Tight budgets have cut back the exhibition industry and Germany, with bigger sites, has a stranglehold on the European market. Recovery will bring a trend towards more specialisation, reports Daniel Butler.
Three years ago the Fleet Motor Show was a major date in Britain's exhibition calendar as Nigel Lawson's consumer boom swung with full, unstoppable, momentum. Wembley was crowded with buyers for a company car was the badge of success to 'Thatcher's Children'. Sales that year were at an all-time high, and with half the 2.3 million models sold in 1989 going to company buyers, the world's car makers flocked to the show.
But times have changed. After two disappointing years at Earl's Court Olympia, next March's show is to be held at Silverstone. The show's organiser, EMAP, claims rather limply that the new venue is an exciting development, but few outsiders are convinced. It's effectively dead,' claims one rival. 'Two or three of the big manufacturers pulled out - they didn't see the point in a special show when most potential buyers go to the dealer on the corner to see models.'
It has been a bad year generally for shows. The Exhibitions Industries Association estimates that visitors to events last year were down to 9 million from 10.6 million the previous year. And spending dropped too, falling by 7% (excluding inflation) from £537 million to £502 million. Several major shows have disappeared and many organisers have quietly slipped out of sight. Not surprisingly, an industry which has seen such a wonderful period of growth in the last decade has looked for a scapegoat. The recession and the Gulf War seemed the obvious targets for bemused organisers, but the truth is more prosaic.
By 1989 the conference industry was in poor shape, with too many companies offering too wide a range of events. The scale of events on offer ranged from the multi-million pound international events, where serious exhibitors could easily spend up to £30 million on a stand, through the major domestic dates, such as the Motor Show (up to £3 million), to a small environmental display at a local school (£25).
It was inevitable that as the recession began to bite that company accountants began to question the value of individual events. Most firms have cut back on the number of shows that they used to invest in and are now concentrating their efforts on one or two.
'This doesn't necessarily involve cutting expenditure,' says Peter Berners-Price, executive chairman of Spectrum, a company specialising in audio-visual communication. 'There's just a realisation that executive time is limited,' he says. As a result, with the trend towards costing staff time, any trip has to be justified. The five- day events of the early '80s are now a rarity.
According to the Exhibition Marketing Group (a consortium of six of the biggest organisers) a major problem for the domestic exhibitions is a traditional British undervaluing of shows as a marketing tool. The Group points out that Britain spends proportionately only half that of German competitors (roughly a fifth of German marketing expenditure is on exhibitions).The Germans staff stands with top executives, so that potential customers can talk to important decision-makers on the spot, saving time and money. British events are small and underpowered in comparison.
Not that Britain has been blind to the threat. This spring Birmingham City Council unveiled its International Conference Centre, built at a cost of £160 million, while the National Exhibition Centre is about to launch a £100 million expansion programme. Not to be outdone, Earl's Court Olympia is investing £80 million on its facilities. Unfortunately, none of these investments will create a venue to rival Munich or Dusseldorf.
Most UK shows are tiny in comparison with the big European events. Phil Soar, chief executive of the Blenheim Group says that the average Dusseldorf show is twice the size of the biggest event that Birmingham's National Exhibition Centre can cope with. This means that in spite of the ultra-modern facilities on offer in Birmingham, some events are forced abroad. As Dave Tonnison, says: 'Good venues in Europe are as rare as hen's teeth. Even if you have just 200 delegates and need eight breakout rooms there are only a handful of places in the whole of Europe capable of handling that.' Germany has four of Europe's five biggest venues (Paris is the other) and has a stranglehold on the market.
As profits fall and belts are tightened across industry, company financial executives dislike having to justify large items of expenditure. As a result there has been a paring down in the size and frequency of events. 'It's not so much cutting back on conspicuous consumption as avoiding conspicuous wastage,' claims Sean Bodkin, marketing manager of London's Queen Elizabeth II Conference Centre.
This can hurt domestic events, according to Soar: 'A British publisher will concentrate on the Frankfurt Book Fair and may hardly bother with the London Show,' he says. 'The UK is a regional market - and some people think of it as a provincial market,' he adds. 'If you wanted to be controversial you might even call it a local market.' EMAP's Rayner agrees: 'Even the biggest British exhibitions are really not much more than large regional events compared with the international European shows,' he says. With the German fairs central to so many European markets, it is not surprising that many exhibitors are cutting their UK budgets first.
But pulling out of an exhibition is not without its dangers. Whenever firms cut back on such public exposure, questions are inevitably asked. Even the recession's worst-hit industries like the building trade have been shocked by some of the deserters. This year's Interbuild exhibition was hit by the surprise announcement that two Hanson companies, London Brick and Butterley Brick, would not be attending, though the fact that the biennial London Building Show had been cancelled, made the companies' decision to pull out less surprising than might otherwise have been the case.
Even the biggest spenders, such as computer firms, are cutting back. This autumn Hewlett Packard pulled out of the Which Computer? show, and, according to communications director Shirley Horn, it is looking carefully at other events, while the industry giant, IBM, is also pruning its budgets. While Martin Archer, the company's marketing communications manager, is reluctant to criticise the event, he believes it was too wide in its scope. Five years ago a show covering all the industry could be justified: smaller, specialist events are today's flavour.
Archer stresses, however, that this is not a product of the recession. 'It would have happened anyway but the economic climate has speeded the process up,' he says. The root cause is that, as specialised products flood onto the market, so potential buyers have become more tightly defined. The trend now is towards careful targeting rather than cutting back, Archer believes. 'Events are becoming much more focused,' he says. 'For example Open Systems '91 is an excellent, tightly-focused show.' Tightening up on costs can cut both ways and it is not only the exhibitors who are looking for savings. Two of the biggest organisers, Andry Montgomery and EMAP Exhibitions recently decided to run together their PC User and Business Computing events.
But while companies may have cut back on the frequency and lavishness of their exhibitions, few have abandoned them. Naturally, in some sectors exhibitions are still central to marketing strategies. The very nature of pharmaceuticals, computer and telecommunications firms dictates that a long stream of new products is perpetually entering the market. In a competitive and fast-moving market products have a short shelf life once ready for sale. With massive R and D costs already incurred, a computer firm, for example, cannot afford to delay the launch of a model. Nor do they dare cut corners. In today's economic climate, one big flop could be fatal to even industrial giants. In spite of the general gloom, some sectors have held up well, according to Blenheim's Soar. 'Some areas will probably always be resilient,' he says. 'Clothing and furniture are very suited to exhibitions - people like to feel fabrics and sit on sofas before they'll buy. But areas like travel and leisure are suffering.'
One of the few really bright prospects at present comes, believes Soar, from abroad. With 83% of Blenheim's income last year coming from overseas, he is clearly prejudiced in favour of foreign markets, but he is referring here specifically to European firms, keen to reach potential customers, and putting a large proportion of their marketing into exhibitions and shows.
Optimists liken recession to a purgative, claiming its painful results will prove beneficial. For the exhibitions industry it holds some truth. Once the dust has settled, Britain will see a growth in the number and importance of exhibitions as a marketing tool, particularly for opening up new, post-1992 European markets. Events in Britain are likely to become more specialised - unless someone invests in facilities to rival the German fairgrounds.