Harveys, Officeworks target printers, too!

Trade website ProPrint is to the printing industry what PhotoCounter is to the photographic industry, and the resonance between the report below by ProPrint journalist April Glover and the experience of photo retailers is such that we sought – and were kindly given permission – to re-publish. The $64 question (on special this week for just 64 cents from Hardlys) is whether the forthcoming ‘Effects Test’ on the use of market power will provide any protection to smaller businesses…

April writes: Giant Aussie retailers such as Harvey Norman and Officeworks have the printing pie firmly in their sights, the chains offering print services to the public for highly competitive prices and undercutting business for local printers.

The Print & Copy department at Officeworks competes with photo specialist retailers and printers alike.

The Print & Copy department at Officeworks competes with photo specialist retailers and printers alike.

In an already unpredictable print landscape, the retail giants are offering small to large run print jobs for ultra-competitive prices, deeply affecting sales for some small to midsized print businesses.

Small and family-owned organisations have felt the sting from national corporations such as Harvey and Officeworks which offer ‘lowest prices guaranteed’ slogans, promoting costs that are often unfeasible for companies unable to offset print loss with a suite of other products.

Print targeted at consumers and small business is facing a similar situation to both the petrol and retail alcohol businesses, both of which have been virtually taken over by retail giants Coles and Woolworths.

Harvey Norman advertises print jobs such as business cards at prices as low as $9.83 for x250. Harvey offers x500 business cards on 350sgm paper for $49.95, while Officeworks advertise even lower, the same print run costing $40.

Comparatively, smaller Sydney printer Bullprint charges $65 dollars for x500 business cards, a higher price for a business that doesn’t comprise of 230 worldwide stores such as Harvey Norman, or Officework’s 150-strong Australian store network.

Business operations manager at Bullprint Kaushik Ajmera says ruthless pricing models and fierce market competition from printing giants have kicked small to mid-sized printers to the kerb, and adjusting prices won’t help them to keep up.

‘Fierce competition is not permitting us to adjust our pricing and we end up absorbing the cost,’ says Ajmera.

‘Therefore it is imperative that we develop strategies to improve our volumes and keep the costs under control. We want to dwell on our popular attributes, quick turnaround, great quality of printing and finishing, and competitive pricing.’

Business-cardsSimilarly, smaller firm Red Print in Melbourne quotes x500 business cards at $116, equivalent to 23.2 cents for each card, while Officeworks is pricing its cards at 8 cents per card – 65 percent less.

Harvey Norman’s print shop sells pull up banners for only $97 each, and Officeworks for even less at $75. Bullprint charges slightly higher for the same pull up banner at $100.

Harvey and Officeworks’ printing services have expanded to the design component too, meaning the retail chains have developed one-stop-shop printing departments which almost eliminates the need for consumers to seek out small-sized printers for any part of the process.

Both companies offer their own in-house design services, which then reduces consumer demand for outsourced design.

In the past, smaller printers could differentiate from large scale corporations by offering design, print and finishing services all under the same roof, while chain retailers could only print pre-designed content. Now, Harvey and Officeworks provide full service printing at competition-obliterating prices.

10-centsMany printers are struggling to keep afloat as they cannot compete with prices that are only possible when selling print below cost price can be offset by selling a myriad of other products. Diversification into digital, content management or other services now seems to be the only route for many businesses that originally began as only printers.

Bleak predictions of retail giants soon having a stranglehold on majority of the small-run consumer print market is an unfortunate truth for many other industries, similar to the grocery market near-monopolisation of Woolworths and Coles, where the two retailers control over 70 per cent of the consumer market, and in petrol stations and bottleshops where they similarly have taken over the market..

The old idiom that the bigger fish will always eat the smaller fish continues to ring true. Multi-million dollar companies will constantly have an appetite for profit, and will diversify into any business can make that money.

These companies have sprawling global resources and are willing to sacrifice profit margins in order to take out local competitors. This low-margin sales model simply can’t be matched by small print businesses.
– April Glover,
(Re-published from ProPrint, 14/04)

 

 


5 thoughts on “Harveys, Officeworks target printers, too!

  1. For the big retailers, cheap Business cards are a loss leader, not a profit centre. They want you in the store buying their bigger ticket items. In the process, they kill off small business operators. Last time I looked, houses sell for around $1-2 million and dentists charge $3000 for a crown, medical specialists want $200 for a 5 minute consultation and tradesmen charge a weeks salary for a days work. So how many $65 business cards (with a tiny margin) would I have to sell to survive? Print prices have dropped significantly, and so have many print companies. The only future-proof business model may well be cheap, fast food. As unemployment kicks in, people still have to eat.

  2. Until the mass merchants and “Hardlys” realise that the Photo business is no longer selling “other CE Products” as a lost leader..(how many TV’s do we need!) We must understand our position in the market. We don’t compete with 3 other stores on the same street any more so those of us who have kept our heads above water must understand that we are now a niche business. That said we must also make some good business decisions that will not only strengthen our independent businesses but tell those who supply the mass markets that we don’t need them any more.
    I recently invested in an Epson dry solution which is profiled to beat any mass output in my area. This changed the dynamic of my store which led to updating my wide format to a 44 inch solution. We don’t waste our time on 6×4 prints(although we don’t knock them back), we concentrate on Big stuff….margin stuff!
    Too many times i hear that stores are holding onto wet labs as they want a “point of difference”. It’s no good offering this if your competitor has a quality dry lab producing a better quality print than yours! Also the costs to run this with silver recovery and power….not to mention servicing.
    Finally some advice…..get some images up in your store…..the stuff you want to sell the most because the margin is the highest!

  3. The big two players in retail Coles and Woolies control something like 85% of the retail market in Australia like, fuel, alcohol, groceries and branching out into pharmacy lines, insurance etcetrera. In the USA the top two control 10% while in the UK it’s 20%. Looks like we didn’t complain enough to our politicians. So we only have ourselves to blame. It may appear our polies are also toostupid to understand what is happening or too gutless to act. There is no third option.

  4. Agree Matt, It has been of great interest watching people power supporting the dairy farmers and sticking it to Coles and Woolies. I feel we might see more of the people showing their support for local businesses. There have been some powerful messages sent during this campaign by the people and as more mass merchants are exposed, they will protest with their buying patterns.
    Watch this space!!

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