," said Andy Tompkins, ASR’s group
show director, in the statement. "This includes manufacturers and
in turn trade shows. But even in hard times, brands know to go with what
works first and for 27 years ASR’s been proven itself as the place for
brands and retailers to connect."
Discussion Question:
Is the internet reducing the need for trade shows? Is there anything
trade shows can do to become more viable? Are you planning to attend
fewer trade shows in 2009?
In a world of national accounts, trade shows have greatly outlived their purpose. Manufacturers have dedicated account teams in virtual daily contact with their retailers or distributors. Brand and product managers routinely co-develop products with retailers to ensure that shelf space will be available and that key retailers will be prepared for and a significant part of new product release.
I have attended 2-3 trade shows per year for the last 15 years (PLMA, LGMDA, APPMA, AAPEX, Hardware/Houseware, FMA….) and it has been a long time since any meaningful new business was written or found outside of international or close-out opportunities. Trade shows have become social meetings unless you are a new manufacturer or a new retailer – otherwise, my experience is business is done back at the retailers headquarters. The costs are not justified unless you deal in a fragmented boutique or independent market niche. I know that many manufacturers continue to show only to prevent rumors about their demise or financial position–but many have cut back drastically. Similarly, trade shows are largely attended by non-buyers–attendees wearing the right badge usually (not always), get the right attention. When corporate and marketing plans are often confidential and customer-specific, non-buyers are seen equally as espionage risks.
The more often people are exposed to electronic presentations such as web casts, the more of an impact face to face presentations will have.
Businesses of all sizes and from all industries need to understand that people do not buy from companies, they buy from people. If you take the personal aspect out of the equation, then you will be at a severe disadvantage relatively speaking.
Companies such as Apple and Quicksilver need to understand that being in a show is as much about creating a presence as it is about creating sales. And nothing does this better than physically being where potential buyers are.
Regardless of what companies say about their marketing focus, I believe that once the economy picks up again, we will see these companies back in their respective industry shows.
The retail gift business has 2 major shows. One is in New York and the other is in Atlanta. Each show is scheduled Spring and Fall. Each of these facilities have high costs for rental, set-up costs, and support services. Add to that shipping, booth design and construction, support materials, personnel, travel, hotel, and meals, and the cost is daunting.
The regional shows are shrinking or being eliminated. San Francisco is being combined with the Gourmet Show to boost attendance and to fill 2 big halls. Production costs per show should be less by sharing support services. This is the one to watch in 2009 to see if this works in restoring traffic to San Francisco.
There is also buyer fatigue. Retail has constant pressure for new products and ever shorter consumer buying cycles. A product may have a shelf life of 1 month before customers move on. Few products are immune to this trend. Buyers buy 3 to 6 months ahead; difficult to do in this economy. Major chains design, manufacture and promote groups of products beginning 1 year ahead. Summer 2009 products are being finalized now and Christmas 2009 products are well under way.
Specialty stores are a bright spot in retail. These stores are looking to travel outside of the US for new products. Specialty stores can change their product mix and can increase or decrease product categories faster than chains; a significant advantage in this market.
Will trade shows survive? Likely yes. There will be fewer gift shows in the future but the need to see the goods requires some sort of hands on experience. New York, Atlanta, Paris, and Frankfurt are the power shows that attract large numbers of buyers and thus large numbers of exhibitors.
Making trade shows more buyer friendly is a major challenge. Trade show operators are increasing amenities and programs to keep buyers coming back. Try checking a coat or briefcase at some shows and you will understand why show operators need to consider every aspect of the show experience to make their shows the first choice in a difficult market.
Trade shows have been less and less important for a decade, and the economic crisis has caused a number of retail companies to impose travel freezes. Technology companies that want to market to retailers are responding by concentrating on top decision-makers, and are meeting with them in their own cities.
Since business has dropped off, I’ve got more time to go to trade shows. So for me, its time to hit the road.
It is not just the Internet that is causing problems for trade shows. It is also the consolidation of retailers that has affected attendance. While the trade shows used to be important if you wanted to see regional retailers, these retailers have all but disappeared. What you see in trade shows today is empty aisles with exhibitors peering down the aisle at an oncoming person, squinting their eyes to see the color of the badge, and hoping and praying that it is a retailer. If it is a retailer, whether or not that retail buyer happens to buy their category no longer matters. They are accosted like a minnow in a sea of sharks.
