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Print Markets Update — Where Print’s Hot, And Not

August 2007 By Vincent Mallardi
AS THE dog days of summer begin to wind down with five months remaining in 2007, printing sales are poised to grow faster than the 3 percent clip of the first half of the year. The U.S. Federal Reserve Bank is now forecasting the nearly 4 percent Gross Domestic Product (GDP) nominal growth rate that we predicted a year ago.

The falling dollar continues to inflate prices in energy and other imports, and earnings growth among companies with foreign operations. At least two interest rate hikes before year’s end are inevitable, which will likely dampen retail sales and speed up mega-merger activity in every sector.

All of this is good news for our industry. Consumers have been outspending the overall economic growth, and retailers will buy catalogs, ROP and outdoor/point-of-purchase (POP) to keep their customers’ spending beyond their means. Increasing dependence on offshore earnings and capital will mean more multi-lingual advertising and packaging, and business combinations will bring name changes and a boom from business cards to outdoor signs.

Discretionary: The hottest Discretionary category is Travel/Hospitality (+27 percent), reflecting the biggest increase in printing, as the cheap dollar draws record numbers of foreigners to the country and keeps Americans at home. Nearly 1 percent of the $762 billion in travel/hospitality revenues will go toward buying print. Personal Care (+12 percent) is grooming for $346 billion, with 1.8 percent to print, principally in packaging, publication advertising, inserts and POP.

Along with Entertainment and Gambling/Wagering (each +9 percent), Leisure Activity (+5 percent) and Fashion (+1 percent), these discretionary units should account for nearly one-fifth of all printing.

A record number of blockbuster films, a proliferation of casinos, and more horticulture and hobbies with an aging population, are the principal movers. Down-dressing is hurting specialty retailers where same-store sales are in threads.

Discount Retail (-17 percent) is the only Discretionary component in demand decline. Same-store sales are down—from the great “Wal-to-the-small-Stein-marts”—because of increased prices of imports and a financially stressed underclass that can’t absorb the increases.

Durables: A lesser selling oppor- tunity (at less than one-sixth of all print) is to the Durables. Real Estate and Automotive (each +4 percent) drive this group with $12.3 billion and $8.9 billion in annual print procurement, respectively, mostly folded sheetfed, digital narrow and wide-format, outdoor, OEM parts and packaging. Home Improvement (-5 percent) at $6.2 billion in demand needs print to rebuild, but isn’t buying it. Or, maybe we’re not selling them (the print buyers).
 

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