Without a doubt, the last few years have proved to be difficult for businesses in all parts of the globe and even though we're only a few months into 2011, unsettled world conditions—Middle East unrest, rising cost of raw materials, natural disasters—continue to make running a business anything but usual.
"Rapid and significant raw materials inflation can potentially have radical impact on the industry's financial ecosystem bringing realities we do not yet believe the marketplace fully understands," said Don R. Uzzi, president, Coloredge. "Ours is a raw materials-intensive business and there is little to nothing anyone can do to curb this inflation."
The Top Shops, however, proved that while it might not be easy, it is possible to grow revenue and expand in difficult and uncertain times. "While we have 'survived" this past year and managed to stay ahead, to say it has been difficult is like saying Charlie Sheen has some minor issues," said Kevin O'Hea, owner, Academy Reprographics. "We did manage to grow our business and shake some revenue to the bottom line, but it wasn’t easy."
The economy—and the roller coaster wide it seems to be on—continues to plague businesses worldwide and puts added pressure on PSPs. "The biggest business challenge we face is understanding the fluctuating economy and how it influences our clients," said Bob Bekesha, vice president of sales & marketing, DGI-Invisuals LLC. "In today’s economy the end consumer’s behavior is unpredictable so our challenge is we must be ready to meet the needs of our clients when they call upon us for their branding requirements."
But even though it's been difficult some, like Berry & Homer's Joe Thompson, saw growth in 2010 and are optimistic in the opportunities it can bring his company in 2011. "We’ve seen a significant increase in business over the past year and if it continues we will need to reinvest in more capital equipment."
Overall, the numbers for this group look good and were very positive. It was good to finally see a rebound of revenue numbers for most firms this year and the overall number bears it out. As a group, shops gained on average about 7.82 percent in 2010—a pretty nice number given the economic situation—and owners were positive that 2011 would see growth again.
The age of our companies averaged out a little over 28 years (28.04 years), with our oldest founded in 1898, 113 years ago and a a new entry this year: Philadelphia, PA-based Berry & Homer. Filmet Color Laboratories, Inc. from Cheswick, PA, is the only other firm on the list to top out at more than a century old—boasting 101 years. We have five shops which can boast more than 50 years in business: The Composing Room (77), F.W.Haxel Co. (76), Sharpe Images (60), Thomas Reprographics, Inc. (55), and Coloredge formerly known as Crush Creative (52).
Two of the shops tied for youngest, established in 2010: Digital Graphics Express based in Concord, NC and The Great Display Company, LLC, based in Bloomington, IL.
While most shops had only a handful of locations—ranging from one to four—Thomas Reprographics based in Richardson, TX boasts 31, one less than last year. And even in this tough economy, the Top 40 Shops have plans to open up new locations in 2011.
The Top Shops offer a range of capabilities and services, both color and black-and-white graphics as needed. The numbers stay pretty consistent with the report from last year. As an average, 53.55 percent of the top shops' output is wide-format (36-96 inches in width) down a hair from 54.96 percent in 2009. Grand-format (96-inches plus) grabs the next largest share with 26.82 percent, up from 25.64 percent the previous year. Medium-format (24-35 inches) runs closely behind with 14.95 percent down from 15.20 percent. The remaining 7.32 percent is in small-format (14-inches and smaller documents) up from 7.1 percent.
Like the numbers last year, banners and signs (19.22 percent) make up the largest application on average for the shops with retail and POP displays (15.90 percent) and exhibit and trade show graphics (15.58 percent) pulling in a close second and third respectively. Fleet and vehicle wraps (11.75.09 percent) pull in the next largest segment of business, up a percent from last year. Fabric and textile printing (8.95 percent) saw a nearly three percent increase. Engineering drawings (7.30 percent), specialty graphics (4.23), fine art and museum graphics (5.58 percent), backlit display graphics (4.72 percent), billboards and building wraps (4.34 percent), posters (3.61 percent), décor (2.86 percent), and other applications (1.35 percent) round out the rest of the applications.
