2012 State of the Industry Report: Fundamental Market Shifts Underway

Uncertainty, though, is still evident, even among the positive indicators. Business owners in this segment are very close to their customers. They know their customers well and watch their income and expenses carefully, but many will not invest or expand if they are unsure about the future. “Business owners typically want predictability and if they do not know what the future may hold with healthcare, taxes, ITC rollbacks, and other variables, they will be careful,” says Esko’s Bennett.

But are pre-recession numbers possible? According to MACtac’s Moore, it depends on how you frame the conversation. “Generally speaking, the recession took 20 to 25 percent of the volume out of sales numbers, transcending different industries. Some segments of the industry will never return to those numbers, while others have already surpassed that benchmark.”

According to Catherine Monson, CEO, FASTSIGNS International, it has already achieved 2007 levels as of July 2012 in regard to network sales (last 12 month total), and will exceed 2007 levels in regard to network sales at year end. In regard to average unit volume, Monson forecasts that it will achieve the 2007 level by the end of 2012.

Tom Trutna, president, BIG INK Display Graphics, also reports that his company will exceed its pre-recession sales this year. “It’s tough to know what changes are a result of the recession vs. long-term changes to our industry,” he says

You can “never say never,” according to Michael Robertson, CEO, SGIA, in regard to reaching pre-recession sales numbers. “I believe we will, but it’ll take time and new technology creating new opportunity in the marketplace.”

ISA’s president, Lori Anderson, is equally optimistic—but offered an important caveat. “I anticipate that we’ll see those sales numbers again, especially for companies that have been willing to ask the hard questions about their business operations, make the necessary changes, and take advantages of opportunities that are presented. Technology is driving additional change, which I see as only providing more opportunities for the sign industry.”

But that begs the questions: what technology is driving change and how is it happening?

The industry is in the midst of two key paradigm shifts, according to Seiko’s Ryan: the move to digital from traditional analog processes, and the expansion into other related industries that need the same types of products. “A perfect example is digitally printed vinyl graphics that replaced a lot of hand painted, cut vinyl, and screenprinted graphics. Then digital printing expanded into replacing paint in the fleet graphics and custom car business,” says Ryan.

HP’s Garcia offers some insight into where the growth is coming from. “Our estimations say that the digital sign and display market will grow 12 percent in terms of printed pages in 2012, achieving higher growth rates than in 2011 and demonstrating recovery in the industry.”

Market Opportunities, Emerging Markets

Digital technologies are creating opportunities and new potential revenue streams for PSPs. Digital imaging—which is ideally suited for short-run customization—and current market conditions have pushed print buyers to focus more on customization. As a result, we’ve seen increased demand for shorter runs, with the total number of daily jobs increasing and numbers of job copies decreasing; faster campaign turnaround time; and personalization and variable information including QR codes, variable maps, and B2C opportunities.

Because of digital technologies, there is strong movement in the analog to digital conversion as more applications, including emerging markets such as decoration and packaging, are printed digitally. “Technology is always a strong point in our industry, but what has helped bring the industry to its point now is more the clients need to differentiate themselves from the competition,” says Heidi Hall, marketing director, Ferrari Color.

Industry experts and innovators indicated several industry niches that they feel hold the most promise for growth in the coming year and the highest on the list was digital signage. “Hands down, I think the biggest growth market will be dynamic digital signage,” says ISA’s Anderson. “If our customers aren’t asking about it yet, they will be soon. We see really interesting possibilities for static sign companies to add this component to their business, to partner with others, or to sub-contract it out. Because dynamic digital signage uses a different method of delivery than we’re accustomed to, some in our industry have been cautious about diving in. But truly, this is just another form of signage, and our industry is top-notch when it comes to using signs as communication.”