Lessons in Disruption: Kornit Sales Managers Reflect on 2020

From the grocery store to the production floor, 2020 was a year none of us are likely to forget anytime soon. As with most industries, the textile industry was utterly upended, with sudden, radical shifts in demand, supply chain, and market priorities, largely driven by the COVID-19 pandemic. The digital revolution continued, and the so-called “retail apocalypse” kicked into overdrive, with traditional retailers pounded by the double-whammy of e-commerce and lockdowns.

Today, we hear from three of Kornit’s product consultants, serving three diverse regions of the company’s worldwide network. They’ve been on the front lines throughout this year’s trials, hearing directly from customers and manufacturers looking to digital on-demand production as a means of surviving and thriving amidst new market dynamics. We’ve asked them about some of their experiences engaging with these businesses over the course of this challenging year.

How have supply chains been impacted this year, and what are producers doing to update and safeguard their own business operations?

FEDERICO ZUCCHETTI, KORNIT DIGITAL EUROPE (ITALY): The impact has been especially severe in the fashion sector, so many manufacturers have skipped collections and trying to sell their stock. Almost all are implementing an online business, but the losses are high.

NATE ROZEK, KORNIT DIGITAL AMERICAS (UNITED STATES): A lack of inventory strained customers to source from not just one or two suppliers, but more like five or six. Inventory turn times have skyrocketed in some areas. Forced layoffs and furloughs negatively impacted output for most of the industry; I estimate 25% of all screen printers within my territory have closed their businesses.

ASHLEY PLAYFORD, KORNIT DIGITAL ASIA-PACIFIC (AUSTRALIA): Some 40-plus retailers in Australia have either gone into administration or completely shut their doors, with supply chain playing a major role in that. One large local retailer has changed their supply chain strategy so they now bring in less volume per SKU but across a wider array of SKUs, and they are increasing the frequency of shipments to minimize the risk of being over- or understocked. There has been lots of buzz about more local textile manufacturing, but cost is proving to be the biggest barrier. With Asia on our doorstep providing low-cost solutions, and a very high cost of living in Australia, it’s a challenge to get the right balance of local product with minimal risk, but at a price that makes logical business sense.

How has consumer demand changed in 2020, and what are producers doing to meet those changes?

ZUCCHETTI: Demand is growing for online business; consumers still want top quality, and there’s a demand for sustainability, as well.

ROZEK: Corporate consumers cancelled large volume orders due to events, outings, and festivals cancelling. Smaller-volume orders are now being captured. Markets like construction have seen tremendous gains in need, helping some printers keep the doors open. Bar and restaurant apparel has fallen off of the radar. Direct consumers migrated to ordering platforms that allow for customization virtually. Summer and fall sports orders saw serious decline but have gained some traction recently. Direct consumers are placing orders that are low in quantity and high in customization. Some producers are trying to work faster without investing in proper equipment, and they are losing. Producers that have embraced DTG technology cannot find enough hours in the day; they are enjoying significant backlogs.

PLAYFORD: Consumers have been forced to buy more online, so we’re seeing huge growth in DTG. As this spend is taken away from off-the-hanger, brick-and-mortar stores to customized online purchases, our three largest customers locally have all seen massive growth in demand, and this has led them all to invest in more systems. All three have pretty much doubled their capacity, and there appears to be more local demand for them to produce more. The biggest question they are asking now is will this continue into 2021 and beyond; if so, more systems will be needed.

How have developments in 2020 changed people’s perspectives in terms of adding digital print to their operations?

ZUCCHETTI: The DTG market in Italy is very fragmented; many small companies cannot invest, and others are investing if they are already online. The DTF market is different and very interested in efficiency and sustainability more strategically. Structured companies are searching for a solution that doesn’t compromise on the quality their brands demand; this market is already digital due to the wealth of available technologies from Kornit and other providers.

ROZEK: 2020 has opened many eyes to DTG. In-person orders pretty much halted since the pandemic lockdowns began; companies that did not have an online presence have either closed their doors or are still hanging by a thread. Skepticism from traditional printers remains high in terms of quality and speed, but their attitudes are becoming more favorable towards DTG since M&R got into the game. The primary concerns I encounter today are the sticker shock of entering the DTG market properly, and bullish production practices that do not take into consideration setup times for small-volume, higher-quantity orders.

PLAYFORD: The analog market is very conservative and we’re not seeing much movement from them at the moment. What we are seeing is far more activity in digital shops and startups; next year will be about capturing the imagination of the analog print shops and getting them to think about printing mass customization instead of mass commodity.

Has there been a clear shift in market attitudes towards sustainability?

ZUCCHETTI: Brands are asking for sustainability; honestly, consumers seem so-so on the matter, by comparison.

ROZEK: Customers see the value in reshoring and becoming more sustainable if they are currently working with production facilities overseas.

PLAYFORD: The biggest influence at the consumer level has been the bush fires, which really drove home the importance of us doing more to save our planet, and brands are all looking to capitalize on this need.

How have we been helping our customers adapt to the challenges posed by COVID-19 disruptions?

ZUCCHETTI: We’re keeping them informed, showing them new business model adapt to producing new products—such as protective masks—enabling them to produce in small quantities, and so on.

ROZEK: I’ve connected smaller organizations that cannot justify a piece of equipment for themselves to some of our current customers, allowing the smaller organization to still gain some sales they may have missed. Through the acquisition of Custom Gateway, Kornit has created tremendous opportunities for organizations that can take on extreme volumes. These volumes are a direct reaction to the changed buying habits of the consumers purchasing their goods, and anyone now using Kornit’s HD platform equipment can partake.

PLAYFORD: From the beginning of lockdown, we were proactively working with them to ensure the systems were maintained whilst not producing. Then we were there to support them in getting new equipment to them quickly, and also flexible enough to work with them on payment terms to ensure they could get the right financial backing and not strain their businesses while there was so much long-term uncertainty. This support is now focusing on feeding them enough consumables; our largest customers have tripled their consumable forecasts in a matter of weeks, which has meant air freighting stock in a matter of days across the world at a time when air freight is in short supply.

Why do you believe now is a particularly good time for producers to consider adopting Kornit technology?

ZUCCHETTI: We’re offering sustainability and efficiency on production process, less time demands, less waste, less space needed, and so on.

ROZEK: If there’s a better time to consider Kornit technology than now, I don’t know what it would be. E-commerce sales have taken off like a rocket ship, pulling in opportunities that would traditionally be printed by analog production. Leaner inventory and stronger profits is inherently appealing. Major brands are seeing the light and considering a shift.

PLAYFORD: Our systems are so efficient when you are producing mass customization. The biggest barrier for our systems was the volumes required to justify the capital cost; however, demand is now booming, and it’s here to stay—the opportunity is there for the taking.

What’s one thing you learned from your customers or prospects this year?

ZUCCHETTI: Everything can change in a while; someone will take the opportunities others will lose.

ROZEK: I’ve learned to better appreciate and to embrace the entrepreneurial mindset of my prospects and customers.

PLAYFORD: Resilience. For example, a customer was taking delivery of our first Atlas in ANZ; due to shipping delays, it was very late to be installed and ended up being commissioned in the middle of peak season. We’ve had to install the machine with remote support; the customer has led the application tuning of the system, as well as developing their own workflow, all at the most stressful time of the year. The dedication and resilience they have shown is phenomenal.

We at Kornit Digital wish you, your families, and your businesses a very healthy and prosperous 2021.