New Market Opportunities
While 2010 saw growth in some markets, where will new growth come from? The Top shops are looking at a variety of avenues to increase revenues, but the top five most mentioned focus on some very specific niche markets: fabric and textile printing, retail and POP signage, packaging, Latex printing opportunities, and custom interior graphics.
It's not surprising given that these areas were reported by experts in the 2010 State of the Industry (Wide-Format Imaging October 2010) as being some of the markets with the potential for growth in the next 12 to 24 months.
Additionally, the top shops are fully aware of how converging marketing conditions and increased competition—trends that have only been increasing with time—make it even more essential now for PSPs to stand out from the crowd.
"As we continue to recover from the economic downturn, avoiding commoditization of the business, its products and services, will be imperative. Diversification and innovation in regards to the breadth of our offerings, with continued exploitation of our high-quality core capabilities, will be key to maintaining greater perceived value," said Jon Leasia, owner, EPS-Doublet.
"Our biggest concern is around the commoditization of this industry from several factors including off-shore print and imaging companies, commercial offset companies expanding into this arena to broaden their product offerings, and the general decline in pricing advantage that the wide-format industry as a whole used to maintain," said Sean Miller, owner, Digital Graphics Express. He also pointed to an up-and-coming technology—digital signage—as one of the biggest threats in the coming year. "The decreasing cost of entry to digital signage will play a factor in the retail market as well."
Express Graphics' owner, Mitchell Termotto, agreed. "Digital signs are our biggest challenge this year. Many companies are looking for options to quickly change graphics and implement new campaigns. And digital displays are becoming more and more cost effective and the software to run them is becoming more user friendly. This will create a big shift in our industry."
But even though digital signage may prove to be a threat to business, replacing static wide-format signage in some areas, it can also provide to be an opportunity for savvy PSPs.
"We’ve encountered many challenges and obstacles over the past couple of years. These challenges have driven us to think well outside the box of a traditional large format provider," said Gary Paulin, owner, Harmonic Media. "With the swift emergence of social media platforms and other new forms of direct social marketing, traditional ways of promotion and advertising via print and large-format graphics have definitely taken a hit. We’ve always marketed Harmonic Media as a full service visual media provider, but we also provide commercial print management services, interactive digital signage systems and custom fabrication and installation of a wide variety of displays. By leveraging long standing media partner relationships outside of our core offering, we’re able to deliver a much more holistic solution set and our clients have responded with big smiles and more committed business."
The changing market has forced PSPs to re-evaluate how they do business and how they present themselves to their customers—while remaining true to themselves and their mission.
"The last 18 months has been a strange combination of poor economic outlook, clients paralyzed into a wait and see posture, and competitors eroding the market by employing lowball pricing tactics as the only method to compete and survive," said Tim Fullmer, president/CEO, Vision International. "Our strategy for 2011 includes significant efforts in new product development, aggressive social media and internet marketing, and expanding our overall marketing tactics to create new inbound business opportunities. We are taking an otherwise static industry sales model and converting it to a proactive client outreach. "
"We strive to balance competitiveness with adherence to ethical business practices. A good sales person can sell the wrong product to any buyer, but a knowledgeable sales person can sell the right product to that same customer and establish a long-term relationship," said Alan Wachstein, president, Sealand Graphics. "Our Sales and Production philosophy is best described by an excerpt from the poem Good Enough by Edgar Guest, '…beware of “good enough,” it isn’t made of sterling stuff, it’s something any man can do, it marks the many from the few, it has no merit to the eye, it’s something any man can buy, its name is but a sham and bluff, for it is never “good enough.…Only the best is 'good enough.'”
"The greatest business challenge today is to grow, press on with action not just vision, and cultivate and nurture a positive environment despite the mood of the market or what we perceive it to be," said Jittu Sarna, owner, Inkjet International. "Leadership in this economy has been and will continue to be tested. The most significant investment will now be in human capital. Equipment can buy you opportunity, but people make it happen."