More Than Just Staples

Slow But Steady Sales of office supplies and school products reached an estimated $311 billion in 2004, 3% higher than the previous year. The nation's economic recovery was a crucial factor in the industry's growth last year, along with improvements in customer service and satisfaction. The customer base for office supplies breaks out into three segments: businesses, home-office consumers and back-to-school. Total spending on back-to-school was an estimated $40.5 billion in 2004, a figure that included spending on back-to-college supplies.

The Major Chains The rise in the economy helped the major office-products retailers to strong fiscal years in 2004. OfficeMax's sales skyrocketed by a whopping 61%. Staples reported an 11% increase in its sales last year, which reached $14.4 billion, including a 4% rise in same-store sales. Office Depot recorded a 10% boost in its fiscal 2004 sales to $13.6 billion, but a much more modest 1% same- store sales rise.

Competition from the Mass Merchants Wal-Mart and Costco are right behind the big-box chains in the office-products category. Wal-Mart's sales in this segment ballooned by nearly 18% to $4.6 billion in 2004. Costco posted a 13% gain that brought its office-supplies checkouts to $1.4 billion.

The Retail Channels Retailers account for more than 60% of the industry's sales dollars. The retailers are facing increased competition from independent dealers. Supermarkets have also established a presence in this market, providing office supplies to customers with home offices. Supermarkets have reached agreements with the major chains to offer office supplies in branded departments.

The Consumers Nearly 75% of adults with children spend up to $500 annually on office products, as opposed to 58% of adults with no children. More than 40% office-products buyers have household incomes of $75,000 and up, while less than 20% have incomes of less than $30,000. Men represent 57% of those consumers who spend more than $500 a year on office supplies. Regarding school supplies, the children are obviously the main influencers in the purchase decisions of the $40+billion back-to-school market.

Women in the Business Women have become an important target market for office supplies, given the rapid growth in the number of female-owned businesses. For this market, style has become a major selling point for office products. Specialty and lifestyle-oriented stores and book stores have become important retailers for women-directed office supplies.

Outlook In releasing its 2004 results, Staples said it expected growth in the low double-digit range for 2005. Office Depot didn't project its 2005 sales but displayed an optimistic tone when discussing this year. This year's back-to-school purchases totaled an estimated $13.39 billion, or about flat with the 2004 season.

Opportunities Going Forward Independent dealers expect their business to grow in 2005 as the industry pulls further away from 9/11 and the dot.com meltdown. Midmarket businesses present strong opportunities with the economy's upturn. When business times improve, these businesses tend to grow faster than larger businesses, and thus have greater needs for office supplies. Office furniture sales should grow dramatically this year and next, with expected increases in white-collar employment and construction of office buildings.

Advertising Strategies Like other areas of retailing, office equipment and supplies is a highly competitive area with big-box chains, independent retailers and independent dealers all struggling for share. Television advertising has been proven to make the difference in a such an environment, putting local businesses top of mind with key customer targets. The customer base for office supply stores is broad, encompassing both local businesses and consumers. TV is alone among all of the media in its reach to a wide range of customer demographics, because everyone watches TV  including high-powered business executives who need equipment for their offices, and individuals who are looking for school supplies or merchandise for their home offices.

Advertising Strategies Television’s incomparable blend of sight and sound puts it ahead of all other advertising media. For office supply stores, this combination is particularly powerful in presenting a store’s merchandise, displays and customer service along with strong messages that underscore the store’s most saleable attributes. Clearly, an office supply store needs to stack up a heavy advertising schedule during the back-to- school season, which is a critical calendar moment for its business. However, the store also requires frequent exposures on TV throughout the year, and at high-intensity viewing times of the day, to put it upfront with businesses and individuals in the local market area.

The answer is three simple reasons! Why TV? The answer is three simple reasons!

Why TV? 1. Your customers and potential customers use it — viewing daily for long periods of time. 2. TV’s attributes of sight, sound, motion and emotion let you best communicate your message to these people. 3. Television works in dollars returned!

Remember, Only television can give you: Why TV? Remember, Only television can give you: The right message To the right people At the right time In the right place!