Every year, the same manufacturers complain about the same shows, and swear they will never return. But they do, because they fear that their competitors will be there and they will not. The shows continue.
Imagine what Book Expo is going to be like once Borders finally gives up. You will have two chains, one major and one minor. (Barnes & Noble and Books-a-Million). Why would you need a show for them? Trade shows, in their current form, are slowly becoming less important in this flat, connected world.
Tech shows may not last another two years, says industry observer Robert Scoble here. Their target audiences are already used to using the web technologies that will replace them.
Maybe they have mild Asperger’s, but a lot of tech folks don’t really feel any difference between personal interactions and electronic interactions, so they already don’t miss the kinds of relationship-building interactions that we think can happen only in the live-conference setting. For example, when an A-list blogger and his wife were in the delivery room having twins earlier this year, they kept their friends and fans updated every ten minutes or so on FriendFeed, a service that lets you collect all of your web activity on one page, then choose to make that page public or not. The birthing couple did NOT share video (whew!), but they could have.
As these social tools get better and better, and companies realize they don’t have to foot the enormous costs of event planning and travel in tough times, I suspect a whole lot of industries are going to make this leap sooner than they otherwise would have. And travel will become the thing you do when a relationship is in trouble, or when we’re dealing with a really important client (or, sometimes, a very sought-after consultant).
Long-term, that’s better for the planet, I suppose, and it’s certainly better for our productivity. But if something like 60% of all the business travel, especially to the world’s resort areas, is never coming back, they’ll need some new marketing. And we’ll need to find new ways to get there on our own.
I think a good part of this is that travel budgets are being cut. That said, David’s point about spending 80% of your time exploring new potential partners instead of with your regulars is a great idea. My pet peeve is booths with 30 staff people hanging around talking to each other (they’re always having a great time) and ignoring potential customers. I think booths need the equivalent of Walmart greeters; or, maybe each rep hanging around the booth should have a quota for retailer business cards, with a note on the back of each whether this person needs follow-up, is a B prospect, or is just a looker. Not all shows have to have huge expensive booths and such.
This past October, I attended the National Frozen & Refrigerated Foods Association Convention, which seems stronger than ever. There’s a central meeting area with plenty of tables and coffee and snacks, appointment rooms for retailers, and meeting rooms for manufacturers. The model works extremely well, attendance remains strong and business gets written. No mariachi bands, no scantily clad women shooting pool so their assets are especially visible, etc. It’s just a good show that works.
I feel that the trade show industry will be severely challenged and many may not survive during the next year or two.
It has always been hard to justify the expenses involved in exhibiting at major trade shows. As has been brought up, the pressure was on manufacturers that they must exhibit as their customers expected them to be there. It would be seen as a sign of weakness or disrespect if you weren’t there. Then you had to have an exhibit that was truly worthy of your size and stature as a company. It would be terrible if your number one competitor had a bigger or better booth than you did.
Oh and don’t let your competitor do a better job of entertaining your best customers during the show. This could be as expensive as the actual exhibit and was always done with existing customers to show your gratitude for their business and rarely for new or potential customers.
After the show came the attempt to justify the huge costs in some way that satisfied the accountants and naysayers. It usually came down to the sales department saying “that we have to be there” and that ended the debate when the CEO agreed with them. I suspect the CEO’s won’t be agreeing with the sales department nearly as much in 2009.
Trade shows are always one of the major topics that suppliers want to discuss at length at my round table coffee talk meetings. Why are they so expensive? How could I possibly justify the expense? Which ones should we consider attending? Do we need to do all of them, including NACDS, ECRM, GMDC, FMI, etc? If not, which one should I do?
For most companies, particularly any company that is not “P&G” or any other multinational that has access to retailers all year long, trade shows are truly not a luxury but more so a necessity. Unfortunately, so many companies approach the trade shows improperly or ineffectively, without the right skill sets, and therefore they do end up losing money on the investment.
