As we approach 2025, the copy/print industry stands at a critical juncture, shaped by political changes, economic trends, technological advances and evolving customer preferences. Key factors influencing the sector include post-election economic policies, increasing merger and acquisition (M&A) activity, interest rate fluctuations, the integration of AI and the growing demand for smaller, more versatile MFPs. Here’s a closer look at what lies ahead and how you can prepare your dealership.
Post-Election Dynamics
The 2024 U.S. elections have set the stage for potential changes in economic policy. The most important of these looks to be tariffs on imports, especially those from China and Mexico. Increased tariffs could have a significant impact on the cost of equipment, parts and supplies. Increases in equipment costs could drive customers to hold on to equipment longer or choose smaller, less expensive options. This will have a top-line revenue impact for dealers and manufacturers alike. Increases in the cost of parts and supplies will impact the bottom line of every copy/print dealership, especially those whose service agreements don’t allow for regular price increases.
Depending on the new administration’s priorities, we could also see shifts in tax incentives and environmental regulations. Each of these could have an impact on product availability and pricing. Furthermore, the desire and drive to reduce overall government spending could lead to cutbacks in copy/print budgets. Dealers could see a slowdown in purchases from federal agencies.
The government’s stance on tech innovation, workforce training and small business support may also influence market conditions. Dealers should closely monitor developments to align strategies with new policies and capitalize on new opportunities.
Interest Rate Fluctuations
Following aggressive rate hikes in recent years to curb inflation, many economists predict a more stable interest rate environment in 2025. However, it doesn’t look as if interest rates will be coming down to their pre-COVID levels anytime soon. These higher borrowing costs may continue impacting capital and lease expenditures for many organizations. This is likely to have a bigger impact on larger transactions. Some customers may choose to extend their current leases or allow them to renew under lease evergreen clauses. Dealerships that haven’t already done so should put together a strategy for handling these situations. Strategies can include re-leasing the equipment to the customer, buying out leases and renting the equipment to the customer or negotiating a share of the evergreen revenues. The key is to have a plan and not simply allow the leases to roll into a one-year extension during which you, as the dealer, receive no additional revenue.
Higher interest rates will also continue to impact dealerships that are carrying debt. At the time of writing, the prime interest rate was 7.75%. Dealerships with lines of credit, operating loans, SBA loans, etc., have seen a dramatic increase in interest expense in the last two years. Focusing on reducing these debt obligations could increase net income significantly in 2025. Paying down debt will also free up cash flow for investment in growth strategies.
Shift Toward Smaller Copiers
Another trend that will continue in 2025 is a move to smaller, less expensive machines. The migration from A3 to A4 units has been going on for a few years. The customer that previously purchased a $10,000 unit is often replacing it with a $5,000 unit. This drop in revenue hits the businesses’ top and bottom lines. It’s also impacted many dealerships’ ability to hit their manufacturer quotas and has reduced the rebates earned. Beyond that, these reduced purchases impact sales representatives who now must sell almost twice as many systems to earn the same money they did in the past. 2025 strategies need to include plans to address this. This can include adding new product offerings, developing new vertical markets and/or aggressively targeting standalone printers for replacement with A4 MFPs, among others.
AI’s Growing Influence
Artificial intelligence (AI) is no longer a futuristic concept but a practical tool reshaping the copy/print industry. From predictive maintenance that minimizes downtime and reduces service expenses to intelligent document management systems, AI is enhancing product functionality and the customer experience.
In 2025, we can expect a surge in demand for AI-powered MFPs that integrate seamlessly with cloud services and enterprise workflows. Dealerships that embrace this shift will not only gain a competitive edge but also unlock new revenue streams through software subscriptions and data analytics services. With all the talk around AI, 2025 will be the time to truly look at how you can monetize it.
Mergers and Acquisitions (M&A)
M&A activity in the copy/print industry has remained strong, being driven by the continued consolidation by larger private-equity-owned businesses and independent dealerships alike. This trend is expected to continue in 2025 as companies seek to scale operations, diversify portfolios and enhance market share.
For smaller dealerships, the consolidation wave presents both challenges and opportunities. While increased competition from larger players could pressure margins, independent dealerships remain willing and able to deliver a higher level of customer service and attention. Smaller dealerships would also do well to take a page from the playbook of the large consolidators and consider acquiring in their local areas. There are still quite a few small-to-midsized dealerships with owners who are approaching retirement age. Acquiring the right company can instantly increase both your revenue and net income. For those who think you’re too small or not sophisticated enough to complete an acquisition, I challenge you to take a look. There are resources out there to help you. If you speak with those that have acquired another company, most will tell you it’s the best thing they ever did.
Conclusion
The outlook for 2025 presents a mix of challenges and opportunities for the copy/print industry. By embracing technological innovation, navigating economic shifts and responding to changing customer demands, independent dealerships can position themselves for profitability and growth in a dynamic marketplace. More than ever, it’s important to take a disciplined approach. Focusing on key areas such as net income, employee productivity, employee headcount, diversification opportunities, AI strategies and acquisition opportunities will pay big dividends for 2025 and beyond.
