Specialist stationery: What’s behind the surge?

In one of the most surprising turnarounds in retail, stationery is now hip with sales booming for a new generation of brands.

To see how much has changed, just visit one of the new breed of stores and you’ll find yourself immersed in a world of colour and artful expression. From writing pads to drawing sets, binders to diaries, product lines have shifted from the functional to the fun and merchandising emphasises style ahead of discounts.

That couldn’t be more different from the experience a decade ago when a visit to a traditional stockist was about as exciting as the blue staplers and yellow bound A4 legal pads piled onto the shelves.

Find yourself immersed in a world of colour & artful expression.

The other surprise is that in an increasingly globalised retail industry the revolution in stationery started in Australia with the opening of Smiggle in 2003. Pioneering founders Stephen Meurs and Peter Pausewang based their strategy on the key insight that one of the most important set of customers – school-aged teens and young adults – found traditional stores boring.

Now part of the Just Group, Smiggle opened up a yawning gap in the market and has expanded to 200 outlets across Australia, New Zealand, the UK, Singapore and Ireland. Double digit sales growth in 2014 has seen retail analysts like Jordan Rogers of UBS forecasting Smiggle could double its size to 450 stores in ten years’ time.

Smiggle’s success tempted Cotton-On Group to launch Typo in 2009 with a format matching stationery with homewares and gifts. Typo now boasts stores in Singapore and the UK and many expect both brands to expand into continental Europe and cities like Hong Kong, Shanghai and Tokyo.

While Typo and Smiggle sell style and creativity, at the other end of the spectrum is a giant of the trade, OfficeWorks. Part of the Wesfarmers Group, OfficeWorks shunned the fun and followed a classic ‘category killer’ strategy based around big box stores and everyday low pricing.

That has made it popular amongst stationery’s biggest buyers – businesses, as well as the more price conscious occasional stationery shopper.

What the major chains have in common is sophisticated Enterprise Resource Planning systems linking sales and customer data to distribution centres and headquarters. This allows executives to streamline inventories and analyse sales down to the hour and respond to trends quickly.

These divergent themes of artful fun on one hand and high-volume price leadership on the other have left the mainstream of the industry, standalone high street stores, stranded. Adding insult to injury, the rise of the internet is reducing demand for writing materials while enabling a new generation of online competitors to enter the market.

The rise of the internet is reducing demand for writing materials.

The result can be seen in IBISWorld’s analysis of the industry; sales have fallen by an average of 2.8% over each of the last five years, down to just $787 million.

For owners of retail properties, that makes catering for a stationery business a tricky proposition. New age brands are a regular in most regional centres, favouring smaller outlets in high traffic positions and CBD centres are attracting online groups like Notemaker, keen to open physical stores to complement their cyber brands.

But for old-school high street stationers, the brave new world has thrown up an existential challenge – find new ways to bring the romance of writing back to your customers or figure out a way to win a price war.

Booming sectors: The ink industry – A booming niche for retail