*NEWS*THE CONSUMABLES CUSTOMER !
*NEWS*THE CONSUMABLES CUSTOMER !
2005-11-07 at 10:27:00 am #14523
The Consumables Customer and the Importance of Product Facings
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.
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
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.
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.
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
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.