Category Report - Stationery

Category Report
01 May, 2009 14:07

Stationery: managing discretionary spend

by Sara White

In a tough market, stationery sales have taken a hit with the first quarter results from the major suppliers showing a sharp decline in sales. As companies cut discretionary spending, stationery is just one area where you can make savings, using a mixture of savvy internet buying and using up stock rather than splashing out on brand new office supplies.

In a market where high profit margins were traditionally part and parcel of the business, a combination of the recession and the growing influence of the internet on purchasing has hit the big stationery suppliers, who are all looking increasingly to the internet to drive sales.

While the bricks and mortar office suppliers are feeling the pressure from the devaluation of sterling, which is reducing buying power and pushing up the price of imports, the same suppliers are not in a position to pass on the price increases to businesses. Which makes it a good time to renegotiate any long-term supply contracts and review existing arrangements.

If you have not looked at online options, it is time to do this as there are substantial cost savings and, in such a commoditised area, there really is no sense paying over the odds for stationery.

Although there are around 770 stationery suppliers in the UK, there is increasing competition from online retailers who do not have the high running costs of operating storefronts and are able to offer very competitive prices. The announcement that Amazon has entered the stationery market with a range of products, many of which would be suitable for businesses, and the unstoppable march of the big supermarket chains, which sell stationery at sharply discounted prices, is pushing down prices across the board, welcome news for buyers.

If you have not looked at online options, it is time to do so as there are substantial cost savings and, in such a commoditised area, there really is no sense paying over the odds for stationery

The latest research from analyst firm Plimsoll Publishing shows that the UK office supplies industry is not immune to the current crisis. The sector has overcapacity and 36% of businesses reported a fall in sales last year, with competitive pressure seeing sales fall by up to 12%. A record number of companies are losing money and overall business values are plummeting - almost half of office supplies companies are now worth less than half their value of 12 months ago.

Plimsoll senior analyst David Pattison said: "The office supplies market will see winners emerging out of the crisis. There are 354 terrific companies who can compete fiercely on price, and are largely debt free while holding their margins. Most are operating at the height of productivity. These will be the ones to watch in the next period."

Market value

The UK stationery market was worth around £1.91bn at manufacturers' selling prices (msp) in 2008, according to Key Note, but analysts point out that market value was already in decline before the recession hit with a 8.1% drop in sales between 2003 and 2007.

At present, the area of greatest opportunity in this market appears to be products made from recycled materials or offering other environmental advantages, said Key Note. Companies are placing an increasing emphasis on their green credentials, and the sourcing of office supplies is one aspect of this.

The decline in direct mail has reduced demand for envelopes, labels and bespoke forms, while the rising cost of raw materials and transportation costs is squeezing profit margins.

Market leaders

Office Depot, which trades as Viking Direct in the UK, reported global sales of $875 million (£603m) in the first quarter of 2009, with a 24% drop in sales at its international division compared with the same period last year. Operating profit was down to $19m (£13m), compared to $60m (£41m) in the same period of 2008. The company was hit by a combination of declining sales volumes, increased promotional spending, cost increases that could not be passed on to customers and unfavourable foreign exchange rates that more than offset an improvement in operating expenses.

Despite the tough conditions, market leader Staples opened three new stores in the UK in 2008 and rolled out a number of new on-site services including copy and print shops in all outlets. International sales were down in 2008 and store sales in Europe decreased 10% over the same period in 2007, as a result of weakness in average order size and customer traffic, but the company held its number one market position.

The focus on customer service and providing specialist services in store is key to Staples maintaining sales in a difficult trading climate, although online sales is a growing part of the company.

Staples head of marketing Yetunde Ige said: "We are always looking to introduce new products and services to meet our customers' needs. For example, every store now has a Copy & Print Centre (pictured right) which means our customers do not need to use designers, separate printers and order a million to have business cards to hand out to clients. We can sort out colours and designs, then print a bundle for £14.99.

"We are also piloting the HP Experience in two of our stores - the idea means there are HP specialists on hand to give advice on hardware, software and any issues you may have with your computer equipment.

When asked about future plans for Staples, Ige said: "We are always looking for new ways to take our business onto the next level. There are no immediate plans we can talk about here - especially at the moment as we all know, the economy is tough, and businesses everywhere are being cautious."

Online sales

Online sales are definitely a disruptive element in the market with traditional catalogue-based operations giving way to ecommerce. Online retailer euroffice.co.uk is expanding and recently opened an online sales operation in Italy, but the UK market remains difficult.

Euroffice chief executive Simon Drakeford said: "At a macro level, things are definitely tougher than they were a year ago. Credit is being loosened a little bit, but it has taken a long time to filter through to the local bank managers who are the ones speaking to local business. All small businesses are affected by the need for credit and cash flow, and a lack of credit for the business affects productivity and in turn reduces stationery consumption."

