PIP continues to grow despite a glut of competitors; Agoura Hills printer repositions to meet industry changes.

PIP continues to grow despite a glut of competitors

Agoura Hills printer repositions to meet industry changes

Agoura Hills printing franchiser PIP Printing Inc. continues to grow despite the saturation in its industry by repositioning itself to serve the business market.

PIP's retail sales increased by 4 percent from $253 million in fiscal year 1988 to $263 million in 1989. "We believe our growth rate is fairly substantial given the type of industry we're in," said Thomas Marotto, PIP president.

The company has also contained expenses, Marotto said, with costs not increasing significantly for the past two years.

Despite rising sales levels, the number of franchises has remained steady for the past two years, at about 1,132 stores worldwide, he said. That, he said, is due to the maturation of the industry.

PIP is the largest printing franchiser nationwide in numbers of franchises, though Sir Speedy Inc. of Laguna Hills claims to be larger in dollar volume, with $300 million in retail sales in 1989 and 867 stores.

PIP is in the midst of a repositioning designed to increase its appeal to the business community, encroaching upon what has traditionally been the domain of commercial printers.

"We did consumer research that said there is a market for business printing products such as letterhead, brochures, presentation manuals and newsletters," Marotto said.

A large part of the repositioning effort has involved persuading franchisees to remodel their stores and put up new exterior and interior signs. Marotto said that since the effort began over 50 percent of the franchisers have remodeled their stores.

Another effort has involved providing new training for owners and employees in management and printing techniques. The seminars at PIP's headquarters have been attended by 2,100 owners and employees over the past two years, Marotto noted.

The firm is also positioning itself to serve part of the lower-end color printing market that the firm believes commercial printers are ignoring. In March the company announced that full-color printing is now available at all stores.

Claiming the cost of full-color printing in limited quantities is prohibitive for most smaller companies, the stores now offer customers full-color brochures printed on heavy glossy stock in quantities of 1,000, 2,000, 5,000 and 10,000, with a turnaround of 10 days. The company expects first year sales of $6 million, farming the work out to a contractor.

"Color printing is growing at 30 to 35 percent [industrywide] annually and is one of the fastest growing segments of graphics," said Marotto.

Since other printing franchises already offer color services, Marotto said the repositioning is imperative. "As we move forward [franchisees who do not participate] may be put in an awkward position because they may expect more from a store," he said. "If not, [franchisees] will rely on their past customers and some may survive and some won't."

In addition to repositioning, the company continues to emphasize traditional strengths, such as marketing and service to its franchisees.

In August, the company will begin its annual media blitz, aimed at driving home PIP's ability to serve eight specific business product areas including: desktop publishing, facsimile, graphic design, 4-color [photographic quality] printing, high volume duplicating, multiple color printing, business forms and business printing.

PIP was the first printing franchise to advertise on national television and radio and now spends over $12 million annually on advertising. "It's helped establish our name for brand identity and imprints it on people's minds," said Marotto.

The national advertising is a joint franchisor/franchisee effort, with PIP matching the 1 percent of gross sales that franchisees are required to contribute to the national campaign.

Marotto said another area of strength is the franchise's support for its dealers. A field staff of some 45 people -- there are 120 total employees at the franchise level -- help train and provide support.

In addition the company provides financial assistance. In 1988 the company loaned its franchisees some $8 million -- at 2 percent below the prime lending rate -- to pay for more sophisticated equipment.

Franchisees seem to be responding. From June of 1988 to December of 1989, the number of PIP Printing stores that installed desktop publishing units nearly doubled, from 32 to 60 percent.

Marotto said that the firm is not concerned with competition, because the market is highly fragmented and PIP owns only 5 percent of the nation's copy stores. "Our philosophy is that the market is so enormous, we just try to focus on our owner network to do things at the highest and best level," he said.

He added that the firm is pleased with its current distribution of stores, about one-third are on the West Coast, one-third are on the East Coast and the rest are spread throughout the country.

The company also has eight stores in Canada and 59 in the United Kingdom, with a master franchiser setting up the stores. Marotto said the company has taken overseas expansion slowly because "many people who have gone overseas haven't made a lot of money."

The franchise was founded 22 years ago by printer Bill LeVine, who used then-revolutionary technology to provide while-you-wait printing. The company was taken public in 1971. In the late 1970s and early 1980s it grew rapidly, fueled by the rapid growth of the industry itself and the introduction of high speed copiers.

In 1988, the company relocated from near the Beverly Center to a larger upscale location because "[the Westside location] didn't reflect our new image," said Marotto, who assumed the reins from LeVine in 1986.

In February 1989, after two unfriendly takeover attempts, PIP management and Kane Miller Corp. of Tarrytown, N.Y., took the company private. "The board and outside counsel concluded that the fate of the company was not in its own hands because so much stock was in so few hands," Marotto said.

"They are doing well," said Bob Hall, editor of Quick Printing Magazine of Port St. Lucie, Fla. "They are one of the top franchisers in the country. They probably do more market studies and surveying than anyone else. Nothing has caught them by suprise."

PHOTO : Marotto: PIP keeps printing