LAS VEGAS—Despite the let-it-ride mentality that permeated its surroundings, the 2017 ITEX Imaging & Technology Exposition held April 18-20 at the Mandalay Bay Resorts & Casino was anything but a gamble for the dealers attending the annual event. While there were no Elvis impersonators to be found, the opening day keynote address painted a clear picture of the numbers behind the trends that continue to shape the industry’s fortunes.
Although some of the statistics raise cause for concern, the report offered conclusions that can enable underperforming dealers to emulate their more successful brethren.
The ITEX keynote speech was delivered by Jeff Hayes, managing director of Keypoint Intelligence, the Buyers Lab/InfoTrends combination that specializes in data and market intelligence for the digital imaging industry. Hayes launched into a lively State of the Office Equipment Channel presentation that included findings from a recent survey with dealer principals.
Hayes dissected the $40 billion U.S. office and production equipment, service and supply business, which has been declining slightly. The A3 and A4 market has been declining 1.5% per year. Light volume production printer revenue is up by .2%, while the wide-format printer sector (engineering, CAD, not including wide flatbeds) witnessed robust growth at 5.2%.
In terms of U.S. office and production printing volume, page counts are declining 2% per year. Light volume production black-and-white has tumbled 3.8%, while color is up 5.1%. Business inkjet growth is 11%, while office black-and-white toner pages have fallen 5.5%.
Looking at the market in terms of size of customer and type of contract, more than half of the business with large customers (500-plus employees) is done via managed print contracts. Medium-sized customers (100-499) tend to prefer click-charge contracts while the smaller customers (99 and fewer) lean toward transactional business.
U.S. document solutions will become a $3 billion business by 2020; according to Hayes, it is growing at a rate of 3.5% per year. Document management and workflow enjoys a 4.1% growth rate, with device and output management at 3.1%.
Keypoint Intelligence surveyed a wide range of dealers (from sub-$5 million to $50 million-plus in revenues), with 87% of respondents being either the owner or a high-ranking executive. One-third reported flat or declining year-over-year revenue. Smaller dealers reported a profit margin of 10%, while large dealers registered a margin just north of 16%.
The bigger dealers, for the most part, are making more investments and reaping the profits in the process. Some of the most common factors cited as drivers for revenue growth: better internal business systems (45%), increased sales (35%), added sales staff (30%), bolstered marketing efforts (25%) and acquired dealerships (25%).
On the opposite end of the spectrum, among the leading factors cited for revenue decline were loss of key sales staff (45%), loss of key customers (35%), a weak economy (20%), competition from local dealers (20%) and direct competition from OEMs (10%).
Among the top dealer challenges, Hayes cited enhancing solutions selling skills, improving business systems, reducing operating costs, improving marketing infrastructure, expanding into new regions/territories and new service categories. He also outlined a list of recommendations:
- Focus on core opportunities and natural extensions.
- Strengthen managed service offering.
- Invest in marketing and solutions selling.
- Position sales reps as advisors.
- Become more data driven.
