Dealers--More Than Middle Men
The price pressure also spilled over into developing electronic imaging products, as these ended up being bundled with consumables.
"As with any efficient marketplace, this situation cannot continue to exist," Faughnan says. "The situation is now being resolved by manufacturer and supplier consolidations and the resulting rationalization of production plants and infrastructures. Once this plays out, price equilibrium will swing back, stabilize and gain strength."
While the heavyweights rationalized themselves, it left an opening for what Faughnan terms the second-tier supplier. These suppliers are more focused on a particular technology or application and do not boast traditional consumables. These companies feature wares such as digital proofing products and computer-to-plate technology.
Consolidation has not played a large role in shaping the landscape of distribution, not yet at least. By FitzPatrick's estimates, Pitman and PrimeSource—the industry's two leading dealers—constitute less than a third of total business. With so much fragmentation existing, this could be what he terms the "calm before the storm."
PrimeSource—with roots going back to 1865—has made eight acquisitions since becoming a public company in 1993. "As we look ahead, there are several trends to which we are responding," states Fred Heinkel, vice president of sales and marketing at PrimeSource, noting the consolidation that's occurring throughout the industry. "Companies are increasingly seeking a distributor that can offer one source for prepress and pressroom supplies, timely deliveries and national coverage."
Heinkel contends that his company is uniquely positioned as the most geographically diverse distributor in the country. "Our customers and manufacturers expect PrimeSource to transition into a more consultative role in meeting their needs. As a result, we've positioned our company not only just to sell products, but also to provide solutions, support and training," he says.
Reshaped Role and Focus
If consolidation does not reshape the role and focus of the dealer, it's a safe bet that the digital age will. As commercial printers embark on integrating digital workflows, the distributor plays a pivotal role aiding in the installation of the system, as well as training printers on its mechanisms. It became an exciting time to be a dealer when the market shifted from proprietary workflows and architectures to a standard platform, open architecture, PostScript environment.