by DPS Magazine
It’s been quite a year to say the least. The challenges imposed on individuals, small businesses, enterprises, and the government during a global pandemic felt at times insurmountable. However, as we prepare for a new year, it is important to reflect on both the positives and negatives deriving from the COVID-19 crisis.
2020 forced us to reprioritize our personal and professional lives amidst worldwide lockdowns. Some businesses made difficult decisions to shut down operations, lay off employees, and cut spending. Others looked for ways to invest in technologies to meet new demands and become more nimble. Many did a mix of both.
A Daunting Year
2020 was fraught with challenges and change. However, the print industry is no stranger to evolution and many print service providers (PSP) remain focused on meeting new demands that came from the pandemic. While new opportunities presented themselves, it doesn’t totally compensate for all that was lost.
“The biggest negative is to those people within our industry who contracted COVID-19 and, sadly, those who didn’t survive it,” offers Jacqueline Hudmon, SVP, sales and marketing, Komori America. “The next negative is the rapid decline for print, leading to an economic hardship for many in our industry. In addition to dealing with the economics of this pandemic, printers—as essential businesses—developed their own handbook on workplace safety.”
“The biggest negative comes from the impact on small businesses and little to no small business growth. As we know, a large percentage of digital services come from this customer segment,” shares Clarence Penge, EVP, head of product management North America, Heidelberg.
Bob Honn, senior director of marketing, Canon Solutions America, admits that demand from key industries such as education and events have all but dried up, with some of them starting to slowly pick up again. “While sales teams are still able to conduct a reasonable amount of business remotely, new customer development and prospecting requires a level of face-to-face interaction that is still difficult to do. Key industries such as trade shows that historically drive printing demand such as event signage are/were significantly impacted with suppression of demand most likely continuing into 2021.”
In an uncertain environment, the tendency is to cut levels of investment. “As a result of that, those that have the business cases and balance sheets to invest will garner disproportionate market advantages,” states Robert Stabler, managing director, Koenig & Bauer Durst GmbH.
COVID-19 presented challenges and continues to disrupt the supplier and converter area of the supply chain.
Stabler points out that nobody really knows how long this will last, hence the need to employ agile systems and processes. “My guess is that there will be no fast return to the pre-COVID-19 days. Companies are already adjusted to the new reality with different work practices that will continue long after the crisis is over. Home delivery that was already strongly growing pre-crisis and is likely to continue to grow at a faster pace. How and when consumers order goods are trends that will continue to be unpredictable. Converters are going to have to become more adept at identifying the early signals for new trends. In essence, those that embrace the need for agile systems and are very close to their customers’ supply chains and promotional needs are going to win.”
Coronavirus created a challenging business environment for print providers. Many saw their sales dip in the Spring and Summer this year. “We know that was a tough time for our customers and we tried to stay in touch with them as much as possible. I personally spoke to at least two customers per day through those tough months. But the good news is they are seeing signs of recovery and their print volumes are starting to come back. As this happens, they are looking to the future and how they can compete better and build their organizations to be more flexible in the future. COVID does present a huge opportunity—we can change the print industry for the better,” shares Francis A. McMahon, EVP, Canon Solutions America.
The Bright Side
While we can get lost in the negatives, it is important to consider the other side of the coin. One benefit is that print stood out as an essential industry.
There is no doubt that COVID-19 has been a distraction to digital print, but at the same time it has forced businesses to adopt the way in which they operate, creating many new efficiencies and opportunities, shares Honn. He notes several positives, including new demand for applications that never existed before COVID-19, like social distancing signage and the production of personal protection equipment (PPE). It also propelled the need for more efficient business operations. Further, with many non-essential resources working remotely, this leads to lower SG&A expenses, helping to offset some of the lost profits.
“Pivot will be one of the words defining this period in history because it is exactly what many printers had to do,” says Hudmon. “We have seen printers shift their businesses to address new opportunities in signage, PPE equipment, and direct mail, while others used the gaps in production to re-tool their equipment so they can be running at maximum efficiency when print regains its footing.”
“Many businesses were forced to redefine themselves overnight and created viable new business segments to help ensure further revenue diversity and growth opportunities. Companies reluctant to implement remote working policies have proven this is a viable and productive model. Long term this may offer the ability to reduce fixed real estate costs,” adds Honn.
On a global scale, the pandemic forced a transition from analog to digital in many areas, including package printing.
“We see an acceleration of trends towards shorter run lengths and unpredictable demand. Channel mix is changing, retail brand promotion by channel is more important than ever as brands seek to stand out in store. Of course there is the ongoing increase in online ordering, often requiring different packaging variants. To meet these challenges, converters need more flexible and automated systems to deal with many small orders and a much faster in-plant cycle time. It is also an opportunity to develop new business models for brands to allow them to take advantage of the promotional and supply chain flexibility opportunities that high-speed digital printing provides,” comments Stabler.
