15%-20% rise likely in cost of filler paper - PMA-Stationery

Higher prices for filler paper and theme books, trade-up in the school stationery area, a greater merchandising of fashion--licensed characters, colors and designs--in a number of classifications and continued growth in the office supplies section are the major trends to watch for in stationery this year.

Price increases for basic school paper products, along with the move to traded-up itmes are first coming on-stream this year; the fashion focus was evident last year and impacted a number of areas tracked on the Stationery Product Movement Audit for 1983.

Price hikes likely to be put through by manufacturers of filler paper and theme books this year will result in costs going up 15% to 20%. Two factors are behind the increases: the marginal profitability of major paper manufacturers last year resulted in producers raising prices in an effort to make more money; additionally, manufacturer costs have gone up due to higher prices for all wood products triggered by the boom in home construction and the increased demand for lumber.

Despite the anticipated higher prices, filler paper and theme books are again expected to be the key items featured in back-to-school promotions this year.

Filler paper was the leading item in total dollar movement of any product in the PMA due to the traditionally extensive se of this merchandise in BTS promotions. This reflects both the basic nature of filler paper and the footballing of this merchandise made possible by the drastic decline in filler paper prices last year which were probably 15% below 1982 levels. (Filler paper prices, in fact, had declined for about five years in a row.)

The outlook for higher filler paper prices this year will see discounters and other retailers step up their use of theme books as an alternative major BTS promotional item. Footballing of theme books isn't as sharp as for filler paper, and the price hikes for theme books still leave discounters more leeway for margins than do the increases for filler paper.

The increased merchandising of theme books was evident in last year's PMA. A 70-count spiral theme book was the top item in unit movement, and theme books of various types accounted for for of the top 10 spots, including the Nos. 3 and 4.

A reduced focus on filler paper as a BTS promotion last year saw a number of discounters becoming very sharp on the price of the basic 70-count notebook as an alternative promo. A five-subject theme was another hot promotion at under $1.

Discounters' focus on theme books ties in well with consumers' interests. Customers view theme books as a better value than filler paper as a five-subject theme is less expensive in overall value than a pack of filler paper.

The difficulty in obtaining profits from promoted BTS products has resulted in manufacturers this year launching trade-up efforts for this merchandise. Better quality paper; more drable metal spirals, book binders and covers, and heavier-weight platic are cited as the benefits of the traded-up items.

Manufacturers and retailers will both obtain higher margins from the traded-up items introduced during the past two months.

If the PMA is any indication, traded-up items shouldn't face any consume resistance. In the school paper and notebook category, where the trade-up move is under way, items that carried $4.99 price points scored high in the rankings.

In stationery, fashion shows up as characters, colors and designs on notebook covers, envelopes and stickers; this year will see more licensed characters appearing on stationery products as manufacturers key in on fashion as an important way to distinguish their merchandise from other producers.

Besides school stationery, fashion's greatest impact is on two other classifications: miscellaneous school supplies and stationery and notes.

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