Stationery and Office Supplies

SIC 5112

Companies in this industry

Industry report:

This entry includes establishments primarily engaged in the wholesale distribution of stationery and office supplies, including computer and photocopy supplies, envelopes, typewriter paper, file cards and folders, pens, pencils, social stationery, greeting cards, carbon paper, business forms, loose leaf binders, and inked ribbons.

Industry Snapshot

In 2010, D&B Sales & Marketing Solutions reported 9,306 establishments primarily engaged in the wholesale distribution of stationery and office supplies, down from 10,262 in 2003. Their combined sales were approximately $24.3 billion, and the industry employed 76,640 people. The majority of establishments were small, with almost 68 percent employing fewer than five people. With $17.3 billion, Illinois--home of industry leaders United Stationers, OfficeMax, and Quill Corp.--accounted for more than 71 percent of industry sales. The only other state to come close to the billion-dollar mark was California, which had industry revenues of $976.7 million. Texas, New York, and Florida rounded out the top five states in terms of revenues and together accounted for about 6 percent of total sales.

Organization and Structure

Traditionally, wholesalers buy merchandise from a manufacturer and resell it at a profit to other wholesalers, retailers, or industrial and commercial customers. To compete with wholesalers, superstores such as OfficeMax, Staples and Office Depot provide small businesses, and the distributors who supply those dealers, with similar merchandise for lower prices. As competition for smaller businesses intensified, larger distributors began focusing more on commercial accounts. For example, United Stationers targeted commercial accounts with $5 million or more in annual revenue, servicing industry office complexes of 50 or more employees. Unisource Worldwide also reported success in attracting and retaining regional and national accounts.

Wholesale distributors also tried coordinating their efforts with the superstores rather than trying to compete with them. United Stationers, for example, initiated distribution system with office supplies superstore Office Depot. United received products from 10 different manufacturers at its Atlanta distribution center and then within 24 to 36 hours shipped the merchandise to 31 Office Depot stores in the southern United States. United also performed this service for smaller dealers and for some manufacturers by delivering products to the manufacturers' key accounts.

Many retailers and their commercial customers began operating on a "just-in-time" delivery system, requiring their distributors or manufacturers to ship supplies as quickly as possible. With just-in-time buying, dealers or their customers placed smaller orders more often, saving them space and inventory time and avoiding tying up their money in supplies that might sit on the shelves for months. For commercial and industrial accounts, just-in-time also reduced the theft that often occurs in business.

Just-in-time ordering prompted retailers to more fully computerize their sales and inventory information, making it readily available to their distributors, or manufacturers if they dealt directly. With state-of-the-art computer equipment, suppliers could perform some of the inventory management tasks and determine what items needed to be restocked. Because dealers were keeping less inventory on hand, however, they had to ensure that the distributor could get merchandise to them quickly, often for next-day delivery.

The office supply wholesale industry also had to compete with the convenience of catalog and direct mail marketers, in addition to online dealers, with whom customers could place orders by calling a toll-free number, using a fax machine, or sending an e-mail. These suppliers also operated on slim profit margins and dealt directly with the manufacturers.

Background and Development

Distributors of stationery and office supplies saw steadily growing sales in the 1990s. Total sales for this industry grew from $27.8 billion in 1990 to $33.5 billion in 1993 and $39.3 billion in 1996. Average annual growth for that six-year period was 6.9 percent, well ahead of inflation. In 1994 and 1995, larger distributors posted strong earnings growth. One particularly strong growth area was contract business forms management.

The Independent Office Products and Furniture Dealers Association (IOPFDA), formerly the Business Products International Association (BPIA), identified four major trends affecting the industry in the late 1990s: vendor consolidation, globalization, internal competition within the industry, and liquidizations of family-owned businesses. Whereas the office supply and stationery wholesale industry had a large number of establishments operating in the mid-1990s--just over 11,450--this number diminished in the late 1990s.

As part of the consolidation trend within the industry, larger national distributors established networks of distribution centers to serve targeted regions. National distributors also turned to technology to help make them competitive with the many regional distributors. To enhance service to customers and ensure quick delivery, many distributors converted their ordering, billing, and warehouse operations to sophisticated computer hardware and software systems so inventory could be tracked easily and orders filled within 24 hours.

Meanwhile, large retailers and warehouse clubs such as OfficeMax, Staples, and Office Depot were usurping the role of distributors and buying directly from the manufacturer, their large size and vast networks facilitating the volume buying power of wholesalers. These retailers grew quickly by targeting corporate purchasers and expanding their service capabilities.

Smaller distributors were operating on increasingly narrower margins and serving a shrinking market of retail stores, and many went out of business due to a poor economy and fierce competition. Those that did survive did so by reevaluating their pricing and service policies, finding that while they often could not beat the discounters' prices, they could provide value-added services as part of the traditional two-tier distribution system. Wholesale distributors then focused on ways to better serve retail clients and to help those clients provide better customer service.

