Over the past ten years, we have seen a fundamental decline in the use of core stationery products. Hopefully, it’s not quite the Kodak moment, but people no longer utilise cabinets and everything else related to the filing function due to iPads and the cloud for storage.
I remember talking to someone five years ago who told me they’d just taken all their punch pockets to a charity shop. This typifies where the industry has gone. Businesses have stopped using the traditional stationery items we’ve known and loved forever.
If punch pockets are no longer needed, the ring binder goes with it. The cupboard used to store the files then becomes surplus to requirement. People are buying less ink because they don’t wield a pen anymore, or print as much, so less paper and fewer ink cartridges are needed. Put all this together, and you can quickly see why general stationery is in decline – and in serious decline from a user’s perspective.
Alongside this, there’s the usual market disruption shaking up the status quo or even sparking a revolution. Amazon is probably the most obvious disrupter. Some of us will remember the upset WH Smith caused when it bought all the contract stationers years ago. Viking also did it with direct mail, which unsettled the market then too.
Finally – inevitably – sociopolitical upheavals have had an effect. We only have to look to the single biggest global factor of the past three years, the pandemic, which created a new environment for working from home. This has further impeded the requirement for office stationery and is unlikely to be resolved in the near future.
It’s worth looking at this latter point in more detail. Rather than sit in the office using our employer’s stationery, many of us are now at home choosing what to buy. We’re more likely to order online for next-day delivery than go into town just for an item from WH Smith or Ryman.
Purchasing habits have also changed as online creates fewer impulse buys. In a retail outlet, you may spontaneously pick up other items, but this doesn’t tend to happen with e-commerce as it lacks the touchy-feely element. You don’t see other shiny things that catch your eye as the focus is on the one or two items you want.
Whichever way you look at it, we are using less stationery for work, which has inevitably impacted our industry. The large resellers with considerable overheads have lost, or are losing, a significant and the most profitable section of their business.
As a consequence, some key players have disappeared. The likes of Staples and its superstores are gone. The big wholesaler Spicers went bust three years ago – although it’s back in another form. Meanwhile, VOW Wholesale has recently bought reseller Complete so it didn’t go out of business. The small dealer is equally under pressure.
The market has further fragmented with even more non-specialists selling stationery. In addition, working practices have evolved – no one’s working on a Friday afternoon anymore! Both these factors impact the consumption of office supplies as well.
Still, there are niche retailers like Smiggle drawing in Gen Z with cute and functional products and Arts & Crafts is a massive industry which also stocks stationery. The B2B side, however, is altogether different, with the wholesalers fulfilling a key role in providing resellers with their business supplies.
COVID, containers and cash
Fundamental change is being driven by several other global factors too. Container costs went sky-high during the pandemic because governments needed to ship their PPE and COVID tests around the world. Prices increased from $2,500 to $17,500 in about four months, with all our collective profit wrapped up in that gap. The same as most businesses, I suspect, we were unable to push through price rises quickly enough to compensate for this. Container fees are presently falling, but inflation is rising, presenting yet another issue.
Like many companies, we burned through a lot of cash during the coronavirus crisis just to be able to trade. Those who borrowed money have to pay it back, reducing the ability to invest. Corporation tax went up from 19% to 25% on 1 April, and the damage this will do to existing businesses still in recovery mode is potentially significant. Our whole industry is staring down the barrel of a gun over cash flow and many of us have eaten into our cash reserves since 2020. Fortunately, we are still here to tell the tale.
Opportunities and optimism
The opportunities are still there. As an industry, we are offering more to the consumer than ever before. Food and drink, cleaning products, workwear ranges, etc, are all becoming part of the business supplies space, which is encouraging. But margins, volumes and usage are not what they were, and while new product areas are filling a gap, we’ll never get back to the magnificent growth days of the 1990s and early 2000s.
Our trade association BOSS is doing a great job – somehow managing to inform the industry, keeping it networked and running awards. It has also created the Leaders of the Future forum to encourage young people to meet regularly and make them feel part of a vibrant sector.
Online sales continue to grow outside of Amazon. Viking, for example, is doing extremely well online with its ‘drop shop’ direct delivery. The big contract stationers are recognising the challenges ahead, and if they do e-commerce properly, they will succeed. There is light at the end of the tunnel and online is where all the growth will be – unless something drastic happens!
While the stationery sector in 2023 operates as it has done for decades in a global marketplace, one business aspect to be considered now is cost versus value. The big takeaway is this: it can no longer just be about price – customers want a product that works and will pay more if they think it has value. If we remain fixated on price, we are all defeated.
In the face of all these issues – and more – I believe the time is ripe for a global industry forum to consider where we are and how to move forward together so we don’t just survive but continue to grow and thrive. My call is for a get-together for senior-level executives, along with new colleagues, to discuss the current state of play and the direction of travel, and whether we can influence, respond and maybe even get ahead.
Geoffrey Betts is Managing Director of Stewart Superior