Drug presents opportunity to help office sector out of bind

A new year could be an opportunity for home-office product sales as consumers turn their attention to organizing and preparing for tax season.

Office supplies represented 2% of nonprescription sales in drug stores for the 52 weeks ended Oct. 3, 2009, totaling $900 million, according to AC Nielsen. That was a 3.3% dip in sales from the same period last year. Industry experts believe the category may be underperforming in the drug channel.

“Back-to-school and back-to-college are the biggest seasons for home-office products in the drug channel,” an ACCO Brands representative said. “It’s a convenience play, and stores are getting more aggressive with promotional offers, especially after many of the big-box retailers tear down BTS and run out of merchandise. The drug channel tends to be more of a destination once school starts since they have stock of products needed.”

Shelly Morick, president of Better Office Products Co., said she thinks drug retailers can grab a bigger share of category sales by devoting more space and promotions during BTS, tax season and second semester. Basic filing, presentation, envelopes, binders, sheet protectors and organizational products should be part of a stationery section year round, Morick said. Better Office Products’ line of eco-friendly, biodegradable and recyclable products addresses consumers’ interest in green products.

Fourth quarter also is a key time to promote organizational tools. April Whitlock, director of brand management for Carolina Pad, said drug retailers’ home-office businesses usually are impulse-driven and currently are underperforming. “By capturing and promoting filing systems right after the holidays, drug retailers can capture the natural top-of-mind impulse of consumers who are ready to organize their life and finances,” she said.

To increase the impact of the category year-round, Whitlock said retailers should take advantage of product innovation and work with vendors who can provide fashion as well as commodity products. “Executive mom” organizational products — such as file folders, expandable files, planners and products such as Carolina Pad’s new tiered memo books and flip-top organizers — are strong year-round performers.

As in many other categories, retailers are turning to private-label products to meet the needs of the basics in the category. CVS and Rite Aid stock private-label everyday home-office products, including three-hole punchers, magnets, binder clips and calculators.

Drug chains can grow sales by adding value packs, especially on endcaps and in high-traffic areas.

Another area of growth is computer accessories. “Many drug stores consider this category as a small part of their overall business, and if they do something, it’s on an in-and-out promotion, but business is very steady on basic items,” said Liza Abrams, a spokeswoman for Sakar International. Abrams said the basics include two mouse offerings (wired and optical wireless), Hubs, Web cams and surge protector electrical strips. Ethernet and extension cables, she said, are huge sellers at stores near colleges and universities.

Rite Aid, which has many locations near colleges and universities, devotes 4 ft. to ink cartridges and computer accessories. The chain’s planogrammed set includes Sakar’s iConcepts Web cam, which retails for $19.99, USB cables at $9.99 and flat-panel speakers for $14.99.

“Retailers don’t need branded goods at higher retail. These products today are commodity items; it’s like buying paperclips,” Abrams said. The best time to promote is during back-to-school with a small bump in the fourth quarter to second semester. “Promotions can be set on an endcap or wing titled ‘All your needs for the upcoming year,’ and should be set in store late July to run 60 days,” she said.