Top Shops 2014: 2014 Marks a Year of Innovation, Collaboration, and Continuing Growth

Growth. Collaboration. Innovation. Acquisition. Increase. Potential. Partner. Expansion. Opportunity. Diversification. Enthusiastic. Stabilization. Improvement.

When asked about the current state of the sign and graphics industry owners of this year’s Top Shops, answers included the above words.

“Like most, our industry is facing changes to the way we do business,” said Kirk Green, president, Ferrari Color. “Our clients need more creative approaches to communicate with their customers. We have benefited by becoming partners with our clients. The last couple of years have seen us expanding into new markets and helping our clients find new and better ways to be noticed.”

“We’ve seen substantial growth in 2013. Companies are spending money and showing signs of financial improvements,” said Gary Schellerer, VP of operations, Bloomingdale Signs by Tomorrow.

“2013 has seen noted improvement,” said Paul Lilienthal, owner, Pictura. “I believe that there will be opportunities for small-to-mid sized firms to gain market share from larger firms that simply are not nimble enough.”

Shop owners are optimistic about future growth, but are also realistic in their expectations—and their concerns about what could restrict their opportunities. Companies are still facing the repercussions from the uncertain national economy, changing government regulations—including healthcare reform—and worry about how they can maintain margins and grow sales when the cost of goods continue to increase and prices are on the decline.

“Uncertainty in 2014 within the economy, health care costs, and tax increases has created some level of caution in corporate spending and marketing budgets,” said Raj Persad, president, XL Digital Imaging LLC.

One of the biggest concerns is government regulations, said Joseph Castellano, president, Color Reflections Las Vegas. “We need a clear definition of what we can expect within the next five years.”

Vista Color Imaging’s CEO, Pete Gallo, elaborated, “I still believe our industry, as well as the nation’s economy, in general, is handcuffed by the inability of our law makers (Congress) and the Executive Branch to negotiate and/or to work together to approve an acceptable annual budget and to agree upon the laws and the direction to take our country forward into the near future and further. These inabilities greatly effect our industry in many—apparent and sublime—ways, which makes for a very unhealthy economic environment for all.”

“My big concern is the Obama care and what impact it will have on our size company,” said Randy A. Crow, owner, Source One Digital. “If health care becomes a bigger cost than my equipment, it could have big impact on our growth and [the] size of company we can afford to be.”

Pathways to Growth

But even with these uncertain times, shop owners aren’t standing still. More than 80 percent of Top Shop owners plan to purchase new printing equipment and ancillary products in 2014—and many started making those investments in 2013.

“Our biggest opportunity lies within our current client base and expanding the breadth of products they purchase. 2013 was a great year for us, so as our company grew, we chose to stay ahead of the curve with our production capabilities so that we could continue to offer the best solutions available. We made several purchases in 2013 that allow us to offer more products, better quality, and improved our workflow to be more efficient. So now we must focus our sales efforts on educating our customer’s understanding of all the items they can partner with us on,” said Glen Fairbanks, DGI Invisuals.

“We have invested in the latest and new state-of-the-art equipment, which gives us the power to have a larger throughput capacity, higher print quality, and faster turnaround times,” said Persad. “We have also adequately beefed up our personnel to truly handle both small and large-scale projects that need to be turned on a dime. Our biggest opportunities in 2014 and beyond are leveraging our size, flexibility, and reliability to meet large and very time-sensitive client needs. We have truly transformed into a one-stop, fully digital sign shop.

“Every part of our business seems to be affected by technology in one way or another,” said Gary Schellerer, VP of operations, Bloomingdale Signs by Tomorrow. “In 2013 we made significant investments into our servers and IT backbone. RIP software has shown much needed development. We have also seen improvements in backup solutions for ESX servers that are being implemented into our environment now. Lastly, a lot of advancements are being seen in printing technology. Companies such as EFI, Durst, and HP are pushing the limits of digital technology and creating machines that are ‘raising the eye brows’ of conventional printers.”

Hand-in-hand with technology is also the topic of digital signage. Dynamic displays continue to be a growing topic of concern and interest to the Top Shop owners—and for good reason. We are starting to see an increase of digital displays, which in many cases are replacing traditional static signage. It’s not surprising to see that digital signage (1) and LED displays (5) were in the top 10 list of market segments with the biggest growth potential in 2014.

“While we are seeing migration from static/printed signs to dynamic/digital signs, there is still solid demand for printed environmental graphics and always will be,” said Tom Trutna, president, BIG INK Visual Communications.

