Sector analysis: Marking and stamping



Top marks


OPI spends some time with Colop’s CEO Ernst Faber and Markus Würcher at Trodat, to find their thoughts on the marking and stamping outlook for the year ahead


OPI: Another year, a brand new set of problems and only a few opportunities. How do you think the sector has developed in the last year?


Ernst Faber: In common with many other sectors, ‘stamps’ faced a negative development (in the past 12 months) compared with previous years.


Our export rate ex Austria is more than 98 percent with sales into more than 120 countries in all continents and the development differs from region to region. We can see positive developments in South America, while other regions are stable.


In some regions and countries we see a decrease, based on two factors. Firstly, a weak general demand of office products and secondly, difficulties based on the strong euro exchange rate in some countries. Generally we see growth potential all over the world.


We see the greatest potential in the CEE, including Russia because of general market growth and also because of the substitution of traditional products with our self-inking range.


Other growing areas will be still South America, the Far East with India, or the Maghreb countries. But also in European countries where we still can substitute the traditional hand stamps with our products.


Markus Würcher: There has been a difference in the economic cycle between investment goods and consumer durables. Investment goods like our laser machines immediately felt the delay of investment decisions and budget cuts. (On the other hand) durables take longer to react but it is also taking them longer to recover from a downturn.


The effect has certainly been slower market activity for everybody and the situation is somewhat sticky on one hand and more volatile than before on the other. There are months when one can only guess what drove the good or bad results. Sales are definitely less predictable now although one has to admit that we had gotten used to a pretty one-directional pattern of business performance prior to 2009, and that was growth.


OPI: It is certainly true that we will be feeling the effect of the downturn for years to come. How do you think it will shape your sector?


EF: One of the effects will be a consolidation. Companies are merging; some of them will disappear because they are not handling the downturn in a professional way; some companies will come out of the downturn stronger than they were before.


Everybody in the ‘value added chain’ has become more cautious. Budgets have been revised. Expenses have been scrutinised more. Important things have been done immediately, unimportant have been cancelled.


Our response has been to maintain our product development budgets. In terms of production and deliveries we have had to become more flexible.


OPI: There seems to growing optimism in the market that a recovery could be coming sooner rather than later. Where will you be concentrating your efforts?


EF: We see many areas of growth potential. Particularly the substitution of traditional hand stamps, as well as new innovative products and ‘green’ products, or products with additional features.


MW: We obviously watch our European strongholds very closely but pursue share opportunities all around the globe. We are certainly getting deeper with our analysis and attention of what might have been ‘B-tier’ markets five years ago.


Fortunately, we have no need to be listed at the stock exchange which has the incredibly important consequence of allowing us to pursue long term strategies, even if they do not pay off in the short term. That is why we are directly engaged in India and China, for instance.


Take the Multi Color initiative as another example. We know we can drive the market to a certain extent in that direction and it is to the benefit of all involved, end-users included. It opens so many doors, it is amazing.


Look at the Expo in Shanghai: we have supplied a few thousand self-inkers there and now the main souvenir – the ‘Expo-Passports’ – which will be sold to several millions of visitors will be stamped with maybe 200 million multi-color technology based imprints. And all this in a market where self-inkers currently may have a market share of 5 percent of the total stamp market. We can definitely see growth on a regional and category level.


OPI: With that in mind what kinds of trends can we expect?


MW: We have always been convinced that the stamp market will slowly gravitate towards self-inkers and die production via laser machines, even in those markets which are right now still seeing significant shares of other technologies.


This is because the end-user will eventually value, at a large scale, the possibility to order a stamp via the internet which lends itself to interaction with a laser machine which then produces a first class quality die with no inking mess and simple assembly.


Right now, a lot of people talk about ‘being green’. But make no mistake, the tide has already turned. If you want to be relevant for the end-users and your customers you have to forget about all the ‘greenwashing’ which we have seen for a while now. The market demands real value in that respect and will reward those who offer it. Has the office products industry fully consolidated yet? We do not think so.


Give it another ten years and the ‘digital natives’ will be fully involved in the economy and internet-based ordering will be much more standard than it is today. And on the back of that trend the stamp industry will become more marketing-driven.


OPI: Talking of marketing, how do modify your approach across the channels?


EF: It is important to serve different channels with the right products and concepts. Our strategy is to differentiate our market approach. The stamp makers have other requirements and needs than buying groups, contract stationers, mail order companies, etc. We support each market sector to its specific needs.


We see our main strengths in the high potential of development resources to be able to serve all sales channels with new innovative products.


Additionally one of our strengths is the well known flexibility and our speed to put requests into action. And we can offer all different sales channels with individual solutions.


MW: Wholesalers are the backbone of the independent dealer sector in terms of providing marketing programmes and logistics. We think that independent dealers have come under more pressure during the economic downturn and life has become harder for these companies. Therefore, a vital relationship with office products wholesalers is very important for us and key to serving this part of the market.


OPI: What are the main threats to your part of the industry?


MW: One is tempted to say the ‘digital revolution’ but when you think about it, you realise that a stamp offers a very good cost-benefit relation for what it is meant to deliver. Growth potentials for our self-inking stamps by far outweigh the threats, although it is clear that some applications will occur less frequently, or even disappear over time.


The real threat is rather that market participants drive out value of the industry without thinking. Because one thing is pretty obvious: the total number of stamps (all categories) is not growing. From our perspective, we see the value potential here.