Gap Intelligence recently published two interesting postings related to printer supplies on its “Mind the Gap” blog. First, the market intelligence firm compared and contrasted the cartridge-collection programs at Best Buy, Office Depot, OfficeMax, and Staples to see which retailer offers the best deal for empties. Second, Gap Intelligence says circular advertising for ink supplies is up almost 60 percent so far this year compared with the first eight months of 2010.
OfficeMax Will Pay the Most for Empties
Gap Intelligence points out that the office superstores, Office Depot, OfficeMax, and Staples, require customer to join a rewards program to receive discounts on each ink or toner cartridge brought in for recycling. Best Buy does not, but the retailer does not offer any financial incentive for recycling cartridges, either. Staples offers $2 in rewards for recycling any ink or toner cartridge but sets a limit of 10 cartridges per customer per month for up to $20 in rewards. Gap says that Office Depot offers $2 back in rewards but sets a limit of 20 cartridges per customer per month for up to $40 in rewards. Gap says the program is limited to toner cartridges. When we sought to verify this on the Office Depot website, the language indicated that the program is now more similar to Staples with a limit of 10 cartridges per month. Apparently this change was effective May 1, and Office Depot says, “You can continue to recycle ANY BRAND of ink or toner cartridges.” But, in any case, as Gap points out, the program that can net customers the most in rewards is OfficeMax’s. While the OfficeMax program is limited to “visibly undamaged HP, Dell, or Lexmark ink or toner cartridges,” the program offers $3 in rewards per cartridge for up to 20 qualifying cartridge per month for a maximum potential savings of $60.
We have noticed that, in general, the trend has been for office superstores to gradually offer less in the way of incentives for the empty cartridges that customers bring in. At one point, for example, Staples offered $3 coupons, even to those customers not part of its customer-loyalty program, for empty cartridges, although there were restrictions on the brands accepted. Last year, both Staples and Office Depot lowered the amount in rewards offered per cartridge from $3 to $2.
Ink Advertising Up, but Not for All Vendors
Gap Intelligence’s posting on ink advertising was also interesting. The company says that the number of ink advertisements in retailers’ circulars is up 57 percent so far this year. The market research firm says, “Manufacturers are dedicating more of their ad dollars toward ink supplies in an effort to push the razor blade part of the equation and increase their profits.” According to Gap Intelligence, advertising is up 28 percent at Office Depot, 64 percent at Staples, and 186 percent at OfficeMax. The company suggests, “The increase of ink cartridge ads in the office supply channel is particularly noteworthy considering this is one of the primary channels that consumers shop for this product category. The increased circular activity for ink supplies potentially indicates a renewed sense of confidence by manufacturers in the channel, which is demonstrated by increased investments.” Gap also saw a surge in advertisements in the mass-merchant channel.
Gap Intelligence also published some interesting data showing weekly circular advertising by brand. Ads for OfficeMax-brand refills increase by 350 percent. Despite the large percentage increase, it should be noted that the increase brought the number of ads up to only 36 so far this year. Multi-brand ads grew 272 percent and also grew strongly in terms of absolute number of ads. Gap explains, “The increase demonstrates that retailers are heavily pushing ink supplies in their circulars and promoting programs such as ink recycling and merchant rewards.”
According to Gap, Kodak has significantly increased advertising for its ink—the number of ads places this year was up by 144 percent. HP, which places more ink ads than any other vendor, increased the number of ads in circulars by 16 percent this year, and Lexmark increased its ad volume by 59 percent. Ink advertising volumes for Epson, Canon, and Dell dropped by 14, 22, and 50 percent, respectively. The research firm notes that Dell’s absolute number of ink ads is quite low—the firm advertised its ink twice in circulars in 2010 and just once so far this year.
We are not surprised to see Kodak, HP, and Lexmark stepping up their advertising for ink—all three firms have been eager to paint themselves as leaders in terms of low ink costs. We have heard rumors that Epson may soon debut new business inkjets, and we wonder if the firm is reserving some of its advertising budget to promote those products in the latter part of this year. Canon has been a bit hesitant to make ink price/cost per page a selling point for its inkjets, so we are not surprised to see the firm cutting back on ink advertising. As for Dell, it has been quite a while since we have heard of new inkjets from the firm, and Dell sells most of its inkjet cartridges directly. In fact, the firm does not sell its cartridges at many of the stores for which Gap Intelligence collects circulars. To the best of our knowledge, only Staples has a selection of Dell inkjet cartridges.
Gap Intelligence argues that these ink advertisements in Sunday circulars may help drive printer sales, especially for HP and Kodak, and will help increase the installed base. Certainly, that is what printer OEMs hope. So too do office superstores. In the second quarter, Office Depot posted flat revenue and a larger loss than one year ago, OfficeMax reported decreases in sales and income in the second quarter. Staples is scheduled to report its second-quarter results next week.