No frills at Stuarts - discount department store's office supply marketing strategy - Home Office Marketing

Discount Store News, Jan 8, 1990

No Frills at Stuarts

Warehouse pricing may not be for everyone, but it is for Stuarts.

The 23-unit discount department store chain sports a warehouse-style merchandising program for 25 of the fastest turning products in office stationery. Items such as yellow legal pads, floppy disks, file folders, paper clips and desk accessories are available from cut cartons at prices that rival those of the office supply megastores, said Linda Harrison, Stuarts stationery buyer.

Stuarts' warehouse office supplies area is geared to appeal to the at-home business user who wants to buy in bulk but not by the caseload.

Stuarts' warehouse program is part of the discounter's basic floor plan, occupying between 12 feet and 40 feet--depending on store size and market conditions--out of a 175-square-foot total stationery department. Included in the stationery department is the regular office supplies area, which features 16 to 20 running feet of merchandise such as file cabinets, packaged and priced along industry standards.

The 25 sku's in the warehouse program represent "the guts of the business," said Harrison.

Harrison chose the 25 sku's with the assistance of the Allen Penn Co., Newton Centre, Mass., Stuart's stationery supplier for 80 percent of its stationery merchandise. She said she reviewed her existing product mix and compared it to her competitor's to help determine the fastest moving items in the category and the appropriate sku's for the warehouse program.

"The presentation is powerful," said Joe Ettore, the former Jamesway soft lines executive who became Stuart's president in October 1989. "I'm surprised at how it has taken shape. It makes us a little different."

To prove to shoppers that Stuarts' pricing is competitive with the office supplies megastores on those 25 sku's, the discounter uses comparison price tickets. The warehouse section is filled with clip signs comparing the price of each available item to that of a local competitor. In addition, there are signs listing all 25 available sku's. And in some of the stores, new red, tan and white signs advertise "Stationery Warehouse Pricing" with a truck on it to emphasize the every day low price strategy of the department.

When it comes to pricing, Harrison said she often takes her lead from Staples, the Newton, Mass.-based superstore chain. Such comparison even allowed for an increased margin in one instance. For example, Stuarts recently raised the price on its 12-pack of yellow legal pads from $3.99 to $4.99 because the local Staples store had the item for $5.09. Therefore, the Stuarts price tag will say the price is $4.99 compared with $5.09 elsewhere.

Instituted four years ago to compete with the likes of Staples, the warehouse program was revised 18 months ago to appeal to the at-home user whose office supplies needs may be satisfied with fewer sku's in a smaller environment, said Harrison who was responsible for the change.

"We tried to make a massive statement," she said, noting that Stuarts wanted to seize on the "supermarket mentality."

"We want to make the customer know that we have it at the right price, that we've got it and we're not going to run out of it," she added.

Unlike the megastores, Stuarts does not offer special terms or services for its customers and does not direct special mailings to a specific client base.

Since Stuarts revised the warehouse program to its current focus, sales have doubled, Harrison said. And every time the department is advertised in company circulars, "we pick up another 25 percent on ad," she said.

So far, Harrison is satisfied with the current merchandise mix in her warehouse home office program. Recently four to five new sku's were added, but no new additions or subtractions are contemplated.

However, in January the entire store will be replanogrammed, as usual, and although no major changes are anticipated, some alterations are being considered.

Currently, Stuarts is testing facsimile paper in one unit, located in Salisbury, Mass., and the stationery staff is now reviewing the feasibility of adding home-office electronics to the department.

No decisions are expected anytime soon, Harrison said, noting that Stuarts is taking its time with making any changes.

The Allen Penn Co., is also pleased with the success of Stuarts warehouse program and plans to expand the concept to other retailers in the drug and discount industry, said Irwin Shulkin, vice president.

PHOTO : Stuarts assembled 25 of the fastest turning sku's in home-office for inclusion in its

PHOTO : warehouse format, a success after just 1 1/2 years.