Stationery

This Epson Holiday Pack has been a good seller over the last month or so. With six inks and 50 sheets of photo paper, it’s hard to go past the $89 price tag. What’s even better is that there is margin in this for us.

Having packaged deals like this one from Epson an the twin packs from HP demonstrates that we’re mainstream when it comes to ink and toner – this builds confidence and drives repeat business.

Often newsagents have thought that discounting is what is necessary to drive growth. The ink and toner strategy shows that range and relevance are key. Sure price plays a role but it is not the main game.

This brilliant and interactive Post_It display makes excellent use of the space in front of our photocopier. As you walk past, the screen at the top of the display starts running a commercial for the product – yep, that box at the top is a small LCD screen and it plays video with sound!

People stop and watch and often pick up one of the products and check it it out.

This the type of in-store sales tool usually reserved for major retailers. We’re fortunate to be in a position to test its effectiveness in newsagencies. Since the stand is also located near our main newspaper stand in one store I will be particularly interested in sales basket data.

It’s good to see 3M prepared to experiment with us.

The two products on offer – a wrapping paper cutter and a handy tape dispenser – are ideal for this time of the year.

Command adhesive products from 3M are featuring in a long format TV commercial based around Christmas use. I have seen the commercial several times on pay TV. Newsagents not carrying the range ought to right away. It’s selling well in stores I am connected with. Be warned however – not all newsagent stationery warehouses have the full line.

Higher end boxed pens are usually supplied with two price stickers. The RRP and a special price. We didn’t receive the special price stickers so put the pens out at full price. A month later when we realised we fixed this, we discovered that it didn’t matter. The pens are selling well at their RRP. A check of our sales team reveals that not one customer has queried the price. It turns out that no one nearby has our range so we are providing a service for which a premium appears to be accepted.

I am not suggesting that newsagents gouge on price. Rather that we understand our market position and take this into account on price. Oh, and just because a discount opportunity is available, it does not mean that we should always take it.

These Maped erasers from Pelikan Artline are walking out the door at our Watergardens store.

We have them on the counter without much around them and have sold half a box in a few days. Admittedly, we don’t have confectionery at the counter so there is not a lot of competition for customer interest.

I would not have picked these erasers as a successful impulse item, it just goes to show…

These are the kinds of stationery newsagents need to stock more of. These stationery packs sit between what we traditionally call social stationery and more specialist paper products such as those from Artee and Christina Re.

The two packs in the photo are a small part of a much bigger range – every item is fantastic.

Newsagents can push the envelope in this more social area as there are fewer competitors. We bust our balls competing with Officeworks, K-Mart, Big W and others at Back To School and other traditional stationery seasons yet no national network is driving in this social space. The opportunity is ours if we want it.

While some individual newsagents and the newsXpress group is playing in this space, there is room for more newsagents to become engaged.

We have replaced cigarettes with ink from HP, Epson, Canon, Lexmark and Brother behind the counter at our new Frankston business – Quayside newsagency. The border used is the same as used on the headline for the brochures we’re sending out with the local paper to homes around our area.

Our evaluation of the performance of cigarettes made the decision to quit the category easy. With three more specialised outlets nearby it made no sense for us to remain the smallest player in such a challenged and regulated retail category.

The ink store sits well with other changes we are making in the business. The story behind the counter is appropriately in your face.

At a Hong Kong trade fair yesterday I saw stationery from many China based factories. Some items were familiar to me – they are sold in Australia under a house brand. Given the prices offered, I was left wondering why newsagent house brands can’t be more effective than they are. Surely those newsagents who want a house brand strategy can buy better, sell for less and make more than is achieved today.

Based on the prices of some items I saw in Hong Kong, current pricing for house brand stationery offered to newsagents in Australia could be off by between 25% and 50%.

A customer called about the paper advertised in a stationery flyer we sent out with the local newspaper last week. He wanted to make sure we still had stock and to check our location.

Winning a new customer directly from external marketing like this is wonderful. It reinforces the value of regular advertising and marketing activity and the importance of branded hero products to generate interest.

This out of season stationery offer is a bonus.

A couple of colleagues from Sydney on Saturday commented that our $2.00 price for 2008 desk calendar refills at Forest Hill was high. Their price was around 20% less. I checked our buy price and sure enough we were marking the calendar blocks up higher than usual – because at $2.00 we considered it to be still good value.

The $2.00 price point was considered carefully by Jason, our manager at Forest Hill. He went for a price which he felt was fair for the product and which was convenient – being at the counter, these are an impulse item at this time of the year. His view, with which I agree, is that the extra we make on this item is balanced by the thin margin on paper and some other products.

Given that newsagents are considered expensive by consumers, there is no point in trimming margin for what is to many an essential item. We’d rather leave margin trimming for promotions.

