Breaking Down the Trends from SGIA’s 2019 Industry Benchmarking Reports
For this year’s 2020 economic outlook, we are turning to the rich wealth of data generated from the SGIA Industry Benchmarking Research in 2019. That research provided members with quarterly reports covering a number of important topics that range from products and markets, to financial performance indicators, to wages and benefits. But what can we learn from looking at the reports as a whole for the entire year? And how does that relate back to the average wide-format printer?
Here are ten of the top takeaways, which can help wide-format shops better plan for how to spend their dollars — and grow their business — in 2020 and beyond.
1. About every second company (41.5%) serves at least one segment in addition to their primary segment. Where do they serve? The coverage varies from commercial printing (30.9%), to functional (18.7%), package printing/converting (11.4%), and apparel decoration (9.8%). That will likely continue well into the new year.
Self examination: How do you stack up? What segments are you looking to expand into? If you’re not looking to expand, why not? What’s holding you back?
2. On average, companies serve seven markets and provide eight products. The most popular vertical markets served by at least half of the respondents are educational institutions, corporate branding, architecture/construction, food services, retail, and nonprofits. The top three vertical markets with the potential to grow in 2020 are architecture, interior decorators and designers, and health care. The last two were also mentioned among the markets that printers would like to add, along with hospitality services and exhibit manufacturers.
Self examination: Looking at the markets you serve today, what adjacent verticals can you expand into for the coming year? Are there programs you’re currently running that will import easily into another vertical? Remember: If you plan to expand into another market, make sure you do your research so you know the pain points — and make sure you have solutions at the ready.
3. Window graphics (85.3%), banners/soft signage/flags (84.3%), and labels/decals (76.5%) are the most popular products among the graphic and sign community. Digital displays (73.9%), wall/architectural/building graphics (63.2%), and vehicle wraps/vehicle graphics (56.9%) were identified as the areas with the highest growth potential by at least half of the respondents.
Self examination: For many companies, this could be an exercise in how you can do more with the same equipment and staff — especially if you’re not running at full capacity. What would it take to add some or all of these products to your service mix for 2020? Looking at your current equipment list, which ones can you most easily add with minimal — or no — additional investments?
4. Companies are looking forward to growing their product offerings, as 40.5% would like to add a new product to their current product line, and every second (50%) would like to expand into new markets, with hospitality, exhibit manufacturers, and interior decorators being among the most desirable.
The majority of respondents (78.1%) rely mostly on digital, and about half (48%) are entirely digital. Roughly nine out of 10 printers (85.7%) offer finishing/post-production services. The most popular value-added services offered by printers are installation, lamination, grommeting, mounting, and diecutting/laser cutting. On average, printers tend to offer five different finishing/post-production services. Providing value-added services allows companies to use their production facilities wisely (the majority use at least 50% of their production) and bring in more revenue.
Self examination: What finishing services do you currently offer and what are you outsourcing? What additional finishing options would add the most value to your current product lines, and/or what options are your current customers currently going elsewhere for?
5. When asked about their current sales revenue, two out of three companies (66.1%) reported an increase compared to 2018, and they have high expectations for the future. The majority expect their sales to increase by at least 10% in 2020. And to get there, marketing more effectively and devoting more resources to marketing efforts is the way to go about it for two-thirds of the companies (64.9%).
Self examination: What marketing plans do you have in place for 2020? If you don’t have one already, now is the time to sit down and create a plan for the coming year.
6. What about the profits? About every second company had a profit increase (47.9%) and slightly more than half (53.1%) expect profits to grow in 2020. Profits are more challenging than sales, and while sales are the major contributor to the profits, focusing on cost reduction and better efficiency in operations allows companies to improve profitability.
Another important factor was staying focused on more profitable jobs. Rising wages and costs of materials, supplies, and inputs were identified as the top obstacles to profitability. How do companies overcome them?
Although, a number of approaches were mentioned, focusing on personnel and improving the efficiency of operations seem to be the most successful, according to the survey.
Self examination: When was the last time you did a full cost analysis of your shop, down to determining the exact cost for each product, process, and service? And if it’s been a while since the last time that kind of deep dive was done, how much money are you leaving on the table when estimating and pricing jobs?
7. What are the primary barriers to grow a print business? Downward pressure on prices was mentioned by at least half of the respondents (51.7%), followed by finding new customers (38.3%), recruiting/retaining production personnel (36.7%), and rising costs (33.3%).
Self examination: With the proverbial “low-hanging” applications like posters and lawn signs becoming commodity products, how do you plan to differentiate yourself from your competition? What are your biggest barriers right now? What keeps you up at night? And what strategies are you employing to get past them?
8. How do they overcome the challenges? To attract new customers, companies use websites (75%) and referrals (70%). On the management side, at least half of respondents (53.8%) try to maximize value of their current customers and improve customer service.
Self examination: Are you providing your customers with all of their print-related needs or are they going elsewhere to procure what you don’t offer? How can you increase the business done with your current client list in 2020?
9. Almost all the respondents (91.4%) are planning to spend at least $5,000 on capital investments in the coming year, and the major contributing factor to this is the need to increase efficiency and automation (67.6%). Two out of three printers (65.7%) are planning to spend more on hiring in the nearest future, with the most needed positions being sales representatives, graphic designers, installers, and digital press operators.
Self examination: Where are the biggest pain points in your shop today? What strategic investments can you make in the course of the next 12 months to help alleviate them?
10. Overall, printers are looking optimistically into the future: they are either positive or neutral about their industry (88.5%) or the national economy (82.6%). This bodes well for a strong 2020 that will see continued growth across the board.
Self examination: Excitement is contagious, so what are you most excited about when it comes to your business in 2020? How can you pass that excitement along to your staff and customers?
The outlook for 2020 is a bright one, with a range of options for growth for wide-format printers of every shape and size. The data paints a strong picture for the potential of the coming months — now it’s up to you to take advantage of those opportunities.
Andrew D. Paparozzi joined SGIA as Chief Economist in 2018. He analyzes and reports on economic, technological, social and demographic trends that will define the printing industry’s future. His most important responsibility, however, is being an observer of the industry by listening to the issues and concerns of company owners, executives and managers.
Previously, he worked 31 years at the National Association for Printing Leadership. He has also taught mathematics, statistics and economics at various colleges.
Andrew holds a Bachelor’s degree in economics f rom Boston College and a Master’s degree in economics — with concentrations in econometrics and public finance — from Columbia University.