Data collected over the past couple of years paints a clear picture; the number of printing and converting companies diversifying their product offering is increasing. And the trend doesn’t show any signs of slowing down.
We've read up on the recent research on diversification, so you don’t have to, and summarized what the experts are saying about this trend below:
The report states that in 2021, 51% of businesses were looking into potential opportunities in three or more new markets, compared to only 28% in 2018. This steady increase apparently reflects a shift in perspective following the market uncertainties brought about by COVID-19.
Packaging and labels are the sectors seeing the most change
Out of all the different sectors surveyed in this same NAPCO report, the packaging sector came out on top for most keen to expand their product offering. A whopping 77% of packaging converters are considering diversifying into one of the four packaging sectors outside of their main focus.
Labels come out on top for the product that most companies are looking to add to their repertoire. You can see from the chart below that 38% of the businesses surveyed have looked at expanding into this sector.
Credit: NAPCO report "Diversification Patterns in Print: opportunity in adjacent markets".
It’s important to train staff so they understand the new sectors
It quotes the COO of Wallace Carlson, a Minnetonka, Minnesota-based company who expanded into packaging. “We have some really good internal seminars teaching the different departments the differences, nuances, and engineering standpoints of developing and putting together retail packaging,” he says. “There are complexities to packaging printing that involve a deep understanding of the process, which is why investing in training is important.”
PSPs need to pick the right technology partners
When choosing which software and technology providers to work with, PSPs need to ensure they choose ones that understand the importance of diversification and whose systems can support their growth into different markets.
As the NAPCO diversification report puts it: “Service Providers must identify technology providers that understand the convergence trend and are able to support service providers as they expand into additional markets. They will also need to identify new technologies that may be required to support their transition into new segments.”
It's important that companies don’t forget their MIS software here - most solutions only support or two sectors of print, so wouldn’t work for companies who are looking to branch out. You need to be using a multi-sector MIS solution such as Tharstern Desktop, which supports all print disciplines within the same product.
Acquisition is the safest route to diversification
According to Gareth Ward at Print Business magazine, the best way to achieve diversification is through the acquisition of another business. As Gareth puts it:
Successful diversification requires expertise, not just in understanding how the technology should be set up, but also in having the knowledge of the marketplace and the degree of trust that will help prise open the door to a new market. This leads to the conclusion that the best route to a diversification may be through the acquisition of a business that has existing relationships and technology. It could be easier to take a purely analogue label printer into a digital print world using skills acquired from digitally printing sheets of paper, than building a new operation from scratch. And easier too to graft on new business to the established stock of work.”
Keep up with what’s going on in the market
Tharstern user SunDance in Orlando, Florida, has plenty of experience when it comes to diversification. In an interview he gives for a Printing Impressions report on this topic, President JohnHenry Ruggieri tells of how they diversified from their primary focus in the commercial sector, to include wide format, label, folding carton, flexible packaging, and corrugated capabilities.
“We had the conversation of, ‘Why not take the opportunity to reinvent ourselves and push forward?’ That’s when we made the giant leap into flexible packaging. Printing with the wide-format printers on corrugated doing POPs, the folding cartons, the labels, they were little steps that were good steps. They were little in retrospect [compared to flexible packaging] but seemed big at the time.”
Ruggieri advises that the best way to identify opportunities to do this is to “stay plugged in to industry seminars and research reports” to find out which products are in demand in which sectors.
Another great way to do this is to attend industry events. The Print Show in the UK have a dedicated “Diversification Zone” which gives visitors the opportunity to speak to suppliers from different sectors and understand how they could be accessing new work.
The Printing United show in the USA offers the same opportunities and was originally created in direct response to how the marketplace is diversifying.
Anyone in printing knows that the key to longevity, now more than ever, is diversifying services. At a printer level, diversifying your application portfolio drives continued success. Whether you’ve already began integrating this strategy, or if this is something you’re in need of learning more about, PRINTING United Expo will be the single most important industry event to attend.” - Mark J. Sebers, President of Printing United.
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