By: Scott Cullen on November 14th, 2019
Cannata Annual Dealer Survey Insights: The Biggest Concerns Facing Office Imaging Dealers
Anybody running a business has a boatload of concerns. Imaging technology dealers are no exception. The Cannata Report asked independent office equipment dears what their most pressing concerns were via the Annual Dealer Survey. This year, dealers could idenfity their concerns from a list of 12 options, including “Other.” Let’s dig in.
Top Concerns of Office Equipment Dealers:
- Competing against manufacturers’ branches
- Declining print clicks
- Hiring and retention
- Keeping up with new technology
- Keeping up with the growing number of solutions on the market
- Maximizing revenue and profits from MPS
- Maximizing revenue and profits from MNS
- Effectively diversifying your product/solutions/services offerings
- Succeeding in production and/or industrial print
- A clear vision for where the industry is heading
- Maintaining profitability
Dealers can identify an unlimited number of concerns but are asked to place them in order starting with their biggest concern. The number of concerns reported ranged from 0 to 8 per dealer with approximately one quarter of all respondents identifying more than four concerns.
Let’s Examine How These Responses Have Evolved Year over Year
The top three concerns in this year’s survey were competition from manufacturer’s direct branches (35%), declining clicks (32%), and hiring and retention (16%). The order of those three concerns has remained consistent since we’ve been tracking dealer concerns.
The order shifts, however, when we consider all dealer concerns regardless of positioning. Here, the top three concerns are declining clicks (54%), hiring and retention (50%), and maintaining profitability (46%). Those are followed by competition from direct branches (39%), a clear vision of where the industry is heading (33%), effectively diversifying (29%), and maximizing revenue and profits from MPS (25%).
Maintaining profitability was a new addition to the list of options this year, included at the request of our readers. Contributing to maintaining profitability as a concern are trends such as declining clicks, tighter margins, the need to diversify, competition from mega dealers (a concern also noted in “other”).
If you want to dissect things even further, every other item on the list impacts profitability. To be honest, we were surprised that maintaining profitability was only cited by 46% of respondents. Think about it. Dealers are entrepreneurs competing every day against other independent dealers, mega dealers, and direct branches. Maintaining profitability is something they must be thinking about every day. I imagine if I picked up the phone and contacted every survey respondent and asked if they were concerned about maintaining profitability, few would say, “no.”
OEM Dealer Concerns
Reviewing the responses reflecting the concerns of each group of dealers representing the “Big Six” OEMs (Canon, Konica Minolta, Kyocera, Ricoh, Sharp, Toshiba) regardless of positioning when listing those concerns, we continue to see consistency among the leading concerns although the order shifts depending on the manufacturer.
Dealers representing Canon (50%) were more concerned about competition from direct branches compared to dealers representing the other Big Six OEMs. The percentage of Konica Minolta and Ricoh dealers concerned about competition from branches continues to fall as each of those companies have taken steps to reduce conflict. Konica Minolta saw that percentage decline from 48% last year to 46% this year while Ricoh saw it fall from 35% in 2018 to 31% in 2019. At one time dealers considered these two companies the biggest culprits in competing against their dealers.
Maximizing revenue & profits from MNS has become increasingly important to Sharp dealers as we saw that percentage rise as a concern from 18% in 2018 to 31% this year. Could Sharp’s Smart Office Suite and other network- and PC-related initiatives be driving that change?
Hiring and retention was the biggest concern among Konica Minolta dealers (64%) compared to all dealers representing the other Big Six OEMs even though those percentages were significant as well. This concern primarily applies to sales positions, a job with a high turnover rate. As dealerships diversify their product, services, and solutions offerings, this is creating more hiring and retention challenges. And as you will see in our recap of “Other” concerns, making this industry attractive to young people will be an ongoing recruitment challenge.
Are Dealers Concerned with Their Success in Production Print?
As we did in last year's survey analysis, we've examined how much of a concern success in production print is between the leading players in production print—Canon, Konica Minolta, Ricoh—and those without a with a limited production print line—Kyocera, Sharp, Toshiba. Here 15% of dealers aligned with the leading production print OEMs identified this as a concern compared to 12% (down from 15% last year) of those aligned with Kyocera, Sharp, or Toshiba. It’s not a huge gap, but still indicates the sentiments of those with access to a production/industrial print line and those without. Those percentages are regardless of positioning. Only 0.5% of all Big Six OEMs identified succeeding in production and industrial print as a primary concern.
Examining the “Other” Response
We saw a significant jump in the number of dealers citing “Other” in this year’s Survey. Last year only 3% of the 338 respondents identified “Other” as a concern, this year with 344 respondents, that percentage rose to 14%. Although we asked dealers to explain what they meant by “Other” not every dealer did so.
The “other” concerns that were noted include:
- Branches selling at cost
- Predatory pricing from larger organizations
- Growing mega-dealer concentration and ability to compete against them due to volume pricing on hardware
- How ink(jet) will change our industry and how to bill for it
- Our industry is no longer where young folks want to be
- Competition not selling value
- Low pricing from competitors, particularly Kyocera and Toshiba independent dealers
- Mergers and acquisitions among our customer base
- Maximizing personal production
- Consolidation of smaller independent dealers into larger dealers
- The cheap cost of inkjet
- Konica Minolta’s One Rate program
- HP’s vision of color click costs being similar to black & white
What’s interesting about the “other” list is that many of the concerns noted revolve around pricing and competition. Reading between the lines, here’s what we think dealers are saying:
“Don’t mess with my margins!” and “How can a small independent dealer like me survive in this changing dealer landscape?”
Despite all the concerns identified in our survey, many dealers are still running successful businesses, and many have for a long time. What this tells us is that no matter how big a concern, or how big a challenge they are facing, the independent imaging technology dealer continues to find ways to navigate around these concerns and challenges.
Scott Cullen is regarded as one of the most respected and longest tenured journalists in the industry. Throughout his distinguished career, Scott has contributed to numerous business and technology publications both inside and outside of the industry. In February 2016, Scott joined The Cannata Report as managing editor and chief correspondent and in October of 2016 was named editor in chief, his true dream job. Since joining The Cannata Report, Scott has accentuated breaking news and related follow-up coverage and analysis across The Cannata Report’s digital platforms. He has introduced substantial editorial coverage of business modeling, software, IT and other professional services and enhanced coverage of product and vendor news. A pop culture enthusiast with a passion for music, movies, baseball, and women’s basketball, when Scott’s not writing about the document imaging industry or traveling to an industry event, you can usually find him at a concert or sporting event somewhere between Philadelphia and New York City.