Monday, December 22, 2014

2015 – A Year of Opportunity?

Christmas is now upon us and the New Year is looming – so did 2014 deliver on all its promises?  And what does the future hold for us all in 2015?

Following on from the UKDPN Conference we were presented with research materials form two of the major players in the digital print market – Canon and Konica Minolta.  They looked at what the future holds for the digital print business.

Both offered similar conclusions regarding the future potential of digital print as a cost-effective business communication channel.

Their research concluded that the print community is going through a significant period of change, both technologically and structurally, and overcapacity remains an issue in many of the traditional print sectors.  Digital print, however, remains one of the bright spots with a number of opportunities for growth.

There is no doubt that the economy is still very much price-driven and there will be inevitable cash flow pressures during the early part of next year.  Recent global events are also likely to impact on potential business activity in 2015 and will make any growth in activity very difficult to achieve.  

My own view is that 2015 will be turbulent and the levels of business will flatten.  

Fortunately, the UK economy is in a reasonable condition to withstand the ramifications.

But we are now in an “instant world” where our customers seem to need everything tomorrow – which lends itself to fast digital print production.  The need for less wastage and better targeting will also make digital a very cost-effective communications option.

The Canon report “Building Your Future with Print” offers the more global perspective with a survey across 550 print providers in 25 countries.  Within Europe, the majority of respondents see an increased pressure to digitise and automate the print processes.

Almost half of all mentions were adapting to the increased use of digital technology to meet customer demands for more full colour, short run demand as a result of increasing time and cost pressure.

Print is still seen as a better method to communicate with hard-to-get customers, promoting quality and is more likely to be read than email.  This makes a lot of sense, as outlined in the last blog about Christmas cards - it is always better to receive something tangible than a digital message.

Web2Print is set to be the strongest growth area in the next year.  According to this report it has grown over 50% since 2012 and both providers and customers see web2print as offering greater convenience, speed and cost savings.  More and more customers are now in a position to produce their own artwork.  So there are some obvious benefits in not having to travel to visit the print provider in person and using an automated order process system.

The Konica Minolta “Digital 1234 White Paper” follows a similar theme.  The research claims that 20% of print companies are succeeding whereas 60% are static or stagnating and the bottom 20% are experiencing a marked decline in both sales and margins and are in danger of disappearing before too long.  The vast majority of printing companies are still running twentieth-century business models around outdated production systems in a twenty-first-century digital world.

These businesses will have to adapt to printing more jobs, in shorter run lengths with much faster turnaround times.  Otherwise, these print providers will only have a limited amount of time before they too become increasingly uncompetitive and are priced out of the market by more efficient suppliers.

The conclusions are stark – basically there is a need for most print companies to reduce costs and become more efficient.  Investments in the automating of the workflow and introducing web2print reduce the administrative costs of handling orders.  In terms of sales development, investment in data management and cross-media technology are seen as two avenues to explore.  This moves printing businesses along the path to become full service communications providers.

Apparently the move from being operations-driven to innovation-driven is a hard but necessary path to take for future development.

The one main omission from their analysis is the evaluation and cost-effectiveness of each of the developments proposed.  Will you generate sufficient returns from the investment?
Similar conclusions were drawn some years ago about the potential of wide-format printing.  Although the market grows and continues to grow – the suppliers are working in a market where there is considerable over-capacity and as a result,  prices are often fractionally above cost without sufficient margin.

Based on our own discussions with printers at the UKDPN conference – some who have taken the first steps into cross-media have yet to see any tangible return on some substantial investment.

In terms of online printing and web2print.  The advantages are obvious.  It will make it easier for customers to integrate their systems so they can submit orders, proof online and have real-time updates and information.   Using web2print allows the print provider to process a large number of small value print orders in a B2B or B2C context.
And in my view this is the main point.  It is often the larger print providers and customers who have adapted to web2print so far.  However, the country is still dominated by SME’s who have not yet taken up the potential benefits and it is this type of company that offers the real growth potential for smaller print providers.

2015 will offer some great opportunities.  The results will not be immediate and will require patience and considerable investment in time and money for little short term financial gain.  However, the benefits will be felt in the longer term.
Most SME’s will soon be demanding fast and convenient print ordering or will be migrating to those suppliers who can offer this type of service.  There will always be a need for face to face transactions but this will become cost-effective for only the larger print orders.

E-commerce solutions are moving too fast for the majority of print companies to keep up with but web2print many alternative solutions can be purchased “off the shelf” at very good prices and are unlikely to be quickly superseded.

The challenge ahead is that printers will need to have to develop the new skills and adopt a new communications channel to survive and grow.

2015 is likely to be a tough year and there will inevitably be casualties and consolidation.  The smaller or faster moving companies are likely to be the ones to prosper in the year ahead.
Being able to handle more transactions, quickly and cost-effectively will be the key to success.

I am really looking forward to it but not before a well-earned two week break..
Merry Christmas and Happy New Year to all!

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