How Covid-19 is Impacting the School/Office Supplies Category  4/13/2020

Leen Nsouli, NPD Group

Now that we've been under the stay-at-home order for a few weeks, consumers have been seeking out products that can help them and their families better cope with isolation, and many of these products are within the school and office supplies category. They include everything from arts and crafts-related materials, to organizational products for those now working or learning from home, to fun products like finger paints and slime. 

In this podcast, ECRM's Joseph Tarnowski speaks with NPD's Leen Nsouli about how consumers are now shopping the school and office supplies category during the crisis, which segments of the category are seeing growth, and how retailers and brands can best engage people while they are locked away at home.

Buyers and suppliers of school and office supplies can connect virtually at ECRM's upcoming Efficient Supplier Introductions: Click here for details and dates!

Click here to listen to the podcast


ECRM: Hey guys, Joe here with ECRM and I have with me Leen Nsouli from the NPD group a lien. Thank you for joining us!

Nsouli: I'm happy to be here, Joe. Thanks for having me.

ECRM: Today we're going to talk about how the coronavirus pandemic is impacting the school and office supplies category, and there are a lot of things happening that will make these products among the next wave of essential items. The first wave was obviously the staples for survival: food, hand sanitizer, and of course toilet paper. But now people are looking for those things to help them make it through this isolation, and achieve some sense of normalcy. Plus, you have all these people working from home for the first time. You have students learning from home for the first time. So all of this has got to be impacting the school and office supplies category. Can you give a high level overview of what's going on in the category?

Nsouli: So it's been a very interesting and insight-filled few weeks. We're being impacted in a different way. The bulk of our sales are actually still selling through essential businesses. So if you think about mass, that's still open. Mass typically makes up about 30 to 35 percent of our sales for office supplies. Ecommerce is another, it's typically about 15 percent. So obviously consumers are still ordering the supplies that they need online. You also have office supply stores like Staples and Office Depot. These were designated as essential businesses. So these stores are still open. You also have dollar stores still open. These make up about anywhere from five to 10 percent of sales as well.

Some craft stores have stayed open. They also do a good portion of industry sales, and then you've got food and drug. Food and drug sales are also designated as essential businesses and they're open. So unlike some of the other industries that have seen a lot of retail closures, for our industry, the bulk of the sales are happening in stores that have been designated as essential businesses. Now, the flip side of that, is that our consumer is actually still going to stores. And when they do, are they buying supplies? I think that's the part that we're watching in the data and seeing how it's changing. 

At the beginning there was sort of a panic, we saw industry sales, and we track some of these original essentials like janitorial and break room products such as bathroom tissue, paper towels, hand sanitizer, hands soap, and when you included those in our industry view and our point of sale tracking service, sales were trending upwards of like 83% growth a year over a year. I mean, it was incredible. If you remove some of those essentials or prevention products that consumers were buying – we're talking stationary sales – industry sales were closer to about flat to 2 percent growth or a 2 percent decline. Then once everyone started to sort of stockpile, they feel like they have everything they need, they have the food they need, they have the, the toilet paper, the paper towels, everything that they could use for the next year.

We're seeing that growth rate kind of lessened now. So, with those janitorial and prevention products included, it's trending now at about 30% as opposed to that 80 or 90 percent that we were seeing for the industry. When you remove those prevention products and are talking pure stationary sales, we were about flat this week. The industry is actually down about 9 percent. Are consumers making the same number of trips, are they spending as much time in the store as they did before? And then with businesses being closed, do, we need the same amount of output in terms of supplies right now? Right. so all these things considered, that's, that's where we're at.

ECRM: Are you seeing that ecommerce sites are delaying the shipping of the things that are not essential like food and sanitizers?

Nsouli: Yes, depending on the category. We have seen some of that and in some cases there's even verbiage under an item that that will explain what's happening with that product. 

ECRM: And that's what happened to me when I was searching for a podcast microphones, and I gave up because I couldn’t get anything till May. I figured I'll look around somewhere else and find somebody that has it because it might not be an eCommerce retailer, but if I go to a brand website, they may be able to ship it to me direct sooner.

Nsouli: That’s what we're kind of seeing in the industry. We're seeing a shift in channels. For example, drug and food, typically for us year over year it's declining anywhere from five to 10 percent. We don't usually see growth within drug and food as channels overall. All of a sudden now drug and food are seeing growth week over week. I think we saw about a 23% growth within food for office supply sales this past week. And drug last week was growing in about six to 7%. So what I believe is happening is there's a couple of different forms of convenience that consumers are looking for, but they also want safety. So if I'm going to go out and do a shopping trip, I want to go to one place and I want to be able to get everything that I can in that one trip.

