Staying Bullish

Big Picture: What’s your assessment of the state of the wide-format digital printing market – bullish, bearish, or somewhere in-between?

Tim Greene: Bullish. The wide format graphics business will continue to grow through the coming 12 months, but clearly the growth of digital signage systems affects this market in segments like billboards and outdoor advertising. The billboard/outdoor segment is a cause for concern because there continues to be a move toward digital systems and a lot of regulation that adds complexity and expense.

BP: Digital is increasingly displacing screen printing lines in the major POP and graphics facilities and the placement of wide-format lines at offset plants has increased dramatically. Have we arrived at the long-predicted convergence where the sectors that used to define different market segments have disappeared? And if so, how might that change the market in the years ahead?

TG: There’s a kind of a cycle effect here, where larger companies move into a market, commoditize it, and then compete on efficiency, while smaller players invest in new technology to exploit new markets and applications. Once a segment becomes big enough, the larger shops invest and the cycle goes on.

Many wide-format PSPs we talk to are unconcerned about the commoditization of the market because they know that many projects they work on/accounts they work with are much more than commodities, and they provide services such as fulfillment and finishing that keep them ahead of their “stack-it-neat-and-sell-it-cheap” competition. One other effect will be an increase in merger and acquisition activity wherein the sales expertise of wide format PSPs is the key to the deal, much more so than access to equipment or production capabilities, which can be acquired or even outsourced fairly easily.

BP: With increased competition between printers and all of the changes in how print is purchased – in shorter runs, with shorter lead times, under more competitive bidding processes, and with increasingly complex post-print finishing and fulfillment demands – has it become critical for printers to become more efficient? Do you feel they are embracing workflow automation and other technologies that can help them toward this goal?

TG: It’s critical to become more efficient to compete with high-capacity suppliers, but according to our data, many wide-format print shops have been slow to adopt workflow automation and some of the other software and analytics-based technologies. The numbers of PSPs expecting to invest in new wide-format hardware is much higher than the same that expect to invest in software and automation, which I have to say is a bit dangerous because it there’s a steady stream of new hardware options that can facilitate speed and productivity improvement, but that are not able to improve operational efficiency and automation.

BP: What other things are shops doing to counter the perception that there is too much capacity in the market and too many other graphics providers with similar capabilities?

TG: I think it is important for PSPs to focus on the service part of their business including graphic design and prepress services that help clients design for efficiency including incorporation of the kind of product expertise that helps clients save money on installation and disposal. Also, we think PSPs are increasingly offering fulfillment and installation services that take costs out of their clients’ supply chain. To stay with printing, we think that a lot of companies are investing in technologies like dye sub which is still a bit differentiated, so there are lots of options.

BP: What other critical business decisions are shop owners grappling with today?

TG: I think the number one thing that we hear is questions about how to keep up with all of these technologies, software, hardware, finishing, etc. and how to keep sales and production teams up to date with all of their critical selling and production skills to make new business investments more successful.

BP: Many technology suppliers to inkjet OEMs consider the wide-format market to be maturing, and seem to be focusing on other sectors such as packaging and industrial applications. Yet most forecasts show that inkjet has captured less than 40 percent of the retail and out-of-home markets. Is there a disconnect here, or are we reaching a point where wide-format’s long-term growth will come through incremental rather than revolutionary changes in the technology?

TG: I think it’s the incremental change scenario here, but that’s not to say that we don’t see things continuing to go digital. In aggregate, we see digital wide-format graphics print volume growing at an 8.3 percent compound annual growth rate, which is more than just a subtle shift.

BP: Returning to the industrial market (meaning industrial applications), inkjet hasn’t gained an appreciable market share in most applications to date with a few notable exceptions, particularly the ceramic-tile industry. Any thoughts about which applications may be the next to break out?

TG: Textiles for sure. Forecasts for digital textile printing show a very robust growth in the textile segment for garments and décor products. That said, there are numerous markets classified under the “industrial” banner that are emerging quickly, from solar cells and printed electronics to packaging.

BP: The US has trailed countries in Europe and Asia in digital printing onto textiles, but this is beginning to change. Do you see continued growth for the textile market, and will it include commercial print shops as well as specialists in markets like upholstery and home furnishings?

TG: Yes. We see the textile market moving towards digital for many of the same reasons that other markets have done so; for value-add, for supply chain advantages, for cost reductions, and for sustainability advantages. Certainly, many wide-format print shops are participating in the digitally printed textile segment. It is one of the markets that many shops have their eye on as they make their investments over the next year or two.

BP: What other applications and sectors do you feel are particularly promising in the year ahead? Any (retail, as a possible example) that concern you?

TG: There’s excitement in the wall murals, exhibition graphics, and window graphics markets. This is probably because of some of the repositionable print media that has been made widely available over the past couple of years. As far as applications that concern me, I’d definitely say billboards are a trouble spot, both because of the price point that I know some suppliers have to hit, which is squeezing profits, and because of the replacement by digital screens. Along the same lines, backlit signage has the same threat by digital signage or digital displays. This is partly why we think a lot of shops should be looking at digital signage as a “next phase” or at least as an addition to their current business.

BP: It’s been interesting, at a time when the feature sets of various printer brands seem to be getting increasingly similar, to watch vendors keying on different ink technologies as replacements for solvent-based inks. Any thoughts about the long-term prospects for UV, LED-UV, mild solvent/eco-solvent, and latex technology? Will each continue to fill specific niches?

TG: You’re right that each of latex, eco-solvent, and UV are going after the functionality of solvent, with improved outdoor durability, better flexibility, and more efficient ink in order to make running costs more competitive and lower power consumption. Certainly latex, eco-solvent, and UV are going head-to-head more often as production-speed latex printers, and lower-end UV printers are going after the volume of solvent and eco-solvent. Still, the suppliers of eco-solvent are using the latest printhead technology to improve speed and image quality. So, we see higher growth rates in latex and UV, but there will continue to be a market for eco-solvent as a great entry-level signage and graphics printing system.

BP: Any other observations about the wide-format market as our readers make their plans for 2015, 2016, and beyond?

TG: Wide-format suppliers should be working hard to develop the services element of their offering. PSPs should be expanding their capabilities to include services that are more data-driven and less about price. Over and over we hear that the transaction-oriented sales is much less profitable than the relationship-oriented sale, and services are the key to developing that relationship.