As is many times the case with industries in late stage business cycles, the commercial print industry, while significant in size, has been experiencing changing customer norms pertaining to print and digitalization. Since most printer manufacturers generate significant amounts of their company’s profits from commercial managed print services and consumables, the profit model was becoming less effective even in a pre-COVID world. Add to that a global pandemic that drove business to migrate employees to work remotely and you can imagine the challenges this segment is seeing.
The swift shift from office buildings to the work from home setting not only significantly reduced commercial print demand, but also fast-tracked the migration from physical print workflows to digital. With productivity and business continuity reflecting a strong performance from the work from home migration, even with a reasonable percentage of employees returning to the office post-COVID, the likelihood that print and consumable demand will return to pre-COVID volumes is low. According to NPD’s B2B Distributor Track® and Reseller Tracking service, aggregate unit printer volumes (including Laser, Inkjet single and Laser, Inkjet multi-function models) declined by -12% in Q1 2020, and at an even faster rate -21% in Q2 year over year. Consumables didn’t fare much better with Laser Toner for the first half of 2020 declining -24%, while Inkjet Cartridges improved only slightly, growing 2%. In contrast, these categories have seen strong growth on the retail side with consumer needs for print and associated consumables increasing.
While the work from home migration completely changed commercial print usage, there were some small, positive impacts. Home installed legacy printers were typically older and slower, but as employees were forced to work from home printer performance and capability needed to be improved. As a result, printer sales declines in the channel slowed and multi-function Laser printers fared best, decreasing only -4% for the first half.
Commercial Print Industry: What’s Next
The damage inflicted on the commercial print industry by COVID-19 has been significant, but there are opportunities to consider. For printer manufacturers pivoting to a new model incorporating a broader service offering could help to reinvent the industry along with providing a more sustainable and lasting financial model for the long term.
Based on a recent MIT study, up to 30% of people will work from home multiple days per week versus 4% pre-pandemic. This fundamental shift will help to frame future strategies, products and services for print manufacturers looking to address a more decentralized remote employee base of their major corporate customers.
Post-COVID, decentralized, on-demand printing options may be one of the areas manufacturers look to leverage, as they are not physically restricted by home or office. Kiosk based resources can be deployed at high activity locations including schools, airports or high traffic retail locations able to transact, print and go in short order.
Another interesting concept is Device as a Service (Daas) option for Printers. Utilizing an existing model in place for servers and other technologies, DaaS provides significant flexibility for companies with remote workforces able to install, manage, service and recover deployed devices without negatively impacting productivity and cost. DaaS also provides improved financial flexibility as the associated service costs can be treated as an operating expense and recognized monthly versus a traditional capital expense that would need to be depreciated over a typical 3-year period.
While there will always be a need and value for the printed document, especially within Healthcare and Government sectors, digitalization will continue to accelerate and post-COVID the printed document will likely play a secondary, more supportive role to digital workflows. Bottom line, in the old model digitalization equaled lower printed document volumes along with lower consumption of toner and ink and ultimately a loss in profits. Post-COVID, Print manufacturers are at an economic crossroads and will need to embrace digitalization through the development of an integrated service offering including on demand printing, DaaS, as well as collaboration and cloud based digital workflow solutions.