Stationery

The stationery play by Harvey Norman, is not going away as some newsagents expected. An announcement a few days ago is evidence they are finalising supplier arrangements. I hear that a March opening for the first two stores is the plan with fifty by year’s end. Now is the time for newsagents to redouble attention on stationery.

The offer from our local government owned Australia Post store was compelling.  Reflex for $4.95 a ream.  This is around $1.50 a ream less that newsagents pay their wholesaler today.  But, wait, it gets better!  Spend over $50 and Reflex is delivered free.

I have a couple of issue with this: Newsagents ought to be able to buy better through their warehouses; Australia Post should not be able to use its government protected monopoly to take business from small businesses, it’s not why they were created.  I am hopeful that Kevin Rudd’s new team in Canberra will look at this and Australia Posts pursuit of newsagents.

Given that the brochures offers up to a truck load of Reflex, maybe I should take the opportunity and grab the cheap stock while I can.  Checking the fine print, I can’t as I don’t have a fork lift to receive it.

First there was the rumour overseas that Corporate Express and Staples, the largest US office supply retailer were in merger discussions.  these were later denied.  Then, as Forbes reports, the story won’t go away.

If, and, yes, it is a big if, the talks lead to a merger, the implications here in Australia could be considerable.  Staples has an excellent retail network in the US.  Their entry in Australia would give Officeworks a run for its money in the mass retailer model of office and related products.

Printer ink consistently accounts for 30% of “stationery” sales at our Forest Hill store. I put stationery in parentheses because we actually track ink as its own department – it’s certainly not part of stationery one usually finds in a newsagency.

What makes the 30% interesting is that this has been maintained while stationery has grown 29% since June 2007.

This is our third crack at ink. The first, just over three years ago, was okay. Our second, an online business – Inkfast – continues to work a treat. Our third, re-entry in the retail ink category around a year and half ago, has been very successful.

What is especially good about ink is its efficiency. Ink customers rarely purchase ink and nothing else. We are using this category to drive sales elsewhere in the business. Also, we have a high stock turn (we order two or three times a week) and a minimal real-estate investment. In a high-rent shopping centre this is most welcome.

The key to making ink work is consistent aggressive marketing outside the business. This is the only way to attract new customers. With the right in-store offer, they come back again and again.

I have received considerable private correspondence about my comments here on the price of stationery in newsagencies. There is little consistency in the views expressed. They range from: all newsagents should sell stationery for the same price, to: we should always undercut the majors when it comes to price.

It is impractical for our channel to act as one on the issue of pricing of stationery just as it is impractical for us to act as one on range. These things are better left to be managed through the brands under which we operate pricing is part of the brand value proposition after all.

Establishing the price of an item requires careful thought and requires consideration of a variety of factors.  Those with whom we compete have back rooms filled with people who manage such things.  For national brands it is easier since they exert more control over the brand.  In the newsagency world brands exert less control – hence the challenge at the local store to determine the right price for the business.

Cardboard is a staple stationery item for any newsagency. Everyone sells it and if you don’t you’re missing out on good sales every week. We sell the high end cardboard, it’s coloured to the pulp. This means the colour holds better and the board will not curl. Our price is currently $1.10 a sheet. I know of newsagents selling lesser quality cardboard for close to $2.00 a sheet and others selling the higher end product we sell for 95 cents a sheet.

This vast price difference surprises me. In an opportunistic sense, newsagents can charge more because we are almost the only source of a good range of such cardboard. From a business perspective, given the stock turn of some of the colour, the lower end price point, and I’d include our $1.10 price in that, is too low.

While newsagents, when they get together, talk about late newspapers and magazine oversupply, I don’t often hear discussion about the price they set for cardboards. Maybe I am wrong but I think it makes for a good business discussion. We have more control over this than the other things we complaint about.

As for our $1.10, we’ll move that up over the next few weeks.

Check out this impressive back to school display being run by Graeme Baker and the team at newsXpress Macarthur.  It’s a big outpost at Macarthur Shopping Centre. 

I like the way the tables are setup – very easy for shopping having everything within arms reach and at a shopper friendly height.

The outpost is the result of countless hours of back room work, analysing previous results, choosing the right products and determining layout.  It is a season which requires good local knowledge because what Graeme sells most of may not be popular elsewhere.

It is good to see such a strong presentation by a newsagent in back to school.  The newsXpress back to school marketing pitch of no stress could equally apply to the parents doing the shopping, the kids preparing for the year and the newsagent making the sale work.

At our Frankston newsagency, we are finding that Back to School is bigger.  We are running a more traditional newsagency sale – but on a small scale since we are new to this business and the sales history suggests such an approach.  It is working well for us – we have kicked the stationery pitch up with the book offer as well. The two work well hand in hand.

The book display is in our main entrance and our back to school offer right behind and down into the stationery aisle. While this is nowhere near as big as some back to school offers I have seen, it’s working in Frankston.

Back to school is not big at Forest Hill so we are promoting a range of holiday and back to school related books and activity packs instead. This is working very well for us.

We have the books on the dance floor, you can’t miss them. We’re supporting the offer with an A5 school fever flyer. For years we pushed hard with back to school, both in-store and with an outpost and the investment never worked. Hence our decision to find an alternative sale generator for this season.

I think it’s time newsagents stopped stocking fax rolls.  The return on investment I see from fax roll stock in newsagencies carrying them is less than half of one percent.  They are not paying their way in most stores.

When it comes to stationery, many newsagents are happy to be the retailer of last resort – the one place which will have an item others no longer carry.  It’s okay for us to do this as long as the return, from slim sales, justifies the stock and labour investment.