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    Supermarket NONFOODS Business: Beyond back-to-school

    Grocers can boost year-round sales of school and office supplies simply by regaining focus on the category and using creative promotions.

    If ACNielsen's latest sales figures are any measure, grocers dread the back-to-school season as much as children winding up their last days of summer freedom.

    The only bright spot in the data is the inkjet and toner cartridges category, which grew 12.3 percent--an indication that computer users are adding these supplies to their grocery lists.

    And just as teachers tell their students when they give them a failing grade, grocers have no one to blame but themselves. "They need to pay more attention to the category," says SHOPA president Steve Jacober. "While they're beginning to take back some market share, it's not dramatic. They must let consumers know that they're in the business of school and home office supplies, and highlight these products in the store—especially during nonpromotional seasons."

    Bennett Little, c.e.o. of Montreal-based Business Stationers, agrees. "Retailers tell me that back-to-school is their big thing," he says. "But what about tax season? Tax season is a big stationery requirement. You need pens, paper clips, folders, organizers. Then you have the other back-to-school season, when students gear up for the second semester. Stationery should be well merchandised throughout the year."

    Other channels aren't faring much better. Total food, mass, and drug data from ACNielsen show that overall mass retail sales of school and office supplies are down 2 percent. "Share is going to the category killers, like Staples and Office Depot, and supercenters," says Terry Kelly, v.p. of sales, retail division, for Bellwood, Ill.-based Sanford Corp. "Buyers in these channels are focused on school and office supplies year-round. It's a destination in those stores, and customers expect it."

    Grocers shouldn't just give up, though. There's plenty of room for growth in the category, if it's merchandised properly.

    According to SHOPA's Flash Report, published in May 2003, there are three major purchasing cycles, or frequency groups, for school and office supplies:

    •Back-to-school: Once-a-year purchasing, which coincides with school openings. Items in this category have a relatively long life span and include binders, folders, dividers, book covers, backpacks, and scissors.

    •Ongoing purchases: Occurring on an as-needed basis. These items, which have a relatively short life span, include paper, pencils, pens, notebooks, self-stick notes, and computer discs.

    •Replenishment/second semester: These can have a long or short life span, and represent all of the items above.

    Different products fit into one or more of these categories. For example, paper, notebooks, and pads, a $2.3 billion category, sell best during the back-to-school and replenishment periods, but not so much on an ongoing basis, according to the report. Writing instruments, however, sell well during each of the three periods.

    "It's for those off-peak items where the focus tends to drift in grocery," Sanford's Kelly says. "The general merchandise buyer has so many categories to work with that school and office supplies sometimes lose priority."

    But if attention is paid to the category, it's a good opportunity for incremental sales. "If a grocer drives incremental sales with office products, they're not cannibalizing any other categories," says John Stasiw, president of Lincolnshire, Ill.-based Wilson Jones. "One grocery customer of ours has a 20-foot section near the deli and bakery. Eighty-five percent of the store's customers walk by it daily, and it does very well."

    Of course, the product mix must consist of high-impulse items for this strategy to work. "You want to exploit the high ratio of grocery visits," Stasiw says. "Convenience doesn't mean anything if consumers don't think the products meet their needs."

    This means having unique products and refreshing them regularly. "It's important to carry products that go beyond basic consumables, such as writing instruments, but things that are different," SHOPA's Jacober says.

    Some ideas Jacober suggests are domestic items for college dormitories, particularly items that help with organization and saving space; computer accessories, such as mousepads, ink, discs, and CDs; and backpacks and other organizational items.

    "There are many lifestyle changes out there, and stores have to change with them in order to keep up," Business Stationers' Little says. "For example, more people are being outsourced into home office scenarios. They're doing all of their work in a space that's less than 30 linear feet. So they need organization, as well as something that will add some color to their day."

    Home products are huge

    Indeed, the category of products purchased for the home—whether for school or office purposes—is $87.5 billion and growing, according to SHOPA's State of the Industry Report, with the growth driven by an increase in the number of home businesses and home schooling.

    Business Stationers develops products to meet these people's needs, offering a different spin on the traditional office supply selection, such as heart-shaped pushpins, multicolor clips of all types, and a pair of scissors colored from point to handle in the stars and stripes of the American flag. "You have to come up with items that offer a better-perceived value than what you would find in the market," Little says. "Grocers can't afford to match prices against a category killer that offers similar products. Consumers will pay for products they're interested in. You want them to spend that money in your stores."

    Little also recommends finding a vendor that will work with retailers to customize offerings. Business Stationers customizes packaging for some of its retail customers, either bringing several products together in one package or offering items on clip strips for space saving. "These are the types of things that drive pull-through from your customers," Little says. "Too many grocers are trying to shove products down customers' throats."

    Wilson Jones embarked on an extensive project two years ago in an effort to breathe life back into school and office supplies, with the goal of translating consumer insights into products. "What we found is that everybody has basic functional needs for products," Stasiw says. "How you express those functional needs was where the opportunity existed. Most kids today want to be successful, and they know that they have to be organized to do so, and believe there are tools needed to be organized. So we developed products that tied new trends, such as fashion and emotion, into those products they believe are needed to achieve this success."

    What resulted is a group of products tailored to fulfill both the trends and functions desired by students. The company's Text Me binder, for example, is covered with the symbols commonly used as shorthand e-mail vernacular by teens and young adults. Its Big Cheese binder has see-through cutouts in the shapes of stars, hearts, flowers, or circles.

    Wilson Jones also recently launched a Web site, wjschool.com, to help kids locate products in their neighborhoods, as well as to offer strategies for keeping things organized.

    Licensed products also generate impulse purchases and keep the school and office supply aisle fresh during off-peak times. Rancho Cucamonga, Calif.-based Scripto earlier this year launched a line of NASCAR-branded writing instruments featuring well-known racecar drivers Jeff Gordon, Dale Earnhardt Jr., and Dale Jarrett. A special offer enabled consumers to receive a free 1:64-scale die-cast collectible racecar when they purchased any three Scripto-licensed NASCAR writing instrument products.

    General Mills Trademark Licensing worked with Paper Adventures to create scrapbooking items—including paper, quadrants, die-cuts, borders, and stickers—featuring the Trix Rabbit, Lucky the Leprechaun, and other popular characters from the company's product lines.

    Once the grocer decides on a strong product mix, the next step is building a year-round merchandising plan, manufacturers say. Create a large emphasis during back-to-school, and then keep the products in front of the consumer through all the other stationery-purchasing occasions. "Grocers should merchandise school supplies the same way they do other categories," Business Stationers' Little says. "Promotions, off-shelf displays—you have to get the products out into the customers' face all the time, let them know what you have."

    Cross-merchandising is an easy way of keeping the products top of mind, and many school and office supplies complement other departments. "Markers go well by food storage containers or in other areas—like video—where there are products that are frequently marked," Sanford's Kelly says. "The metallic silver Sharpies are great for filling out greeting cards. And since writing instruments don't take up much space, you can fit a clip strip of them anywhere in the store."

    Indeed, just as supermarkets have created their own problems with school and office supply sales, they can easily reverse the situation with a little effort. According to SHOPA's Jacober, "Those chains that I have seen putting effort into the category have seen dramatic results."

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