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Profiling instrument for the toy trade / drop shipping under pressure / changing market shares

Among the most attractive "supplementary product ranges" with the greatest synergy effects for the toy trade are school articles and stationery. The motive for the trade to supplement its toy portfolio lies primarily in correcting the powerful Christmas bias in the toy business.

School articles are purchased over several months and are certainly not just products for starting school. Expendable materials needed throughout the year, such as pencils, erasers and notebooks, play just as important a role in this varied assortment as the must-have school bag or the bag of goodies given to children to "sweeten" their first day at school. It’s often the half-yearly school reports in February that set this process in motion. Then the sale of school bags often accelerates in March and at Easter, and reaches another high point in the last three or four weeks before the holidays. Experts have estimated that a third of parents buy their school articles in the holidays. During the first week back at school, there are a lot of replacement purchases.

School articles and stationery are a means of retaining customers and raising the image profile. The specific role the range is expected to play within the core toy business depends, however, on location (for example, a local provider) and the particular aims of individual toy retailers. "Professionalization" usually leads to significant growth in sales. Professionalization means primarily defining the range as profile-raising with corresponding presentation, events and marketing managed in exactly the same way as for toys. Toy retailers are now offering their own "school bag parties" and/or are taking part in the competition "The golden goodies bag". This is transforming them into "raiders" in the stationery business. Thomas Grothkopp, Managing Director of the office equipment trade association (Bundesverband Bürowirtschaft – BBW) is convinced that developing this second business expertise is the key to success.

The stationery industry in Germany estimates its market volume to be about 8 billion euros. Offices and administration account for 4.6 billion of the 7.7 billion euros; the remaining 3.1 billion euros are attributed to end consumers. This turnover includes school articles, greetings cards and the hobbies/handicrafts group. According to BBW, the total trade in stationery, paper products, school and office articles grew by 2 per cent in 2008. Although the basic demand is being increasingly met by industry outsiders like self-service stores, food stores and discounters – estimated to be up to 30 per cent – specialist shops and stores are still covering two-thirds of current school articles. And while the Internet registers one success after another in the case of textiles and books, it has made hardly any impact as far as school articles are concerned. More than 95 per cent of sales are still being achieved by the conventional shops. A fundamental reason: the average till receipt shows customers spend less than 10 €.

Not all product groups benefited from the sound economy in 2008; some core areas of the stationery market like writing utensils (-2 per cent) and painting and drawing materials (-6.2 per cent) did not escape unscathed. Above all, the global economic crisis is currently hitting drop shipping hard – in some cases companies are reporting double-digit percentage decreases in business. The general state of the economy is reflected by the export of office supplies. The collapse of practically all European markets is the rule rather than the exception, and this applies to Eastern Europe in particular. In Germany, private consumption has turned out to be a small measure of support for the industry. The market in France is also proving to be relatively stable. The number of stationery shops quoted in Germany varies. BBW assumes there are just under 4,000. But the macro market for office stationery is being squeezed increasingly by drugstore chains and discounters on the one hand and by Internet mail order companies on the other. Insiders estimate that the first two suppliers mentioned above have a market share of approx. 30 per cent in the case of school articles.

Low birth rates are not only a challenge for the toy industry. They impact equally on the market for stationery and school starter product ranges. So manufacturers of school stationery and the retail trade will have to devise strategies to stabilize sales or even increase market shares despite the drop in the number of schoolchildren. One way of doing this is to broaden the product portfolio – remember the cosmetics line of a world-leading manufacturer of "lead pencils", and also how Eberhard Faber has always operated as an OEM manufacturer – with a broader product range or new sales channels, such as chemists’ shops that stock magnifying glasses for reading. Another point is that in recent years the per capita turnover per school child has been raised.

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