Channel Report: Office Supply

Just five years ago, in the days of giant stacks of merchandise and bare steel shelving, a trip to an office supplies store might have been overwhelming for some shoppers. But today, the warehouse look is fast becoming a thing of the past, as office retailers try to create a unique and pleasant "lifestyle" atmosphere to make shoppers loyal to their store. This shift in focus toward overall store brands has profits soaring. The "Office Supplies & Stationery Stores Industry 2006" by Barnes Reports, Bath, ME, estimates that office supplies and stationery stores will post nearly $25 million in sales this year. As revenue continues to climb -- projections indicate sales will top $25 million in 2008 -- these specialty shops are forging their own brand identities and adding parameters on how brands like OfficeMax, Office Depot and Staples use P-O-P to keep a more consistent look throughout their stores.A Brand of Their OwnOffice supplies stores are working to change their images from big box retailers to stores that have distinct brand identity. "Historically, we've been seen as big box retailers with little differentiation," says Bob Thacker, senior vice president of marketing and advertising for OfficeMax. The Naperville, IL-based retailer has about 900 locations in the United States. "The move is really to make the shopping experience more engaging -- not just about the [merchandise] but about the brand itself; the store is the brand."For example, OfficeMax has begun opening new OfficeMax Advantage stores that boast a different format than the existing locations. "Our regular stores have our old format -- larger, more stark, more bare bones, more just about stuff," says Thacker. "The new stores have a race-track design, bright color, different areas of lighting to create more drama in the store. ... There's more open sight lines, so you can find your way through the store more easily. The old stores were like walking through canyons of product and that's really very 20th century." Part of the OfficeMax repositioning involves its new logo, which was unveiled in February. The idea for the giant, multi-colored rubber-band ball came from Thacker's own desk: He has a bowl of small rubber-band balls in his office that he hands out to visitors. The logo reflects OfficeMax's new mantra to have "fun, passion and innovation" as a company. Eventually, all OfficeMax stores will reflect the new Advantage design. "We want to make sure our stores are clear, engaging, bright and that they have energy, a point of view that people will find inspiring in their shopping experience," says Thacker. Office Depot and Staples declined interviews for this report but, other stores are consolidating formats and overhauling their planograms, like OfficeMax has done with its Advantage store layout, says Jon Altenberg, global marketing manager for Fellowes' shredder division based in Itasca, IL. "Two or three years ago, we'd send a sign to a retailer and say, 'Put it up,' but it's no longer like that. Now they tell us the parameters for P-O-P." "We have seen an increase in coordinating graphics as dictated by the retailer; modular displays; smaller footprint displays; and displays with a demo product or something unique to capture the attention of consumers," adds Gary Lazicki, retail merchandising manager for Swingline, a product from Lincolnshire, IL-based ACCO Brands Corp., which also markets such brands as Day-Timer, Kensington, Quartet, GBC, Rexel and Wilson Jones.Jackie Paralis, senior marketing manager for channel development for Oki Data Americas Inc., in Mt. Laurel, NJ, sees retailers also focusing more on their local markets to reach targeted customers. "Some retailers are testing regionalized product offerings and merchandising activities that align specifically with their local market demographics rather than broad-based target audiences," she says."Office superstores are getting more sophisticated every day," adds Altenberg. "The office supply stores are just starting to align store formats ... and they want a consistent look. There's always an issue of making sure our P-O-P matches their store brands." When Fellowes' Powershred home and office shredder series with SafeSense technology launched in June 2006, the company placed exclusive P-O-P in OfficeMax that featured a live demo to show how the shredders protected children and large pets from getting caught in the machine.More Crowded Than a CubicleWith the increased sophistication and store branding efforts, office supply stores need to utilize their floor space more effectively, these brands say. "This new competitive environment, with an increasing number of new players and models lobbying for the same shelf space, creates a vendor challenge of merchandising differentiation in capturing consumer purchasing consideration -- all while working within the corporate, visual merchandising standards," says Oki's Paralis. OKI Printing Solutions placements in Staples and Office Depot include a printer demo model that produces multiple, full-page samples and duplex samples from printers with those capabilities."As retailers focus on making their sometimes shrinking footprints more efficient, there is often less off-shelf space available for seasonal placement on the introduction of new products," says ACCO's Lazicki. Last year, Swingline launched its Optima PowerEase Stapler off-shelf via endcaps, store impulse racks and corrugated shippers at Office Depot, Staples and OfficeMax; demos also allowed customers to try the reduced-effort stapler. "[The office superstores face] competition for this limited space, cost increases