We’ve had the desk calendar refills out for five days and sales are excellent so price does not seem to be a barrier at Forest Hill.

I was in another newsagency yesterday at the same desk calendar refills were priced at $2.85. This is way too high.

I have been thinking a lot about this issue since Saturday. It goes to the heart of how we manage the stationery department in our businesses. Our competitors balance margin in the same way airlines balance ticket prices on a flight. Where they apply research and discipline to the task, we tend to operate off a flat margin with little consideration of what price an item could carry.

I think there is an opportunity for newsagents to talk more, in small groups, about how they approach pricing of stationery. While no one approach is right, I am certain that such discussion could improve the return all participants achieve.

I recently blogged that Canon was outselling other ink brands at our Watergardens store. At Forest Hill, HP is the hero brand – easily outselling all other brands of ink. I am surprised by the difference between the hero brand in each store and the next best performing brand.

My real interest in this analysis is getting the product mix right. Ink, with a shelf life, is a category which needs to be managed carefully. We did this recently when we quick generic product – something which has proven to be right for our business.

Private Label Strategy by Nirmalya Kumar and Han-Benedict E.M Steenkamp is an excellent book for anyone involved or interested in the use of private labels (house brands) in retail. This book has specific application for Australian newsagents given the use of a private label (Sovereign) to combat the private label strategies of our competitors: Australia Post, Big W, Coles, Safeway, K-Mart and Officeworks. The book also helps us understand the place of private labels net to branded product.

Too often in the newsagency channel we copy others without thinking the strategy through or researching whether it may be appropriate to our situation. I suspect our approach to private label stationery is an example of this. Take the Sovereign private label stationery offer from GNS. This appears to be all about price – it is certainly not a quality proposition. Sovereign doesn’t provide better margins so on price it fails.

As Private Label Strategy documents, private labels are about much more than price.

With a potential retail network of in excess of 4,000 newsagents, I would hope that those involved in developing the Sovereign strategy for newsagents take time out to read this book – it is the first of its kind. I am finding it inspirational and challenging.

Canon is outselling the other major ink brands at our Watergardens location three to one. This is different to the mix we are seeing in other locations.

Maybe it says something about the demographic? Who knows? All we know is that it will affect our stock holding mix if this trend continues.

Canon might be the first printer offer we carry.

Our printer giveaway is going well – two Samsung laser printers have been won and have four to go.

We have moved the display to the top of one of our stationery aisles, wrapping and labeling boxes to represent the printers given away already – to make winning real and achievable.

Having branded free stock like this to support local in-store promotions is important in our newsagency competing with Big-W, Australia Post and other national retailers nearby.

From a sales perspective, stationery is tracking good growth – this is probably more due to our major overhaul of the range around national brands than the printer giveaway itself.

This is the pen unit Ben Kay designed for the new newsXpress corporate store at Watergardens.

The unit is four sided and integrates pens from a range of suppliers – making selection very easy for customers.

We have located the stand near the counter for security reasons and to make it easier to help customers with queries about the right pen for them.

We have focused on pens because they are an important point of difference for newsagencies. Our stationery competitors are Big-W and Safeway a good range of individual pens well demonstrates our product knowledge and point of difference.

It’s great to have another stationery promotion in play to reinforce our price competitiveness and our commitment to branded product.

Newsagents would not usually have another marketing pitch until Christmas and / or Back to School.

This two page flyer is important if we are to compete with the Australia Post government stores which produce a flyer every month.

We know from market research from several companies that newsagencies are considered to be expensive. This is why it is imperative that we pitch deals like those on this stationery flyer.

The biggest challenge for us is space – what with calendars, diaries, Halloween and even some Christmas out, space is at a premium – so we’ve created the promotion around a table on the dance floor as well as in the body of the shop.

To counter visual noise and draw attention to our ink and toner offer we are experimenting with a frame around our ink product. The Hot Ink border draws attention to ink – I’ve noticred people walking across from the newspaper stand in front. On saturday one such customer walked out with three cardridges when all she came in for was a newspaper.

The frame is make-shift, printed on our copier. Now we can see it works, we’ll make it pretty and robust.

Visual noise is a real challenge for newsagents – we are provided many posters and other materials by suppliers wanting eyeball time. Many of us just whack these posters up without thinking that less is more. By framing like this I hope we can better manage space allocation and drive categories which support our margin goals.

Ink is proving to be the hero category at the new newsXpress Watergardens store in which we are a partner.

Ink accounted for 16% of all sales in our first seven days of trading. The stunning back wall is acting like a magnet – drawing people down to the back. In most cases customers buy two or more cartridges. We only stock brand name product and this makes choice easier and eliminates questions about the quality of the product since the brand is the thing. What is interesting is that next to the ink we have technology product and that is being browsed by the ink customers. We have also located computer magazines next to the ink and technology wall – it seemed appropriate.