    







                Simon Drakeford, Euroffice 

Euroffice posted a profit in 2008, although growth will be tempered this year by the tough trading climate. Drakeford said: "I don't think there are any signs of green shoots, although in March there was a significant increase in public sector spending, coinciding with their financial year-end. If they don't spend the budget, they lose it."

The competition in the online market is intense with price discounting across the board; to keep ahead of the pack suppliers needs to be proactive.

For Office Depot [Viking Direct], the online sales platform has attracted new business customers and will be expanded to offer a broader range of services as more companies buy online.  

Office Depot e-commerce manager Gary Thompson said: "We have developed our online channel to compliment our mail-order business and have observed how our customer patterns and trends have changed as they migrate between the two. By careful analysis and planning we have been able to use our website to target and attract a whole new audience, to which we had previously not been exposed; and this has also shown to us its great importance.

"The stationery purchasing decision is a desire rather than a need - you want a new presentation folder, but do you really need it? If you brought it down to a need, maybe you do not have to buy it," said Simon Drakeford, Euroffice

"In the future we shall intensify our focus on ecommerce, as we see an ever-increasing number of our customers choose to place their order online."

Cutting costs and down trading

With budgets under pressure it is no surprise that people are down trading. At stationery behemoth Staples, sales of its own brand products are growing, reflecting price concerns. It has responded by expanding the own brand range and focusing on quality and value.

"During the last 12 months we have seen a real growth in our Staples brand products, which deliver premium brand quality at a value price," said Ige. "With our Staples brand products, we have also focused on innovation, such as our one-touch stapler, which only requires one touch to power through 60 sheets and Better Binders and Lever Arch files, which are some of the most durable files on the market and come with a lifetime guarantee."

But whether you move to own brands or introduce tighter purchasing guidelines, stationery is regarded as something of a discretionary purchase.    

"The stationery purchasing decision is a desire rather than a need - you want a new presentation folder, but do you need it? If you brought it down to a need, maybe you do not have to buy it, especially when you consider that most stationery cupboards in small businesses are full. Times are changing and there is an obvious slowdown in consumption and customers are trading down," said Drakeford.

"In the EOS [electronic office supplies] sector, there is a marked slowdown in sales of branded products. The area most specifically hit is ink cartridges as prices have gone up 20% since the beginning of the year and you can't pass on price increases like that to the consumer."

Green sales

The buzzword a few years ago was recycled stationery but economic pressures mean this is less of a priority and with recycled stationery prices higher than standard products there is little incentive to pay over the odds. In fact, paper products aside, it is quite hard to find that many recycled stationery products.

However, analysts see green as a potential growth area, particularly in the public sector where procurement guidelines are more clear cut. On the downside, this will raise spending on stationery in the public sector, which already represents the lion's share of office supplies spending.

"With the added pressures of the current economy,  customers are demanding value for money when it comes to purchasing environmentally sustainable products," said Jackie Thompson, Viking Direct

Office Depot environment manager Jackie Thompson said: "With added pressure from Government to ensure that businesses are reducing their impact on the environment and to become more sustainable, customers are looking to Office Depot [Viking Direct] to lead the way in sustainable procurement. The environment is still very much at the forefront of customer's minds; however with the added pressures of the current economy, our customers are demanding value for money when it comes to purchasing environmentally sustainable products.

"We have seen a significant increase in customers purchasing own brand environmentally sustainable products, which deliver not only environmental benefits but also cost savings too."

Paper is such a major part of any stationery spend that this is one of the best ways to introduce a greener stationery policy. It is something that the paper vendors are all too aware of. Xerox papers carry labels from the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC) to help consumers find products that meet strict worldwide standards for sustainable forestry.

Xerox has also developed a useful web tool to help customers assess the environmental impact of their paper usage. Xerox European paper business manager Patrick vanDommelen said: "Xerox's Paper and Supplies Sustainability Web portal provides easy-to-use resources to help customers assess their paper choices and the environmental impact throughout the paper's lifecycle. Tools include a paper reference guide that educates customers about environmentally responsible paper choices, a sustainability brochure with tips for greener printing, webcasts from industry experts discussing sustainability practices and links to the Xerox Green World Alliance recycling programme."

Save money on stationery purchasing

The first cashback website for businesses www.companycashback.com has been launched by cmypitch.com, supported by Microsoft. (http://www.companycashback.com) The site gives UK businesses the chance to earn money back on their everyday business purchasing and works like a standard cashback consumer site. With estimates that British businesses are missing out on £2.7bn in cash each year in their procurement of everyday business items such as office equipment, stationery and utilities, the new site provides immediate savings on stationery purchases.

The office supplies and stationery section features Ryman, 3M, Euroffice, OfficeGiant, Staples, UK Office Direct and Viking Direct with cashback offers ranging from 2% to 5%. Users need to register for the site and can then access cashback from over 75 companies.

What's new on the shelves?

Staples Bagasse: Fresh off the production line is Staples new green range called Bagasse.  It is an eco-friendly collection of paper products made from ‘bagasse' or plant fibre waste from sugar cane. The product range includes notebooks, pads and filler paper made from 80% bagasse.

