Sector Analysis: Office machines



Changing times, changing needs


2009 was bleak, 2010 has been better, but what has changed in the office machines market over the years? OPI looks into the new initiatives behind shredder sales


The business machines world has been evolving rapidly, not least with the growth of offerings such as managed print services and cloud computing. Of late, businesses have been cutting costs during the economic downturn.


For some this has meant reducing the number of machines they run, or at least not replacing those that break. This clearly signals a fall in the market, but interestingly in recent months some types of business machines have seen a resurgence.


Take printers, for example. The cost of printers, including colour printers, has fallen for consumers in recent times, due to increased competition and lower production costs as companies become more efficient and produce offshore.


The knock-on effect has been growing sales of printer supplies. Simone Bahrs, European PR at Pelikan, says: "Especially in the field of printer supplies, we increased sales by more than 20 percent in the toner business due to the fact that prices for laser printers are getting more interesting for private end-users."


Struggling shredder sector


The state of the shredder market, meanwhile, has not been so positive during the global recession. Herman Chang, CEO of INTEK America, says: "From what we know, the retail shredder business is down 10-15 percent."


Mike Stranders, Rexel’s Global Director of Product Marketing, agrees: "We estimate that there has been a further ten percent decline [in the shredder market] in 2010 across Europe. Sales of large shared workgroup shredders remain particularly soft – many companies are avoiding capital investments where possible, which is restricting upgrade sales in the segment."


But despite the choppy 2009 having had its effect on the industry, it’s not all doom and gloom and sales of shredders could be on the up again. Chang goes on to say: "At least for us, both Boxis and GoECOlife shredders have started very strongly this year and we are optimistic about our increase in business."


David Vitrano, Head of Marketing at HSM, is similarly positive: "This year, we could register a general positive trend and a slight increase compared to the previous year."


Maureen Moore, VP Marketing and Communications at Fellowes, paints a fairly uneven picture. She says: "The shredder market recovery has been uneven with the independent channel sales exceeding prior year for nearly all of 2010. The commercial channel sales have recovered and have been exceeding prior year for the last few months. The retail channel sales have been lagging behind 2009 for most of 2010."


A global development that could be why shredder sales are again, if slowly, on the rise is the continued focus on data protection and identity fraud. There have been many cases of lost or stolen data in recent years, as well as increased messages about the importance of keeping information safe. As Chang says: "Over the past five years, there has been a direct correlation between the increase in media coverage and the growth in shredder and identity theft protection service sales.


"Identity theft remains among the fastest growing crimes in America with over 11 million identities stolen in 2009," he continues. "As identity theft awareness grew exponentially in the US during the last 15 years, so have shredder sales. We welcomed the challenge of expanding production facilities and capabilities to keep up with the demand in the market.


"Shredders represent the first line of defence against identity theft and are also the single most effective form of prevention. The shredding of documents containing personal information and even junk mail, particularly containing pre-approved credit offers, assures against access to thieves."


HSM’s Vitrano also believes that the growing awareness for data security has increased the need for shredders, and provided an opening for manufacturers to offer aligned services. He says: "The need for privacy and data security is further increasing and customers are becoming more sensitive about handling confidential data.


"The amount of data and data flows continue to rise and therewith the risk of abuse. HSM is not only a provider of document shredders, but also a consulting company that advises on the most important information and requirements of data protection."


As a result of these developments in data protection, the shredder market has had to expand its offering. The first shredders all those years ago couldn’t handle the sheer amount of paper and materials that needed to be destroyed, as Vitrano remembers.


"The first document shredders could only destroy 6mm wide strips in an entry width for A4 paper vertically," he says. "The machines have adapted over time to provide more technical possibilities and increase the type of material that could be destroyed. With the possibility to print on continuous computer paper or to print in small font sizes, the requirements of document shredders have changed and smaller cutting sizes had to be established to meet increased security requirements, such as after 11 September 2001."


Continuous innovation has become vital in a fast-changing world in order to keep the shredder market from buckling under the pressure, and not only in the field of data protection. As with any market, there is fierce competition between shredder manufacturers to meet customer needs in a new and innovative way.


INTEK recently won Product Innovation of the Year at the North American Office Products Awards 2010 for its BOXIS Autoshred. Chang explains why he believes the product won the title: "The BOXIS Autoshred was successful because we were able to launch a unique technology that provided a solution to a growing problem of many companies – paying employees to stand and shred sensitive documents for a long time. Satisfied customers have reported buying several units because they paid for themselves in just months, countering lost productivity and wasted time."


Going green


Another development that has required shredder manufacturers to think outside the box has been the need to conform to new environmental requirements in the business machines segment. It’s not easy to create a machine that runs on electricity that is also eco-friendly, but it can be done, as some manufacturers have demonstrated. INTEK for one has developed its product lines to reflect this with the creation of its Eco Shredder.


"Globally, green awareness has grown significantly in the last ten years," says Chang. "INTEK decided four years ago that this was an important aspect to have in the products that we delivered to market. It continues to take time, but we believe that the fiduciary responsibility to protect or at least minimise the negative impact on the earth’s climate and limited resources is in fact the responsibility of everyone. It made sense for us to transition our business philosophy to match this important trend."


Vitrano similarly believes that putting environmental concerns in the heart of future, as well as current, products and manufacturing processes is inevitable. He says: "Continued environmental awareness is important and is already reflected in the production processes of our paper shredders. Materials and products are becoming more environmentally friendly and energy savings will increase in significance in the future."


As well as environmental advances, there are other criteria that shredder manufacturers should look out for, according to Vitrano. When asked what the future holds, he says: "From our perspective, it will be increasingly important to focus on the user and draft products that are easier to use. We have already implemented many innovations, such as integrating an automatic oiler that decreases the user’s need to manually oil machines and a paper thickness measurement that indicates whether the paper stack can be destroyed or needs to be reduced. This type of innovation means that shredders have a longer life and problem situations can be avoided."


Hopefully, over the next year, the shredder market can shake off the remains of the recession and stride forward with more innovative ways to meet customers’ needs. Maureen Moore of Fellowes is positive about the future. She says: "Shredder sales are very much tied to the overall performance of the economy and the unemployment rate. If the economy and unemployment rate continue to improve, we expect the shredder market will also continue to improve."