Top Shops 2013: Investing in the Future

Digital signage, new technology, and efficiency are the keys to the growth of the sign and graphics market

Denise M. Gustavson

April 1, 2013

It's really no surprise that this year's Top 40 Shops have their sights focused on the national economy and their sales growth—and how those will affect their margins, profits, and bottom line. The uncertainty that still exists in regards to taxes, healthcare, and the general worldwide economy have a profound effect on how business plan for the future especially in terms of upcoming investments—in people and equipment—for the following year.

"Macro economic uncertainty will likely be the biggest challenge of 2013," says Heather Gorman, marketing director of NY-based Duggal Visual Solutions. But while the economic uncertainty still Gorman also points out one of the keys to continued success—for Duggal and other Top Shops. "We expect to overcome it by our continued emphasis on efficiency in order to prosper in any market condition."

Efficiency has been a key word from shops this year when they talk about their current productivity and future profits—and it's something many of them have a lot experience with given the economy over the last several years.

"The biggest business challenge in the next twelve months is our ability to do more, with less, faster. It's the same for most other companies—efficiency is key," says Dave Sunderman, project manager and SGP coordinator of Twinsburg, OH-based Visual Marking Systems.

"The weakening economy has changed the way many of us approach our businesses. It has forced us to become as lean and agile as possible," said Jon Heilman, marketing director for Firehouse Image Center based in Indianapolis, IN. "We already subscribed to the lean manufacturing philosophy and that gave us a head-start. But, more than ever we are examining every step of our operation and excising waste whenever we see it. Now, we can react faster to client demands. We don't waste resources dealing with internal issues. That energy is directed outward to create solutions for our clients."

"Our sales and internal production workflow are in a constant state of improvements. The leaders in industry will be the ones who keep efficient," says Gary Schellerer, Sr., president of Bloomingale Signs by Tomorrow. "Finding technology and implementing it to help with this efficiency is our biggest issue. Our capabilities are now in place. I feel 2013's motto will be to 'find ways to do more with what we have.'"

While maintaining margins, growing profits, and finding new efficiencies is at the heart of everyone's plan for 2013, where will this growth come from? Industry leaders list a few things, which they believe will drive their growth this year. Differentiation—from their competition—is high on the list as is expanding the current list of services their companies offer. Avoiding the commodity trap is also high on their lists to avoid.

For Sharpe Images, Zach Sharpe, vice president of graphic communications for the Winston-Salem, NC-based firm says they are determined to show their customers the true value they offer as a company. "We are creating measurable value and innovative ROI for our clients so we avoid commodity pricing comparisons," says Sharpe.

"Our biggest challenge in 2013 will be to keep successfully navigating the waters of a price oriented marketplace," says Nicolas Slobinsky, sales and marketing communications director, for Vancouver, BC, Canada-based PacBlue Printing. "How? By effectively communicating to our customers that PacBlue adds value and quality to the work we do for them. We showcase that in the materials we use, in the personalized relationship we establish and with our standard operating procedures."

"The continual commoditization of print is more prevalent than ever and companies need to find ways to move beyond a 'print only' business," says Paul Lilienthal, owner of Minneapolis, MN-based Pictura—and newly-elected Chairman for the SGP. "There will continue to be business constraints—capital, competition, etc.—that will likely create continued business consolidation in the printing industry."

Dallas, TX-based Inkjet International Ltd.'s owner Jittu Sarna feels that the commoditization of product affecting the industry comes from "under capitalized companies" and that it is only temporary competition to those more firmly fixed companies. "They spoil the market prices to keep the cash flow and eventually go out of business leaving behind other stable companies," says Sarna.

Long Island City, NY-based Peeq Media's CEO Steve Babat feels that is more than simply commoditization that's the issue. "Many perceive and understandably so, that the biggest challenge in the industry is the commoditization of traditional graphics services as a result of price competition. However, we do not see this as accurate. The true issue of our industry is the new competition from previously non-existent channels of advertising—web-based media, social media, banner-ads, viral campaigns, and the impeding revolution of digital or electronic signage," says Babat. "For business to survive, the must not only focus on the now, but be keenly aware of what is around the corner and ready to implement and coordinate these new technologies into their respective businesses."

