Sector Analysis: Back-To-School review

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Drawing conclusions
By Bruce Ackland
Despite a slow start, the latest Back-To-School season finally kicked into gear, showing signs of a sustained recovery
With the autumn winds blowing anew and the kids placed firmly back into the hands of their teachers for another term, the opportunity arises to look back on the Back-To-School (BTS) season.
A glance at the data revealed in the accompanying table shows a revealing three-month period from July to September in the US.
Overall, the figures show a modest recovery with sales up 2 percent over 2009 (in dollars) which is pretty consistent with overall retail trends in the US.
One clear trend that emerges is that consumers prefer to wait as long as possible to buy their BTS items, with September performing best and August close behind.
Perry James from research group NPD (who supplied the data) says: "In general, we are seeing US consumers holding back on their spending as much as possible in many industries. They are still anxious about the economy and their own economic situation, and are holding back purchasing until they absolutely need to do so. Additionally, around 17 percent of the US population are unemployed or under-employed, so there is a large percentage of consumers who are living paycheck to paycheck at best, and thus don’t have the discretionary income to make purchases well in advance of when they need to make them."
It was also clear this season that standard BTS items such as pens, pencils, sharpeners and notebooks were the top selling categories while those nice-to-have items including file folders and fine writing products didn’t perform so well overall.
James explains: "In general, consumers are telling us that they are purchasing what they need, rather than spending a lot of money on discretionary or nice-to-have items. Consumer consumption is rebounding, albeit slowly, but consumers are much more aware of what they’re spending their money on before they open up their wallets. Reducing debt and saving income are still key drivers to consumer purchasing.
"That said, consumers are telling us that they want to start spending again. Most people don’t like not being out in the stores buying products, so there are opportunities for retailers and manufacturers to get consumers to start spending again."
The much ballyhooed Jan/San segment again proved to be a winner during BTS with hand sanitiser now putting itself firmly in the standard must-have category of BTS purchases. Hand cleaner was actually 3 percent down on last year, but that category a year ago was greatly swelled by the H1N1 scare, so this modest dip represents the category holding especially strong.
James adds: "Hand sanitisers, tissues, paper towels and other similar categories have become more common on the supplies lists that schools give out to students in recent years. I don’t think this is just related to health scares, but an expansion of school supplies lists that schools give out, as school budget cuts have required them to push more of the BTS purchasing onto the parents."
Promotions
Of course, promotions played a significant role in the marketing of OP suppliers. And although results were a little mixed during the bid to drive early traffic in July, promotions did play their part in the strong September.
James explains: "I wouldn’t say promotions were overly unsuccessful. Certain promotions did drive foot traffic and helped get some consumers back in the stores, but I believe that some of the early promotions in July didn’t help drive enough traffic, because consumers weren’t yet ready to shop BTS.
"Isolated promotions can help drive traffic, however, especially in an industry like OP with increased retailer competition and heavier channel blurring."
Pelikan used the celebration of the 50th anniversary of its Pelikano school fountain pen to piggyback promotions and marketing campaigns onto, while ergonomic items also caught the eye of consumers with Stabilo’s Easyergonomic range and Pelikan with its Griffix learn-to-write system proving popular.
Communication with teachers is also seen as a key part of BTS marketing, with Pelikan in particular working hard on creating a relationship with the teaching community.
The company’s European PR Simone Bahrs explains: "As a leading specialist in school products, the BTS season is obviously one of our most important periods, so we spend a lot of energy on innovative ideas in making them as attractive as possible to our trade partners as well as to end-users. Teachers are a very important part of this. We’ve been publishing our Teachers’ Issues since 2002. Here, we offer teaching suggestions, handicraft ideas, pedagogical tips and further helpful materials on our website for free."
So what pointers does the latest BTS season have for the future and what hopes are there for a sustained recovery? The news according to NPD’s data appears to be good.
"Office supplies trends seem highly correlated with the overall US economy," James says. "In the office superstores, office supplies have seen year-on-year growth four out of the past six months, and the two months of decline were very small (1 percent or less). This is a change from 2009, where declines averaged between 5-10 percent per month. So, yes, we see signs of a very modest, but sustained recovery."