ALEX TATHAM INTERVIEW
Diversification required
These are challenging times for those involved in the print sector, but, as Alex Tatham explains, there are still opportunities out there – but businesses may have to be prepared to diversify their product offering.
In his long time in the sector, industry expert Alex Tatham, who has recently taken up a new role as global client and marketing director at NSC Global, having left WestCoast, has seen many things, but the past three years have been unprecedented. COVID has affected businesses in all sectors, but the print sector has been particularly shaken up by the change in working practices brought about by it. “The situation in the print sector is complex,” he says. “While the overall sector is, in general, enjoying growth post-COVID – especially as some businesses are now investing in office technology to boost efficiencies, rather than in boosting employee numbers – print remains in a difficult space. “The demand for print is still effectively going down but there aren’t enough of the printers people want so there is still a shortage of capability of being able to put print in place,” Alex explains. Alex adds that matters are not helped in that print has different cycles compared to some other products in the sector and isn’t really driven by consumer demand. “We will also see people printing less and less in the coming months because it is an expensive thing to do,” he says. “The most optimistic estimates for any corporate print marketplace – speaking to the largest MPS providers around the world – will say sales are not going to get to 80% of what they were pre-COVID.” He admits that trading conditions are not brilliant now. “Home printing will continue but most people have upgraded their printer in the past couple of years and a lot of the print companies are effectively going direct to their end users now,” he says. “The home space isn’t a lucrative market space for print companies and in the corporate space there is less printing being done and getting hold of large printers is difficult due to production issues.” Indeed, the problems that have beset other parts of the sector, with a shortage of certain components, has also impacted printing, and this looks set to continue for some time to come, Alex notes. Consolidation With the prevailing conditions in the sector, Alex believes that a period of consolidation is coming to the industry at all levels, from manufacturers downwards. “There are too many print manufacturers – there are more than PC manufacturers – so you can
see some consolidation at that level,” he says. “But there will be consolidation at all parts of the chain. For any business where print is the lead part of your services, my message to prepare to be consolidated. This has been on-going for some time, but COVID has accelerated it – large managed print companies are only maintaining their space by buying up others. “Managed print companies will continue to exist but they will consolidate – and we are seeing this all over the world.”
Alex Tatham
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The demand
But Alex also has a warning for any business thinking of selling up, especially at the smaller level: “A lot of owner-managers still think they have the valuation they had pre-COVID but they don’t.” Valuing businesses has become a difficult proposition post-COVID, as the past two years’ accounts will reflect the dips in business caused by the lockdowns. Even if turnover and profits have returned this year, getting a similar valuation to what might have been achieved in 2019 is difficult – and owners must be realistic about this, Alex says. Diversification But more than consolidation, Alex expects there to be diversification in the market in the coming years, especially from those that have traditionally been predominantly print-focused. “You can see this isn’t going to be the most lucrative space so some companies are going to expand more into IT services,” he says. “Some larger players have already got most of their business outside of print. There is a lot of work to be done outside print because print is not a place to rely on your numbers. “My advice is to diversify; you are seeing some big companies diversifying very successfully – Ricoh, for example – there is a core focus for most businesses and generally the biggest shortages are in networking products, networking switches because of 5G, IoT, all those things that require a network, that is a key area of business at the moment.”
for print is still effectively going down but there aren’t enough of the printers people want so there is still a shortage of capability of being able to put print in place.
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