Positives from BTS, says NPD
Flu-related items boost the market, while must-have Back-To-School supplies and laptops weather the recessionary storm
Market research company NPD says that there were a few bright spots for the US school and office supplies and consumer technology sectors in the 2009 Back-To-School (BTS) period.
NPD measured BTS sales at Office Depot, Staples and OfficeMax retail outlets during a seven-week period from 26 July to 12 September. While there was no arrest in the overall downward trend, there were some individual product categories that showed dollar growth.
According to NPD’s weekly tracking service, revenue for school and office supplies at the office
superstores declined 3 percent during the period to $677.2 million.
However, sales at the office superstores got a boost from flu fears, as hand wipes, hand sanitizer, hand soap and tissues saw the biggest year-over-year revenue boosts with triple and quadruple digit increases. Other heavily promoted "must-haves", such as office paper, presentation products, folders, notebooks, appointment and planner books, and calendars all saw dollar increases as well.
"BTS at the office superstores was not bad considering the economy and what we experienced during the first half of the year," said Perry James, President of NPD’s office supplies business.
James says that consumer shopping habits, like in 2008, were heavily influenced by in-store promotions.
"We even saw some strength in July as consumers went into the market earlier driven by the strong promotions," he told OPI. "The market actually saw year-over-year growth four weeks in a row in late July and early August, which was enough to drive an OK BTS season."
However, James did note that shoppers were still highly selective about what they bought.
"Categories with dollar growth were often those where retailers ran promotions and so were able to drive traffic," he said.
"Consumers are consciously making decisions and delineating between must-have replenishment items and those they can make do without or what they already have," added James. "Categories like hanging files, staplers and even self-stick notes did not do that well this year."
Meanwhile, consumer technology revenue for the seven-week period in the overall US retail sector declined 12.5 percent versus 2008 to $7.6 billion, according to NPD.
Notebook PCs were the largest dollar category in consumer technology and made up 21 percent of all revenue. Revenue was flat with 2008 as the average selling price of a notebook PC dropped from $804 in 2008 to $624 for the 2009 BTS season, dragged down by low priced laptops and netbooks.
"Notebooks seem to be recession proof and this BTS season was no exception," said Steve Baker, VP of Industry Analysis at NPD. "We are seeing more consumers opt for netbooks and low cost notebooks under $500 as viable options despite the changing economy."
Netbooks were a big draw this year accounting for 14 percent of all notebook units sold for BTS, up from just less than 2 percent of sales last year.
However, Baker notes that when consumers are faced with a choice between a low price full-size laptop and a netbook, they usually opt for the laptop.
"During BTS we did actually see some percentage declines in volumes of netbooks when compared with the rest of the year," Baker told OPI. "This was due to aggressive pricing on full-size notebook and the specific needs of BTS consumers."
In the printer category, Baker notes that the recent trend of price and volume stabilisation continued this BTS.
"This is pretty much due to the growth in wireless MFPs," he says. "Wireless fits in better with the way people are using their computers today. "Many families may have two or three notebooks and a wireless connection is much more convenient. This reason to upgrade is driving the market."
However, Baker admits that the office supplies superstores (OSS) still struggle to really compete in the technology category.
"On the technology side the OSS have been challenged, especially in BTS," he argues. "Any incremental increase in BTS is basically notebook computers and this has been a problematic category for the office suppliers. They’ve dabbled in it, but it’s difficult for them to compete with market leaders Best Buy (on choice) and Wal-Mart (on price).
"That said, we are comparing them against the two main notebook retailers," he adds. "Staples and Office Depot are still in the Top 10 in the US. Circuit City went away and now there is just a gap between Best Buy, Wal-Mart and everybody else."
Mass retailers such as Wal-Mart and Target continue to pose a major threat to the OSS in the BTS season with a strong promotional message based around a one-stop shop theme for all consumers’ BTS needs. Anecdotal evidence would appear to suggest some channel shift in favour of the mass retailers.
The big question is if this represents merely a temporary change due to the recession or a long-term shift in consumer purchasing behaviour.