Staples Better lever arch files: Looking for something colourful but hardwearing to store documents, then look no further than Staples' Better lever arch files which have been awarded a red dot global design award. The files are made from hard-wearing rubberised material with a flexible spine and edges, a nifty new open and close mechanism, pen holder and easy access spine label holder. Matching accessories include an attachable pencil case and calculator. Available in a rainbow of colours including orange, red, turquoise and purple. Priced at £7.33 for for a lever arch file; regular document binder £4.18 (inc VAT)

Avery Dennison: New from Avery Dennison is a selection of Avery-brand Avery Signature Series Binders, which can be personalised and overprinted in any quantity through avery.com. This line will be expanded to include dividers, labels and fabric transfers in 2009.

Avery desktop accessories have been given an environmental makeover. The Black Desktop products are manufactured from 100% post-consumer recycled polystyrene and are 100% recyclable. The desktop organisers have an angled base on all letter trays, magazine racks, book ranks and file sorters to keep papers in check.


Diary dates: National Office Week

National Office Week 2009 (N.O.W) will be held 11-15 May 2009 with a busy programme of events and giveaways, as well as roadshows around the country.

This year N.O.W has teamed up with GorgeousOffice to give-away prizes including a privilege pass to the 100-a-day gorgeous give-away with prizes from BIC, Oxford, Pritt, Sellotape, Tombow and Your M&S for Business. You could also win a free office makeover, a teambuilding weekend and free travelcards or childcare.

Find out more about how to take part at http://www.nationalofficeweek.com

Cep Verticep This French company has a line of clever modular organisers. Cep Verticep is a smart L-shaped modular organiser for the desk or bookcase, ideal for storing reference books. It can be expanded with up to six modules which snap together to create compact, smart storage up to 100mm in length. 

Exacompta For storage, try the smart, large capacity magazine racks in the Multiform Examag range with wide bases and a handy ringpull for easy access from storage. These are made from over 50% recycled polystyrene and can be recycled at end of use. Alternatively, try Exacompta storage files and ring binders which are great to add a dash of colour to the office. The files are made from flexible, shatterproof plastic and are available in turquoise, purple and lime green.

Staedtler has designed a mechanical pencil in a triangular, jumbo shape with ergonomic, non-slip rubber grip. The 1.3 mm diameter, break-resistant lead stands up to strong writing pressure. Another practical feature is the PVC-free twist eraser. For those with a penchant for underlining and proofing in colour, try the Triplus Big Pen. The big pen doubles up as a practical pen holder on the desk and contains triplus fineliners in 12 colours.

If you spend a lot of time on the road, the Staedtler triplus mobile office is just what you need. The practical stand-up box contains three triplus fineliners in red, blue and black, blue ball ballpoint pen, 0.5 mm micro mechanical pencil and a textsurfer highlighter in neon yellow. And so that you have everything you need, there is also a pad of self-adhesive notes and two pads of brightly coloured index tabs.

For traditional highlighters with a nod to the environment, Staedtler Textsurfer classic highlighter pens come in six colours with fast drying ink which does not smudge even on inkjet prints, always an advantage. Also worth noting is the handy highlighter refill station, which is not only environmentally-friendly, but also offers a clean refilling solution for Textsurfer classic markers. Staedtler now makes these products with up to 50% recycled parts.

Pentel has a new range of planet-friendly presentation and filing products called Recycology. As the name suggests the products are made from recycled materials - in each case more than 50% recycled content. The range includes display books and presentation files, clip files, document organisers, document envelopes and refill pockets - all in a range of fresh colours and sizes. With special features including non-reflective refill pockets, side opening display books, ‘wing' pockets for insertion of display material and a locking mechanism for the document envelope, Pentel has shown that recycled products do not have to be of inferior quality.

On the pen front, Pentel Line Style Ballpoint pens have a slimline, tapered barrel and scratch resistant finish. Available in a black, pink or violet barrel with a choice of black or pink ink. There is also a Special Edition Line Style all-pink ballpoint which supports the Breast Cancer Campaign - £2.40 of each 12-pack sale goes to the charity.

PaperMate has a new Flexgrip Eco Ballpoint pen, made of over 50% recycled materials. Available in black, blue or red ink.

Parker has some smart new pens including the Facet with a stainless steel nibbed fountain pen and a twist mechanism ballpoint and the Sonnet Gold Lustre with a herringbone finish and 23 carat gold plate on a brass base.

Cross has a twist on its classic silver pen with the Cross Century Classic Lumina with a rose or brown metallic style finish and chrome trims.

 

Contact file

http://www.staples.co.uk free delivery orders over £30

http://www.viking-direct.co.uk/

http://www.euroffice.co.uk free next day delivery

http://www.office365.co.uk/ free delivery orders over £30

http://www.ukofficedirect.co.uk/ free orders over £40

http://www.supplies-team.co.uk