Stick to What Works with Labels

In a world where technology takes precedence, labels continue to reinvent themselves and thrive.

The BFL&S 2003 Top 100 Distributors' survey reported that label sales rose to $247 million from $218 million in 2002—a 13.3 percent increase—and the Top 10 sold $149 million in labels and tags that year. What does this all mean for the labels industry? Suffice it to say that labels are a force to be reckoned with.

In an effort to find out just what gives labels their staying power, two executives provided some much-needed insight into the profitable world of labeling.

"Labels will always have a niche because they are used everywhere and on everything," said Melinda Fulton, marketing manager for Elgin, Illinois-based Continental Datalabel, a supplier of sheeted laser-compatible, thermal-transfer and continuous dot matrix labels.

Echoing Fulton's sentiments, Dick Dennis, vice president of sales for Label Art, Wilton, N.H., said, "Every product that is manufactured has a label. I recently came across an air conditioning unit that had 24 different labels adhered to it."

In a market that seems to be motivated by promotional products and commercial printing, Dennis contends that labels are here to stay. "Labels have a great future. They have been showing an upward trend in a number of vertical markets, such as manufacturing and health-care," he said.

What's New?

The numbers undoubtedly show that label sales are on the rise. In return for this good fortune, manufacturers introduced a variety of new products in 2003. Fulton said that Continental Datalabel introduced a number of thermal-transfer and direct thermal label products. "Due to overwhelming popularity, we introduced thermal-transfer labels on 3˝ cores with 6˝ and 8˝ outside diameters. We also introduced direct thermal labels on 3˝ and 1˝ cores," she explained. This year, the company has already introduced sheeted labels and cards. "We strive to provide distributors with unique products," noted Fulton.

While Dennis admits that most of the products that Label Art introduced in 2003 were primarily marketed to the promotional products industry, he noted that the company also introduced a removable oval bumper sticker, a repositionable mousepad and static-cling decals, and expanded its line of Kiddie Fun Stickers to include a unique sticker product that allows children to color its surface.

What's Going On?

Label Art reported that 100 percent of its sales last year was attributed to labels, and Continental Datalabel reported that labels accounted for 95 percent of sales in 2003—a stable source of income for the companies.

Having seen a 3 percent increase in overall label sales last year, Dennis anticipates a 6 percent to 7 percent increase in 2004.

He also said that technology will play a significant role in the increase. "Unlike forms, technology has helped the label industry. Today, airlines are using labels to help verify and assist in the security checking process," he explained. "With thermal directs and thermal transfers, labels are increasingly being accepted in all market segments."

Fulton noted that as a result of technology, there has been a changing of the guard from pin-fed to sheet-fed and thermal products.

When asked if there was a general trend occurring in requests for certain kinds of labels, manufacturers said that there appears to be a rise in radio frequency identity (RFID) labels.

Dennis believes that RFID labels are gaining popularity, but have a long way to go. "I believe that there will be a trend in high-tech labeling, but it may take several years before we get there. I don't see a trend happening with RFID labeling just yet, but people have been asking for them," he said.

The Order of the Day

As for the level of consistency of orders, Dennis noted that they were smaller in size, but repeated more frequently last year. "We are finding that more and more customers are going for what I call 'just-in-time' deliveries. They are not buying large quantities and keeping them in their warehouses as before. Instead, we may get four orders for 250 labels at a time, which averages out to higher profits because the orders are more frequent," he explained.

When it comes to selling techniques, suppliers offer distributors useful advice that runs the gamut from identifying customers' needs to learning more about each customer's organization.

Said Fulton, "Distributors should focus on developing contacts and learning more about an organization. Many companies use different types of labels, which may include sheeted in the office and thermal-transfer in the warehouse. By knowing that a company uses more than one label product, the distributor is equipped to fill the customer's label needs." She further noted that Continental Datalabel offers a variety of selling tools to assist distributors.

Adding to Fulton's suggestions, Dennis said that the key to successful selling is education. "Distributors have to identify what customers are doing and how they're doing it. They should ask customers if they need labels to accomplish their goals," he said.

Dennis also noted that distributors tend to retreat when they are not familiar with a product or service. As a result, Label Art hosts a number of educational sessions for distributors. "When distributors don't feel comfortable with a product or with the needs of their customers, they tend to shy away from selling a particular item. Our six regional managers hold sales seminars to help educate distributors on how to ask the right questions," he explained. "Education is key—that's why we put great stock in the work of our regional sales managers," Dennis added.

Manufacturers agree that the future of labels in the printed business products industry appears to be bright. "I see labels growing because they have applications in every market segment," said Dennis. "I positively see an upward swing in coming years."

By Cynthia T. Graham