Stationery

We have been in the ink and toner space in our newsagency for over four years and in each of those four years, generic product has accounted for between 10% and 15% of all sales. While the margin on generic product is exceptional, there is clearly a preference among our customers for brand name ink and toner.

It makes sense that customers prefer the Epson, HP, Canon, Brother and Lexmark branded product. These companies spend millions building brand awareness and trust. While some generic brands advertise, their spend does not match that of the brands and their pitch is not as compelling – no I am cheaper pitch can, except for a very specific demographic.

A third of our four metres of ink and toner was allocated to generic product. We have actively supported two generic brands – but at different times. We switched from one brand to another earlier this year. The brand switch did not lead to an increase in sales of the generic product.

For the last few months we have taken more notice of what our customers are looking for and how they approach their buying decision. Branded product sells easily whereas generic product involves more of our time. Branded product is rarely returned whereas generic product comes back more often.

After a review of return on investment, return on floor-space and return on labour for the generic versus branded ink and toner product we decided to quit the generic space. The most immediate impact can be seen in our product display – losing the generic product means our ink and toner wall is now 100% owned by brands our customers know whereas in the past there was this other unknown or lesser known brand which, to some, gave off a confusing message.

We are building a marketing campaign around the brand commitment. This is likely to include selling some hardware directly associated with the top selling brands.

Our decision to only carry brand name ink and toner is reflective of a broader commitment to branded product in the Stationery department. Our view is that newsagencies are not capable of supporting generic product in the same way you would find at Coles, Safeway or another national retailer. What we started with Ink and Toner will travel through the rest of our business.

I’d note that our online ink and toner business, Inkfast, will continue to sell generic product. This reflects the difference in online customers versus those who shop in a newsagency. Inkfast sells between eight and ten times the ink and toner we sell in store.

I am not a fan of spinners as they impact sight lines and generally clutter the store. They can also cause customers to trip over.

This spinner from Avery is different: it is lower in profile, well anchored and quite attractive. It connects our business with the respected Avery brand and I like that. Brands are important in newsagencies.

The product mix is, overall, new for us and to present it in this more corporate way than one would usually see in a newsagency is welcome.

We have introduced the spinner and its unique product in a high traffic area before moving it to its planned home near our range of ink and toner.

During school holidays we are likely to bring the spinner out as part of our activity offering – the t-shirt printing kit would especially appeal to holiday time.

This is the brochure form GNS to which I referred yesterday.

The exclusive offer from GNS is between 5% and 10% off selected stationery lines. It is offered exclusively to Newspower members but has been sent to other newsagents. Most items are priced less than OfficeSmart prices.

OfficeSmart is a GNS buying group for newsagents driving stationery – newsagents pay a premium to be part of OfficeSmart and are promised better pricing in return. Not this time.

As a GNS shareholder I am disappointed that they are using their resources to fund discounts for Newspower members to the detriment of their non Newspower members.

For a newsagent owned business it is sure making some odd decisions.

GNS in Victoria has announced discounts on some stationery items exclusively for Newspower members. As a GNS shareholder of 11 years standing and owner of a newsXpress store I am disappointed that I am locked out of this pricing. I note that when newsXpress approached GNS to negotiate pricing arrangements a year ago GNS advised it would not offer pricing which disadvantaged any of its newsagent customers. I guess time has changed for them.

What is interesting to me is the third line forcing situation – that I have to pay money to company A (Newspower) so that I can get a discount from company B (GNS).

I visited Officeworks this morning and it reminded me of the clarity of their stationery offer compared to newsagents. While we are broadly focused retailers, Officeworks plays in a relatively narrow space. This makes their pitch easier – the same as the card and gift pitch at our Sophie Randall Cards and Gifts shop finds it easier to sell cards and gifts. Beyond this, however, I noticed several other things of interest:

– The counter is well populated with everyday impulse purchases. Gone in the confectionery from the past and how they have blister packs of opens at what appear to be good prices. It would be hard for a small business owner to pass these up.

– Plenty of staff on hand. At 7:10am I counted five around the store. I was asked three times if I needed help.

– Deals. The way they sign their product it is easy to be lulled into feeling that everything is priced competitively. Their use of laminated made in-store signs adds to this feeling.