for those materials as used in the production of off-shelf displays, lower production runs as they wish to maximize their inventory positions, and a desire to focus on their own brand while still meeting consumer needs with product offerings," says Lazicki.Becky Stapleton, merchandising manager for Sanford Corp., Shelbyville, TN, says each office superstore has developed its own process for in-store displays. "Sometimes, we send in graphic renderings for review, sometimes white samples and sometimes a fully mocked-up display packed out with all of our product. Each one has specific requirements," she says. Sanford markets its writing instruments with P-O-P, such as its tax time displays that play up big packs of markers like Sharpie, Sharpie Accent and Expo, and the everyday writing lines of Paper Mate and Uni-ball. Sanford emphasized the "big" theme by supersizing key products on the graphic panels and lug-ons.However, the push toward an updated atmosphere means that office supply stores do allow a bit more creativity, too. "We're really able to push the envelope with them. They tend to be a little trendier [and accept] something a little different than other retailers," says Stapleton.Standing Out In-storeAs retailers focus on their own branding issues by reorganizing categories and favoring private-label products, brand marketers face another challenge: standing out against competitors in category presentations."Each brand and product category faces different issues and challenges in the marketplace based on distribution, product/category lifecycle and other factors," says Carol Lucarelli, director of ACCO's merchandising and brand development. "However, retailers' desire to see increased impressions in the marketplace for their own brands is putting pressure on our ability to get our brands placed off-shelf. More and more, we are seeing retailers focus on the ROI for one product category versus another, making for a more competitive situation to get placement off-shelf or in advertising.""We're in a pretty wide category," says Stephen Macklin, brand graphics leader for Bic USA Inc. in Milford, CT. "Oftentimes, case displays will have markers, pens and correction products displayed together, so it's hard to come up with a product-specific theme or idea behind the display."Bic's solution for such products as its ballpoint pens, fountain pens, pencils, highlighters and correction fluids is to "try to find something that fits the season and the environment," says Macklin. Lately, Bic has been working toward establishing one central theme for everything related to point-of-purchase the company does throughout the year. "So while we may wind up with a different display at Staples than at OfficeMax, there's a thematic cohesion. ... Customers would be able to see the consistency even as they go from store to store," says Macklin.With the launch of Windows Vista and Microsoft Office 2007, Microsoft used a central theme to make its products appeal to consumers. "We created one look and feel for Microsoft for our Office, Vista and Games for Windows products," says Parisa Zander, group manager of worldwide visual merchandising for Microsoft Retail, Redmond, WA. Endcap displays offered laptops with touchscreens to demonstrate the new software to customers. "[The office supply stores] built endcaps to our [specifications]," says Christopher Wagner, worldwide visual merchandising manager for Microsoft. "They were very particular about what they needed, but they were also really impressed with what we did, so they gave us a little bit more leeway to be creative in their stores."Brands are now working more with the stores to customize P-O-P. "Each of our customers has their own look and feel, so they require their own specific graphic package to be incorporated into our P-O-P," says Sanford's Stapleton. "Managing the different graphic packages and incorporating them into our grand theme is a challenge we face every season."For Oki, having in-store staff trained in its products helps enhance its P-O-P. "A key issue for all vendors is rate-of-recommendation, which directly relates to store sell-through," says Paralis. "Oki's primary goal is to own first and second rate of recommendation, meaning that store associates recommend OKI Printing Solutions brand more often than competitive devices when a shopper makes a purchase inquiry."More customers want to try a product before buying it in the office supply stores, and many of these brands design P-O-P to accommodate that desire. "A trend in the printer space is in-store, standalone displays that allow consumers to interact with the products," says Paralis. "People like to physically interact with the device, which underscores the importance of ensuring the device is performing optimally."Stapleton agrees. "For us, we found that consumers really want to try our products before they buy them, and being able to really have that experience in the stores ... is key to our consumers."Brands also need to define their in-store space in order to capture consumers. "Everybody is starting to carve out the product's own space in the in-line sections," says Microsoft's Wagner. With its new unified look, Microsoft has clearly identified its own area within the in-line software section.For OfficeMax, brands that succeed in today's office store environment understand what the retailers are trying to accomplish. "It's about creating a display and P-O-P materials that are in the character of the store, not just literally taken off the shelf from the manufacturer," says Thacker. "[We want something] in the same tone as the rest of our initiatives."Retail Media