How a South Florida Commercial Printer Transformed Its Business
Earlier this year, NAPCO Research published a report on the convergence that’s taking place in the printing industry. The most compelling result was that fully one-third (33%) of commercial printers surveyed indicated that they have already expanded their service portfolios to take advantage of new opportunities for growth - or are actively taking steps to do so.
One such enterprise is JKG Group, headquartered in Deerfield Beach, Fla. Established as JKG Printing and Graphics in 1984, the company is a case study in industry convergence, having significantly transformed its business.
Like many of his peers, Adam Gittlin, president of JKG Group, had observed that margins in the printing industry were shrinking and client demand was shifting, most notably toward consumer goods packaging and related fulfillment services such as storage, packing and shipping.
When Gittlin took the management reins from his father in 2015, the company had already changed its name from JKG Printing and Graphics to the more agile JKG Group, added direct mail to its offerings, and moved into a modern, 90,000-sq.-ft. facility centrally located for efficient shipping and delivery.
With more space and a better location, Gittlin was able to apply a laser focus on product packaging and fulfillment, both of which - unlike most commercial printing - could be priced fairly, with healthy margins, and still remain competitive. In particular, the personal care products packaging market was set to explode, and JKG Group wanted to be well-positioned to leverage that growth. At the same time, entrepreneurial and enterprise markets were actively managing budgets by reducing overhead and outsourcing services like warehousing and fulfillment.
“Our clients were increasingly looking for support services under one roof for convenience, accountability and cost efficiency,” observes Gittlin. “And we were looking for additional revenue streams. Transforming our business seemed to be the right answer for both.”
Assembling the Right Resources
To make the transformation work, certain resources were necessary. Skilled personnel would be needed to sell and support the JKG Group’s new capabilities in packaging and fulfillment. The company hired a sales director with both cosmetics packaging experience and strategic packaging connections. As a technology-reliant company, JKG Group also brought IT support in-house and hired three IT staff members within the year. Specific training in kitting and fulfillment was provided for operations staff. Another important addition was a senior production director to keep all of the new parts synchronized and humming.
Capital investment was also required - to support packaging, short-run product boxes, complete fulfillment services and direct mail growth. During the course of 15 months, Gittlin added a new Xerox iGen digital press, specialized labeling capabilities, sachet/pouch packaging equipment and cellophane over-wrapping machines. He also reengineered his warehousing space to meet the new demands.
Challenges of Transformation
Doing all the right things the right way was important to the success of these initiatives, but still there were multiple challenges as the company moved to seriously transform its business. For one, the packaging industry itself is undergoing dynamic change in response to new consumer demands, the green movement and increasing regulation (and deregulation). Price competition has heated up due to off-shoring of manufacturing. Niche markets, such as CBD and craft brewing, are opening up narrow, but intriguing, opportunities. As Gittlin points out, “To stay ahead of the curve, we have to continually assess the landscape and decide our next strategic moves.”
Providing fulfillment services brings its own set of challenges, mostly related to product diversity. Varying product dimensions and weights create specific demands, as do hard goods, soft goods and consumables. Some products require kitting, some do not. Will kitting volumes be steady, or spiky? Does a product require climate control or extra security? Is it shipping to other businesses, or to consumer addresses? Does the fulfillment program for a given client need to be integrated with an eCommerce platform, such as Shopify or WooCommerce?
For Gittlin and his team, the mandate is to be able to customize every fulfillment project and price it profitably, in addition to being able to quickly mobilize kitting temps from a trained labor pool.
Finally, the challenge of expanding direct mail services involved the use of new technologies to provide added value. While direct mail relies heavily on commercial printing - primarily digital - Gittlin believes it is also necessary to provide barcoding to offer expanded content, and dynamic QR codes to offer video tours and demos. Near-field communication (NFC) tags offer huge interactive potential for product retailers in stores and online, and augmented reality apps can turn client messages into memorable user experiences. “Each offering requires different technology,” he says, “and it is vital to educate our clients so they can select and use them effectively.”
In the face of these challenges, how has JKG Group measured its success? The obvious answer is by experiencing growth in margins and bottom-line revenue - by service category and in the aggregate. JKG Group has begun to enjoy the outcome of its strategic transformation efforts and anticipates additional success over time. “We continue to closely watch our results,” says Gittlin, “and will make course corrections based on what we see.”
In addition to advocating strategic re-investment in resources and infrastructure, Gittlin is a proponent of constant learning, and regularly talks with clients to understand what forces they are responding to and what is causing their needs to change. He keeps an ear to the packaging, printing, fulfillment and mail industries, wanting to know what’s on the horizon and why.
“Agility, being able to scale quickly up or down, is critical,” stresses Gittlin, adding that it’s also important to be prepared to fail. “But learn fast and keep moving forward!” Good advice, certainly, from this case study in industry convergence.
Related story: Convergence in the Print Industry