MIAMI -- The new year fosters renewal among shoppers -- an opportunity supermarkets have not fully realized.
It's a period when more consumers are finding the need for a fresh start, to organize their lives or to review their financial position in preparation for tax time. The kids are also getting ready for the second semester.
As retailers gather here this week for the annual International School, Home, and Office Products Association (SHOPA) Show, Nov. 15 to 18, they will be evaluating trendy items and new promotional programs for back-to-school. But the most immediate selling opportunity will be the first quarter, when reorganization and replenishment will weigh heavily on consumers' minds.
Evidence that the category is growing into more of a year-round business is seen in SHOPA's second Flash Report on the first-quarter selling season. According to a consumer survey of 1,000 households, average household spending on school supplies increased 119% from $62 to $136 between 1998/1999 and 1999/2000. Office supply expenditures increased 66% from $103 to $171 during the same period.
"I think we've been seeing slight increases year after year in this area [of first-quarter selling opportunities], and the reasons are changing for it," said Steve Jacober, president of SHOPA. "The marketplace has always known that the January time frame is the beginning of second semester and students need to replenish. The new year reorganization aspect is also creating a better promotional opportunity for retailers to take advantage of consumer demand. And, preparation for tax time is another factor."
Right now the retail winners during this selling period are the big office supply superstores, according to Flash Report statistics. These retailers captured between 25% to 30% of the purchases of writing instruments; notebooks, pads and paper; binders and portfolios; planners and calendars; and equipment and machine supplies. Mass merchandisers came in second with 13% to 24% of the purchases in these categories. Grocery stores registered just 1% to 2% of sales. Convenience and best price were cited as why consumers shopped where they did for these items during this period.
While retailers like Save Mart, Modesto, Calif., make some attempt at capturing these sales, Steve Urgo, general merchandise buyer, said as far as purchasing home-office supplies, specific stores that cater to such products see the real sales bump. "Office supply stores have more space -- we're limited for space," he said. "But with the advent of more home computers and commuters, maybe that need [for office supplies] has gone up."
"You have to keep it in perspective," said Jacober. "It certainly won't be as large a promotional period as the traditional BTS July-through-September time frame. Let customers know you have the products to satisfy their needs. In terms of advertising and promotional opportunity, retailers should speak to their consumers, let them know they have the product and promote it. In-store merchandising plays a very important role in consumer purchasing habits, so as long as the product is there, presented properly and promoted properly, they can realize a little bit of a boost."
Dan Black, senior director of drug and general merchandise, Raley's Supermarkets, Sacramento, Calif., acknowledged the growing home-office sector. "With computers and increasingly bad traffic, home office and school supplies will always be a strong category and Raley's has stocked school and home office supplies for years," according to Black. Another SHOPA Flash Report on small offices and home offices indicated the rise of working from such locations. According to a 2000 study, 41% of respondents who work in a small business reported they pick up office supplies at a retail store. The study also showed that the fewer people employed at a small business, the more likely they were to buy supplies at retail.
"We've always run miniature back-to-school programs in January and February," Black said. "You need items to fill on shelves after Christmas, so it's just natural to promote these type of items that time of year." Raley's covers tax time, and promotes school supplies, since "more and more school districts have year-round schooling."
Raley's gets an early jump promoting the tax season, since there is less space on April's shelves that is dominated by spring and summer items. "I don't know if people do their taxes early, but they at least plan early for tax time when they receive their W-2 forms," Black said. He makes sure shelves are stocked with necessary notebooks, filler paper, calculators and organizational products.
Charles Yahn, vice president of nonfood, Associated Wholesalers, York, Pa., also agreed that the work-at-home population is a strong driver during this period. "What we have to realize is to keep these supplies all year-round," he said.
Alison Maile, vice president of general merchandise, Top's Markets, Buffalo, N.Y, said there is definitely a push for home-office supplies. "There is a bigger move into the office segment, with more home computers and people doing more work at home," she said.
The chain tried something different this year by running a promotion on Canon computer printers, according to a local newspaper report quoting the chain's spokesperson. The printers were priced at $99, after a $50 rebate from Canon. Also those shoppers using the Tops Bonus Card received another $20 off the retail. Tops moved 2,000 printers in a week, said the spokesperson.
Supermarkets may be able to win some of the home, office and school supply business back from the superstores because of the convenience factor. Maile said smaller store space for home-office products allows customers to find specific items easier. "Customers can find what they need at [supermarkets]," she said. "They don't need to wade through a huge mass merchandiser to find an ink cartridge." Maile added that the need for home-office products is in the early stages, so there is room for it to grow. "All these products are an opportunity for supermarkets to win some business that traditionally goes to mass merchants."
