2022 Growth Opportunities for Wide-Format Print Providers

Without a doubt, the last two years have been a challenge. While the COVID-19 pandemic started the ball rolling for the trials wide-format print providers are facing, it was only a piece of the overall puzzle.

The pandemic highlighted the interconnectedness of supply chains, which proved to be a global weakness. Energy shortages in China limited the manufacture of materials — both raw and finished. The severe freeze that affected Texas in February 2021 limited oil refining, and thus, plastics and chemical production. A shortage of truck drivers meant that manufactured materials sat on loading docks or were shipped by overnight carriers. The general labor shortage meant there were not enough people to run the machines that produce the materials graphics producers need. And printing businesses have their own labor challenges, having to address an increasing number of orders with a reduced or inexperienced production team. While this might seem dire, it doesn’t need to be.

Since the pandemic began, PRINTING United Alliance and NAPCO Research have been tracking key leading and current indicators for wide-format printers, first through the Print Business Indicators research, and now the State of the Industry research. The current indicators include sales, production, employment, prices, and pre-tax profitability.

PRINTING United Alliance and NAPCO Research also asked printers to gauge which markets have the most potential for growth over the next two years. The list to the right includes markets outside of the wide-format space, but it is clear to see there is definite growth potential for several markets that fall within this segment.

But that should not be surprising. In 2018, NAPCO Research and PRINTING United Alliance conducted the first printing industry convergence study. The analysis of commercial, in-plant, packaging, wide-format, garment, and industrial PSPs validated the convergence phenomenon, assessed the degree to which it is occurring, measured attitudinal beliefs as to convergence trends, and defined a printing industry migration pattern.

The research confirmed the anecdotal migration evidence: 81% of PSPs are entering or considering entering a print segment other than their own.

Three years later, with industry forces such as digital adoption, service provider contraction, increased e-commerce demand, and external factors such as a global pandemic impacting the industry, NAPCO Research and PRINTING United Alliance have reassessed the degree to which convergence is occurring across print segments and have redrawn migration patterns across segments.

The data is clear: convergence in the printing industry is growing. Printers in every industry segment are considering entering areas beyond their primary focus, and many already have done so. Not only has the percentage of service providers considering segment expansion increased since 2018, but the number of segments printers are also considering entering has increased substantially as well, with more than half surveyed considering entering three or more segments beyond their primary focus.

A Closer Look

So, what is it about these applications that make them ripe for growth? Let’s examine some of the trends driving growth in these segments.

▶ Folding Cartons (73.1%) / Tags, Labels, and Decals (53.1%)

Packaging, without a doubt, is one of the most essential printing segments and has generally fared well over the past two years. Technavio reports that the folding carton market is expected to grow by $2.68 billion, registering a CAGR of about 5% from 2021 to 2025.

According to the 2021 State of the Industry Report: Folding Carton in Packaging Impressions (September 2021), during the pandemic, folding carton demand was high as packaged food sales soared.

Additionally, as retailers and brands from big box brick and mortar to out-of-home online businesses compete for consumers’ attention and dollars, folding cartons take on a more powerful role as a marketing tool — driving the trend toward shorter runs and print on demand.

Consumers were pushed to rely on digital retailers even more during the pandemic, as many physical stores were closed, and people opted to stay indoors. Packaging — both folding cartons and labels — saw a huge boost as e-commerce sales rose.

The pandemic also revolutionized e-commerce with an explosion of small-scale businesses selling through online storefronts on places like Amazon Marketplace, Shopify, Etsy, and eBay. These entrepreneurs have unique needs that only digital print can meet, such as cost-effective short runs and quick turnarounds, with customized embellishments that make their packaging stand out from the big brands.

▶ Wall, Architectural, and Building Graphics (72.5%)

With the rise of malware attacks, ransomware, data breaches, and password leaks, consumers have become more concerned about digital privacy. Consumers are also concerned about the amount of data they are giving third parties through online trackers and online data collection tools.

According to a report by PEW research, a majority of Americans believe their online and offline activities are being tracked and monitored by companies and the government with some regularity. It is such a common condition of modern life that roughly six-in-ten U.S. adults say they do not think it is possible to go through daily life without having data collected about them by companies or the government.
Americans’ concerns about digital privacy extend to those who collect, store, and use their personal information.

With the introduction of iOS 14, Apple changed its approach to the collection of the identifier for advertisers (IDFA) in the mobile operating system created and developed by Apple. Previously, identifier information had been collected on an opt-out basis, but Apple switched to an opt-in model (consumers must agree to be tracked). As a result, there are far fewer authenticated users than before the IDFA change.

If people are blocking ads or tracking bots on their phones, what alternatives do brands have? Old-school marketing might be the new way to reach these audiences.

According to Harris Poll, out-of-home (OOH) relevance is expanding, with 42% of respondents saying they are noticing OOH more than before the pandemic, and consumers noticing OOH “much more” is up nine points from a year ago.

It also means brands are looking for safe, privacy-compliant solutions. OOH — like wall and building graphics — can reach consumers where they are during their day.

▶ Direct Mail (63.5%) / Marketing Collateral (50.8%)

Apple’s privacy changes have also made brands shift Facebook budgets to old-school marketing vehicles such as direct mail. Could this be the right time to return to optichannel marketing, especially when the vehicle is print?

The pandemic has also impacted screen time across all demographics — by some reports as much as 50% — as Zoom meetings, online learning, and Netflix binges became the norm. To recharge, many consumers turned to cooking, baking, knitting … and going through their mail.