One way retailers and brands can garner consumer notice is through retail media -- an area most office supply marketers are still just testing. "Reaching consumers where they shop has always been a more attractive option than relying on more traditional forms of communication to influence shopping behavior," says ACCO's Lucarelli. "Focus on packaging, signage for in-line merchandising, off-shelf displays and other factors that hit closer to the decision-making moment have always been a priority for our organization. While some of the distribution channels for our products have been early adopters of retail media, the office stores have not moved as quickly in this direction.""Retail media is constantly changing with a continuous flux of new products, price points, features and initiatives," says Paralis. "Therefore, manufacturers must keep abreast of changing trends and merchandise their displays to reflect these changes."Digital signage is one new way brands and retailers are using retail media to impact shoppers. OfficeMax recently partnered with Adflow in Burlington, Ontario, to develop an in-house network of digital signs that target market-specific consumer demographics."It's certainly an emerging technology -- more and more retailers are venturing into that arena," says Thacker. "[With digital signage], there's greater efficiency, more excitement and more engagement with the customer. ... All this new technology makes it less about stuff being printed and put up."For OfficeMax, Adflow developed two large screen LCDs that, while in the print services department, can be seen from the entire store footprint, says Wayne Ruttle, Adflow's vice president of sales. OfficeMax Advantage and mid-sized stores will incorporate this in-store media into their store environments."These networks add value to retailers," says Ruttle. "OfficeMax is getting a higher percentage of conversion or basket-size increase with these digital signs. ... If a retailer is able to engage the customer, he can better inform and educate that consumer about his products and services."But not everyone in the office supply channel is ready to go digital. "From an Oki perspective, our P-O-P is very effective and our demo pages are a clear differentiator in this space. At this time, we don't see a need to move to digital signage to differentiate our products," says Paralis.Being EfficientEfficient display development can yield value to your P-O-P. "For us, it's a matter of using the same form factor for all the displays," says Greg Reilly, merchandising manager for Franklin Electronic Publishers in Burlington, NJ. Franklin uses a standing floor design with six pockets for merchandise to display its electronic dictionaries, hand-held translators and spell correctors. "We take the same display and change the graphics on it for different stores," he says.Besides making the displays themselves efficient, creating P-O-P that can be put directly onto the store floor helps to ensure customers see the display. "We look to design our displays for very easy assembly with minimal, if any, store assembly. We pretty much want to send it into the retailers ready to go [because ...] store execution is something that we want to maximize as much as possible," says Stapleton. "I feel like the office supply stores are really going toward a new generation of [P-O-P that is] very easy to execute for store personnel. They're starting to not switch out their store every season but have more permanent displays.""There's always a balance between cost-effectiveness and implementation," agrees Altenberg. "Execution is a concern at the store level; therefore, it's always much more effective to put a pallet display with a cap on it that you pull off and it's ready to go."The Future of BusinessAs the office supply stores continue to invoke more store branding, these marketers say, office supply brands will meet the challenges of a shifting P-O-P environment with creativity and resourcefulness."Interactive and standalone displays will be prevalent in the future in order to better engage the end-user in a more compelling shopping experience," says Paralis."The more successful our retailers are in building the brands and getting foot traffic into their stores, the more traffic and sales we get," Fellowes' Altenberg says. Fellowes' biggest challenge is having enough educational signage as the amount of space the brand has to work with decreases. "We have to use that space more effectively to communicate the messaging we want to."Office supply retailers might also reduce space given to brands. "It is likely there will be a greater focus on smaller footprint display options to give retailers flexibility in how and where they display P-O-P," says Lazicki. "These displays also allow a retailer to better manage inventory coming into its locations," says Lazicki.Managing inventory helps brands know what kind of products sell well in the office supply stores. Franklin's Reilly says the office stores give great feedback on inventory and sales in relation to P-O-P. "We're able to measure our P-O-P results because of the information they give us," he says. "We can track the difference a display actually made in the stores -- we've found that displays make a 30 to 35% increase in business."With sales in the office supply channel climbing higher each year, the stores and brands continue to work together to create an environment that keeps customers coming back. "We're very excited about the whole category," says OfficeMax's Thacker. "The office is the great, last, ignored space in the world -- it's more than just things; it's about the whole work experience."