Sector Analysis: Writing instruments



An upward slope


by Felicity Francis


The last two years have seen a decline, but the current state of the market looks positive. OPI talks to a few manufacturers to find out what has changed in writing instruments


News headlines in the writing instruments sector in 2009 were fairly depressing, with companies such as BIC reporting lower net sales in stationery units without much hope of recovery until the following year. But 12 months later, despite a still tough economy, 2010 pulled through with more positive results.


In September 2010 research company GfK Retail and Technology reported that it was "encouraged" by early data from the back-to-school season in the UK with writing instruments sales showing positive growth. It said that revenues grew by 4.4 percent in August 2010 compared to the same month in 2009. But, as more recent figures show, it wasn’t just plain sailing for the sector.


Joshua Fedder, Retail and Technology Account Manager, Stationery at GfK, reports a mixed picture for the writing instruments market at the start of 2011. "Tough economic conditions have failed to prevent positive sales figures in many key routes to market," he says. "However, specifically comparing the office and retail markets, different pictures have emerged.


"Over 2010 we’ve observed struggling figures within the B2B market, driven by the continuing restriction on office stationery cupboard budgets. Despite this, the market has grown in both volume and value terms by 2.9% and 1.2% respectively (Aug-Nov 2009 vs 2010). However, this growth is being driven by own-label products to the detriment of the key stationery brands. In contrast to this trend the retail channels have chosen to place more focus on the established brands rather than their own-label products, which has had a positive impact leading to both volume and value growth (see table above).


"Focusing specifically on the supermarkets, valued at £25 million ($39.7 million), we’ve observed a 7.8% value growth from the brands, driving the total value of this route to market up by 4.7% (Aug-Nov 2009 vs 2010)."


While retailers and businesses report different results, so do different countries. "Despite the global crisis, the writing instruments market did not shrink in 2010, but increased in value for the five big countries in Europe (UK, France, Germany, Spain and Italy)," observes Alex Sinclair, Marketing Manager at Pilot Pen (UK).


"When you compare sterling with sterling, year on year, it shows there is a real recovery in the UK. The country where the writing instruments sector was the strongest in 2010 was France, with 6.6% value growth, but Spain and Germany are also recovering."


Stuart May, Trade Marketing Manager of Stationery at BIC, speaks for the US. "After a challenging period during the worst of the recession, we saw a definite recovery in writing instruments sales in the US in 2010."


Purchase decisions


Along with fluctuating market success, those in the industry have also noticed a change in customer criteria when purchasing writing instruments. Consumers seem to be moving in a number of ways, with economic influences having very different effects. "The biggest change has been a move back to basics," says Chris Farley, Director of Marketing at Zebra Pen. "With the economy the way it is consumers are not splurging on new inks, colours and so on. A resurgence in the basic ballpoint pen has occurred over the past three years or so. We are just starting to see a shift back to gels and fashion."


Sinclair at Pilot has noticed the opposite trend, with sales volume making much less progress compared to product value. "This demonstrates that even with the price rises seen over the past year, consumers are ready to pay for quality and innovative products, and trust brands that offer good value."


If we combine these two observations, we can see a trend for purchasing basic, though high-quality products. This is similar to many other product categories in the OP industry. But human nature also dictates that the consumer doesn’t want what every other customer purchases.


"Writing is a personal preference market," says Farley. "You need to appeal to many people, but ‘one-size-fits-all’ is a strategy that does not work in the writing instruments market." So how indeed can a manufacturer or dealer stand out from the crowd? It’s time to get personal, in the opinion of three manufacturers.


"Engage the consumer!" says Farley. "This has been facilitated by social media, but it is important to survey and listen to the consumer."


May at BIC has a similar view. He says: "When BIC partners with a customer, we share the ‘voice of the consumer’. Advanced data mining technologies, expanded syndicated data offerings and the explosion of the social marketing scene, all of which provide consumers with a direct voice to the manufacturer, enable us to better anticipate consumer needs and wants."


And to add another voice, Sinclair believes that getting close to the distributor is the way to develop new products that stand out for the consumer. "The best solution we have found is to really develop the communication and close relationships we have with our distributors to anticipate new trends and customer expectations. We have a strong research and development department to find solutions to these expectations."


More than just writing


When asked what customers will want next, Sinclair isn’t clear, however. "It is very difficult to say," he says. "For many years now the end of pens and paper has been predicted, but as we have seen, the opportunities continue."


Sinclair has a point: if sales have continued to improve throughout 2010 despite the tail end of the recession still making its presence felt, there is every chance that this may continue throughout 2011. Of course, one factor that will impact the writing instruments sector hugely is the health of the paper market, and there have been worries in this sector for some time.


Some people still believe paper has a vital function, such as Lewis Fix, who manages Domtar’s sustainability activities and said in last issue’s Lyra article (see ‘Chasing Paper’, December 2010/January 2011 OPI, page 38): "With the research we’ve looked at, we think that’s a myth, that a paperless world is not a relevant goal because there are things that you do better with paper when it comes to learning, to workflow, to referencing something quickly."


Despite Fix’s confidence, the increasing ‘think before you print’ culture is affecting the paper market. According to InfoTrends research, the number of A4/A3 printed office pages has been falling by about 3% over the last few years and this trend is expected to continue. The situation has been exacerbated, of course, by the global economic downturn with an estimated 10% fall in printed office pages in 2009.


Time will tell what the knock-on effect will be in the writing instruments market. But despite this gloomy topic, BIC’s May remains positive. "We are seeing a continued growth in our ‘bold’ writing – larger point sizes, marking etc – and expect that trend to continue in 2011," he says. "We also anticipate continued growth in the areas of sustainability or green products."


Added to this, Farley has predictions about future trends that we should watch out for. "New ink technologies are making their way across from the Asian markets that are focused on extreme writing smoothness," he says.


When asked what customers will want next, he replies: "Style and fashion. I see writing instruments becoming more and more of a way to express yourself through colour, style, functionality and so on."


Whether or not the writing instruments sector itself will stay in fashion despite the challenges it faces is something worth looking out for.