The signage industry will be looking at markets abroad to counter the drop in business in the emirates, voiced industry players participating at the Sign and Imaging Middle East Exhibition at the Airport Expo in Dubai.
In the UAE, demand on advertising raw material in particular has seen a considerable hit since last November, with advertising budget cuts affecting mainly the out-of home advertising.
Consequently, many industry players curently look to the Saudi market instead to improve their sales, citing that the demand in the Kingdom of Saudi Arabia is still keeping its levels.
Sharif Rahman, Group CEO, IEC, organisers the exhibition said: "We predict a slowdown in demand for advertising and signage material in the UAE. However, regional markets will see more demand on signage material. This is because construction and real estate business have been hit due to the financial crisis hence the signage business which has 80 per cent of its market share in these sectors has also been affected.
"Moreover we have received strong feedback from exhibitors that most of the visitors are international and less from the UAE. The UAE signage market has led the region in recent years and other markets are catching to this."
Shihab Zubair, Business Development Manager at Epson Middle East, told Emirates Business: "The market conditions have definitely affected Epson and therefore we have changed our approach in terms of product and customer focus."
The fall in spending on advertising posters and hoardings by the financial and real estate sectors has had a knock-on effect on companies that supply large-format printing equipment.
"Large format has been most affected by the global crisis, because it mainly depended on real estate expenditure", said Tareq Zahra, Corporate Identity and Interior Signage Specialist, 3M.
"We are depending on street graphics such as automotive wraping and branding, in addition to indoor signage."
Large-format printer manufacturers such as HP and Gandi Innovations are launching products designed to help customers cut costs and continue in business.
Hary Gandy, President of US-based Gandi Innovations, said: "We have developed a robot to load and unload materials in flat-bed printing. Companies don't have to pay salaries, taxes or any benefits to hire employees. In this new scenario, the company can leave the printer on all night without wasting manpower."
Gandy said the company would continue to launch new products but had no expansion plans.
"Gandi is worth almost $150 million (Dh551m) and has offices around the world, therefore there is no need to expand. This is also the wrong time to spend on expansion as we are watching our expenses and moving into new areas cautiously.
"When the economy dropped in 2008 we did not have any cuts and focused on keeping production going."
HP, another key leader in the large-format field, plans to continue working with its partner network in the Middle East and says it has not faced any slowdown in business.
Kunal Avari, LFP Business Manager at HP Scitex-MEA, said: "Our partners are changing their business models and adopting new ways of conducting business in this kind of scenario. This year, HP will focus on launching products to help customer cut down printing expenses."
Food and Beverage, healthcare and government are expected to drive the signage market this year, according to many professionals from the field.
Zahra said: "With real estate being removed from top market spenders, food and beverage are expected to push for more advertising. Now that their costs are also lower, they have more space for larger advertising budgets. We already deal with F&B clients and believe that they will continue to advertise.
"Banking sector might have delayed some of its plans and campaigns, but nothing has been cancelled. I believe they will emerge again to pursue their advertising plans, mainly related to opening new branches, local offices and rebranding."
Players in the sector are now looking at business opportunities in other segments and outside the UAE.
Zubair said: "With advertising coming down we see potential in other segments like education, healthcare and services."
Will signage companies be shifting their focus to Saudi Arabia among other non-UAE markets?
Zahra answered: "The UAE and Saudi markets are our biggest focus. While the UAE, comprising of 30 per cent of our business, is on the verge of a slowdown, Saudi Arabia seems to be least affected."
Zubair said Saudi Arabia recorded lower inflation rates. He spoke of a business shift towards countries like KSA this year.
Increased interest from Saudi visitors helped justify this view. "Customers from Saudi Arabia in addition to Africa, Jordan, Lebanon, Kuait and Oman marked a significant presence this year", said Seldim Dominic, Manager, Blue Rhine.
Dominic said the UAE market seemed to be more affected that other countries in the region. "Outdoor advertising has been worse hit by the downturn. Yet, indoor signage and advertising which comprises the smaller formats is still intact."
Moutaz Oweda, General Manager, Orchid Media, an Abu Dhabi-based advertising material supplier, said that Abu Dhabi market has also been affected by the crisis. "We have seen a slope of 20 to 25 per cent."
Unlike Dubai, he added, Abu Dhabi did not see immediate effects. Instead, the impacts of the slowdown have just started to unflod in January.
"Large format outdoor consisted 50 per cent of our business. We lost a large portion of it. On the other hand, government expenditure remains undiminished and will continue to be the largest source of demand."
Sign and Graphic Imaging Middle East records 20 per cent growth
Although organisers of Sign and Graphic Imaging Middle East have recorded a positive 20 per cent growth for the 11th edition of the exhibition, exhibitors remained apprehensive of the golbal crisis imact on their business this year.
Some of the exhibitors said at the conclusion of the annual exhibition that traffic did not match their expectations.
"There has been a healthy growth in the number of exhibitors. However, the number of visitors has declined slightly on previous years. The official count of SGI 09 visitors is 9500," said Sharif Rahman, Group CEO, IEC.
"Since we changed the venue from the Dubai World Trade Centre to Airport Expo, we are attracting visitors specifically related to sign & graphic Imaging industry. The number of visitors might be lower but the quality of visitors has definitely improved."
Tareq Zahra of 3M said the exhibition saw less participation from distributors, indicating a slowdown in business and tendency of local agents to cut costs.
In response, Sharif Rahman said: "I agree that local distributors might be cutting costs by not spending on participation, therefore many principals are exhibiting. There is a balance maintained between the mother companies and the local firms which means sometimes the principals will participate or sometimes the dealers may participate."
SGI 2009 showcased the latest products and emerging technologies from the industries of advertising, architectural hardware, banners and posters, digital imaging, electronic message centres, e-signage, graphic imaging, graphic services, large format printing, and signage.