Firehouse's Heilman agrees that differentiation is key to their growth and continuing prosperity. "We fit in a niche for retailers, but our challenge is to broaden our appeal by offering more services under our roof. We have expanded our wide-format line to stay on the cutting edge of speed and quality. And we have introduced a small-format solution by purchasing an HP Indigo Digital Press. That reduces the stress level of our clients. Now they can send us their wide- and small-format work under one PO and not have to source multiple vendors."

Jason Cardonick, president of Philadelpha, PA-based Big Mountain Imaging believes that becoming a one-stop shop for all of their client's needs is one of the keys to their success, but it also comes with a challenge. "One of our biggest challenges is the balance between trying to be an expert in one field versus have a broad knowledge of all applications," says Cardonick. "We try to overcome this by understanding and best applying different technologies from printing through fulfillment and shipping. We have no choice but to expand not only our knowledge of different printing equipment by continuing to invest in it."

For one shop, acquisition served as a way to broaden their offerings. In March 2012, Vision Integrated Graphics Group acquired Point Imaging allowing Vision to take a leap in its production mix by adding Point Imaging's high volume POP/POS and out-of-home capabilities to its workflow, digital and conventional printing services, web-to-print, and cross-media expertise. "The acquisition expanded our wide-format presence beyond our roll-to-roll capabilities including the ability to print direct to rigid substrates and a more robust array of grand-format print options," says Joan Patrick, marketing director for Vision Integrated Graphics Group. "With this enhanced service offering, clients have benefited from a full range of services provided by a single source. Our challenge in the next 12 months is to continue to spread the word of our service offerings to potential clients."

"We have made some diversification decisions, which are now paying off dividends," says Glen Fairbanks, director of marketing for North Billerica, MA-based DGI Invisuals. "We believe that the way to grow our business is to offer a broader spectrum of products. Included in this plan is digital signage—including content creation—as well as high-end audio visual solutions, structured wiring, and other technology driven models."

Digital signage has also been a subject of much conversation for the Top Shops this year—both as a challenge and as a growth opportunity.

"We must find more innovative services such as digital signage to incorporate into our legacy—static—products, as well as embrace the new era of signs and graphics through innovative methods of delivery and handling of these new assets," says San Diego, CA-based reproHAUS Corp.'s owner, Tito Taing. "We see a transformation from content 'duplicator' to 'content manager', with digital and traditional signs and graphics as the means to deliver the content we manage as professional services."

Technology plays a huge part in these new digital services and in increasing efficiencies within these companies.

According to Visual Marking Systems' Sunderman, in order for their business to become more successful in 2013, Visual Marking Systems has decided to use remote video production software that allows an increase in production time to while their operators are at home sleeping. "This software is available on their iPhone," explains Sunderman. "When a press malfunction occurs, an alarm sounds on their phones and they can come in to fix the problem." Visual Marking Systems implemented this new remote video technology and found that when the operator set the machine to run throughout the night they were able to keep producing products, while consuming less company resources. "This helps with on time delivery, and capacity to handle more jobs at once," he says.

Salt Lake City, UT-based Vision Graphics / SBR Technologies, Inc. also turned to technology to assist them in increasing the efficiency of their shops. According to Gene Chambers, vice president, Vision Graphics / SBR Technologies, Inc. wrote their own software that includes project management for large events like the NFL Pro Bowl or the Tour of Utah—two projects they've worked on in the past year. "We are in the process of integrating that portion with our production tracking and inventory software," says Chambers. "It's going to be a pretty remarkable system that will do just about everything."

Peeq Media is also looking forward to implementing new business systems and processes that will streamline internal workflow while simultaneously delivering creative technology and print production solutions for its customers. "With our advanced PEEQ IT workflow systems, production managers have been equipped with a new operations system that increases efficiencies—from data asset management to streamlining workflow, making Peeq the easiest company to work with," says Sophia Fox, business development manager, for Peeq Media-West.

In 2012, for example, Peeq implemented an end-to-end solution managing digital assets for one of the largest mobile phone providers. Their client needed to organize, print, and install numerous billboards in various locations, many with localized content, all over the country.

