Wrapping many stores in one - Paper Cutter - Hard Lines - company profile

Discount Store News, August 19, 1991

Wrapping Many Stores In One

LIVERPOOL, N.Y. - Describing itself as "a few stores in one," the Paper Cutter is a combination book store, party supplies outlet, greeting card shop and office supply superstore all wrapped up in one 10,800-square-foot unit.

The chain operates 26 units in upstate New York and the greater Philadelphia area (including southern New Jersey), located mostly in strip centers, and considers itself a destination store. Storewide discounts average 25% to 50% off all merchandise.

The Paper Cutter aims to meet the needs of a predominantly white-collar, college-educated clientele with "good levels of disposable income," said president David Panasci.

A hybrid retail concept, Paper Cutter offers a unique shopping environment and a broad merchandise mix in a relatively small store.

In office supplies, for example, where the chain's prime customer is the small business owner, a selection of 4,500 sku's are available - less than the 5,000- to 7,000-sku average of most office superstores, but more than the 2,000-sku average of warehouse clubs.

The store also offers copy services, credit terms, and telephone ordering.

The chain also produces two office supply catalogs a year, and two smaller, supplemental mailings featuring the chain's fastest moving merchandise. The January 1991 catalog was 120 pages.

The Paper Cutter focuses on paper products, and does not offer computers and facsimile machines, but Panasci has not discounted adding them in the future.

A typical Paper Cutter store is divided as follows: 45% office supplies; 20% books; and 35% party supplies, greeting cards and general merchandise. Sales, said Panasci, break out similarly.

Storewide discounts average 10% to 35% in books, with the highest for The New York Times Bestsellers; 25% to 40% in greeting cards and party supplies; and up to 50% off manufacturers' suggested prices in office supplies.

The Paper Cutter was created as a division of Fays Drug Stores in 1984 and opened its first store in the Albany, N.Y., market that year. Panasci was working in Fays' marketing department when the chain was conceived. He became president in 1988.

This year, Fays has just nine stores planned for Paper Cutter, none in new markets. Five stores will open in the Philadelphia area.

Exact data is unavailable, but DSN estimates Paper Cutter sales at over $23 million for fiscal 1990. The chain recorded a 30.4% sales increase in 1990 with comparable store increases of 11%, according to Fays' annual report, which releases only consolidated sales data for its companies.

A mature Paper Cutter store will produce between $2 million and $2.2 million in annual sales, according to Fays.

While the sales increase was impressive, the store had trouble with office supplies, due to last year's economic downturn, according to Fays. However, book sales rose 20% on a comp store basis.

The book department, run like a traditional book store, stocks 12,000 titles and through its main wholesaler, Ingram Books, has access to 60,000 titles. The Paper Cutter uses several book wholesalers to maximize selection.

The chain offers Ambassador, American Greetings and Gibson greeting cards.