In the Face of Slow Industry Growth, Printers are Optimistic
The printing industry has continued to grow over the past year, albeit significantly slower than last year. Despite this, confidence within the industry has begun to increase.
These and other industry trends from the “2022-23 State of the Industry Report” were shared at the “NAPCO Research and PRINTING United Alliance Key Trends and Insights Breakfast” on day one of PRINTING United Expo, which is taking place this week in Atlanta, Georgia (Oct. 18-20).
According to the report, inflation-adjusted (real) sales in the industry during the first half of 2023 were down 1.6% on average; in full year 2022, real sales were up 1.9% on average. Compared to the entirety of 2022, there was a significantly smaller percentage of respondents in the first half of 2023 that reported an increase in real sales (55.7% versus 37.6%), and a larger percentage that reported decreased real sales (34.1% versus 51.6%).
Regardless, Andrew D. Paparozzi, chief economist at PRINTING United Alliance, explained that 32.1% of participants in the report anticipated that business would improve over the rest of 2023, an increase from 22.6% in spring 2022. Mostly, their reasoning was that “recession fears seem to have subsided.”
Still, some concerns for the last half of 2023 have persisted. The most prevalent were rising labor costs, reported by 64.5% of participants; maintaining profitability, reported by 55.9% of participants; and increasing sales, reported by 51.4% of participants.
Print providers were also asked what they’ve learned over the past three tumultuous years. From this, two key focuses for the future have emerged.
“One of the lessons was, we need stronger risk management because the next upheaval — whether it's technological such as artificial intelligence, economic, social, biological — could come from anywhere, and the more robust the risk management program, the more likely we can make that upheaval an opportunity rather than a threat,” Paparozzi said.
Another focus was productivity, promoted primarily through the use of artificial intelligence. With AI, print providers are looking to automate not just production, but company-wide processes as well. About one-quarter (23.4%) of participants reported that they are using AI in some capacity, with 28.2% planning to use AI within the next year.
Paparozzi explained that AI “allows us to automate activities we never, ever automated before; activities we never dreamed we could automate. And through machine learning and natural language processing, it doesn't just automate, it enhances. It learns by doing as we do. So it doesn't just generate forecasts. It doesn't just generate market analyses. It doesn't just generate an analysis of client responses. It enhances those forecasts and analyses and responses as it’s exposed to more data, supporting superior decisions company-wide.”
Considering this broad impact, it’s no surprise that AI is one of the major trends influencing the investment decisions of printers, said Lisa Cross, principal analyst at NAPCO Research.
Cross also explained that convergence is changing the industry, with 56% of commercial printers moving into adjacent markets and 69% of sign and display graphic providers doing the same.
“Many factors continue to drive convergence,” Cross said. “The top one is digital technology, digital transformation, whatever you want to call it, that has lowered entry barriers and enables people to move into adjacent markets.”
Cross also highlighted key challenges that print providers are facing. For commercial printers, the topmost concerns were funding growth, technology and people investments, reported by 71% of participants; cost inflation, reported by 68% of participants; and price competition, reported by 67% of participants. Among sign and display graphic providers, the top three concerns were finding new sales and revenue sources (85%), increasing labor costs (82%), and increasing shipping costs (78%).
Additionally, the report found that 52% of print users are baby boomers, and only 1% belong to Generation Z, which may play into the hiring challenges reported. Specifically, two-thirds of print providers within the commercial and sign and display graphic markets reported that hiring production staff is either a critical or moderate challenge, while 62% reported that hiring sales staff is a challenge.
Finally, findings indicated that sustainability remains a key factor in an organization’s print buying decision for 80% of print buyers and influencers.
So how can vendors help their customers achieve these goals and face these challenges? Cross highlighted the importance of being more of a partner rather than simply a vendor to print providers. This can take the form of defining a path that can increase their efficiency and reduce risks, listening to them and taking action, providing support services, and educating them.
“Educate, educate, educate, and then I would say educate some more,” Cross said. “There’s a lot of misinformation out there, and a lot of the things in our infrastructure to educate people on print just aren’t there anymore.”