Tough times tipped for stationery industry

The $3.8 billion Australian stationery products market is set for tough times or even extinction according to a new study by BIS Shrapnel.

The threat is a result of the emergence of e-commerce that has the capacity to turn the industry on its head, The Australian Stationery Market, 1999-2001 reported.

The BIS Shrapnel study found that the stationery products market is set for immediate and dramatic change in terms of concentration, distribution and product mix.

The market is poised to grow at nearly double the rate of economic growth, with rapidly increasing imports and equally rapidly declining margins in the fiercely competitive industry.

Author of the study, stationery analyst Andrew Penfold, said the stationery industry is the only industry in Australia where the entire marketing focus is on price.

“In many cases, for retailers, importers and wholesalers alike, the margins are razor thin,” he said.

The study said: “Suppliers are unanimous that profit levels have declined across all sections of the industry in recent years.

“The recent global entrants – Corporate Express, Boise Cascade, Blue Star and Viking – have increased pressure on suppliers for cheaper prices.

“Suppliers have succumbed and have to pass on the same prices to smaller independent commercial dealers who have formed buying groups to protect their position.

“Profits are declining. One major international supplier has estimated a decline in margin of between 10 per cent and 25 per cent in recent years.”

Mr Penfold said the domestic market was being directed by mega-companies based in the US which were making decisions with worldwide ramifications.

The number of stationery operators has already declined by 12 per cent since 1996 to 8,200 nationwide. However, the industry is still fragmented.

“Small, independent, commercial dealers have suffered most and will continue to struggle against the larger new business models of contract dealers, superstores and mail order operators,” said the study.

Mr Penfold said both the greatest threat and greatest opportunity was through the growth of internet ordering systems.

Currently, only 13 per cent of dealers order their supplies electronically. When this becomes the norm, the study concluded, suppliers would achieve greater efficiencies and labour savings and remove the need for a physical store or major inventory holdings.