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Weathering the economic storm

Promotional products company sees growth by reducing costs, outsourcing and combining multiple warehouse functions

Gene Moscowitz says his company manages through tough times by responding to changes in the marketplace. Photo by Christina Mazza-(Christina Mazza)

Gene Moscowitz doesn’t like to sit still when it comes to running Peerless Umbrella Co., a family business in Newark that sells colorful promotional umbrellas, chairs, bags and other items splashed with the names of well-known companies like PNC Bank and Absolut…

Gene Moscowitz doesn’t like to sit still when it comes to running Peerless Umbrella Co., a family business in Newark that sells colorful promotional umbrellas, chairs, bags and other items splashed with the names of well-known companies like PNC Bank and Absolut vodka.

“We’re always thinking about new products,” said Moscowitz, president of the 110-employee firm. “And we’re always responding to changes in the marketplace.”
Instead of selling directly to companies, Peerless deals with about 2,000 distributors across the nation, generating about $20 million a year in revenue, he said.

In 1981, when Moscowitz graduated from college and started working in the third-generation company, the then-New York-based firm had less than $500,000 in sales and about five employees, and sold traditional folding umbrellas to retailers like Macy’s, Gimbels and B. Altman & Co.

“After a few years of calling on those retailers, I saw no growth opportunities,” even though promotional products were a growth area, said Moscowitz, 51. To take advantage of that, “we could leverage our sales force by dealing with distributors that handled multiple client companies, instead of trying to call on each company with our own salespeople.”

Nationally, it’s the largest company by self-reported promotional umbrella sales, according to a representative for Promotional Products Association International, a trade group in Irving, Texas. But the slow economy has taken a toll on sales, Moscowitz said: Compared to year-ago figures, revenue was basically flat in the first quarter of 2011, growing about 2 percent in the second quarter. On average, first-quarter revenue increased more than 8 percent among PPAI suppliers, according to the group.

Moscowitz has taken steps to avoid being caught out in the economic storm, though. He’s modified the firm’s supply chain, reducing costs by outsourcing umbrella production to China and setting up the firm’s 150,000-square-foot Newark headquarters to function as a combination warehouse and assembly center.

Using software that analyzes prior sales, the company places orders for umbrellas in specific colors and styles, and as they come in, Peerless employees assemble them as needed, using silk screening and other processes to brand the goods with corporate logos. The umbrellas are then packaged and sent to distributors.

“We document everything, and all of the products undergo a quality control inspection before they leave here,” Moscowitz said, gesturing toward stacks of umbrellas and other products waiting to be shipped. “We’re not competing on price. Instead, we compete on responsiveness and quality.”

Its clients said Peerless’ focus helps set it apart from its competitors.

“I’ve been working with Gene and Peerless for more than 20 years,” said Betsy Zaplin, who is a Livingston-based specialty distributor and supplies finance, real estate and other firms with Peerless’ promotional material. “The quality of the umbrellas and chairs they produce is incredible, and the entire staff is very responsive.”

The chief operating officer of CSE Inc., a national distributor in New Berlin, Wisc., also praised Peerless.

“We’ve been dealing with Peerless for more than 14 years,” said Mark Ziskind. “We’ve supplied a wide range of their promotional products to companies like Kohler and Hartford Insurance, and in that whole time, we’ve never had any of Peerless’ products returned by a client. That kind of quality control just defies the statistics.”

Moscowitz is proud of the reputation his company has built, but even after three decades in the business, he’s still looking for an edge.

“Our newer branded product lines include café barriers, like the kind that let patrons in New York City sit at outdoor tables without getting bumped by pedestrians,” he said, “We’re also introducing promotional lounge chairs, table and bar sets, and bistro seats.”

But Moscowitz’s optimism is tempered by a looming challenge: maintaining the quality of the products while controlling costs.

“Right now, China is a great low-cost provider, but prices there are beginning to rise,” he said. “We may have to scout out different regions of the country that will continue to offer great quality at a reasonable price.”

But right now, there aren’t many alternatives for an operation like his.
“Vietnam actually offers lower labor costs than China, but the infrastructure to support our products just isn’t there yet,” he said. “But we’re always keeping an eye out for opportunities.”

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