Quick Print Giants

>> Staff at Allegra franchise, Okemos, MI, sales $1.7 million, work on a job (above). Owners Joe D'Aguanno and Joe Haddad (below), Allegra, Windsor, ON, sales $4.3 million, host an open house.

The world increasingly favors branded services and offerings (think Gucci, Starbucks, Target) — and quick printing is no exception. Just as the Borders chain has supplanted many an independent bookshop, franchises are comprising an increasing proportion of small print shop services.

It's important to distinguish quick printing (fast turnaround, small-format print offerings) from quick printers — usually small businesses with fewer than 20 employees. A quick print operation is no longer a "print shop with a cash register," as in earlier days, as small shops have concentrated their efforts to win continuous trade with small businesses. Quick printing services, meanwhile, are offered by firms as varied as traditional franchise outlets (Sir Speedy, Kwik Kopy, AlphaGraphics), chains (UPS Stores, OfficeMax, Office Depot, Staples) and the hundreds of links that turn up when you Google "quick print" (VistaPrint.com, Mimeo. com, printingforless.com, etc.). In the latter group, quick printing production is as likely to be run on a 28" Komori or 40" MAN Roland as on a Xerox DocuTech or a Kodak Digimaster.

In the aggregate, quick print chains form quite a substantial business. Kinko's 1,500 locations, acquired by FedEx in 2004, return more than $2 billion in revenue to their parent. OfficeMax, Office Depot and Staples have all upgraded their in-store offerings. And traditional franchises have rebranded and upgraded in recent years, to capture the public perception that consistency of service will be found from brands that are known and trusted.

As a result, independent small print operations employing fewer than 20 people have seen the greatest attrition rate of any print group in the past five years. The Internet and affordable color printers have taken a large chunk of quick printers' business, forcing many firms to either fold or consolidate. According to the U.S. Dept. of Commerce Economic Census issued last year, the number of self-identified quick print companies dropped 6% from 7,990 in 1997 to 7,514 in 2002. A.F. Lewis Graphic Arts BlueBook data from last year shows a similar trend, but one that is leveling off.

Some franchisors are getting more involved with their franchisee's success by offering branding tools, certification initiatives, e-commerce capabilities and recognition programs. The goal: to build a system that yields consistent service across the network and powers individual franchise growth and profitability. Glen Owen, owner of an Allegra Print & Imaging franchise in Louisville, KY, sales $3.2 million, holds an award for achieving the highest monthly sales volume in Allegra's history. Many franchised organizations are growing aggressively by recruiting independent print shops wanting to sell their businesses.

Survivors in this fiercely competitive marketplace are investing in technology to streamline operations, expanding services far and beyond copying and acquiring firms. These efforts, combined with technology advances that speed all print production process, have led to profitability but have further blurred the definition of a quick printer.

Franchise organizations, in particular, have seized on this branding trend, offering certification and initiatives targeted at giving customers consistent service. AlphaGraphics, which was acquired by British print giant Pindar in 2004, requires its franchises to be ISO-9000 certified, for example.

While FedEx reported last month that its Kinko's unit saw a 2% drop in revenue and a 56% drop in operating income for its recent fourth quarter (a result of a decreased demand for copy services), the print unit has doubled direct sales to feed centralized commercial offset plants spotted in strategic metropolitan locations around the country.

To fend off drops in print demand and grow sales, firms are setting up online digital shops, developing hybrid print/Internet products, adding mailing operations and offering variable-data printing. These tactics are succeeding, according to firms responding to a Graphic Arts Monthly survey on sales trends in the quick print market. The majority of companies responding to the survey reported sales growth, many in the double digits (see p.33).

Staples reports sales at its Copy & Print Centers grew in the double digits as the company introduced new technology, including an online storefront launched in February. (The company does not separate sales numbers for the centers.) Staples' online print store allows customers to upload digital files and submit print and copy jobs. EFI's Digital StoreFront powers the online order system, while more than 2,000 EFI Fiery engines drive printers at the stores.

Sir Speedy, Mission Viejo, CA, whose sales are up 5% to $400 million, launched a new version of its sirspeedy.com website and online ordering system. The system makes it faster and easier for customers to order printing online, says the company, owned by Franchise Services and operating 1,000 centers in 26 countries.

Ginny's Printing, Austin, TX, one of the premier independent shops and a leader in adopting new technology, signed an agreement with MapQuest to print "dynamic maps" onto promotional pieces. Each printed piece gets a unique map based on the recipient's address.

OfficeMax, meanwhile, has rebranded its CopyMax centers as OfficeMax Print & Document Services. It's also testing new store designs that include a wireless network-enabled OfficeMax Cafe, so customers can download reports and have them printed while watching cable TV news or enjoying a cup of gourmet coffee. The in-store Print & Document Services also provides high-tech digital printing and copying services, including binding, finishing and laminating.

Main Graphics, Irvine, CA, a part of CPrint (Certified Printers International), has more than doubled its sales through acquisition (50%) and revenues (50%). The company purchased Orange Inc., another Irvine-based shop with $2 million in annual sales.

CPrint was formed last year by management consultant and quick print marketing guru Tom Crouser, president of Crouser & Associates. It targets existing printing companies with four to 20 workers and less than $2 million in sales.

Another market-shifting trend is franchises efforts to grow by converting existing firms wanting to sell their businesses. Over the last five years, top franchises have grown primarily through acquisition. Allegra Network, Northville, MI, with more than 600 firms today, operated 320 franchises in 2001, then purchased Insty-Prints with 225 shops.

Allegra, with sales of $345 million (up 30% from the prior year), reported ambitious expansion plans that call for opening 30 new printing centers this year and 420 over the next five years through a combination of conversions and startups. Converting independent businesses to Allegra franchises could account for 60% growth.

The company has said there are more than 200 small printing businesses for sale that are looking for an exit strategy. Conversions require larger startup costs than new franchises: initial investment is around $155,000, compared with $90,000.

Franchiser AlphaGraphics, Salt Lake City, had reported 263 U.S. shops in 2001, dropped to 231 by last year, but intends to nearly double its outlets to 500 through aggressive expansion. A key element of the plan is the introduction of new business center franchises for digital print. The company says the average sales at its locations are $948,366; system-wide revenue is $269 million.