Rising costs are impacting businesses at all levels of the print sector – but how are businesses reacting and what are they doing to mitigate the effects of it? By Dan Parton
At the beginning of 2022, it seemed that, as the COVID lockdowns were over, the print sector could get back to something approaching business as usual – or at least a new usual, given the changes in working patterns caused by the pandemic.
But if businesses in the print channel were thinking they could get back to growth and bringing revenues back to 2019 levels – or beyond – thanks to some stable economic conditions, their hopes were dashed in March, when Russian troops invaded Ukraine.
While the tanks were rolling in thousands of miles away, it set in motion events that would lead to energy prices spiking to previously unseen levels – for fuel, electricity and gas – and help to push inflation past 10%, a rate not seen for a generation, which has impacted on product and raw material costs, which were already increasing before the invasion.
Add into the mix further uncertainty caused recently by a disastrous mini-budget by the short-lived Liz Truss administration, which have pushed up interest rates, and times have got tough for some businesses in the sector as domestic and business print customers look to tighten their belts.
Market-wide effects
Clinton Groome, COO at Espria, which provides a range of managed services and document solutions, says that the effects of rising costs are being seen throughout the market. “We are naturally seeing increases in logistic and device charges across all areas making it an even more competitive market,” he says. “However, we are now seeing decisions made on the managed service or service wrap being offered to support the MFDs. These decisions are further underpinned by customers looking for devices with a longer shelf life rather than smaller machines needing regular maintenance. We are not seeing a reduction in requests from customers but a greater focus on maintenance, service and in house controls of the MFDs.”
Rising costs means that businesses such as Espria have an even more important role to help customers save on things like their print costs, Clinton adds. “This is the case especially with our wider technical capabilities where we can support a business strategy or tactical project or solution. We can provide specific packages to support businesses with their digital transformation allowing for growth. We provide a consultative approach in supporting a customer to ensure our offering is at the best price but ultimately providing the right solution fit for the business.”
While prices have been high for some months now, if these levels are sustained for a significant amount of time, it could lead to changes in how businesses run, which those in the print sector need to be alive to, Clinton adds.
“Rising prices will ultimately see customers trying to automate business process to reduce overheads and/or improve process to allow a business to scale at a reduced cost,” he says. “This will force customers away from purchasing small desktop printers to document management solutions allowing customers to perform multiple actions through a single device and move more data to the cloud in an effective way.
“Our MFD machines are increasingly sold with apps to enhance these workflow processes. As integrations with Microsoft 365, SharePoint and document management solutions such as Docuware and DocuShare increase, we will see a greater number of businesses move away from traditional printing to 360 document solutions.”
Mitigating effects
But whether prices will remain at this level is difficult to predict, Clinton admits. “At this moment in time there are too many external factors to provide a concrete answer; however, as we get used to the new global economic situation, the market will flatten, resulting in better stock availability, automation in the warehouses and ports leading to stabilisation or reduction of long-term cost.”
There are things that dealers/print companies in the sector do to try and mitigate these rising prices, Clinton adds. “Fundamentally it will be down to better relationships with suppliers, optimised stock control and helping customers to get the most out of their solutions,” he says. “We are educating our customers on better printing practices, which will not only help them with cost control but support a more sustainable approach to printing and document sharing. With more companies, including our own, focusing on improving their ESG, sustainability is at the top of the agenda.”
Although as Alan Ryan, managing director at Technoprint, who has felt the effects of rising costs on the business, there is only so much that can be done to mitigate the effects of rising costs.
“Rising costs have reduced our margins and resulted in negotiating price increases with our customers,” he says. “However, it has also led to opportunities with new potential customers as a result of their suppliers increasing costs. For instance, paper costs have increased by about 40% this year.
“There is not much we can do to reduce costs of raw materials. We have undertaken a cost reduction program in other areas of the business, which has been successful but does not fully mitigate raw material and energy increases.”
But Technoprint is not alone in this, he adds. “We have a network of companies within the industry both in the UK and abroad and all are reporting the same issues.”
Alan adds that as cost rises have been sustained for a period, Technoprint has had no option but to increase prices. “Our margins have been eroded,” he says.
New opportunities
But this is also leading to new opportunities for Technoprint: “We are finding more potential customers are open to considering our services and we have won new business as a result,” he says.
This shows that, even in tough economic times, there are always opportunities for growth that can be found. With costs rising, the service element continues to be of great importance, as does reputation for delivering on what you commit to.
As for hopes for the future, Alan is clear on what he wants: “We want stabilisation of prices and consistency of supply,” he says.
Whether Alan’s hopes are realised remains to be seen, but for the immediate future, it will be down to businesses in the sector to try reduce their own costs, but also look for innovat