Similarly, I encourage every buyer and retail manager in the industry to go out of their comfort zone at every trade show. Don’t schedule 80% of your appointments with brands and people you already know, but instead, schedule 80% of your time exploring people and brands you do not already know. Use the trade shows to learn and grow your business and to get ahead of the game.
When approached effectively, trade shows are still the best investment that a supplier makes on the selling side, and the best learning investment a retailer makes on the buying side. And by the way…Now more than ever!
I just heard that Porsche is pulling out of the Toronto International Auto Show so that they can ‘deploy those resources to other marketing initiatives’. Could be a sad sign of the future for trade shows. Most high profile consumer brands have great web presence and the need to participate in trade shows becomes irrelevant. Why spend tens of thousands of dollars for 3 or 4 days of exposure when a fully featured website can do the trick 365 days a year? Commercial trade shows still have a place as those brands are not as high profile.
Trade shows are a great way to launch a new item or brand. The problem recently is the dysfunctional interaction by all concerned. How many times do you see new exhibitors sitting behind a table with no attempt to interact or have a process to interact with buyers? How often do buyers just walk by with no comment or interest in learning about what may be offered (my personal pet peeve), and how often do you walk shows to find a category to develop and find companies scattered among thousands of square feet to navigate to accomplish a goal?
All of this has made the “show experience” harder to justify over time; the current economy is just another nail in the coffin. It can still be a great environment and productive; Expo West for example, is still one of the best attended shows in the grocery industry, but the expectations and responsibilities of all involved need to be improved.
It has always been my impression that Trade Shows were as much, or possibly more, about peer pressure and visibility as they were about selling stuff.
Selling stuff is what ALL companies need to do and if the cost of attending a trade show is not offset by the increase in business then the expense may not be justified.
I believe that most true trade shows are short for the future. There are many new ways of making markets and many more efficient (cost and time) ways of connecting to customers and suppliers.
Tradeshows have been declining since the massive days of Comdex. CES, CEBIT, all of the China shows in Hong Kong, Canton, and others have all been declining, and the reason is obvious: they just don’t pay. You can spend thousands of dollars to go to a show, or hundreds of thousands to exhibit and participate, and never realize the payout in profits. More and more companies have realized this and their lack of participation as well as attendance is seen at all of the key shows. Trade shows are a boon for the folks who put them on and even now, this model is questionable. Soon, they will disappear as more folks maximize their time with online meetings, interactive virtual shows and touch and go showings of new products.
Trade shows were at one time, many, many years ago, a place for selling product. A company would actually make deals with the retailers at the shows. It would be a time for executives to meet key customers. And, of course, introduce new products and programs.
Today it is considerably different. Whatever you do, do not surprise one of your top customers by introducing a new product at a show that they have not seen. Now through consolidation, corporate executives only have to go to a handful of locations to meet customers that do the bulk of their business.
There continues to be value for the very small manufactures that can’t get around to all their customers. But, the large ones are only there because their competition is there. And the expense is astounding because one booth must be as good as the next.
This is an expense the manufacturers would like to cut. I assure if Coca Cola drops out of a major show, Pepsi will be gone the next year.
Trade shows are declining in popularity. Their primary purpose is communication and in this day and age, there are many more ways to communicate than when these shows were founded.
However, I would like to take a minute to throw a very big rock at the convention industry. Most of us enjoy the conventions, seeing old friends, eating and drinking well and picking up a little bit of knowledge. What we don’t like is the fact that every company exhibiting at a show has to deal with union [workers] to get anything done; that prices at restaurants and hotels often take a curious up-tick the week of the convention. New York, Chicago, LA, and San Francisco have seen trade shows decline. I guess we are as weary of having to “tip” a $75 per hour forklift driver to get a box moved ten feet.
Trade shows are a product unto themselves. As with all products, they evolve. Costs have to make economic sense for the show producer, exhibitors and attendees. If customers attend, commit to programs and buy at the trade shows then exhibitors will remain to sell them.
Considering the commoditization of most industries, every buyer/merchant should be exploring the marketplace for differentiated product, mindset, intelligence and relationships. In my experience, nothing compares to trade shows for this purpose.