6. SPEED OF CHANGE...
3.5 Years
0 20 40 60 80
6
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75 Years
38 Years
13 Years
35 Days
Time to reach 50m users
7. WHAT HAS BROUGHT US HERE?
The most contemporary study
into UK print
A changing communications
landscape
Evolving customer needs
Challenge of alternative media
Print’s future direction
Understanding the challenges
Ideas
Looking to the way forward
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9. 9
UK PRINTING BY NUMBERS
£14.1 Bn. Turnover
#5 in World Printing
10,000 Companies
130,000 Employees
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10. A SIGNIFICANT INDUSTRY
10
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Source: PIRA International data estimates
11. INDUSTRY TRENDS
The industry has faced
many challenges over an
extended period
The number of
companies has fallen
13% since 2009
Turnover has also fallen
but less so at 10%
Demand is there but
consolidating
Preferences are changing
11
Neopost Confidential Information
Source: Future Focus Report
12. SHAPE OF THE INDUSTRY
Print sector revenues can
be diverse
The sector illustrates a
widening services
portfolio
Ink on paper represents
56% of revenues
Traditional sheet-fed
litho now stands at
51% of print revenues
12
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Source: Future Focus Report
13. % PRINT SHARE OF ECONOMY
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
13
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Source: IBIS World
14. ASSESSMENT
Printing is a highly competitive environment
Supply exceeds demand
Competition from other media is increasing
Core ink on paper is challenging
Print’s share of economy is declining
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15. We just need to think differently...
15
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16. THE FUTURE OF PRINT
Not a standalone medium
Part of the overall communications mix
Compliments other channels
A trusted medium
Services vs. manufacturing
Helping reach customers
Matching customer preferences
16
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18. FUTURE FOCUS...
Commissioned by Neopost
Conducted by the BPIF
Survey carried out March 2014
Findings initially released at
IPEX
Copies available today
Challenges & direction
Thoughts of the industry
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19. PRINTING OUTLOOK
UK print remains a
significant industry
Print and related sectors is
the 5th largest UK industry
A significant employer
Net contributor to UK
economy
Declining numbers
55% Respondents had a
positive outlook
19
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Source: Future Focus Report
20. CHALLENGES
Mixed opinions on growth
Clear picture on key industry
challenges
− Overcapacity
− Other media
− Technology
Additional clear messages on
challenges for winning new
customers
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Source: Future Focus Report
21. CHALLENGES
A number of key challenges
identified
Alongside the 3 leaders we
have:
− Competition
− Material & energy costs
− Pre-packs
− UK economy
No environmental negatives
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Source: Future Focus Report
22. CUSTOMER RETENTION & ACQUISITION
Printers clearly have
insight into customer
challenges
Significant commonality
in challenges for
retention and acquisition
Key challenges:
− Competition
− Alternative media
− Pricing
− Creating value
22
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Source: Future Focus Report
23. AREAS FOR GROWTH
An overall prediction of
growth
Technology and customer
demands instigate change
Industry views a significant
migration to digital printing
Some clear areas of
growth:
− Multi-channel
− Inkjet printing systems
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Source: Future Focus Report
24. MULTICHANNEL COMMUNICATIONS
Print is clearly seeing a
change in demand
Digital media is changing
the landscape
Customer needs are
changing
Print run lengths
reducing
Personalisation and
variable data are key
drivers
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Source: Future Focus Report
25. EFFECTS OF MULTI-CHANNEL
A number of key effects
of growth in multichannel
5 key areas:
− Changing demand
− Reduced print runs
− Declining print budgets
− Revenue loss
− Falling retention
BUT 58% see falling
run lengths as a positive
New opportunities
25
Neopost Confidential Information
Source: Future Focus Report
26. INVESTMENT
Investment decisions are a key
component of technological
change
73% Plan to maintain or
increase levels of investment
4 Key areas for investment:
− Variable data presses
− Web2Print
− Mailing & Fulfilment
− Database management
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Source: Future Focus Report
30. DIVERSIFICATION
Change is inevitable
UK business as a whole faces new challenges
Print is no exception
Customer demands are changing
Providers need to change accordingly
Diversification decisions face all businesses
Diversification can create increased value
propositions and associated opportunities
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31. DIVERSIFICATION
Print is aware of the
diversification agenda
Customers are instigating
change
66% are looking for new
services
72% Companies are
investigating diversification
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Source: Future Focus Report
32. WHAT DOES DIVERSIFICATION LOOK LIKE?
Nearly 70% are
actively engaged in
moving to diversified
opportunities
Diversification takes
many forms
Key areas identified:
