FESPA’s second Economy Survey shows that the wide format printing community is moving on from the defensive survival tactics of 2009, using innovative and proactive sales and operational strategies to improve its business fortunes moving into 2010. 70.2% of respondents had used new products or processes in their operations to help them through the economic downturn, with 61.5% adding products to their portfolio, and 60.6% entering new markets.
The second Economy Survey was conducted by FESPA in the fourth quarter of 2009, in partnership with global research experts InfoTrends. It shows that the community’s outlook entering 2010 is broadly optimistic. More than a fifth of the respondents questioned at the end of 2009 thought the market was already recovering, and more than half expect recovery to previous levels by the end of 2010. Conversely, the Survey clearly summarizes the impact of the downturn in the wide format market. 93.1% of the 217 respondents agree that there has been an economic downturn in the industry, with 56.4% viewing 2009 as the worst year they have ever seen.
The mean level of business decline reported is 15%; however, the community is polarised, with 21.1% experiencing no loss in business activity and another 20.7% showing a decline of 25% or more. Manufacturers and resellers report the same average decline as print service providers (PSPs), underscoring the industry’s tightly connected supply chain.
The competitive landscape is in a state of flux, with 65.6% of those surveyed reporting that competitors had consolidated or gone out of business, 43.1% indicating that competitors are moving into other markets or offering new services, 33% experiencing new competition from other segments of the printing industry, and 22% seeing customers take some wide format work in house. Price pressure is also unrelenting, with 60.6% being price compared more frequently by new and existing customers. This may be reflected in the fact that 33% have themselves been aggressive with financing and payment terms, and 23% have more aggressively used rebates and price promotions. Strain on the supply chain is not restricted to price, with three quarters of respondents citing intensified pressure on production speeds or turnaround times.
FESPA’s Marcus Timson comments: “The FESPA Economy Survey, first undertaken in Spring 2009, sets out to measure the impact of the economic downturn on the wide format community, and to understand how PSPs are responding to the challenging trading conditions. These latest findings stress the need for printers to offer services that stand apart from commoditized print offerings. As our FESPA 2010 ‘Catch the Wave of Innovation’ campaign highlights, in tough economic times innovation can be a key competitive advantage and survival skill. Cutting prices to match the shop across town is not the answer. Printers will thrive when they offer services and solutions that help customers execute their marketing and retail campaigns more effectively.”
Along with service and market expansion and new sales strategies, the survey points to a gradual refocus on developing and retaining ‘human capital’. 22.9% of respondents have expanded their sales force, and talent retention would seem to be a priority in anticipation of an eventual upturn, with respondents preferring to cut staff hours or reduce pay rather than resorting to losing valued individuals.
While survival mode has diluted the industry’s environmental focus, with 59.6% stating that environmentally sustainable production was less important as a result of the economic downturn, a remarkable 40.4% of respondents reported that the economic backdrop has not made ‘planet-friendly’ printing any less important. A fifth of respondents use sustainability as a point of competitive differentiation, suggesting that there are opportunities to innovate in this area, which more PSPs may seize as the economic outlook continues to improve.
Tim Greene, Director, Wide Format & Jetting Technologies at InfoTrends comments: “The economic downturn has accelerated demand for higher service levels, so it’s important for PSPs to be flexible in responding to profitable opportunities. While the requirement for faster and more capable equipment has become a given in the wide format market, the research tells us that new markets and new application areas are what most respondents are looking for during this economic downturn.”
“This industry is essentially symbiotic,” concludes Greene. “Innovation from suppliers can help PSPs to develop proactive growth strategies and achieve success, which in turn leads to improved business for those suppliers. In this way, innovation can create a virtuous circle, making focused events such as FESPA 2010 a vital catalyst to future growth.”