– Logofarm. At the counter was a brochure for this business. Given that many of their customers are small business owners it is logical they will want a good logo. The logofarm brochure makes it seem easy.

– Range. Even though the store has a broad range, they still don’t carry the loose product you see in many newsagencies.

There was a time years ago when newsagents (me included) saw Officeworks as a competitor. Today’s visit reinforced that we, Officeworks and newsagents, play in different spaces.

You know your marketing is working when a customers walk in clutching a flyer you have distributed and they ask for a specific item listed. You feel especially chuffed when the item they want is something you would not usually carry. This has happened several times during our Tax Time Savings promotion over the last month.

This week, a customer came in wanting to purchase the Fellows shredder. There was no hesitation on their part: it was a known brand, the product was well represented on the brochure and the price was competitive. The sale was easy.

Playing in the home office space has been a challenge for many newsagents. The new regular stationery marketing program we are part is showing good signs of success. It is certainly broadening our range and delivering new customers to our shop.

Several Victorian newsagents have contacted me following this post revealing the 10% discount on stationery being offered to Victorian newsagents joining Newspower in July. This Victorian only offer was news to GNS offices in Sydney and Brisbane. One question is if GNS Victoria has the funds for such an offer why not the other states. Another comment was – why is GNS using funds from all newsagents to try and get them to join the marketing group it controls.

I’m conflicted in this in that I am a Director of newsXpress. However, I am also a GNS customer and unit/shareholder of 11 years standing. I am not happy that my money is used in this way.

We are embracing tax season by putting the Tax Pack front and centre on our dance floor. We are linking the Tax Pack with our newsXpress Tax Time Bonanza! sale.

People who buy stationery and pick up a tax pack go in the draw for a free printer valued at $250.00 or a Laptop computer bag valued at $100.00 or $250.00 worth of Xbox games.

We are having some fun with it being Tax time and the handing out of Tax Packs. We figured it is better to embrace the distribution of Tax Packs than stick them in a dead spot and tell customers where they are. Now we have a pitch which should lead to some additional stationery sales.

I have heard that another stationery focused trade show is likely to be available for Victorian newsagents some time in the next couple of months. This will challenge the loyalty of some suppliers. But, hey, competition is healthy.

A feature of the current Tax Time Bonanza! stationery promotion is the bonus product on offer. For example, anyone buying a box of Double A copy paper get a free file Porta Box valued at between $12.00 and $15.00. This bonus offer is exclusive to newsXpress, meaning no one can compete. It is more valuable for me to have this exclusive hero product offer than, say, Reflex paper which other retailers have on special regularly. Newsagents need a point of difference in their stationery pitch given that Australia Post corporaste stores and others are competing agressively with a newsagent type offering.

The free bonus pitches the copy paper at the home office market. It offers a practical bonus product Anyone buying a GBC CL90 laminator gets 25 A5 laminating pouches free.

We have followed the GNS Mid Year Sale with the newsXpress Tax Time Bonanza! sale. The range of products is quite different. The Tax Time offer has more branded product. It also extends my range into areas where newsagents have been weak. I particularly like that I have a paper offer which is not matched by Australia Post, K-Mart and others as happened with the GNS sale.

We have a long table on our dance floor with all the products. Traffic is being driven by the promotional flyers distributed around the centre and at the front of our shop.

This is the second of these two page flyers we have distributed under the newsXpress banner this year. The regular pitch of stationery in these flyers is important, in my view, to re-educating consumers about newsagents, particularly newsXpress newsagents, and the stationery range and price offers – built around brand name product.

Ink and toner sales are going great this month in my store (and plenty of others in the newsXpress group) thanks to this flyer we have sent out to 20,000 homes around our newsagency. What makes it work is the ranging and management advice and support underpinning the brochure.

Customers are bringing the flyer in and specifically asking for items off it. This is unusual for newsagencies which have been known as expensive. Not for ink and toner. My view is that it is important to reposition as being price aware and current in terms of offerings such and ink and toner.

Ink customers are efficient for us – usually buying other items which in-store. We are cross promoting photography magazines since many people are using the ink for printing photos.

We are actively supporting the newsXpress branded GNS Mid Year stationery sale with this display on the “dance floor” of our shop. Every customer walks past this. Note the stand we’re using right in front of the Reflex copy paper with the newsXpress branded catalogues.

