It’s been more than a year of the type of growth that the branded merchandise industry isn’t exactly popping champagne over; small and technical year-over-year growth that hasn’t been enough to relieve margin pressures or guarantee profits. PPAI Research’s most recent bi-monthly survey may not have branded merch professionals opening the fridge for that bottle of bubbly, but it does reveal an uptick in growth that merch hasn’t seen in quite a while.
- The bi-monthly survey has confirmed that distributors grew by 2.3%, and suppliers grew by 2.1% in May and June, compared to the same two-month period in 2025.
- While this shows industry momentum, it still lags behind the current U.S. rate of inflation, which stands at 3.5%.
- The latest revenue data isn’t cultivated from the same methodology as the annual U.S. Distributor Sales Volume Estimate, which polls U.S. distributors of all sizes.
- Rather, the current assessment stems from the aggregated results of PPAI 100 distributors and suppliers responding to a flash survey.
This very well could prove to be an inflection point for the branded merchandise industry. Growth is never completely even across any sector, but in this case, it’s broad enough to believe that the industry could be returning to a point where margin pressures could be relieved if trends continue and execution meets the moment.
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“May and June produced one of the stronger growth signals we have seen in recent survey cycles, with PPAI 100 distributors growing approximately 2.3% and suppliers 2.1%,” says Alok Bhat, market economist and PPAI’s research and public affairs lead. “But the more important question is whether companies can convert that momentum into profitable performance. Demand is holding up, while pricing discipline, cost control, faster service and operational efficiency will determine who captures the next phase of growth.”
Alok Bhat
Market Economist & Research & Public Affairs Lead, PPAI
Distributor Findings
Overall, the uptick was felt more strongly by distributors, continuing an ongoing trend of more than a year of suppliers lagging behind their distributor partners, likely because of a number of factors, including tariffs.
- 76% of distributors reported increased revenue.
How that breaks down among sizes of distributors varies depending on how you look at the data.
Distributor Sales Revenue Trends:
- You can see a strong upside among the smallest distributors, but there is generally a dynamic pattern within that category, with a slightly higher rate of flat sales than the other two categories.
- Distributors in the over $100M group remain largely positive, suggesting scaled firms continue to convert demand despite a larger revenue base.
Distributors are also doing a more effective job of protecting margins. But that doesn’t mean they haven’t been hit by procurement costs: Two thirds reported they were increased over May and June. Still, the majority reported no margin impact.
Procurement Cost Trends:
With more than half of distributors across all size groups seeing rising procurement costs, actual revenue growth is harder to attain despite sales growth. Fortunately, inflation doesn’t seem to be nearly as big a pressure point on distributors, especially for large distributors.
Inflation Pressure On Margins For Distributors:
With distributors leading the way, what to monitor over the next few cycles of bi-monthly surveys is whether these trends can evolve not just into sales growth but actual profitable growth on a wider scale, considering external factors.
Supplier Insights
For more than a year, suppliers have struggled with growth compared to their distributor counterparts. It’s widely assumed that this is at least in some part due to their position on the front lines of tariff price hikes and general uncertainty. Many suppliers say that throughout this time they have absorbed many of the costs of tariffs, rather than passing them down to distributors, or changing prices as the tariff situation shifts.
So, it might be no surprise that as both grew in May and June, the supplier side did not quite grow at the rate as the distributors.
- 65% of suppliers reported increased revenue.
How that breaks down is divided among company size. Its large suppliers who most consistently saw an increase in revenue.
Sales Revenue Trends For Suppliers:
- As you can see, every supplier over $100 million in annual revenue saw some increase in sales.
- The smaller distributors making less than $20 million in annual revenue reported a much more mixed bag of results.
Order volume was consistent among both suppliers and distributors. About 69% of suppliers reported higher unit sales compared to the same months in 2025 as opposed to 70% of distributors.
Where things begin to separate is where external factors can come into play, such as when suppliers are asked about the effects of procurement costs. On one hand, 56% of suppliers reported higher procurment costs, which is actually lower than the 58% of distributors who claimed the same thing, but that doesn’t tell the whole story. A closer look at the data shows a greater strain for some suppliers.
Procurement Cost Trends For Suppliers:
- Across all size groups are respondents who claim that their costs significantly increased. This was not the case for distributors.
- The group made up of suppliers who earn under $20 million annually are most affected by these external price increases. More than one fifth of them say they are seeing significant increases in procurement costs, and the amount seeing any uptick in costs is approaching 80%.
Taken as a whole, the data shows that the supplier growth has meaningfully improved from previous survey cycles. The revenue growth is up 1.1% from just the last bi-monthly survey. However, those supplier margins are still under pressure, and smaller suppliers, in particular, face little room for error or bad luck as they continue to navigate external factors.