Fox explains that it was the PEEQ IT's Digital Asset Management (DAM) system that really helped to organize the client's digital assets. "Peeq's technology team created a customized suite of browser-based tools—including the DAM system—that included a remote proofing and 'work in progress' or WIP system where the client was able to manage, approve and/or change orders which organically streamlined workflow, reduced redundancy, and eliminated confusion of latest versions. The OOH campaign was a success, truly demonstrating 'technology for the creative mind'."

"We need to continue to focus on selling the right things to the right customers," says Janine Trutna, marketing director, BIG INK Display Graphics. "BIG INK Display Graphics does best executing all the little details of large, complicated projects. The challenge is wading through the market opportunities to find those that best fit our business focus, culture, and core values."

"Being successful in the large-format arena requires being current in our technology, training, and products," said Bloomingdale Signs by Tomorrow's Schellerer. "Procedures and standards that we're successful with today, won't necessarily be effective in tomorrow's marketplace. Our goal is to be the innovator rather than to follow trends. In our past experience, we've learned that if you're just now jumping on the bandwagon, you've probably missed the parade."

The Numbers

This year we had some substantial growth in the market—thanks to record numbers in 2012 and the entrance of several new firms in 2012. As a group, the Top 40 shops were up 94.04 percent in 2012 compared to 2011. If we were to look at just the shops reporting numbers year over year, there is a 20 percent increase in 2012 over 2011, up from just over 14 percent in 2011 and 7.8 percent in 2010.

The age of our companies averaged out a little over 30 years (31.3 years), with our oldest founded in 1910, 103-year-old Filmet from Cheswick, PA. This year, we have nine shops with more than 50 years in business: PacBlue Printing (65), Sharpe Images (62), superGraphics, a division of GM Nameplate (59), Alabama Graphics (57), Thomas Reprographics, Inc. (56), Coloredge New York * Los Angeles (54), Peeq Media (53), and Duggal Visual Solutions (50). Our youngest shop was established in 2007: reproHAUS based in San Diego, CA.

The total number of locations is up this year, 122 versus 106 in 2011. While most shops had only a handful of locations—ranging from one to four—six of our Top 40 list have five or more locations, with Richardson, TX-based Thomas Reprographics, Inc. topping out with 27, down one from last year's 28. New York-based Duggal Visual Solutions has 11 locations, while superGraphics, a division of GM Nameplate has 9. reproHAUS Corp. is up one location this year to seven. Peeq Media and Sharpe Images boast five locations a piece. Additionally, the Top 40 Shops have plans to open up 16 new locations in 2013, down four from last year's projected number.

The Top Shops offer a range of capabilities and services, both color and black-and-white graphics as needed. Sixty percent of the Top 40 offer "color-only" graphics while 40 percent offer both black-and-white and color graphics. When it comes to output sizes produced, the numbers are consistent, only a few percentage points off form last year's numbers. As an average, 47.18 percent of the top shops' output is wide-format (36-96 inches in width) down from 51.21 percent in 2011. Grand-format (96-inches plus) grabs the next largest share with 27.87 percent, up from 24.38 percent the previous year. Medium-format (24-35 inches) was down this year, dropping a few points from 18.21 percent to 15.13 percent in 2012. The remaining 9.82 percent is in small-format (14-inches and smaller documents) up from 6.21 percent in 2011.

The type of applications hasn't changed much compared with the previous year. This year, though, we've added a few new categories which has changed a few of the numbers. Retail and POP displays and signs (including floor graphics) is still in the lead position, down a few points to 14.10 percent. Banners and signs remained number two and was down a few points as well to 12.87 percent. Exhibit and trade show graphics (10.64 percent) pull in the next largest segment of business, down two points from last year. Engineering drawings was up nearly two points this year to 7.87 percent. Fabric and textile printing came in next with 6.54 percent, remaining flat over last year. Billboards and building wraps (6.36 percent), posters (6.15), fleet and vehicle graphics (6.10), backlit display graphics (5.85 percent), specialty printing and graphics (4.77 percent), labels and decals (3.92), décor printing (3.82 percent), fine art and museum graphics (3.28 percent), building signs (2.74 percent), yard and site signs (1.44), other applications (1.44 percent), electrical signs (.77 percent) and regulatory signs (.54 percent) round out the rest of the applications.