The full Widthwise Report 2016 will be posted out with the next issue of Image Reports. But here’s a head’s up on the scope and main findings of this year’s poll of domestic large-format PSPs.
For nine consecutive years Image Reports had undertaken an independent annual survey of the UK and Ireland’s wide-format digital inkjet printing PSPs in a bid to provide a statistical-based report on the state of the domestic sector using grassroots information. This year 238 print companies involved in large-format print responded to the Widthwise poll, which went live online at the start of 2016 and closed at the end of February. Telephone interviews were conducted over the same time period.
In the full Widthwise Report 2016 (which will go out with the May issue of Image Reports and be available online at that time too) you will find graphical representation of the Widthwise survey findings, plus detailed analysis and commentary on what they mean for the health and direction of the sector. You are also provided with editorial features and interviews that highlight the key trends and issues affecting competitiveness and profitability moving forward. This initial article is in effect a synopsis of the 2016 survey for those of you wanting an easy reference snapshot of the findings.
It is important to note that only print service providers running digital inkjet wide/superwide-format machines were allowed to take part in this poll. Just over a quarter (25.94%) said that wide-format accounts for under 20% of their total turnover, dropping to 7.11% of respondents where it accounts for 100% of their work.
Most of those that participated are based in England, with Wales and Ireland each representing just over 6% of the total, and Scotland almost 4%. In terms of size, almost half of those that took part have five or fewer employees, though almost 9% have more than 100. Somewhat reflective of that, just under 40% said they have a turnover under £250,000, but over 10% make more than £5m.
Asked if they expected wide-format revenue to increase as a ratio of their company’s overall turnover in the next two years, over half (53.16%) said yes. Less than 3% said they expect it to decrease. Almost all the rest expect it to remain about the same (and bear in mind that 7.11% amount of respondents are already 100% wide-format so can’t increase in terms of ratio!)
While 39% said wide-format profit margins increased in 2015, almost 17% said they actually decreased. Perhaps somewhat telling is that while 44% said wide-format margins were better than in other parts of their business, 13% said they were worse. Does this reflect the fact that many PSPs are diversifying – and not just into other types of print, but other highly profitable services? For instance, over half (54.39%) of those polled are planning to increase/add creative design services during the next year to meet customer demand.
Still, a whopping 79% expect their wide-format turnover to grow in 2016. So, is the focus on growing turnover rather than margin in terms of wide-format projects? It would seem so taking into account the response to the question ‘what is the order of your priorities for the next year?’ You’ve guessed it – more than 36.74% ranked ‘to grow turnover’ top, whereas only 19.63% did the same for ‘improve margins’.
Perhaps it should not then be surprising to learn that while 14% said ‘investing in new technology’ was their top priority, a mere 6% felt improving their return on capital was key.
PSPs were asked: ‘what are the fastest growing parts of your wide-format business?’ Still coming out tops were the more ‘traditional’ applications, showing that companies still see plenty of mileage there. 12% said exhibition/display graphics was the fastest growing, followed by general flags/banners (9.91%), then retail POP/POS (9.05%). Also on the climb was murals/wallpaper (6.47%), but despite all the talk about textile print it continues to come low down the list in terms of where PSPs are actually seeing growth - perhaps because they haven’t yet invested in the appropriate technology.
Asked ‘which markets will you move into over the next two years?’ it was a different story for printed textiles – more than 10% said they would be moving into fabric printing for home/interiors, 8% for banner/flag, and 6% for garments. That would seem something of a validation that investment in dye-sub will start to happen soon. However, while almost half (47.90%) of respondents said they would buy a new digital large-format printer in the next two years, under 8% of those said it would be in a ‘textile printer’. UV curable flatbeds came out top of the wishlist. It’s hardly surprising then that topping the list of investment in products - other than printers - for wide-format, was contour cutters.
Almost a quarter (24.03%) said the rationale behind their planned investment in technology overall was to move into new markets.
When it comes to the biggest concerns for 2016 and beyond, PSPs put pricing and the state of the UK economy top of the list – by some considerable distance over things like the possibility of a Brexit from the European Union. It will be interesting to see if that remains the case after the referendum on 23 June.