That way I'm reducing the risk of exposure and I'm practicing the social distancing. They're also going to be watching and looking at what retailers are doing to mitigate the risks within the store. We've seen retailers do all sorts of things like reduce the hours, create one way aisles so that there isn't a cross flow of traffic. They're also limiting the number of people that can go in and out. All of that can also impact how many sales you can do in a day at a retailer. But the shift we've been seeing has primarily been a shift over to food and a shift over to drug. We've seen a shift to eCommerce. And then pretty soon we've got some data coming out where we'd be able to actually look at the shift within retailers. That should be out within the next few weeks. 

ECRM: I'm also curious to know if the size of the store makes a difference. Here's why: In my neighborhood of Queens, New York, I have a of different stores close by. I have a major drug chain two blocks away. I have three smaller drug chains within three blocks and then three full-size grocery stores and then a bunch of smaller markets. So when I wanted to get something at the grocery store, I saw the line outside, and instead just went over to the little organic market and bought some stuff. I didn't even care that it was going to be more expensive. There was less people in there and I could get in and out quick. And if they had some non foods or school supply things that I needed also, I would get it there too. Are you seeing that?

Nsouli: One hundred percent. So the other factor that I didn't talk about earlier is, think about where the density is greatest – in the urban areas. That's where we're seeing some of the greatest rate of spread. And if that's happening, what is the likelihood that someone is going to be taking public transit and other sort of like public commuting options that, that they might normally take to get to a specific retailer. So would I opt for something that's a lot more convenient locally next to me like a drug or like a grocery store to pick up the things that I need versus hopping on the train and then going to something that's a little bit more harder to get to for me and, and puts me at greater risk or puts my family at greater risk.

I think that's the decision making process for someone living in an urban area versus someone that might be living in a little more open suburban or rural area. They might be making very different decisions about where they choose to shop. Looking at the data on a DMA level, on a regional basis, which we have some data also coming out for that in about two weeks, and we'll be looking at that as well to kind of see what has been the impact if you were to look at primarily urban area versus a more infected suburban or rural area, and how the decision-making process is impacted.

ECRM: When you're dealing with products on the food side brand loyalty went out the window because it's like, whatever's there, I'm going to get. If brand A of macaroni and cheese a is out, I'll get B or C. I don't care. There’s probably not as much of a rush on school and office supplies, but there is a sense of that just in general and I know that if I needed something I would just get it, whatever was available wherever is closest to me. Are you seeing that as well?

Nsouli: I am. And you know, traditionally in office supplies, brands tend to have a higher share online. And the reason for that is due to things like search optimization and the different algorithm that allows them to roll up to the top spot. You also have consumer attention span. So how far down will they scroll versus when you're in a store. You see the, the branded option and the store brand option and it's very quick choice between the price points and you're making the decision based on a couple of different factors. Whereas online there's a little bit more of a control in terms of what's rolling up to the top. I think the shift will continue to online right now where consumers are buying their school from home products, their arts and craft products. The next time we talk I can take a look at what's happening with brands and what's happening with private label performance.

ECRM: Excellent. Well, what about the major categories? Can you walk us through those and how that's being impacted and where do you see it changing?

Nsouli: Sure. I'll go back a little bit of to we saw in the first few weeks of the coronavirus and then we'll talk about what we're seeing now. We had the prevention products, the janitorial and break room products were driving that growth. Also. there was a point in time where the corporations moved their employees to a work from home basis. And at scale you also saw universities closing and asking their students to either not return from spring break or to leave campus and head home. So in those initial weeks, a lot of what I would call productivity tools – things like pens, mechanical pencils, student notebooks, these types of things, highlighters – these were all posting growth in the early weeks

Once the population transitioned and they've become settled, their mindset shifts to dealinig with the isolation, to what are some of the hobbies I want to do. And then if I'm a parent and I have a co parent that's also working, how do we make sure our children are occupied while the virtual and e-learning environment gets set up by the school district. So in that first initial wave you saw that work from home professional and older student product categories sort of tick up.

You also saw some growth within things like filing and storage, people wanting to find a way to organize all these things within their home. So those went up after that now that they've settled, schools have closed, the children have come home. And now it's how do I stay occupied, how do I have fun and what are the schools products that I need so that my kids can effectively participate in some sort of school from home program. Once that happened, we've been seeing things like 60 to 65% growth within category groups like coloring and art. We've seen triple digit growth in some of the writing instruments categories. Things like color markers, window glass markers, that's sort of been the, the phases that I've seen in supplies.

