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.
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.’
Similarly, 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.
Many 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)