High street print shops are going global
Tuesday, June 12, 2007
News last week that Printing.com plans to move into the US, Australia and France in the next stage of its global expansion should come as little surprise to those who watch the fast-paced world of print franchising.
Behind the plans is a recognition by all those involved that while the UK market is moving towards saturation point, the biggest growth opportunities exist in markets where franchise printing is smaller business.
Printing.com chief executive Tony Rafferty, who has pioneered the hub-and-spoke print shop model, says that the goal is purely financial. “We are a public company, pure and simple,” he says. “We want to expand our remit for our shareholders and the faster, the better.”
Rafferty’s company last year recorded total retail sales of £21.3m and currently has 205 outlets. He wants to double the number of outlets and expand the business across Australia, Italy, Spain and the US.
Rafferty says: “In the UK, the market will support around 400 print shops while in America it can support 2,000 outlets.
“We can more than double our outlets by setting up our business in Australia, Spain, and Italy. America is the world’s largest economy and the US has around 300m people. It’s a no-brainer to go for America.”
Rafferty argues, though, that New Zealand, where Printing.com already runs an operation through a licence with a local printer, and France, where a new, wholly-owned service will be running by September, are the “number one priority at present”.
But Italy is another target, both for Rafferty and for competitor Prontaprint, part of the On Demand Communications group which also includes Kall Kwik and was sold to Irish investment firm Boundary Capital in March. Rafferty says: “Italy is a developed economy, the geography allows for easy distribution.”
Prontaprint, which has 171 stores operating in the UK and Ireland, has said it is in talks with an Italian firm to set up a possible franchise in the country.
In Ireland, the company wants to expand its business from seven stores to 18 over the next three years and hopes to employ a director who will work on this, as well as two additional people looking at mainland Europe.
“Xerox has said it will support our global expansion”, says Prontaprint managing director Laird Mackay. “Eastern Europe and the Middle East are good areas providing certain growth.”
But Mackay argues that there is still room for expansion in the UK market, and it has not yet reached saturation point. “It is the opposite of that,” he says. “The UK has a vibrant economy. Our target is to have more than 200 operating business over the next two years. We have employed two sales staff and hope to focus more on the UK.”
Stuart Mason is managing director of Scottish franchiser The Ink Shop, which has eight company-owned stores across Scotland, with 50 franchises up for offer in England. It has just signed up another new site in Scotland with another under option.
He agrees that the UK still offers plenty of room for growth and that global expansion is not a necessity for high-street print shops. “Print worldwide is well accommodated,” he says. “Why target a market that is alien when opportunities exist on your own doorstep? The UK print market is worth around £15bn – once we’ve secured that, then I will look to international markets.”
He argues, as many competitors would, that the franchise model itself is one that guarantees fast growth. “Franchisees are self-employed, highly motivated and hungry for business. We’ve already proved it; we have a new franchisee out getting work before his centre is even open, and it’s commitment like that that only a franchisee can provide.”
However, there are also overseas companies looking at the UK for possible future expansion; FedEx Kinko’s is opening stores in the UK, and there is talk that others will follow suit.
US-headquartered AlphaGraphics, too, is looking at the UK. The company has 230 franchises in the US and businesses in Mexico, Brazil and Russia. It was already an established business in the US when Pindar bought the global high-street print chain, with a view to developing it in the UK. It currently has 15 franchises in the UK.
But AlphaGraphics UK managing director Jason Simpson says that there is a limit to growth in the UK – although his company is nowhere near reaching it.
“The main reason for international expansion is because of the limited geography the UK offers,” he says. “However, this is not a problem for us – international expansion is not high on our agenda. The UK will only allow for 100 to 150 units and then you have to look elsewhere.”