“National and global brands want a more rich environment and are looking to push the limits with their executions. This lends itself to producing not just static graphics. We need to incorporate more interactive non-linear executions along with static,” said Ken Madsen, owner, Graphic Systems Group LLC.

Duggal offered this reminder about one of the real “costs” of digital signage. “The biggest challenge facing the sign and graphics industry is the false perception that digital signage is both more eco-friendly and less expensive than printed graphics when neither of those things are true. To address this issue, it is crucial to educate that forestry is a natural and renewable resource, while digital screens and the resources required in operating them involve heavy pollutants and non-renewable power consumption.”

The other market segments rounding out the top ten growth areas include: fabric graphics (2), window graphics (3), corporate branding (4), interior décor/wallpaper (6), POP/retail (7), environmental signage (8), trade show posters, signs, banners, displays (9) and specialty applications (10).

Many of these are all tied together and linked to the retail market, which continues to make up a large segment of jobs. Today, retailers are looking to engage with the consumer in more ways than just inside the brick-and-mortar retail environment.

“As the role of the brick-and-mortar retail store evolves, our clients are constantly looking for ways to enhance the shopping experience by creating truly interactive and immersive retail environments,” said Jeb Ball, President & CEO of Coloredge. “Having recognized this, it is our view that the biggest business opportunity for Coloredge over the next 12 months is our ability to collaborate with our high-end retail clients in creating dynamic structural displays. Our wide range of services combined with our highly talented manufacturing team helps Coloredge push the envelope in unique combinations of materials, processes and the incorporation of technology (for example, solar panels) that helps our clients bring their visual merchandising visions to reality.”

“The biggest business opportunity for Ferrari in 2014 is incorporating technology into the printing of digital graphics. We have a number of opportunities with our retailers that lean on us, requesting we help them become increasingly innovative, deliver product faster to their clients, and provide insight at a much deeper level than has previously been the norm. 2014 will be the year where we incorporate our long history of printing beautiful graphics and marrying it with technology based tools to better serve our customers,” said Green.

The Numbers

Overall, the numbers are very positive. While we didn’t hit double-digit increases overall this year—only 8.26 percent—anecdotally many shop owners are optimistic about further growth opportunities this year.

Seventy-six percent of this year’s Top Shops classify themselves as a “Digital Color Shop/Digital Printer”, leaving the remaining shops split between “Sign Shop” (9.52 percent), Service Bureau (4.76 percent), Reprographic Shop (4.76 percent), and Other (4.76 percent). The average age of the shops in our list is 27.425 years, with our oldest founded in 1910, 103 years ago: Filmet Color Laboratories, Inc. from Cheswick, PA. This year, we have six shops with 50 or more years in business: PacBlue Printing (65), Thomas Reprographics Inc. (57), Alabama Graphics (57), Sharpe Images (62), Visual Marking Systems, Inc. (51), and Duggal Visual Solutions (50). Our two youngest shops were established in 2012: I3 Imaging Group (former Top Shop Sealand Graphics is now part of this group), and The Graphics Shop, the color-only company that was spun off from Hackworth.

The total number of locations is up this year, 108 versus 106 in 2012. While most shops had only a handful of locations—ranging from one to four—five of our Top 40 list have five or more locations, with Richardson, TX-based Thomas Reprographics, Inc. topping out with 25, down from last year’s 28. New York-based Duggal Visual Solutions has 10 locations while Sharpe Images, Ferrari Color, and Color Reflections Las Vegas boast six a piece. Additionally, the Top 40 Shops have plans to open up nine new locations in 2014, down from last year’s projected number.

The Top Shops offer a range of services, both color and black-and-white graphics. This year, 52.38 percent of the shops offer color-only graphics (no monochrome) up from last year’s 42 percent. A small 4.76 percent of shops only offer black-and-white graphics/drawings with the remaining 42.86 percent offering both color and black-and-white graphics to their customers. As an average, 43.61 percent of the top shops’ output is wide-format (36-96 inches in width). Grand-format (96-inches plus) grabs the next largest share with 29.66 percent. Medium-format (24-35 inches) has 13.89 percent of the share, leaving small-format (14-inches and smaller documents) the remaining 10.21 percent.

Application-wise, there have been a few shifts. Retail and POP displays and signs (including floor graphics) are still in the lead position with 15.89 percent of the overall graphics mix. Banners and signs is next in line with 12.89 percent. Exhibit and trade show graphics (10.24 percent) pull in the next largest segment of business. Fleet and Vehicle Graphics show a slight increase this year, up about one percent to 7.53 percent. Billboards and Building wraps also saw a slight increase, moving up to 7.13 percent.

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