Catalogers have long turned to printers for services beyond those that can strictly be defined as printing. According to the 1997 Catalog Age Benchmark Report on Production (see November 1997 issue), 64% of catalogers say they rely on their printer as a postal consultant, 83% as a paper consultant, and 15% as a database expert. More than ever, printers are serving as partners-in almost everything-for their catalog clients.
As a result, printing companies increasingly are augmenting their technological expertise with strategic skills to aid catalogers in marketing and business development. And as new digital technologies make catalog production more complex, printers are providing even more nontraditional services, such as handling digital data from start to finish, integrating hardware and software into efficient workflows, and providing guidance on electronic commerce strategy and development.
“To compete today and in the future, printers have to offer a soup-to-nuts approach as catalogers demand more services,” says Bob Shaw, senior vice president/general manager of sales at Chicago-based printer R.R. Donnelley & Sons. “We’re increasingly becoming part of our catalog clients’ business.” In fact, he says, “I wouldn’t be surprised to see more printers managing onsite facilities at catalog companies.”
R.R. Donnelley has invested in an inhouse marketing department to help its staff advise clients. Ultimately the $6.6 billion printer hopes to position itself as an expert in identifying business opportunities for its catalog clients. “Catalogers are asking us to be involved even earlier in the process than before, to be assured they are taking advantage of all the products and services available to them,” Shaw says. Catalogers, he claims, want assistance with finding international prospects, producing foreign-language catalogs, and in dealing with postal and tariff issues overseas.
High cost of high tech As the mail order industry heads into an increasingly electronic future, printers will become even more critical in the catalog industry’s ability to compete. As such, the printing industry will have to continue to spend millions on equipment and expertise to guide catalogers and other clients through the high-tech printing, production, and e-commerce complexities of the next century.
According to a survey by the National Association of Printers and Lithographers/ International Prepress Association, in 1998 printers will spend 4.9% of their annual sales on prepress equipment such as digital proofers, networks, and archiving systems, up from 4.4% in 1997. Looking ahead, more than 45% of respondents expect to spend even more next year.
In the past few years, $1.08 billion printer Banta Corp. has invested “millions of dollars” in digital content management systems designed specifically for catalog production, according to Dennis Meyer, vice president of marketing and planning. “We’re seeing an increased interest in areas ranging from digital content management to high-speed file transmission, computer-to-plate technology, digital printing, and online commerce,” he says.
While many catalogers house their own low-resolution image and data archives, high-resolution files take up so much computer memory that they’re expensive to maintain. As a result, catalogers rely on their printer to archive the data for them. “It just makes sense that printers handle the digital assets of catalogers because we’re already managing their images, text, and customer information in a print medium,” Meyer says.
And as catalogers explore new media such as CD-ROMs and the Internet and produce more customized catalogs, the ability to access pricing data, images, and text from a central database becomes critical. Food and gifts cataloger Figi’s, for instance, plans to use Quad/Graphics’ high-resolution image archiving service; apparel and home decor cataloger Bloomingdale’s by Mail and sporting equipment mailer Sportime International are investigating their printers’ asset management services. As Michael Carton, director of catalog production for Bloomingdale’s by Mail, says, “Anything that will shorten production cycles is essential.”
Printers are even getting into Website development and marketing for catalogers as they recognize the importance of electronic commerce. R.R. Donnelley, for example, introduced its Select Source service in April. Select Source links catalogers’ product descriptions and images from a database to partner Websites. A visitor to HouseNet, a home and garden site, for example, may read an article on decorating bedrooms; next to the article might be a catalog offer for bedspreads that the visitor can order with a click of the mouse. Domestications, Improvements, Safety Zone, Ross-Simons, Horchow, and Burpee are just some of the catalog participants in Select Source.
More consolidation As R.R. Donnelley’s Select Source indicates, printers will have to buy more than high-tech equipment to compete in the next century: They’ll need to acquire prepress service bureaus and Website developers too. “It’s easier to acquire companies that are already in a niche than to create something from scratch,” says Craig Price, research assistant at industry organization Printing Industries of America.
In 1997, printing companies were involved in 106 mergers and acquisitions, compared to 34 transactions in 1992, according to The Compass Report, a printing industry research report. And printers don’t see an end to the wheeling and dealing any time soon.
“Consolidation will definitely continue. The marketplace is still very price-competitive, no matter what value-added services a company has to offer,” Meyer says, “and there are decided cost advantages that come from having a large market share.”
Harry Quadracci, president of $1.04 billion Quad/Graphics, goes so far as to predict that by the year 2000, three-if not five-of today’s top 10 printers will no longer exist. “Consolidation heightens, not lessens, the competitive playing field and creates the very real benefit of economies of scale,” he says. “By accumulating mass across all print and production processes, printers can offer catalogers everything from design through distribution, with seamless service.”