− Multichannel
− Multi-format production
− Mailing & fulfilment
− Creative design
− Data services
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Source: Future Focus Report
33. MAILING & FULFILMENT
Mailing & fulfilment is one of
the key areas of change
15bn mail items sent each
year
DM is seeing a return
50% Respondents feel they
need more knowledge
51% Not involved in
mailing or fulfilment
15% Actively investigating
33
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Source: Future Focus Report
34. THE OUTCOME...
The industry’s future is
yet to be defined
Traditional print is likely
to continue its decline
Customers have
changing needs
In meeting these needs
printers can flourish
Diversification is key
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Neopost Confidential Information
Source: Future Focus Report
35. SUMMARY
The industry has some clear ideas on it’s future
Business landscapes are changing
Organisations will always need to communicate
They will need partners to help them
Print cannot survive as a standalone medium
Printers have great opportunities in new services
Not all printers will change
Your customers may have fixed perceptions
Changing that perception is key
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Source: Future Focus Report
Good afternoon, how are we all? First off, may I welcome you to Future Focus. For those of you who may not be aware, Future Focus is the most contemporary study into the UK printing industry. For this seminar I’d like to share with you some of the insight that the study presented to us.
So what are we going to cover during this session? To start we will run through the background to the study, which will incorporate a review of the printing industry landscape. This will take the form of general trends around the sector and identify some of the challenges you will be facing. This is the ‘why’ as it were. I will then take you through some of the key findings from the study, which really is the ‘what’. Finally, and probably the most valuable piece, I will take a step back and open up the floor to have a general discussion about your views on the findings and really to gain a better understanding of your opinions on current and future challenges and direction. Now I could ask if that was OK, but it’s not really going to change so I’ll just get on with it!
So let’s start with the WHY. Why did we think we need to better understand the changing needs of customers and the sector in general?
The central theme to the WHY is change. As we know, change is inevitable and the world of print and printing is certainly no exception. From a business perspective its important to think of change as a process, rather than a singular event. The other thing to consider is that change itself is changing. In particular the speed of change is something that is changing exponentially.
What is it about the speed of change? Well this slide illustrates the speed of change, in a slightly different way. Does anyone know what this graphic represents? In relation to the speed of change, this actually depicts the time that these different forms of media took to reach 50 million users. The telephone took 75 years to reach this landmark, television took around 13 years and Angry Birds would you believe took 35 days! In terms of connecting with people the speed of change is really changing.
In light of the inevitable change that the industry is facing, what brought us here today? When we commissioned Future Focus we came at it from understanding that the environment in which printers operate is changing. This change also applies to printed communications in general. [READ]
To begin with let’s take a look at UK printing PLC...
What does UK printing look like? One thing that sometimes we forget is that printing is a significant sector. Annual revenues are in excess of £14 billion, which in revenue terms actually makes it the fifth largest printing economy in the world. Currently this turnover is derived from around 10000 companies, who are collectively employing 130000 people.
We mentioned on the previous slide that the UK sits at #5 in world printing. To add a little more detail to that comment, this graph illustrates how the 12 largest printing economies stack up. The UK is only behind the US, Japan, China and Germany.
So what has been happening to the sector over the last few years? Clearly there has and continues to be a number of challenges for the industry to face. The number of companies involved in print has fallen by around 13% since 2009. Alongside this, turnover has also fallen but less so at around 10%. This means that demand and output is still there, but consolidating. As one of the drivers we also know that customer preferences and hence demand is changing too.
What does the industry look like today? This slide gives an illustration of how the sector derives its revenues, we can look it at both in terms of services provided and also printing processes within the mix. Ink on paper still represents the lion’s share of the industry’s revenues at 56%, but this also means that nearly half of the revenues of the industry come from non printing services. This mix is likely to change over time. Looking at printing processes in more detail, traditional sheetfed litho remains the dominant source with 51% of printing revenues derived from this process.
I think its also useful to look at how print figures within the overall economy. This slide illustrates the share of the UK economy that print contributes. In 2005 the printing sector contributed 0.4% of the overall economy. By the end of this year, this is predicted to have fallen to 0.2% and predicted to fall to 0.15% in 5 years time. However, we need to look at this in context and what this tells us is that the nature of the economy is changing. What the industry needs to think about is how it changes with the changing landscape.
[READ]
Is everyone depressed yet? I did ask that all sharp instruments be removed before coming in here! But you know what, it’s not all bad, we just have to think a little differently.
What is the overall assessment of printing today and where it needs to go? [READ]
So we’ve covered the WHY. Returning to the subject of Future Focus, what did the research actually tell us and what is it all about?
Future Focus was actually commissioned by Neopost in the run up to IPEX. We worked with the BPIF to produce the report, as we were very keen to get the views directly from the industry, rather than rely on a more detached consultancy approach. We do have copies of the report available today and further digital copies are available to download from the Neopost website.
To start with we looked at the size and scale of the industry. As we mentioned previously its often the case that we forget how significant print is in the UK today. The really positive thing to note is that despite the recent economy and the ever changing needs of customers 55% of respondents had a positive view of the market.