Penge agrees, noting that the biggest gain is the digital integration of production. “In other words, the building of a smart print shop. People tend to think about digital in terms of toner and inkjet output, but today digital is so much bigger. Now more than ever, we have proved the value of digital integration and the ability to carry out a task without everyone being in the same location allowing production to continue and eliminating touchpoints. While it’s not lights out manufacturing, you can clearly see how the Internet of Things (IoT) and Heidelberg’s cloud-based services today benefit customers.
Additionally, the on demand printing of signs for small business was a clear winner in the recent months.”
Another positive from coronavirus is the sense of community from the printing industry. “Throughout the pandemic we heard stories of Canon customers partnering for disaster recovery efforts and exchanging supplies so they could keep their operations going. We again witnessed this strong community during the 2020 thINK Ahead Live Virtual Conference. We saw customers chatting with each other and with presenters and visiting partner booths—all in an effort to better prepare their businesses and our industry for the coming years,” recalls McMahon.
A New Year
It’s safe to say throughout the industry and the world, we are ready to say goodbye and good riddance to 2020. However, the ramifications of COVID-19 are still very much present.
Hudmon points out that while it is hard to predict what even next week will bring, she believes this new normal will go well into 2021. “Maybe it’s not good for the human psyche, but I do believe it will be good for print.” Advertisers, retailers, and business to consumer/business to business operations will need to reach their target markets with greater effectiveness and they won’t get that success through email marketing. “The bigger success during this time will be with print, predominantly, and personalized direct mail. I also predict growth in both the book market and packaging,” notes Hudmon.
Honn expects a few trends to extend into 2021, including continued demand for printed social distancing applications and PPE, continuity of remote working environments with an opening up over time to enable more face-to-face interaction, as well as a gradual shift from a completely virtual trade show environment to a hybrid combination of remote and in person.
The need for improved workflow and integrated solutions for both digital print and traditional offset environments is clear. “Today both solutions are needed, but a smart print shop integrates digital and offset into a single workflow. You will see advanced solutions such as IoT, cloud services, artificial intelligence, and print integration that works along the entire value chain without boundaries,” shares Penge.
Stabler sees compelling trends of brand proliferation, the effect of ecommerce especially on long-tail business models, high-impact graphics, sustainability the requirement to eliminate waste, and the ability to track and trace to know the provenance of a brand package. He points out that all of these trends lead to shorter turnaround times, smaller production quantities, and less forecast predictability.
“We believe these trends will only accelerate going forward, particularly in the wake of the coronavirus pandemic,” he adds. Brand owners are also looking to ensure the new production methods are reliable, compliant, and cost effective while converters need to have the capabilities and competencies to mass customize without any compromise on quality.
Production inkjet has been a trend for years and McMahon expects to see that increase in 2021 as the acceleration from offset to digital picks up speed. “Coronavirus really highlighted the need for flexible operations and healthy margins—two things that production inkjet can help PSPs create. Customers want shorter runs and fast print on demand. With the increase of inkjet, like 1,200 dpi from the Canon varioPRINT iX series and ProStream series, quality is no longer a hinderance. So PSPs can have it all—speed, flexibility, personalization, and high quality—all with strong profit margins,” says McMahon.
Words of Advice
While this has been a difficult year, industry leaders encourage us to look forward.
“Look to the future. This pandemic can serve as a wake up call to innovate and think strategically for the future of your business and how you serve your customers. The industry will no longer be driven by high-volume, large print runs. It is shifting to value-driven communications and print on demand. PSPs need flexible platforms that can turn jobs around quickly, reduce the need for inventory on hand, and add value with personalization, targeting, and versioning,” says McMahon.
Hudmon’s advice is to take a deep breath and appreciate the positive side of your business, employees, and personal life. “Now is the time to support your customers by coming up with different ideas and solutions that will help them drive greater revenue. Don’t forget your employees. It is a stressful time for all, so we must expect the unexpected. Acknowledging that stress and appreciating an employee’s positive attitude will go a long way. Those companies that will survive and flourish through this COVID-19 era will do so as a team.”
Remaining safe and healthy should always be a priority in these uncertain times, says Stabler. When it comes to investments, converters should be looking towards systems, processes, and people to ensure maximum levels of flexibility and agility. “Reduce touch points where human intervention is needed. Be able to produce fluctuations in short-term demand without disrupting your core efficiencies,” offers Stabler. It has never been more important to have a close relationship with your brand partners. “Rapid change is of course unnerving but with the pressure being on the whole value chain, it is a real opportunity for converters to embrace the new reality and develop business models that position them for the future,” he adds.
Penge encourages reduced complexity and making your company easier to do business with. Start by eliminating touchpoints, know your cost, and build a plan to improve margins, as increasing sale volumes or pricing is never easy.
“Stick to what you do well today and solidify opportunities with your strongest customers, but at the same time certain demand will not be replaced so look to diversify business into areas you are not into today,” adds Honn.
One thing is for certain, the print industry is tough. For decades it has continuously evolved, facing threats from electronic offerings and cultural changes. When the world lost its way, it looked to print to connect, inform, and renew. We’ve all had a tough year, but look forward to coming out on top in 2021. dps
Nov2020, DPS Magazine