As for globalization, Paine Webber analyst Aram Rubinson pointed out at a IOPFDA meeting that international expansion did not succeed as well for Staples as it had for Viking, a contract stationer, because Viking did not have to invest in brick-and-mortar infrastructure as Staples did. United efforts within the industry also promoted globalization. For example, in February 1997 the National Purchasing Association (NPA) formed a marketing alliance with Basic Office Products Canada and Integra of the U.K. These three groups represent a total of 600 individual dealer locations with combined sales volume of about $2 billion in office product consumables.

In October 1999 the IOPFDA reported on a study conducted by the National School Supply and Equipment Association suggesting that the education segment represented a growing outlet for the industry. The 1999 State of the School Market Report noted the increase in annual expenditure per pupil--to $7,000 from $5,000 a decade earlier--as well as record enrollment increases three years in a row, with projected record-breaking enrollment every year through the early 2000s. National spending on K-12 education had increased by 51 percent in inflation-adjusted dollars since the 1970s. This growth in education ensured business for the industry, as most of its products catered to students or school administrators.

According to Transworld Information Corp., the school and office stationery sector climbed to $324 billion alone for 2002. Back-to-school sales attributed to the bottom line figure. In fact, the average consumer spent about $123.37 for their back-to-school stationery and office supply needs.

Current Conditions

In 2009, stationery and office supply wholesalers numbered 2,518 and generated $19.1 billion revenues, according to Dun & Bradstreet. Wholesalers of business forms represented the second largest category, with 2,673 establishments and $1.5 billion in sales. Third was office supplies (not elsewhere classified) wholesalers, of which there were 1,458 firms together generating annual sales of $1.5 billion. By 2010, only 393 establishments specialized in greeting card wholesale and 321 in stationery wholesale. These two segments reported revenues of $262.2 million and $228.4 million in 2009, respectively. The wholesale distribution of computer and photocopying supplies, on the other hand, was experiencing some growth, with 345 establishments generating $421.1 million in sales.

Like many other wholesalers in the United States, companies that sold stationery and office supplies were being increasingly bypassed in favor of buying direct from the manufacturer or enveloping wholesale operations within retail businesses. This, in addition to the decrease in use of paper products due to the availability of Internet and e-mail, provided challenges for the industry into the early 2010s. According to IBISWorld, however, "Advertising and special events such as elections and sports will continue to ensure the use of large amounts of paper products, in a volatile and labor-intensive environment, despite growing competition from alternative sources."

Industry Leaders

United Stationers Inc., of Deerfield, Illinois, was the largest wholesale distributor of business products in North America in 2010, with a distribution network serving more than 25,000 resellers. With 5,700 employees, United Stationers sold more than 100,000 products online, via catalog, and by direct sales through 64 distribution centers. subsidiaries included United Stationers Supply (USS), Lagasse, and ORS Nasco. United Stationers had revenues of $4.7 billion in 2009 and reported sales of $2.3 billion in the first half of 2010.

Other industry leaders included S.P. Richards Co. of Smyrna, Georgia. As a subsidiary of Genuine Parts, S.P. Richards sold about 50,000 office supply and related products through 45 distribution centers to more than 7,000 resellers. The firm employed 2,530 people in 2010. With 6,000 employees, Unisource Worldwide of Norcross, Georgia, focused on office paper supplies and had sales of $5.0 billion in 2009.

The top three office supply retailers in 2010--Staples, Office Depot, and OfficeMax Inc.--were also involved in the wholesale distribution of these products. Staples, based in Framingham, Massachusetts, sold through its subsidiary Quill Corp. and had overall sales of $24.2 billion in 2009. Boca Raton, Florida-based Office Depot registered annual sales of $12.1 billion in 2009 but was facing some downsizing due to the economic recession. OfficeMax, based in Naperville, Illinois, obtained more than 51 percent of its $7.2 billion in 2009 sales from wholesale contracts.

Research and Technology

Wholesalers have applied advanced computer technology to improve their slim profit margins. This technology improved productivity of all functions, including purchasing, delivery, storage, picking, and shipping. It also improved inventory as well as credit and information management. Using electronic document interface (EDI) technology wholesale distributors, superstores, warehouse clubs, mail order houses, and dealers can input an order and trigger the shipping and billing, resulting in faster turnaround, less paperwork, and savings on handling.

Advancing technology also had a negative impact on the office supply wholesaling industry, as more people turned to using paperless communication and transaction methods, such as e-mail and the Internet. Such a move reduced the need for stationery, office paper, and related supplies. Others, however, contended that America was a long way off from ditching their pens and paper, and that the key to staying in the business was innovation and keeping tuned in to consumers' demands. This trend was expected to continue unabated into the next decades of the twenty-first century.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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