Current Trends in the Graphics Segment
Brand is key to graphics and sign companies making equipment purchases, according to SGIA’s (Booth 2245) 2017 Specialty Graphic Industry Report. The report, which focuses on 2016 activity, notes that in addition to brand reputation, brand loyalty runs deep in many companies, likely driven by past experience with the company and the reliability of OEM customer support. The survey was conducted in Spring 2017.
Digital technology has been profound in the sign and graphics segment, as evidenced by the 83 percent of companies that classify themselves as either entirely digital or primarily digital. While there is still much analog printing done within the segment, analog-only operations — such as those using only screen printing — have become a rarity: Zero percent of companies self-identified as analog only. Technologies and processes used by more than 20 percent of respondents are dye-sublimation, dry toner, custom or commercial-printing-focused inkjet solutions and screen printing.
Equipment purchases — often an indication that companies have cash on hand or certainty of a favorable pipeline of work — have been strong. In the last year, nearly 50 percent of companies made a production equipment purchase costing between $50,000 and $500,000. The most purchased item was software (RIP, color management, production management), and the most-purchased types of digital presses were roll-to-roll latex ink-based printers (11 percent), UV-curable hybrid systems and UV flatbeds. Four percent of companies purchased graphic/industrial screen printing presses. The most purchased finishing technology was cutting/trimming/routing/die-cutting equipment.
While printing for retail applications has been, and will continue to be, a strong vertical market, recent SGIA reports have shown a softening of the retail vertical and a strengthening of the corporate branding vertical. The causes of this change may be two-fold. First, brick-and-mortar retail is not as robust as it once was. In the U.S., amid rising consumer use of online shopping, some retailers are closing stores and minimizing their locations. This results in smaller ad buys across many channels. Non-retail entities are increasingly using display graphics and printing to convey their corporate messages or build name recognition, and our segment is a direct beneficiary of this change.
The graphics and sign segment produces a diverse mix of end products, and the top three product areas are banners/soft signage/flags, window graphics and retail graphics/POP. Banners and soft signage increased significantly in the past year, which may reflect the strong increase in companies using dye-sublimation technology for soft signage and other fabric-based applications. Of the 15 product areas included in our survey, 13 of them are served by more than 50 percent of companies, which indicates an ongoing amount of saturation.
More than two-thirds of companies (68 percent) reported positive growth. Median 2016 sales growth for U.S. sign and graphics companies was eight percent, with 68 percent reporting increased sales. Nearly three-quarters (72 percent) reported increased production, and 41 percent reported hiring additional staff. The price for products sold remained mostly firm, but did shift slightly toward increase. Industry confidence was strong, with more than 63 percent viewing it as positive. Confidence in the U.S. economy reached 48 percent, an increase by half over 2016.
The challenges facing the industry include downward pressure on prices and finding new customers. Of concern to many companies is the challenge of recruiting and keeping qualified employees.
To bolster their businesses, more than half of companies are working to reduce operating costs, institute lean manufacturing strategies and add new product lines. Controlling costs and increasing efficiency are essential to turning a profit in this competitive industry. To strengthen their management and sales efforts, more than 60 percent are increasing their Internet presence, developing new markets and improving customer service efforts.
For a deeper dive into the information presented here, SGIA members can access the full reports on SGIA.org. The reports include full data and many graphs and tables to help you apply SGIA’s findings to your company. Not a member? Visit the SGIA booth to learn more.