*NEWS*THE CONSUMABLES CUSTOMER !

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*NEWS*THE CONSUMABLES CUSTOMER !

 user 2005-11-07 at 10:27:00 am Views: 55
  • #14523

    The Consumables Customer and the Importance of Product Facings
    Most
    in the supplies industry know that printer manufacturers depend on the
    strong margins of consumables to help produce profitable results. The
    leader in the industry, HP, reported that 58% of its third-quarter
    results came from supplies. That is a lot of money considering that
    HP’s Imaging and Printing Group reported total revenue of $5.9 billion.
    Supplies are big business with estimates that the worldwide supplies
    industry will gross $55 billion this year.
    Retailers want to ensure
    that their channel remains the largest sales outlet for supplies. They
    provide many incentives for customers to shop for their supplies in
    retail. Retailers attract customers through in-stock guarantees,
    recycling programs, promotional efforts, customer support, and
    convenience. These efforts bring customers to the store, but they do
    not guarantee that the customers can identify the products they need,
    an equally important part of the sales equation. Product facings help
    customers easily and quickly locate a product on retail shelves.
    The
    number of times a product appears on the shelf brings strength to any
    item in retail. Of course, obtaining highly valued retail shelf space
    can be tricky and expensive. Since selling product in retail is so
    expensive, manufacturers need to obtain the biggest bang for their
    buck; that is why having multiple product facings throughout the retail
    store is important.
    Having multiple product facings is like
    advertising to the customer without a campaign. When a product is faced
    multiple times within its department, the customer is more able to find
    it because it pops off the shelf. Additionally, when a product appears
    outside the consumables aisle, it reminds customers to add the item to
    their cart.
    Current Analysis started tracking the product facings of
    inkjet consumables in the Dallas market almost a year ago, and the
    results are quite surprising. The number of house brand product facings
    is increasing. In addition to new SKUs, retailers are showing multiple
    product facings of high-volume SKUs. The following chart illustrates
    the percentages of product facings at the retail stores we visited. The
    second chart shows the rise in the number of third-party product
    facings and the subsequent decrease in OEM product facings.

    *Data
    is from a survey of select stores within the Dallas, Texas, market:
    Best Buy, Circuit City, CompUSA, Costco, Best Buy, Office Depot,
    OfficeMax, Sam’s Club, Staples, Target, and Wal-Mart.
    A majority of
    the OEM players continue to hold onto their product facings, but
    Lexmark is losing them to third-party supplies. In December 2004,
    Lexmark held 13% of the product facings at the retailers surveyed.
    Since that time, the manufacturer’s number dropped to 9%. Meanwhile
    Office Depot, OfficeMax, and Staples increased the number of product
    facings of their respective house brand supplies.
    The threat of
    house brand supplies is going to continue to increase now that
    retailers have a taste of the profitable results. Their onslaught will
    change the retail landscape for OEM players. OEMs will have to fight
    even harder and pay more money for the retail space and product facings.
    This
    is only a sampling of retail product facings. However, if OEMs consider
    the amount of face time they are losing to customers in one market,
    they will recognize that the situation is much grander on a national
    scale.
    Consumables customers, like all customers, want to be able to
    find a product easily and move on with the rest of their shopping
    experience. Having multiple product facings allows the customer to find
    the product they need without hassle. More than half the battle of
    reaching the consumables customer is putting the product on the shelf.
    Being able to provide multiple product facings in retail is the way to
    ensure consumables sales.