One David Handles
Store Is Not Stationary
By Namita Devidayal
months ago, a woman walked into Reliable Office Systems
and Supplies and asked a salesperson, "Wow, when did
you guys move in here?" Although she lived in the area,
she had not noticed the 17-year-old store in Dongan Hills,
S.I., until a new awning, neon signs on the window and a
redesigned logo attracted her attention.
since Staples, the office supplies chain, opened its Staten
Island warehouse down the road from Reliable last November,
the small store has adopted a variety of marketing initiatives
to remain competitive. Flashy signs apart, it has reinforced
its commitment to good old-fashioned customer service and
is offering choices that are unavailable at large stores.
are a service-oriented business,"
says Bill Hanson, president of Reliable. "We are catering
to the office ladies who need their typewriters or copiers
fixed urgently, but can't leave their desks," he adds.
will not go to them."
response to Staples is an example of how small merchants
are facing up to competition from large retail chains that
are moving into their territory. Staples is the first large
chain to set up shop in the borough, but others, including
Home Depot and Price Club, see Staten Island as a gateway
to New York and are gradually moving in.
protests from small business owners, the Staten Island Chamber
of Commerce is not in favor of zoning barriers or any other
legislation to prevent large chains from entering the community.
may be politically correct but it's economically disastrous,"
says Mark Muscaro, president of the chamber, noting that
30% of Staten Island's retail sales are currently lost to
neighboring states such as New Jersey.
fact, Staples decided to open its warehouse because market
studies showed that many of those who shopped at its outlets
in Woodbridge and Linden in New Jersey, as well as Brooklyn,
were driving in from Staten Island, says Dave Santana, general
manager of the Staten Island store.
giant discount store has already forced three small office
supply shops on the island to close. Although Reliable has
seen a 5% to 8% drop in sales this year, it is optimistic
about keeping its head above water.
is the key word here,"
says Sherry Gilroy, Reliable's purchasing manager. "We
had to go out and find different ways to make money."
Hanson's initiatives started even before Staples came into
the picture. In 1989, faced with the recession and a growing
market for mail order purchases, he decided to join a buying
group, United Dealers Unlimited. What started with 60 small
store members turned into a 1,000-strong body. A successful
"must buy" policy encouraged suppliers to give
attractive rates to the buying group, which in turn promised
to stay with the supplier.
large store chains was the next hurdle. Staples had already
moved into Woodbridge and was enticing customers with its
discount signs. On finding out that Staples would soon be
down the road from him, Mr. Hanson and his marketing strategist,
David Rampulla of Communication Associates Inc. in Dongan
Hills, met every week for one year to figure out a strategy.
took Staples coming in to make Reliable more competitive
and capitalize on its advantages,
which were always there but never put to use," says
storefront was done up. The store introduced a variety of
new products and services, including a full-service postal
substation and a greeting cards section. Mr. Hanson also
doubled efforts to take an interest in customer needs.
wants bigger slice of pie
help the local pizza guy make his fliers, turning his ideas
into catchy desktop art works at no extra cost," he
says. "Or, if a customer calls in about a broken copier,
we will stop what we are doing and send one of our technicians
to fix it immediately, even loan you a machine. Unlike Staples,
we don't subcontract our after-sales service," adds
Mr. Hanson, who started out in the business as a copier
Hanson's approach may have worked, judging by the response
of old-time customers, who are sticking with the neighborhood
stationer they call "Billy." Says Joe Madory,
vice president of Gateway State Bank, "Since our clientele
is primarily on Staten Island, we like to give most of our
business to local vendors." He says that he does not
see much of a difference in price when it comes to corporate
Hanson believes that although Staples advertises lower prices
on certain goods, it is actually using an age-old supermarket
strategy of offering screaming discounts on select products
in the front of the store, while pushing up the prices of
other items to make up for the reductions.
for the copy machine is cheaper at Reliable. But most key
office products have a lower price tag at the warehouse.
Comparative price lists indicate, for instance, that a box
of letter-sized manila folders costs about $4.25 at Reliable
and about $2.99 at Staples. Staples store managers are also
authorized to offer price deals if a customer brings in
a competitor's advertisement featuring a lower price on
any given product.
Island resident Tony J. Bernardo will stay with Staples.
"I have always bought my office equipment at a discount
warehouse," he says, "simply because they are
cheaper and offer more variety."
New York Business, July 18, 1994
copyright 1994 Crain's New York Business