Retailers are already crunching their numbers in preparation for tax season.
With growing importance of home office products of all kinds, early-year file organizational needs and the last-minute tax filing frenzy, supermarkets play a significant role in sales of these products. Whether from dedicated displays or from their regular stationery sets, grocers can expect to sell more traditional products like file folders, but also computer-related gear, as April 15 approaches.
"Our stores do more off-shelf displays of manila envelopes and legal pads, and increase the presence of computer supplies like ink cartridges and floppy disks," said Gordon Thompson, seasonal category manager, Associated Food Stores, Salt Lake City. "We encourage stores to start displays at the end of January, and we conduct reduced-price promotions on commodity items like envelopes to get an extra spike in sales in that aisle."
Office products, at roughly $200 billion, comprise 64% of the $312 billion school and office products market, according to the 2002 SHOPA State of the Industry Report, compiled by School, Home & Office Products Association, Dayton, Ohio. Home environment products, including home office and home school items, generate about $81 billion and comprise 26% of the total school and office products market in the U.S.
Moreover, technology and the Internet helped home-managed businesses to become the fastest-growing segment of the U.S. economy. In 2001, there were 38.7 million home offices in the U.S., according to IDC/Link, Framingham, Mass. The research company expects this number to increase to 49.3 million by 2005.
Home office products and items purchased for tax preparation purposes often overlap in function, such as file folders, file cabinets and legal pads. Retailers polled by SN said they experience an uptick in home office sales in the beginning of the year as consumers reorganize their home offices to start fresh for the new year.
"I think tax time and new year reorganization is a tremendous opportunity to the retail community," said Steven Jacober, president, SHOPA. "There's a great need for these products, and retailers must make sure that [they] merchandise the products that consumers want in order to make a statement."
G&R Felpausch, Hastings, Mich., displays 4-foot endcaps of tax season supplies, like small plastic file cabinets, filing folders, writing utensils and notepads, starting in February. These items are accompanied by tax season signage to spur impulse sales. "When people are doing their taxes, they're also cleaning their offices and organizing for the new year," said Linda Schroeder, director, general merchandise, G&R Felpausch.
Increasingly, basic computer accessories like printer paper and ink cartridges are generating sales during the height of tax season as tax preparation software becomes more popular.
Last year, Safeway, Pleasanton, Calif., rolled out the tax software program Quicken TurboTax to its customers with sales success, according to Scott Gulbransen, spokesman for Intuit, Mountain View, Calif., which makes TurboTax. The company is in talks to merchandise the software to Safeway again this year, although the two parties did not confirm an agreement at press time.
"There are approximately 36 million consumers who self-prepare their taxes, so there's a huge market out there," he said. "Food and drug chains want to be a one-stop shop, and it makes sense to carry a product on a yearly basis that also has a seasonal [component] to it to find a new revenue stream."
Thompson agreed. "If you compare it to five years ago, stores are jumping on board to take advantage of [tax time], and there are sales to be had," he said. The expansion of 24-hour operators also gives supermarkets the opportunity to create sales as people grab last-minute, late-night tax preparation tools, he noted.
Despite the competition from the office supply superstores, supermarkets can make a significant impact on home office supply sales at the beginning of the year, sources said.
"There is an obvious opportunity for supermarkets to do more impulse seasonal merchandising," said Neil Stern, analyst, McMillan/Doolittle, Chicago. "Office superstores and warehouse clubs pick up a lot of this business, but supermarkets are trying to compete on a different basis and get people at an opportunistic time while they're in the store."
Increasing the category's visibility with signage and freestanding displays helps to "jar" the consumer's attention, Stern said.
"Supermarkets haven't taken full advantage of tax time," he added. "They have to expand the playing field and they have to take the opportunity to expand sales. Something once considered a fringe category is now something that supermarkets have to go after."
Eye-popping displays and appropriate merchandise are ways to "identify and plan for the season," said Roy Fossum, managing partner, F&M Merchant Group, Lewisville, Texas. "Make sure you have the right kind of displays on the store floor." By pulling five or 10 of the most appropriate items together in a colorful display, like tax preparation instructional books, software and blank CD-Rs to save data, supermarkets can grab impulse sales, he said.
However, Fossum urged grocers not to go overboard. "Supermarkets have to try not to be everything to everybody," he said.