GOPD is a market research and technology
company specializing in the office products industry. GOPD has been monitoring chain store pricing practices since 1999 and
is the un-disputed leader in the field.
During the years of analysis, several trends
appeared and continue today.
Low Price Leaders
Everyone has heard the advertising by the
office supply chain stores. Guaranteed lowest prices, 110% low-price guarantee, and claims of 50% discounts. But what is the
It is true that some items are deep discounted,
but these are more than made up for when you look at the whole picture.
Below is a chart of the number of items the
major chain stores have priced at a 10% discount or less.
Items Priced At 10% Discount or Less:
While office supply chain stores like Office Depot claim huge
discounts, the majority of their prices are not that low. Compare 40% of Office Depot’s prices at 10% discount or less
while only 6% are true loss leaders and you start to see how the pricing game is played.
The chain stores are experts at mixing the
pricing to achieve the maximum amount of profit while attempting to fool the consumer with loss leaders.
Items Priced at or Over List Price:
In addition to over 40% of Depot’s
prices being only 10% discount or less, it is quite common for the office supply chain stores to price items substantially
higher than manufacturer suggested list price.
The only way to accurately evaluate the pricing
for the office supply chain stores is to look at the complete picture. Compare all the items, loss leaders and regular supply
items and the results are not what they advertise.
Average Discount Off List Price:
None of the top office supply chain stores
average more than 25% discount off list price. Depot and Reliable struggle to average 15% discount off list.
So what is the answer? Do the office supply
chain stores truly have the lowest prices? Some items are cheap some are high. How do you know?
The truth is you can’t know. As you
will see, the chain stores are constantly changing prices to keep the low-price perception while reporting increasingly higher
profits to Wall Street.
Constant Price Churning
The chain stores are constantly churning prices. Getting a good
deal often depends on what day of the week you purchase the product.
Counts of Items With Price Changes:
common for consumers to spend dozens of hours researching office supply pricing to find competitive sources. Unfortunately,
even the most careful analysis is obsolete within as short as a week due to constant price changes by the major office supply
Prices Going Up
In order to stay in favor with Wall Street, the office supply
chain stores must constantly report more profits. Profits can only be increased by cutting costs or raising prices. Once costs
are reduced, the only alternative is to raise prices.
Counts Of Items With Price Increases:
counts include those cases where the same item has changed price. It is not uncommon for the office supply chain stores to
change the price on a single item, multiple times, within the same week.
To appreciate the magnitude that these constant price changes
have on the typical consumer office supply budget, look at the following chart detailing the number of price changes by month
for a single office supply chain store.
Counts of Depot Price Changes by Month:
is no way the consumer can be assured of any pricing consistency with this constant change.
What Can You Do About This?
Not only do we monitor pricing practices for the office supply
chain stores, we also monitor pricing practices from locally owned and operated independent office supply dealers.
Our research has shown, time and time again, that most local
independent office supply companies are substantially lower in overall cost to the consumer.
Most independent office supply companies also offer “fixed”
pricing that they honor for a length of time. This allows the consumer to accurately budget office supply expenses and not
be surprised by budget overruns.
The pricing gap between the independent and the chains is so
wide, and the consumer perceptions are so engrained that the chains have the lowest prices, that some independents have chosen
to match the chain store prices using our services.
Without exception, every independent office supply company that
uses the chain price matching service has reported much higher profits.
Decide for yourself, but know the facts.
This document was produced by GOPD, which is solely responsible
for its content. www.gopd.com.