As a result, much less questions can be delivered to customers than last year, although of course everything will depend on individual strategies. It is also said that the smallest retail chains will be most affected by this situation. Some players are already working on cost optimization and are looking for ways not to reduce the quality of published materials. Meanwhile, many experts have noticed how the paper newsletter is still an important marketing communication channel.
Commercial network publications have different formats, volumes, and weights.
They are printed in various technologies. This type of material often uses newsprint and improved papers to print. SC-A is also widely used – uncoated, heavily coated and similar – SC-B with recycled paper additives as well as LWC – after coating. Because of the price, offset paper is rarely used. The quality of a particular newsletter largely influences its production costs, but also other factors.
We offer a new washing machine, TV or dishwasher. Who can afford, he chooses technological innovations
– Analyzing the data for the last two years, the biggest price fluctuation in the mid-March of the Kwidzyn accident was registered newsprint. There were over 30,000 tons of this product on the market. In terms of 2017, the cost of the aforementioned procurement increased by 25%. However, this January's hike stopped at 8-10%. If there is no self-limitation on manufacturing or closing another machine, current prices should not increase. This is also confirmed by the reduced demand for newsprint from China and Turkey – he says Krzysztof Izbrandt, Executive Director of Agora Prints.
while Agnieszka KapturkiewiczBauer Media Group Print Sales Manager informs that in January this year, the paper used to produce retail chain newsletters increased by about 7-9%. The expert predicts another increase at this level in July this year. In total, the material may grow by about 15% over a period of 12 months. Paper mills are usually discussed every six months. The expert's observations show that producers always raise raw material prices.
– It should also be noted that the availability of SC and LWC securities depends on orders placed and concluded. And this market area is still quite stable. Therefore, the price increase last year and this year last year amounted to about 5-6 percent per ton. You can already see that the cost of purchasing various publications used to prepare advertising publications for 2019 is stabilizing. However, we should also expect a slight increase in the second half of the year – says Krzysztof Izbrandt.
Bauer's media printing expert explains that paper producers from other countries in Scandinavia explain their growth in high electricity prices. In addition, they replace obsolete equipment with new equipment. And large investment costs have a significant impact on their customers, including Polish companies. In addition, the next factor affecting the price mentioned above is more expensive in Europe. Therefore, according to Agnieszka Kapturkiewicz, it will not be an easy year for the advertising market.
– Since January this year, 7 leading manufacturers have been introduced. When paper is used for newspaper production, it reached 3 to 8%. This is already visible to the whole industry, not just to us – distributors. Networks can only agree on the cost of orders with printers, but I doubt they can be maintained at the previous year's level. Using less weight paper and more relaxation paper can save you money. It's hard to tell if and when there will be another hike. However, their accumulation at the beginning of the year allows us to hope that the situation will calm down for some time – says Michał Tenerowicz, Marketing Manager of Polish paper distributor ZING.
How will the network react?
As Agnieszka Kapturkiewicz points out, how many retailers pay for their expenses will not depend solely on printing. If, after a rise in paper prices, the customer's printing budget falls significantly, he or she will have to publish publications less or less, or reduce paper weight. And this can affect their quality. The expert predicts that networks will still have to optimize their costs. As a result, stores can get as little as less than in 2018, but of course everything will depend on individual decisions and strategies.
Many networks already decide to buy lower quality paper, which is not always a good picture gesture. However, some players may rely on individual price lists for large orders. This means that the smallest networks will be most affected by hiking. Of course, in 2019, we can expect a reduction in the number of newsletters, but the change will not be revolutionary or visible to the average consumer – he analyzes A. Julita Pryzmont, Business Development Manager Hiper-Com Poland.
As he emphasizes Mariola Skolimowska, PR & Communications Manager Netto Poland, big chains have bigger marketing budgets and are definitely more convenient than smaller players. Recent communications are mainly based on paper carriers. However, the growth will motivate all market participants to actively seek out new forms of advertising and move funds to gain greater independence from ever-increasing paper prices.
– The networks will have to deal with this situation. They cannot give up on paper newspapers. Traditional publications definitely allow them to buy new customers, such as mobile applications, whose installation on smartphones requires informed consumer decisions. So I did not expect the networks to reduce the number of printed publications. Rather, they will analyze where to send more newsletters, and where less. And in this area they will make a change – says Sebastian Starzyński, President of ABR SESTA Research Institute.
Retailers selling RTVs and home appliances range from traditional publications
In turn, managing director of AdRetail Group, Norbert Kowalski, believes that discount stores are the most serious situation at the moment. First, they cannot reduce the number of printed newsletters because of their customers' wishes. According to the expert, rising paper prices will lead to the fastest retention of traditional publications in the next few years by chains selling RTVs and home appliances. This will result from consumer openness to modern solutions. Then you can expect them to give up shop, supermarket and supermarket printing. At the end, there will be discount stores related to the buyer profile.
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– We are currently preparing for a situation where the cost of producing a paper newsletter is increasing. This is the most important marketing communication channel in our network. We certainly do not want to reduce its quality by changing the type of paper or changing the publication plans. We cannot afford to reduce circulation because our customers expect a traditional publication. However, we are looking for alternative and effective ways to reach the consumer, mainly by strengthening the presence of the newsletter on digital channels – summarizes Mariola Skolimowska from Netto Polska.