Spoiled for choice

There’s an old retail philosophy – limit your customer’s choices. A rainbow of options might be a feel-good factor behind the counter, but from the buyer’s perspective, it can be a decision-killer. It’s a known fact that when confronted with too many choices, some customers will simply walk away.

Henry Ford imperiously told his motoring public they could have any colour of the Model-T, as long as it was black. Paper merchants have been guilty of the opposite sin – the variety they have presented in this relatively small market, often in heated competition with one another, has been overwhelming.

The cold truth is that a star-studded paper portfolio sits awkwardly with today’s market realities. Specialty houses aside, printers locally and globally are now producing shorter runs, generally on lower-quality grades. Rapid turnarounds on smaller jobs, and electronic attrition have reduced viable stock choices.

Australasian giant Geon has recognised the need to trim its stocks palette. Phil Rashleigh, national procurement manager, says while the group offers a comprehen­sive range, “we also recommend to our customers our house stock grades, which comprise three leading market brands covering coated text, coated cover weights and uncoated offset products”.

He agrees that the suppliers have been guilty of overdoing the options. “Merchants are offering too much choice at present, however, this is changing with consolidation of companies and marketing brands. We have successfully reduced our range of stocks and also consolidated to one standard size wherever possible.”

Rashleigh does not see clients pushing the Geon to keep unprofitable supply channels open. “We get specialty stock requests for smaller jobs but by far the high-volume work is concentrated around regular house grades.”

Most customers actually prefer simplified options, he tells ProPrint.

“They don’t necessarily want to worry about the different grades available. If it’s high-quality, white, feels good and looks good, that’s all they want. This is very much the case for financial institutions and large-volume mail customers.”

But customers still demand quite a variety of stocks – that’s been the experience of Michael Schulz, director of SOS Print & Media in Sydney. “So we need to offer quite a range.”

The globalisation of printing has made the challenge steeper, he says. “We sometimes have difficulties with global customers who specify stocks that are not readily available in Australia. Matching them is not always easy.”

Short notice

It means merchants have to be ready to supply on demand. Schulz makes the point that SOS, like many other Australian print businesses, operates a near ‘just-in-time’ workflow, and keeps little paper stock in inventory. “We do carry some house stocks, especially in digital,” he says. Digital tends to run to short-term demands and deadlines far more than litho and it is important to be able to slot in rapid-turnaround projects without halting the process for paper orders. “But the majority of our offset jobs is produced on paper ordered for each job.”

There’s been a significant change to the Spicers range over the past few years, reports Paperlinx’s manager for emerging business, Rohan Dean. “The reason is twofold – firstly dramatic attrition in volumes and a significant reduction in the use of higher-value specialty products. Both have been created by the economic slowdown and evolving technology, where print budgets have been trimmed and the reaction is generally to print less or on a lower-quality grade.

“To a lesser degree, a shift from analogue to digital has created an adjustment to our range as well. But this has mainly created additional products to complement our range.” In fact, Dean attributes the recent merger of Spicers, Dalton and iMedia to the need for streamlining portfolios. “Instead of currently having three price books, three sample kits and three websites, we will now have only one of each. Therefore, keeping this one consolidated range up-to-date within these mediums will be far easier and less costly.

“But, most importantly our customer will now only have to go to one place to review our range.

“This is consistent with the other benefits to our customers of only having to make one phone call and receiving one invoice, one statement, and so on,” adds Dean. The challenge, he says, is to ensure reliability, not a dazzling plethora of choices. Printers do not want new stocks all the time, but they do depend on a stock being in supply.

“I wouldn’t say they are insisting on a highly featured portfolio, but they’re insisting on us keeping it in stock if you are promoting a grade. I don’t believe they are too concerned about having less choice. They’re far happier to know that it will be in stock when required. Fundamentally that’s a paper merchant’s core function. It’s more about depth of stock holding and less about the breadth of range,” says Dean.

Cut in half

Dean says, for example, Spicers not so long ago carried six coated wood-free (CWF) grades. It now carries three. Considering that CWF volumes have fallen by more than 25% in the past two years, it is impossible to keep six grades available in the requisite quantities. It is far better to focus on fewer and keep a greater level of stock in the chosen ones.

But which ones? Dean says that can be a bit of a crystal-ball act. “The industry is a notoriously poor forecaster, which means keeping all SKUs in stock is incredibly difficult, almost impossible. We do have a very sophisticated stock re-ordering program, but it’s only as good as the forecasts you provide it with. So our focus is to continually work with our printer customers to ensure that the most current data from the most current ‘fashion’ is placed into our ERP system.”

Stock standard

Catherine Doggett, national marketing manager at KW Doggett, says the merchant has streamlined its stocks to provide fewer options and more volume in its best-selling lines. At the same time, Doggetts has expanded its range to accommodate growth areas such as environmental papers, digital papers, packaging and labels.

“It is challenging to exit out of products in odd sizes, unpopular weights or seasonal colours. This is why we have a wholesale paper outlet adjoining our Melbourne warehouse.

“We feel we have a good choice across most paper categories, we try not to double up with too many similar stocks. Printers prefer us to have better depth than too many options. Nothing worse than getting the order and being out of stock,” she says.

“Demand drives supply. Basic white coated and uncoated paper will always be the best-selling product but value-add or highly featured products give the printer other avenues to source business.”



Paper portfolio rightsizing

When merchants seek to transform paper choices for printers – and ultimately printers’ offerings to end users – it is a balancing process. Cull too hard and a merchant can knock out a market favourite. Go too softly and they’re left with too many stocks that have only borderline demand, while dragging on inventory costs.

With today’s razor-thin margins, all players want to keep it moving. Printers do not want to be left housing unwanted paper stock holdings, too far in advance or following a project. It’s demand-driven, and merchants know that if a stock is either not a hot vertical performer for a specialty customer, nor a general market favourite, it will end up sleeping on the warehouse shelves and draining profits.

Tony Bertrand, marketing & business development manager at BJ Ball, is an advocate of choice – but the right kind. “The choice covering paper’s application has not been affected through the rationalisation [of the printing industry] as we continue to stock and deliver the relevant papers for the market.”

He lists three critical products from BJ Ball – EcoStar, Titan and Icon – as examples of knowing what to keep.

Imagine, he postulates, what would have happened if BJ Ball had axed EcoStar from its offerings. This 100% recycled post-consumer waste coated and uncoated paper has led to the development of an environmental market among end users such as government and corporates, he says.

Similarly, Titan Gloss and Silk are highly popular and their consistent delivery is a cornerstone of BJ Ball’s business, Bertrand said. And Icon papers have been in strong demand from digital printers. “As the market continues to consolidate and shift there is a growing requirement for simple but uniquely specialised products.”

Knowing exactly what’s hot and what’s not enables merchants to trim their menus effectively. “The end user is increasingly aware of what they want when it comes to the specification of paper stocks. Our research has concluded that there are very distinct requirements in the majority of end user vertical markets. Therefore, we have a relevant and specific solution for that requirement. Carrying too broad a range is unnecessary in today’s market and, as an organisation with specialist areas, we are more focused on delivering solutions with relevant choice.

“The challenges are those experienced by most businesses when realigning a range of products. Timing is important, as well as ensuring you communicate those changes effectively.“

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