In terms of growth, opinion was somewhat mixed. Funnily enough 44% predicted growth over the next three years and exactly the same percentage predicted a decline. Work that one out of you can. Looking at challenges the picture was somewhat clearer. Three standout challenges for the sector where identified, these being overcapacity, competition from other media and technological changes. If we apply this logic to winning new customers, the competitive environment was clearly represented.
If we look at the variety of challenges in more detail, we can investigate the second tier of issues faced. These issues include general competition, material and energy costs, pre-packs and the economy itself. Interestingly, there was no real identified challenges relating to environmental concerns.
If we now look at the particular challenges around customer retention and acquisition, there is significant commonality across the two topics. The key challenges that were identified were: competition, alternative media, pricing and interestingly the ability to create value. This in particular will have relevance later on in this presentation.
One really positive finding from the research was the view on growth. Growth and change are clearly being initiated by evolving customer demands. As far as printing processes are concerned the consensus is that digital print will grow from its current position of around 18% share of process to 25% over the next three years. The converse side of this prediction is that, over the same period, sheetfed litho is predicted to reduce its share from 51% to 42%. Other areas where strong growth is predicted include multi-channel production and inkjet printing systems.
As we saw in the previous statistics, multi-channel production is predicted to be one of the key influencing factors in the market. Printers and PSPs are already witnessing a reduction in typical run lengths and changing customer demands. In addition personalisation and the use of variable data are viewed extremely positively with 71% of respondents predicting growth in the next three years.
Multi-channel production brings with it a number of effects, according to the research’s respondents. We have already mentioned changing customer demand and reduced run lengths, but other areas that were identified include a reduction in print budgets and falling customer retention. However, if we look a little close, a really interesting view is that 58% of respondents saw the reduction in run lengths as a positive. This surely must relate to some new opportunities being created.
The subject of change is something that has cropped up time and time again during this session and was clearly an important part of the Future Focus findings. But what is the reality and outcome of this change and what effect is it having on the nature of investment taking place in the industry? The next couple of slides tackle the findings, with particular regard to investment. The first positive thing to note is that 73% of respondents were planning to either increase or at least maintain their levels of investment. What did this investment look like? Well there were 4 popular areas that were identified, these were variable data press technology, web2print, mailing and fulfilment and database management.
Outside of the top 4 areas, we can take a closer look of the patterns for investment historically and going forward across a number of different technology spaces. A good comparison can be drawn using this slide and if we take the previous 3 years and compare it going forward 3 years you can see the strong change identified in two of the areas. Namely, web2print/e-commerce and mailing and fulfilment.
We’ve now been through the why and the what, which leaves us with the final stage – the how? By this we mean, how should the industry look to progress?
On the previous slide we asked ourselves, how does the industry progress? The big area here is really that of innovation and diversification.
So why should the printing industry consider diversification? In reality there are a whole host of reasons. Some of which we have identified here [READ]
How do printers view diversification? According to Future Focus diversification is high on the industry’s agenda. Diversification is not an internal issue, but being driven by customers. According to the research 2/3 of customers are looking for new services from their print suppliers. From an industry perspective 72% of organisations are, in turn, investigating diversification.
Maybe no surprises there, directionally at least. But, what does diversification look like for printers. It is clearly important with nearly 70% of organisations already involved in the process. Where are they looking, well a number of different areas. However, a number of common topics came up such as multichannel, multi-format production, mailing & fulfilment, creative design and data services.
Earlier we looked at multichannel as an area for diversification. Another popular sector was mailing & fulfilment. No wonder really, as with 15bn items being sent through the post in the UK each year, there is clearly an opportunity. However, its interesting that although identified as an area of opportunity half the respondents felt they did not have enough knowledge in this subject. The fact that a similar number were not involved in mailing & fulfilment is probably no coincidence.
So what is the overall outcome on the back of all we have seen? We have already observed that the industry’s turnover has been falling consistently for a number of years. As far as traditional revenue streams are concerned, this is likely to continue. BUT the changing environment and customer demands will surely create new and further opportunities for the sector. For these opportunities to be capitalised upon effectively, the industry will need to think differently going forward.
From a Future Focus perspective, lets now summarise what we have seen so far from the report and it’s findings [READ]
At the start of this session I mentioned thinking differently. If we apply that thought to this event, it really is about removing limits...
I’d now like to close this section with a thank you to both the BPIF, for conducting the report on our behalf and also to Duplo for giving us the opportunity to host this seminar.
As we like to do in Neopost, I’ll leave you with a quote. This one I think is quite apt for a session like this one...
That’s it from me. Thank you for your time and attention. I’d now like to open up the floor to discuss the report, the findings, your views or anything else you’d like to share.
In bringing this session to a close, I’d now like to thank you all for attending this seminar and for engaging with the discussion. Thank you for your, time commitment and contributions
I should mention that there are complimentary copies of Future Focus available here today. Further digital copies are also available to download from the Neopost website.
Finally thank you from me and thank you from Neopost...