I've also categorized the different sort of behaviors or lifestyles that we're tracking within our team. One is your school from home. How are you going to effectively conduct school from home? Second is watching the shift to virtual learning and what's its impact will be on school supply sales. As we go more digital, what does that do essentially to supply sales down the line? What is it going to do to supply sales during the back to school season? Those are all things that we're doing current research on right now. Work from home is the other one that we're looking at. The work from home group, and those who have kids. And then you also have your mental health. How are consumers coping? What are they doing? Journaling, painting, these kinds of things that bring piece of mind. Those will also impact category sales.

ECRM: Interesting. I have a twin brother, right? He has a 17 year old who's home from college now, but then he's got a 14 year old and a 10-year-old, so three different stages of learning, and three different ways of coping with bordom. The older one might read a book, the younger one do some arts and crafts, so it's just a different dynamic the way each will keep occupied. And a lot of these people are working from home for the first time, so they're slapping stuff together, maybe a folding table and such.

Nsouli: I know somebody who was using an upside down laundry hamper, to make a standing desk. 

ECRM: I'm sure like those organizational products are going to become really important for them. So there was an initial wave when they first started saying home, then it's slowed down. Now they're looking for lifestyle related products that will make life easier during the lockdown. Within those categories, what are you seeing happen? 

Nsouli: I could talk about this for like two hours. It's so interesting. I believe consumers need to do some sort of mental health coping, and we're seeing activities related to that. We're also seeing community connection activities. How can you connect with your community, but through social distancing and maintaining sort of that practice. And they are also looking for ways to occupy their children. How do I make sure that they're sort of staying busy, having fun, being stimulated and you know, and what are the supplies that support that? 

I'll start with community connection. There is one really cool sort of global trend that’s this rainbow scavenger hunt. People were making any sort of rainbow out of construction paper, you could paint it on your window using window markers – which were growing like 300% last week. You could take chalk and create the rainbow with chalk on your driveway. And the idea is that you could walk around the neighborhood cause everyone's doing their quarantine walk now, right? You walk around the neighborhood and you can find these rainbows and it's sort of like a scavenger hunt. And you can do that with your parents or your sister or your brother. And it makes it fun. Some people are also pinning when they find a rainbow, so others can track it and look for it too.

ECRM: I see that happening here a lot.

Nsouli: It helps them sort of connect with each other. Another community based activity is kindness messages, like thank you cards. Some people leave that on their door for the delivery drivers. Others are sending letters to the elderly within nursing homes. I've also heard of some people writing letters to patients in the ICU just to let them know that they care about them. So just different acts of kindness. Also they leave chalk messages on the street or in driveways. A third community connection is the car ride celebrations. I'll give you an example from my hometown. From my old elementary school, 60 teachers got together, they all rode in different cars and they drove around the neighborhoods to say hi to all the students. The students knew this was going to happen, and they came out of their homes and waited for the teachers to come by. And some people made signs. 

But it's just a way to connect while still keeping that social distance. Another thing the car ride celebration is being used for his birthdays. So it's someone's birthday. You can make them a sign – posterboard sales are through the roof right now at food and grocery stores. I think that's where everyone's buying their posters. But you can make a happy birthday poster and you know, hold it outside of the car as you drive by their homes and beep the horn. Some people are using car paint and draw a cake or balloons on the cars. It's just a way to kind of make someone feel special and make someone feel good in a time where they can't be with the people that they want to be with on a special day.

Another new trend is stained glass sidewalk chalk art, where you're using a painter's tape to make sort of like a contemporary art piece with the paint. And then you can color within the lines of the stained glass that you've created through the painter's tape with different chalk colors. Then you remove the tape and the end is you have this really gorgeous piece of stained glass-type art on your driveway as an example. 

We've also seen adult coloring come back. Sales of adult coloring books and family coloring books are back up on our scan data, and that's leading to sales within colored pencil sets. I think that we're finding these compliments and it’s important to allowing consumers to see that here are some cool things that you can do while you're at home on your own or with your family. The other one that I'm actually also participating in is so of course horse and wine and paint night that you could do virtually with your friends. You can all sign up for the virtual class and have to order the painting products online. And those are some of the high growth the highest growth categories for us – all the painting products right now. So people are taking these painting classes they're offering mixology classes, they're offering all sorts of things to stay connected.

ECRM: I just participated in a virtual happy hour and cocktail class run by a restaurant group in Asbury Park, New Jersey. It's live and interactive, there's a fee and all of the proceeds are going towards the bar staff who is currently not working, and they get 110 to 130 people every Saturday evening.

Nsouli: I'm taking a mixology class this Saturday. I'm excited. It's going to be fun.

ECRM: I think a lot of these things are going to carry over in some way, shape or form down the road. I think it's forcing us to find innovative ways of making those connections. For example, everyone's doing virtual happy hours. At ECRM we have all the different teams, doing their own virtual happy hours once a week to stay connected with each other.

