CATALOG & MAGAZINE PRINTING OUTLOOK — TURNING THE PAGE

December 2006 BY CHRIS BAUER
Managing Editor

multipage

FACING INCREASED competition from electronic alternatives and another possible jump in postal rates, players in the catalog and publication markets may have to fight for a successful future. Industry consolidation should also make tracking these segments interesting for industry watchdogs.

According to “A Study and Analysis of the Future of Catalogs, 2006-2011” by PRIMIR (Print Industries Market Information and Research Organization), the North American catalog industry is in a state of disruptive change. This can be attributed to the Internet becoming more of a vital selling tool for companies that traditionally used printed catalogs to drive sales.

The shift to online shopping by consumers has potential negative impacts for catalog printers and their equipment and consumables suppliers, the report warns. Some key findings of the study include:

• The outlook for the catalog industry from 2006-2011 is for a decline in volume.

• The forecasted decline is the result of a structural change in catalog merchandising companies and the further development of electronic alternatives.

• The catalog’s primary function is shifting from direct response to driving customers to the Web.

George Zengo, president, catalog and retail inserts, at RR Donnelley, notes that catalog industry consolidation continues throughout the entire supply chain as the catalog market’s growth slows. He expects there will be further consolidation ahead.

In the past year, Zengo says RR Donnelley continued to execute on the plan that it began three years ago. This includes: profitable growth; productivity; and targeted mergers and acquisitions.

“From an organic growth perspective, we have a disciplined process in place that we follow each year, where we carefully align customer needs with our capital budgeting process,” he reveals. “This allows us to make strategic capital investments tied directly to specific customer or market needs. This year, we continued to make customer-specific investments in print and binding assets, as well as making targeted acquisitions.”

Additional Services

RR Donnelley has invested significant capital and resources in co-mailing, and there is an associated resultant revenue stream. Co- mailing has not been set up as a separate profit center—it is seen as a natural extension of printing, binding and distribution services.

In 2006, RR Donnelley acquired OfficeTiger, which provides integrated onsite and offshore business process outsourcing (BPO) services. OfficeTiger’s services include financial analysis and reporting, desktop publishing, creative services, word processing, credit analysis, claims processing, litigation support, market research, database services, managing creative services for output and more.

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