Stationery offerings find little room for growth
The tables have been turned on discount stores when it comes to the categories that make up the stationery department. Unlike departments such as apparel or domestics, where it is the discount channel putting pressure on competing retail segments, much of the growth in stationery product categories is being gobbled up by rapidly expanding office superstore chains.
The discount store strategy for the stationery department has been to focus on basic assortments of predominantly value-priced merchandise including writing instruments, mailing supplies and essential home office needs. The focus on narrow and deep basic assortments may limit consumer choice, but it has proven to be an effective way for retailers to reduce inventories while improving stock situation and to save money by handling fewer skus.
Target has attempted to liven up its home office product offering with its own brand of fashionable desk accessories made from metal mesh and wicker and writing instruments including pens with large wooden barrels.
In addition to the everyday challenge of competing with the assortment power of the office superstores, discount retailers also must deal with superstores, which in the past few years have steadily become more aggressive in their pursuit of the Back-to-School seasonal business. Almost as soon as school lets out for the summer, the superstores begin setting up merchandise displays in advance of television commercials touting superstores and destinations for Back-to-School shopping.
The one segment of the stationery category where discount stores aren’t encountering superstore competition is greeting cards. However, the card business is experiencing slow growth despite steady increases in the numbers of female Baby Boomers, who represent the highest card-sending segment of the population.
Wal-Mart’s response has been to scale back space for the department and position it less prominently in newer stores. At the retailer’s large supercenters the card department is located at the front of the store near the pharmacy, but customers really have to look to find it. Conversely, newer Target stores feature tubular metal fixturing and overhead track lighting, which combined with a front of store placement makes the card department highly visible.
STATIONERY PRODUCTIVITY
Discount segment sales ($mil.) $5,218.19
Dept. size (sq. ft.) 1,490
Sales per sq. ft. $565.34
Turns 3.65
Initial markup 39.63%
Gross margin 37.93%
Source: DSN Research
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COPYRIGHT 2000 Gale Group
