An Overview on the Office Equipment and Supplies Industry

The office equipment and supplies market involves:

  • The manufacture and sale of paper, storage and other equipment, business forms and stationery
  • The manufacture of office technology equipment for office services (photocopying, printing, and binding)
  • Equipment such as facsimile, calculators, cash registers, and coin and currency counting devices. Office furniture, office equipment, water coolers, computers and telecommunications-related equipment are excluded. In stationery and office supplies, office filing supplies, file folders, envelopes, greeting cards, blank books, carbon paper, inked ribbons, albums, scrapbooks and binders, pens and pencils are included.

Key characteristics

The U.S. office equipment and supplies industry is highly competitive and concentrated. The top 50 companies account for nearly 75% of revenue. Demand is determined by the level of business activity, which, in turn, is determined by the level of efficiency. Large manufacturers of office equipment like Xerox have to deal with economies of scale as new competitors enter the industry. Smaller manufacturers compete by offering specialized services.

In addition, the office equipment and supplies industry is cyclical and therefore closely related to varied cyclical fluctuations mainly of the U.S. economy, but also of the European economy. The first key sector comprises of companies that manufacture digital office equipment, such as copiers, printers and facsimile and sell them to small and medium-sized companies or large financial institutions and government agencies. The second key sector comprises of office supply distributors, including retail chains (Staples, Office Depot and OfficeMax), contract stationery suppliers, online suppliers and international operations.

Key Statistics

According to MarketLine, the office equipment and supplies industry recorded a 3.2% growth in 2011 reaching a total value of $200.9 billion. By 2016, the market is estimated to reach $240.1 billion, an increase of 19.5% in five years.

The key segments of the office equipment and supplies industry are three:

Global Industry Analysts estimate that, by 2017, the global office writing and marking segment will reach $22 billion as a result of product innovation that will be able to satisfy consumer demands with a variety of new products and generate growth. In developing markets such as the Middle East or Latin America, where consumers are not that literate or sophisticated, low-cost pricing will be the key factor to generate growth and raise the literacy rates.

According to TechNavio, the global printer segment is expected to record a 5% year-on-year growth between 2011 and 2015 due to the growing demand for all-in-one printers.

Finally, Markets and Markets estimate that the large format printers (LFP) segment will record a 6% year-on-year growth between 2011 and 2016, reaching a total value of $13 billion. Although recessions had a major impact on this particular segment, the LFP market has bounced back as a result of an increase in advertising and a higher demand for billboards, banners and non-digital signage from small and medium-sized companies in the US but mostly in the Asia Pacific.

Growth orientation

Most of the key players in the office equipment and supplies industry are growth-oriented. The companies use three key growth engines to stimulate sales and improve their positioning in the competitive landscape of the industry.

The first key growth engine is the launch of enhanced models with advanced features. Typically, the new models feature colour output, lower cost per unit, and improved functionality. In doing so, office equipment companies aim to increase their sales by offering better models to their customers at a lower cost.

The second key growth engine is the development and marketing of business services, which have been successfully offered to a great number of customers on an ad-hoc basis. Such services are document management or the printer/copier service. Major players in the industry include these services in their initial proposals, thus attracting more customers through the offering of a more complete package of services.

The third key growth, particularly for office supply distributors, is the implementation of acquisition strategies in foreign countries in order to achieve higher sales and competitive market share gains. These strategies combined with online sales and the offering of loyalty programs are used to enhance sales.

In conclusion, the office equipment and supplies market is highly competitive. Taking into account the current market dynamics, it is highly likely that the focus will be on product development and product customization to meet the needs of sophisticated end-users. Given that there are quite a few competitors currently in the office equipment and supplies market, buyers are expected to be more demanding and seek for higher quality, lower cost products.