Nsouli: That's a good way to spend a night. 

ECRM: I’m also seeing my local businesses getting involved in some of these things. There's a couple of restaurants in my neighborhood that are drawing and having customers draw different things on the sidewalk in front of it every day and everyone's participating. I think it's going to revive interest some of these craft-type items like the adult coloring books. And journaling, too. Every morning I would write a couple of pages before “journaling” became a thing and it's good to see more people doing that. The slime thing is cool, too.

Nsouli: It is. I can't believe it's coming back. That's awesome. And it's that it's both the ones that come in a kit and you've got the DIY, so that making it from scratch is coming back. The, the other thing I think that's important for me to mention is like the traditional school list categories. You know, we expected to see a bump in some of that, like loose filler paper or back up crayons, and color markers. Chalkboards are up, as are combo boards – those things you might need to teach a child something or go through lessons, those are all up too. And then journaling. It's, you know, for an older, for an older student or for a professional, 100%, but surprisingly a lot of teachers I heard are also asking the younger students to journal so that you could release their feelings, talk about their feelings as all these changes are happening and they're trying to understand it.

ECRM: This whole situation is going to drive digital engagement because all the platforms have seen a super huge spike in activity. And any brands who weren't doing digital well before this are really getting hurt because the ones that do a good job and are staying engaged. They're already coming up with cool solutions and content that's going to help people during this time. I think consumers are also more willing to spend time researching products than they have in the past. They have a lot more time to kind of dig down and find out exactly what they want and explore a little bit. And I think they're more receptive to good content cause they're online all the time.

Nsouli: Yes. I think that's something that's going to be really important to watch as we get closer to back to school. So we are, we are looking at these trends. We're also going to be looking at measuring the impact that that could have on the, the back to school season. So that sort of content, what needs to be out there, how does it need to be delivered, the communication because it's going to be a really dynamic season based on everything that's going on. We've a webinar in May to start the conversation about what we expect, what are some of the considerations that need to happen. And then as, as the, the shift has been more digital and purchasing moves online, what does that do to student’ needs and consumers’ consumption of supplies related to that. 

ECRM: What's the deal with finger paints? They're blowing up.

Nsouli: I think that has a lot to do with keeping kids busy at home. Part of is also these different like trends that I've talked about. But that's my hunch. 

ECRM: I saw on the data that you sent me of all of those finger paints were doing well. And after that was other paints and then construction paper, colored papers. Moving forward over the next few weeks, where do you see the category going? 

Nsouli: It’s hard to predict, but I could see these categories continuing to grow for a little while. We are trying to look at the data in a way to see if consumers are pantry-loading in any way on any of these supplies. For example, if I have enough crayons and colored markers and finger paints for now, will I need more in a month? Will there be a little bit of a plateau at some point or a lull in the sales and then a pickup? That’s one of the things that we're trying to look into now – understanding if this is going to be a continuous sales cycle.

And that goes back to the opportunity for brands to continually connect with the consumer, helping them support the ideas that they have right now in terms of how they're using these products and consuming them, and what else they can be doing with them. So once you feel very satiated with some of the current activities and trends that are happening, what's next, and then what are the supplies that are going to support that? I think that that's a very important consideration that brands and retailers have to stay so connected with the consumer right now to make sure that they're giving them various options and how to stay creative and how to stay stimulated, stay busy while they're at home.

ECRM: I think that's the number one thing that they should do – listen to consumers and what their needs are and just suggest things that they could do because they're dying to figure out new things to do. They have all this time home and especially someone who's laid off that's got kids, they're going to really want to fill the time. So that's probably the best advice that you could give them. What do you have coming up reporting-wise that we should keep an eye out for?

Nsouli: We’ll be sending out a few different reports. One is the economic virus report that's sent from our top advisors, Don Unser who's the head of our retail group, and Marshal Cohen, who's our Chief Industry Analyst is working on that report along with our industry advisors. So that's going out on a weekly basis. I'm part of the tech sectors. Under Ian Hamilton we have a weekly report that's also going out that talks about technology sales on a global level and that includes what's happening in office supplies. And then for our office supplies client base, there's a third report that I put together that gets sent out to our account managers, and then that in turn gets relayed over to our clients. So if there's anyone that's interested about the insights what we're seeing, what are some of the different ways they could be connecting with consumers and taking advantage of the trends that are happening, please reach out to us. We'd love to help and get you some of these insights so that you know where to, where to play.

ECRM: Excellent. Well, it was great talking to you again. Hopefully ultimately we'll be in person again next time. So thank you for all those insights and for your time.

Nsouli: Thank you for having me.


Tony Giovanini

SVP of General Merchandise

Tony can be reached at (440) 528-0416

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