Home office spurs stationery: chains stock up on higher-end merchandise, expand offerings - Discount Industry Annual Report: part 2: Merchandising and Productivity Analysis

Discount Store News, July 16, 1990

Home Office Spurs Stationery

Chains Stock Up on Higher-End Merchandise, Expand Offerings

No longer a black and white business, stationery departments throughout the discount store industry are painting the business red.

Fashion colors, particularly neon, licensed characters, improved greeting card displays, and office quality supplies are sweeping through discounter's stationery departments at daunting speed, taking advantage of customers willingness to pay more for products with perceived quality.

No longer just a seasonal business, stationery is a year-round seller delivering substantial sales and profits to discounters.

Driving the business in recent years has been the exploding home office sector that has affected sku mix, price points and merchandise presentations at the discount department store level. The apparel and toy businesses also have had their effect on the stationery business, expanding the parameters for licensed products and color, particularly neon.

Overall, discounters have found that their customers are willing to spend more for better quality products, licensed goods and fashion-oriented merchandise, if they perceive improved quality, and report they will seek out more of these products for their everyday offerings.

Discount store retailers, in ever increasing numbers, started expanding their office stationery selections last year as a way of participating in the office supply business. Several avenues were selected, among them multipacks, bulk displays, some office-grade products, and sharper pricing, all to appeal to homebound office workers.

Initially, discounters were leery of participating in the home office business, particularly last year when paper prices were rising on commodity goods, but the advantage for incremental sales has changed that for many of them, particularly Stuarts.

Last year was a "super fantastic year" for Stuarts, said Linda Harrison, stationery buyer for the 23-store chain based in Franklin, Mass. During the year, Harrison implemented a warehouse office stationery program that Bradlees has since started testing.

While Stuarts did not create the warehouse office stationery program to compete directly with the office supply superstores or warehouse clubs, the program was created to appeal to the at-home user whose office supply needs may be satisfied with fewer sku's in a smaller environment. At first, 25 of the fastest moving office stationery sku's were selected for the special program. Now Stuarts' offers 30 sku's with warehouse pricing.

Stuarts' program, and now Bradlees', may be only the first entries by discount department stores to compete with the office superstores. But they aren't alone. Many discounters, including K mart, Wal-Mart, Hills, Ames and Target have created home office departments in space culled from social stationery to answer the battle cry of the superstores.

Although the office superstores are geared to service small-to mid-sized businesses, there is some overlap among all of the retail players and many discounters aim to attract sales from the small business user, the home-based worker and the stationery purchaser.

Sales opportunities for home office stationery products should continue increasing as business formations explode. Last year alone, 21.7 percent of the nation's labor force worked at home and spent $2.7 billion on home office accessory products such as computer paper, appointment books and telephone answering pads, excluding furniture and electronic equipment.

Back-to-school stationery and home office supplies through the mass market channel have grown remarkably in the past few years as evidenced by the record attendance at February's Back-To-School Merchandise Show and the large number of office stationery products that were on display. The show boasted 11,168 registered buyers for the three-day event at New York's Jacob Javits Convention Center. In addition, the DSN-sponsored early morning seminar at the show, this year entitled, "Update '90: Projecting Trends and Developments Over the Next Decade" drew more than 200 people, also a record crowd.

Some of the trends identified during the seminar, and still valid today, included fashion's stronger impact on the category; the possibility of creating sales opportunities with college related materials in college towns; the willingness of customers to trade up to higher-grade products if the perceived value is present; and the willingness of retailers to use distributors.

Some of the new products at the show included the new greeting cards displays that feature more cards including a greater representation of non-occasion greeting cards and religious themes, hot categories for greeting card retailers; more recyclable paper products for home and office; and 3M's pre-cut tape strip and label protector, Post-It Notes facsimile transmittal memo paper and new red and silver packaging.

Licensed products were also in huge supply as were neon-encrusted products in just about every category.

Despite the popularity of both licensed properties and neon, buyers were cautious about buying too much of each, explaining they were being careful not to overbuy for what could be short-lived phenomenons.