Published on 06/04/2016 by Punchmedia

Expansion Continues for Dominant Industry Players

On the back of the recent announcement that giant sporting goods retailer Decathlon is preparing to enter the Australian market, stationery and office supply king Officeworks is looking to increase the size of its already massive super stores as it continues to add a new range of products and services such as drones and 3D printing options. The core office supplies market is worth around $11 billion a year and Officeworks has racked up 4.6 per cent compound annual sales growth and 10.4 per cent annual earnings growth over the last six years, emerging as one of the strongest performers in Wesfarmers' retail stable. Officeworks sources believe the potential market for Officeworks is worth $55 billion a year and includes traditional office supplies such as stationery and office furniture as well as electronic products, wearable technology, cleaning supplies and equipment, food and beverages, and art and craft supplies. These upward trends from arguably the biggest player in the office supplies game, have not been felt across the board with the Stationery Goods Retailing industry's performance over the past five years being reasonably average. It is believed this partly reflects the continued move towards a paperless society, as email becomes the preferred method of communication for a growing number of businesses and consumers. Growth in the number of alternative retailers and e-tailers of stationery products has translated into downward pressures for traditional stationers however through 2015-16, the industry is still forecast to generate around $767.0 million.

Sales

The industry is expected to contract over the five years through 2015-16, however, the growing range of fashion-based stationery items and the popularity of scrapbooking has limited this contraction. Increased sales of fashion stationery items by stores such as Smiggle, Typo and Kikki.K, along with fine art supplies and scrapbooking products, have partly offset lower sales of traditional office stationery items.

Profit

Intense competitive pressures, price discounting strategies and falling paper prices due to cheap imports have constrained industry profit margins over much of the past five years. This has forced some of the larger office product supply companies to change broaden their product ranges by stocking business and home office products such as computer accessories and consumables, in recognition of the technological revolution currently reshaping communications. In June 2015, Officeworks launched its first 3D Experience Centre, complete with 3D printing options.

Consolidation

An increasing number of retail channels have been stocking industry products. For example, basic papers, notebooks, pens and pencils can be acquired from supermarkets, discount department stores, newsagents, convenience stores and even Australia Post. These bricks-and-mortar stores join the growing number of online stationery operators where industry products can be purchased. In the face of such intense competition, the industry has consolidated. Several of the smaller independent players have left the industry or been acquired by larger players seeking to shore up their position. Small-scale niche players such as Smiggle, Kikki.K, Typo and Riot Art & Craft have all opened new stores in the past five years, indicating their may still be some upward trends for the industry to come.  

punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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