SGIA 2016 Industry Survey: Summary Report

The Industry Survey was conducted by SGIA in March and April of 2017. This report is based on the responses of 82 garment decoration companies from US and Canada. Our respondents were almost equally divided between business-to-business (53.7%) and business-to-consumer (45.1%) segments, with in-plant printers sector shrinking during the last year to only 1.2%. Two out of three companies served either local (68.3%) or national (65.9%) markets. The current trend is toward increase of national and international accounts and decrease of local and regional ones. We believe that one of the reasons behind that is the fact that as companies become bigger, they try to serve larger customer base. Both, the median annual sales revenue ($1,343,749) and the median number of employees (9.3) increased during the current year: 46.5% and 36.8% respectively. Almost half of the companies that participated in the survey (47.6%) had sales revenue of $1,500,000 or more. The number of the survey respondents with more than 10 but less than 100 employees increased significantly: from 25.2% to 43.9%. More than half of garment decorators are men-owned companies, and for every four men-owned companies there is only one that is owned by women. About one-third of the companies are mixed group (men-women)-owned companies. Women appear to be under-represented in management and over-represented in administrative support departments. Although the number of companies using digital technology has increased, companies also rely on multi-technological approach, especially those in the higher revenue brackets. Top three processes used by garment decorators are: screen printing, embroidery and dye-sublimation. About sixty one percent of the companies provided post-production/finishing services to the customers. Offering post-production/finishing services to customers or other printers makes companies more efficient in using their production resources. Also, it has positive influence on their sales growth. Equipment purchases stayed strong in 2016 with 95% of the companies making a capital investment. One third of garment decoration companies made either a $5,000-$49,000 (35.4%) or $50,000-$499,999 (35.4%) equipment purchase. Twenty two percent of the companies invested up to $5,000 in their production facilities. Almost half of the companies (47.6%) are planning a capital investment between $5,000 and $49,000 in the future. Image carrier tools, software and production tools, as well as screen presses (manual and automatic) and dryers were the most common equipment purchases among garment decorators during the current year. Key factors influencing buying decisions for at least half of the companies were durability of equipment and customer support. This shift, from previous years, indicates that purchasers are asking different questions about technology, and price is not the first one on the list, with buyers looking further down the road on the value of their investment. Companies started to move toward cash payments in the current year: every second equipment purchase was paid by cash (50%), but only every third-by credit card (35.4%), whereas in 2015 both payments methods were equally represented (44.8% for each type). The most served markets are business-to-consumer, educational institutions, athletic, corporate branding, and retail; with the first two being also perceived as the markets with the future potential. The other two growing markets are hospitality services and health care. The most popular end-products are also recognized as the ones with the most potential: t-shirts, performance wear and hats/caps. The most popular credit terms in 2016 didn’t exceed 30 days, with those that require payment prior or at the time of delivery and those that allow 30 days to pay being almost equally represented (43.9% vs. 48.8%). The median percentage of outstanding account receivables was 4.8 percent. The median sales growth in 2016 was 7% (slight decrease from the previous year), but it was mostly because the number of the companies that stayed the same in 2016 increased significantly (from 4.6% to 17.1%), which mean that the garment decorating industry is strong. Although the positive growth wasn’t as high as it was last year, the number of the companies with increased sales numbers was still significantly higher than the number of companies with negative growth. At least one in every two garment decoration companies had increase in sales and production, every third company had increase in employment and every fourth-in prices for goods sold. Even if there was no growth in hiring and product pricing, at least half of the companies stayed the same, with no decrease in numbers. Overall, the proportion of garment decorators that experienced growth in at least one of the following business characteristics: sales, production, employment, prices for goods sold, to those that had not, was 3:1. The industry confidence stayed strong, with more than two thirds of the companies feeling positive about it. The national economy confidence improved considerably. About half of the companies had positive attitude about the national economy (38% increase), and the number of negatives decreased by 66.5% and became only 3.7%. Our results demonstrate that the main barrier to growth was still finding new customers for at least half of the businesses, with another obstacle to growth being the downward pressure on prices. Production-wise, the companies rely on lean manufacturing and operating costs reduction to solve the pricing problem. To attract new customers, more than half of the companies use their websites, referrals, and social media instruments. To stay competitive, companies focus on the quality of customer service and web presence growth. Although social media is used by at least half of garment decoration companies, we believe that its full potential is still to be discovered. Overall, we consider 2016 to be a successful year for the industry. The fact that a lot of companies experienced slower growth this year may suggest that the markets that they serve are maturing, which is also supported by the fact that the main barrier to growth identified by more than half of the respondents is finding new customers. Those companies may need to expand their horizons and look for new markets to serve and products to produce in an effort to attract new customers.