In Australia, the office products market is a profitable industry where companies compete for market share and customers. These companies retail or distribute products in each market segment of the industry, such as: writing instruments, paper and stationery products, computer accessories, filing and storage products, presentation products, general office supplies and office machines. Some companies have expanded their market presence to other business operations such as printing, canteen supplies, packaging products and other office services.
The office products market has a competitive landscape as demand is closely tied to the level of business activity.
However, the office products market in recent years has suffered the effects of the economic downturn. New trends and developments have helped shape the industry as companies attempt to recover their losses and grow their businesses.
Inventory Efficiency vs. Service Quality
Large distributors with sophisticated computerised inventory and order systems have been able to operate more efficiently than small and mid-sized competitors, creating a competitive advantage over their smaller rivals. However, many small distributors can still compete successfully by providing superior customer service and distributing specialty products.
The Power of E-commerce
The efficiency and convenience of ordering office products and supplies online from dealers with elaborate distribution networks threatens smaller less digitally oriented operators. Suppliers that do not invest heavily in the latest computer technologies will be at a large disadvantage. Many of the large retail chains are currently growing their internet and catalogue sales while office supply distributors are increasing their online procurement activity.
Creative Promotions
Many companies undertake creative promotions by capitalising on peak months such as the “Back to School” season that occurs in January and February. “Back to School” related promotions help the office products market generate a significant boost that compensates for the low demand months through the year.
“Hi-Low” Pricing Strategies
Most large office operators like Corporate Express, Officeworks and others use “hi-low” pricing strategies to sell higher profit margin products wherein they charge low prices for conspicuous high volume commodity items like office paper. Office product suppliers can earn higher profit margins on the high-priced items because companies are willing to pay more for the convenience of purchasing all supplies from one supplier.
Purchasing Associations
While large office supply chains receive very competitive pricing from manufacturers, small retailers and other office products distributors have formed purchasing associations to negotiate similar volume based pricing. Purchasing associations have become more powerful as they join other buying groups; this has resulted in a few major associations with substantial buying power.
Market Expansion
These days, many companies have ventured into other market segments such as printing, promotional, janitorial and office furniture.
In this highly competitive and volatile office products market, the best run companies have leveraged these trends in an effort to gain more customers, achieve sales targets and expand market presence.
Penfold Research is headed by Andrew Penfold. Andrew has been a leading industry researcher since 1999 and before that worked in marketing for a major office products retailer.
Contact Penfold Research for more information on how we conduct our research services including providing printing industry trends and office supplies market reports.
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