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Dec 19, 2016

Why the Small Business Customer is Important, and How Retailers Should Respond

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Outside of the back-to-school season and throughout the holidays, the focus for the office supplies industry shifts to the small business and home office consumer. This consumer segment is gaining share at retail and is critical to the overall success of the industry. At NPD, we recently uncovered what makes these consumers tick, and how retailers are responding to more effectively compete and attract their business.

According to The NPD Group’s recent study, “Understanding the Small Office/Home Office Consumer,” two-thirds of small business and home office consumers report purchasing supplies at least once a month or more. This reinforces the fact that, although advances in technology are paving the way for new office solutions such as cloud-based storage, electronic data filing, document cameras, and digital boards, consumers will always need and use traditional supplies.

At the same time, vendors and manufacturers of office supplies must also understand the full scope of the needs of the small business and home office consumer. Simply providing the supplies is no longer enough to maintain a competitive edge in today’s retail environment. At retail, the emphasis has shifted to offering a holistic solution for the customer buying supplies.

Here are three ways retailers are adapting and changing in order to more effectively compete and grow their share of the small business and home office consumer:

Providing High Value Services
Approximately half of small business and home office consumers indicate that having in-store experts is “extremely to very important” to their in-store experience. It’s important to remember that this service isn’t limited to the physical store; experts can be made available through text, phone, or video chat. Advances in artificial intelligence are also helping to provide quick solutions and satisfy the needs of this important consumer. Other valuable services that retailers are providing include promotional or logo printing, solutions centers, and co-working environments, and these are increasingly being made available online to increase the level of customization for the customer Services which small business customers find lacking are related to speed of shipments and an incentive model that rewards long-time customers. Retailers should explore ways to capitalize on these opportunities.   

Having an Office Solutions Perspective
At retail, simply offering a great product is no longer enough; it’s about providing consumers with an experience that they’ll remember and want to repeat. The small business and home office consumer is not just looking to buy a pen or notebook – she is looking for solutions that will help to optimize the whole office, from writing to sanitation and breakroom needs, and at a sensible price. Consumers also want to be able to find these solutions across purchase channels.

Office supplies retailers are expanding the customer experience in the store, online, and are connecting the two. The customer experience encompasses everything on the path to purchase, from the research phase, to receiving the product, and the post-purchase period. Although the consumers may know they need a specific item, retailers and manufacturers have the opportunity to also remind consumers about what else they need during their shopping experience. After all, impulse purchasing is common, with almost half of office supplies purchasers indicating they buy on impulse at least some of the time. Factors such as sales, clearance events, and purchase frequency tend to drive the rate of impulse purchases up for small business and home office consumers. Providing a holistic solution to serve whole office needs and optimizing the user experience across all channels will drive loyalty, spending, and will grow share of this important demographic. 

Offering Loyalty Programs and Purchase Incentives
Most retailers offer some type of reward or loyalty program for their customers, but not all offer programs designed or tailored to the small office or home office consumer. Almost half of such consumers feel it is “very or extremely important” to offer some type of awards/loyalty program. This is especially true among those purchasing for a small office of 31-50 employees who tend to purchase not only more supplies, but more frequently as well. When asked about the preferred benefits of these programs, small business and home office purchasers cite shipping benefits, special discounts, and earning points or cash back incentives. These programs also satisfy the concept of providing a holistic solution for the business customer, and meeting their needs across supplies.

There does, however, seem to be a gap either in the awareness level or availability of a program that rewards based on time-in. For example, a customer with 10 years of membership and consistent purchasing wants to receive enhanced benefits compared to a customer with only two years of membership. In building strong, long-lasting relationships with these consumers, this type of rewards model would make sense.

These are three big ways retailers are expanding in-store and online services to better meet the evolving needs of small business and home office consumers. These consumers are looking for holistic office solutions that deliver convenience and value, and they want it all done quickly. Expect to improve consumer acquisition and retention by meeting these requirements and closing the existing opportunity gaps.

Upcoming Event

Home Improvement Insights Summit

Date: September 24, 2019 | 2:45 p.m. – 3:15 p.m. CT
Location: Sofitel Chicago | Chicago, IL 
Presentation: Planning for Growth: Understanding the Online Home Improvement Consumer
Speaker: Leen Nsouli, Executive Director, Industry Analyst – U.S. Home Improvement
Overview: The retail marketplace is still in the midst of an ongoing online shift now more rapidly than ever before. The availability and advancement in technology at retail is changing the way consumers shop and purchase. Generational shifts in lifestyles and values are also impacting the sales of retail categories. The home improvement market is anticipated to grow as generation cohorts enter key life moments. This presentation will provide an overview of the size of the home improvement market, the products driving growth and declines, channels shopped, what motivates the consumer to buy, and key behavioral factors of the DIY consumer. Members can anticipate that the content will help them identify opportunities growth, how to connect with the online consumer, and what barriers they will need to overcome in the years ahead.


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