Sales of personal shredders grow as home use gains popularity

Office World News, Sep 1998 by Boykewich, Susan

Rise in identity theft increases consumer demand for personal document security.

The shredder market is booming, especially for personal shredders, and that's good news for the office products channel. Manufacturers attribute growing sales to increasing consumer awareness of the need for security. Yet, there is still a great deal of untapped potential in the marketplace.

Tony Storrie, vice president and general manager of the shredder division of Fellowes, Inc., estimated that the industry is doing $300 million in annual sales, but market statistics show that consumer awareness has not yet reached its highest level. Last year, 2.5 to 3 million personal shredders were sold in the U.S. while 22 million computers were sold. "That means that there are 22 million people who are potential customers for a shredder," said Storrie. "A lot of people haven't grasped the need yet," he continued, "unless they've become a victim [of identity theft]."

Identity theft, the common tag coined for a host of crimes involving the theft of personal information, is being called the "Crime of the 21st Century" and is on a sharp rise, affecting about 500,000 new victims each year. Trans Union, a major credit bureau, reported that in 1992, its fraud division received about 300 calls a month. Today they average 40,000 calls-over 130 times more than six years ago. The higher incidence of identity theft has resulted in raised awareness and an increased demand for personal shredders.

"Over the last five years, I've noticed more people are purchasing shredders for the home," said Sheileena Essex, general manager of Jackson Office Equipment, Inc. in Greensburg, IN. Individuals account for the largest percentage of Jackson's shredder sales and they cite security as the reason for their purchases.

"The marketplace boom is in personal shredders," agreed Libby Nelson, marketing manager of Schleicher Co. of America, Inc. "We're bombarded with information. There is more information available than ever before and document security is following suit."

Daniel Smith, vice president of Smith Office Equipment Co., Inc. in Lafayette, IN, noted that 30 to 40 percent of his company's sales are to individuals. "The shredder selling the best is the personal shredder," he stated, agreeing that the reason is the growing awareness of security issues.

"The fact that 3 million units were sold in 1997, but that there are 97 million households in the U.S. means there will be a lot of growth in the years ahead," said Todd Henreckson, director of the Shredmaster division of GBC, based in Northbrook, IL. "The shredder market has changed over the last five years to the extent that shredders are now considered a home appliance."

With a rise in sales has come a drop in prices. "Shredder prices have dropped so much that they are now down around toaster levels," Storrie said. "What cost $100 a few years ago costs $29.95 today. The number one reason is more competition, especially from Asia."

Of the 3 million unit sales projected for 1998, over 70 percent are under $50 apiece and are being bought for home use, Henreckson said. "This category of under $50that's the first time buyer."

Customers shopping for price alone often find that they need to upgrade, manufacturers say. "They buy a small, inexpensive shredder to test the concept, then find they need more shredder than they purchased," noted Nelson.

The more advanced machines are faster and have more sheet capacity, with motors and technology designed for continuous use. Some of the larger machines can shred continuously for seven to eight hours. A low cost machine, on the other hand, has a short duty cycle and requires a cool down. Henreckson pointed out that a $50 shredder won't do the job for constant multiple users and that companies will then buy up.

Essex notes, however, that individual customers are purely looking for price and don't upgrade. The highest sales are at the $20 to $30 price point. While individuals usually buy the least expensive model for home use, that is not necessarily the case for companies, manufacturers and dealers say.

"Consumers are looking for price, while the commercial customer is looking for durability," noted Dan Linville, general manager of Danville Office Equipment Co., Inc. in Danville, KY. His experience has been that nine out of ten are new purchases and upgrades are few.

Smith said that commercial customers are looking for reliability and speed. The dealer has seen a large increase in personal shredder sales. "About one percent of total sales are in shredders," Smith said, "and shredders account for five to eight percent of total machine sales. Commercial accounts make up the largest percent of shredder sales."

The dealer's advertising through direct mail, newspaper inserts and in-store promotions has been very effective, according to Smith. Smith Equipment adds new models "more or less as they come out from the manufacturer." Smith's shredder sales have increased year by year an average of 15 to 20 percent. Smith Equipment sells models priced at $40 to $4,000 and Fellowes is its leading brand.