As a result, direct mail and marketing collateral have become new ways to reach consumers. A Canadian study about the neurological power of direct mail found it’s more memorable and more persuasive when compared to digital media.

A 2020 State of Multichannel Marketing Report by PFL and Demand Metric found that the inclusion of direct mail in multichannel campaigns boosted return on investment by 18%. Eighty-four percent of survey respondents noted that direct mail also improved their multichannel campaign performance.

A study conducted by Millward Brown for the U.K.’s Royal Mail concluded that the “research strongly suggests that greater emotional processing is facilitated by the physical material than the virtual.”
The research claims that offline marketing — which includes a tactile item such as a gift — leaves a much deeper footprint in the brain. The result is that a physical item is more likely to be remembered, have a positive brand association and ultimately aid motivation.”

▶ Posters and Presentation Graphics (51.9%)

Widely used to promote manufacturing and services from the mid-19th century onward, the power of advertising wasn’t truly recognized until the 1950s.

Interestingly, a study sponsored by Canada Post and performed by Canadian neuromarketing firm TrueImpact reported that brand recall was higher among participants who were exposed to a printed piece (75%) than a digital ad (44%).

Large-scale posters are still one of the best and most effective ways for brands to attract customers and the cost is comparatively inexpensive. They don’t cost much to design, print, and install, and are quick to produce.

▶ Directional Signage and Directories (51.2%)

Wayfinding signage has always been important to commercial design, but today it takes on new meaning with social distancing.

Over the past two years, we all grew accustomed to seeing the directional graphics as we attempted to navigate through life during a pandemic. Unfortunately, it appears these graphics will be remaining with us for a while longer as variants continue to rise.

As employees and customers step carefully back into the world, we all need to shift our behaviors, interactions, and ways of moving through public spaces. New signage and wayfinding graphics, when implemented thoughtfully, can encourage practices to help people navigate this new world.

▶ Window Graphics (50.7%) / POP, Displays, and Retail Graphics (47.8%)

The latest data from McKinsey shows that consumers are likely to keep the behaviors they’ve adopted amid stay-at-home orders, such as more online shopping and fewer mall visits. Retailers have to adapt their brick-and-mortar operations to comply with health-and-safety regulations and meet basic customer expectations.

Retailers also need to make their in-store experiences even more extraordinary for those who can visit in person. They have to give people a reason to visit that is so compelling, it justifies their exposure to health risks and overcomes the inertia of the behaviors they adopted during the shutdown.

When it comes to retail stores, frosted storefront window films can be used to provide some privacy for shoppers. Storefront window graphics can turn a simple storefront into a vibrant display that attracts and converts shoppers. One survey found that 92% of shoppers are always on the lookout for a deal. Shop windows provide a great way to market to deal hunters.

But also remember, proper visual merchandising — like retail displays and graphics — can stop a shopper in their tracks. That eye-catching display can help to convert lookers into buyers.

▶ Banners, Soft Signage, and Flags (48.9%)

Climate change has been a topic of concern to consumers around the world — and many are putting their money where their mouth is, so to speak, supporting brands that pursue sustainability initiatives.

Textile printing, traditionally, has not been a “green” industry, but digital textile printing has proved to be much more sustainable than analog printing techniques. Its benefits range from a reduction in ink consumption and water pollution, to an increased efficiency of production processes and logistics.

Many retailers are also using natural, sustainable, or recycled fabrics that are environmentally friendly. More consumers are judging retailers and brands on their commitment to business sustainability. Visual merchandising choices can be a prominent way to showcase a brand’s corporate values.

Additionally, digital textile printing covers mostly areas where vinyl and banners can’t be used for certain occasions, such as outdoor flags. Fabrics are being looked at in a different light and, in many cases, are preferred instead of banners. This includes interior decoration for tradeshows, showrooms, and point-of-sale advertising.

In the retail space, we know store windows and product displays are critical components of a visual merchandising strategy. Fabrics are an excellent example of sensory marketing. First and foremost, store windows and product displays are meant to have dramatic visual appeal. Sometimes a display can be tactile too if elements are intended to be touched.

▶ Promotional Products (45.6%)

Promotional products are a powerful way to get a brand’s message across. A study in the U.S. found that promotional outerwear is kept for 16 months, while umbrellas and T-shirts last for 14 months or so. Promotional products offer a better ROI, recognition, and sales for many brands.

Remember, many of the customers coming to you for wide-format printing are already using promotional products they’re buying elsewhere. Others may not even realize promotional products exist but could benefit from using them if introduced properly. Either way, the promo segment represents a major opportunity for wide-format providers to become a one-stop-shop for customers while growing sales at little or no up-front cost. (Check out the “Promo 101” article in the September/October 2021 issue of Wide-Format Impressions for more details on how to get started in the promotional products market.)

Opportunities Abound

So, what does this all mean? Global economic trends — including COVID-19 — have impacted the way brands market and print (in its many forms) offers a strong ROI. Convergence — the movement into adjacent sectors — will continue to increase as print providers look for opportunities to expand their revenue streams. Print providers have the chance to become one-stop-shops for brands — but they need to ensure they continue to provide high levels of service to their new and current customers while they expand their reach into other markets.

Remember, a brand — aka print buyer — will inevitably lean into a more convenient option, and multiple service offerings from one provider is more convenient than a single service from a single provider. This means the time is now for print providers that have not researched segment expansion to begin doing so, or risk being left behind by competitors that can more effectively meet their clients’ full range of print needs.