With a smaller number of printers to choose from, catalogers may worry that prices will rise. Not so, according to Quadracci. “Pricing has never been more competitive, and printers are feeling the squeeze.” He cites the consolidation of the telecommunications industry as an example. “Despite the fact that AT&T, MCI, and Sprint dominate global telecommunications, pricing competition has never been more fierce. Undoubtedly, the future holds more of the same.”
In general, most agree that the converging trends of consolidation and value-added services will continue to drive a shift in the relationship between cataloger and printer. By the turn of the century, catalogers and printers will depend on each other to grow even beyond the services they offer today. In fact, some catalogers believe that printers will act almost as a division of the company. “It’s no longer the ‘us vs. them’ mentality,” says Tim Benz, Figi’s senior creative print and operations manager. “It’s now ‘we’re in this together, so we need to build a strong partnership and share information.’ It’s almost like they’ll be treated as an inhouse facility.”
As the larger printers such as R.R. Donnelley, World Color, Banta, and Quad/ Graphics continue to diversify their services beyond ink on paper, small, regional, and midsize printers struggle to find-and keep-their place in the industry.
By 2001, some observers predict, the less-known players will have to carve out a niche from the services that the big guys choose not to pursue. “To survive, the smaller players are going to be forced to offer different services or rely on close customer relationships to keep clients,” says Craig Price, research assistant at industry organization Printing Industries of America.
If that’s the case, on-demand printing may be a saving grace for the smaller printers, as catalogers increasingly demand shorter runs and faster turnaround. In 1996, print-on-demand accounted for $10.1 billion in revenue; by 2001, that should increase to $17.7 billion, according to a recent study by Strategies On Demand, a Naperville, FL-based printing industry research firm.
The customer is always right Small catalogers are another saving grace for the small printers. With their small press runs-typically fewer than 150,000 copies-many small catalogers just don’t have enough business to attract the attention of the larger printers. And the smaller printers have held on to these clients the old fashioned way: via strong customer service and personal relationships.
After considering working with a larger printer in another state and a print broker, Phoenix-based food and gifts cataloger Fairytale Brownies decided to stick with O’Neil Printing, an $8 million local, employee-owned printer, precisely for its customer service and convenient location. The cataloger prints 100,000 catalogs and mails 10,000-25,000 postcards and brochures a year.
“We always do a press check, and having a printer close by definitely helps in communicating what we want,” says Eileen Spitalny, president/founder of Fairytale Brownies. “They’re always willing to work with us on payments, quality issues, and even additional promotional ideas.” This year, for instance, O’Neil convinced her to print postcard reminders for Secretary’s Day, Mother’s Day, and Father’s Day at the same time, which was more economical and efficient than printing the cards at separate times.
“I’ve definitely expanded my role from a salesperson into more of a consultant and problem solver for our printing clients,” says Jerry Spendley, sales engineer at O’Neil Printing, who visits Fairytale’s offices once a week to discuss printing and mailing strategies. Spendley admits that O’Neil can’t always compete on price, but the printing company hopes that the relationships it develops with clients will compensate. “I realize that Fairytale Brownies may outgrow my services eventually as they grow their business,” Spindley says, “but I hope that the consulting relationship we’ve established will remain.”
Part of that relationship includes recognizing that small businesses may not have the financial resources to print as many catalogs as they wish, especially at peak selling seasons. Fairytale Brownies prints its largest mailing of catalogs, brochures, and postcards right before the holidays. But as a relatively small company, the cataloger was unsure if it could pay for the job up-front. O’Neil agreed to work out a payment schedule with Fairytale, whereas a larger printer the firm considered working with wanted the money up-front. “It’s nice to work with a printer that recognizes we’re limited in resources yet is willing to help us grow for the future,” Fairytale Brownies’ Spitalny says.
Caught in the middle And what will happen to the midsize ($10 million-$50 million) printers? In the future, observers say, they will have to contend with a double whammy: There won’t be enough business from small catalogers to fund the investments needed to stay current in printing technology, and without the latest technology, midsize printers won’t be able to compete with larger printers for larger accounts.
“The expense of keeping up puts the midsize printers at a disadvantage,” says Michael Carton, director of catalog production at upscale marketer Bloomingdale’s by Mail. “They might not be able to take the pressure.”
Others agree. “Many midsize printers don’t want to make the large technology investments that are continually required to compete,” says Dennis Meyer, vice president of marketing and planning for Menasha, WI-based printer Banta Corp. “Many will sell while their businesses are attractive to larger printing companies.”