While the Mid Year Sale is available to all newsagents, our point of difference is the newsXpress branding and marketing group support. We have the GNS prepared catalogues (under newsXpress brand) plus we have backup support materials designed to drive sales – additional in store promotional strategies and exclusive marketing support.

While their competitors switch to house brands for stationery, newsagents have an opportunity to develop a point of difference around established brands. At the same time, they could inform customers of how superior established brands are compared to house brands. Such a pitch, built around quality, would resonate with consumers.

Brands like Post-IT, Scotch, Spirax, Uniball and Collins are respected. It would be easier to build their stationery sales around these brands than to invest in newsagent house brand product.

Stationery customers are becoming wary of cheap imports from China. They understand that lower quality is a hallmark of lower priced house branded product. This is why smart newsagents are pursuing branded stationery items.

I was talking with Jim O’Toole, a regular commenter here, in Albury on Tuesday and he gave me the example of scissors and staplers. In his Rutherglen Newsagency in each of these two categories the well known branded product outsells the house brand by a long shot – to the point where the viability of the house brand has to be questioned.

This branded product issue is important for newsagents. What do we stand for? If it is quality then we ought to more robustly embrace brands which manufacturers spend millions developing and promoting.

When Officeworks launched newsagents were scared for their future. Well, the sky didn’t fall in. Even so, I am surprised at how little attention is being paid by newsagents and their news channels to the arrival in Australia of Office1.

No wonder newsagents are losing stationery sales. Floppy disks are one of the products to be featured on a flyer being sent out on behalf of newsagents next month. While floppy disks sell occasionally, they do not sell sufficiently to justify prime promotional space in a brochure or shelf space in my shop. We need to promote current branded product at keen prices – not yesterday’s product which few people use.

It’s easier to copy than innovate I guess. Newsagents now have not one, not two but three major ink and toner campaigns running thanks to the launch last week of something called Inktek by the Victorian branch of the ANF newsagents association.

While the competition is healthy and will force the two established players Newsink and newsXpress (of which I am a shareholder) to be more competitive, I question whether it is smart to launch another newsagent connected ink and toner brand in what is a well serviced marketplace. If it were up to me I would guide the non Newsink and non newsXpress newsagents into equally profitable yet unchartered territory.

I know a bit about the ink and toner space having been involved with the original group out of which the Newsink group grew some years ago and having started Inkfast two years ago. Inkfast is a pure online play. It generates fifteen to twenty times more monthly ink and tiner revenue than my newsagency – orders are bigger and involve quite different product. On the downside the margin is slim, hence the focus on volume.

While ink is hot, newsagents are competing with Australia Post, Big W, K-Mart, Dick Smith and Harvey Norman. It is the categories these majors ignore which provide newsagents with better opportunities.

The Ink and Toner flyer distributed to 20,000 houses around our shop three weeks ago continues to drive good sales. The promotion has boosted retail ink sales over the three weeks by more than $6,000. In our demographic that’s astounding. Add to this the additional purchases made by the customers brought in by the flyer and it is easy to label the promotion a resounding success.

Being able to quantify a marketing campaign in such a specific way is essential. In the case of ink and toner it locks in our commitment to run these campaigns regularly not only to remind the customers we have already but to grow the pool.

Not enough newsagents promote outside their four walls.

Quick Stick labels are another good habit based product for newsagents. They’re a strong brand, easily merchandised and support a good retail story without a chunky stock investment. We’re finding that Quick Stick customers are likely to return – hence the ‘habit’ tag. We’re also finding that Quick Stick sales are rarely single item sales. That is, people buy a box of labels and other products or they buy multiple boxes of labels.

Newsagents ought to be achieving a stock turn of six to eight a year with the right range. This is up on a year or two ago because Quick Stick products are stocked in fewer places. Bigger companies don’t like them because of the time involved in handling customer queries.

Newsagents wanting to grow stationery sales will need to carry at least sixty types of labels. I’d suggest more if you have the space. With a good range of stock it speaks for itself and acts as a magnet for customers. Quick Stick is not something to be timid about.

Our approach to rebuilding stationery this past year has been to build around strong brands which either through the nature of the product or range offer us a local point of difference. Quick Stick fits this and the range we carry generates good business elsewhere in the stationery department.

The only challenge is stopping customers taking a label of two.