Office products superstores are threatening the area's mom and pop operations. But 25-year-old Portia Pusey has united small stores as they fight back.


June 03, 1991|By Cindy Harper-Evans

As the news whipped among the gathering of office products retailers, fingers stopped worrying plastic foam cups filled with soda pop, and eyes looked up from note- and scribble-filled pads:

The Office Stop chain of "superstores" had filed for Chapter 7 bankruptcy two days before, meaning that its three Baltimore-area stores would be liquidated.

"That's good news," said Joyce Lortz, owner of Printron Office Products and the host of the meeting at her store in Parkville. "And a customer just came in and said he was just up at Office Stop and the shelves were empty -- had to come here to pick up what he needed."

Mom and pop office supply stores -- often described as sleepy and passive -- are in an awkward state of transition in Baltimore and around the nation.

Much of the upheaval stems from increasing waves of competition from price-cutting superstores, a 6-year-old concept that made its first appearance in Baltimore only 18 months ago. The superstores are grabbing huge chunks of revenue from an industry that has grown to more than $70 billion a year nationwide. And, they're aiming at the same small business customers as independent office supply stores.

That scenario has been played out before: small neighborhood stores with little competition are confronted by a huge, well-financed corporation specializing in their industry and offering lower prices. Most notably, it happened among toy and hardware retailers with "category killers" like Toys R Us and Home Depot.

Now that it has hit home, the trend has given Baltimore-area office supply dealers -- which number well over 100 -- a case of the jitters. Several have had to layoff workers, rearrange product mix and scale back operations that were small to begin with.

Hence, Ms. Lortz's excitement at the demise of Office Stop, a superstore that has a location in Towson uncomfortably close to her Printron store.

Still, analysts describe Texas-based Office Stop's financial malaise as the result of poor management -- not an indication of a general weakness in the new megastore industry. Perhaps that explains why the Office Stop news created only a brief moment of levity among the retailers at the meeting last month.

Not all independent dealers will be as lucky as Ms. Lortz to have a superstore go belly-up just around the corner. They still have Staples and Office Depot -- with four locations in the area and plans for more -- to worry about.

In the long run, the only way for mom and pop dealers to remain prosperous is to change the way they do business. To that end, area retailers have created Traditional Office Product Dealers, a 17-merchant group designed to jointly purchase, advertise and promote products. And to swap stories on survival tactics at meetings such as the one held in May at Printron Office Products.

Portia Pusey put that meeting back on track with an -- "OK, let's hear the radio spot."

Ms. Pusey, a 25-year-old Loyola College graduate who began working full-time for her parents' Regester Office Supply in Parkville four years ago, sparked the creation of the TOP Dealers group. She had heard horror stories about the small, Philadelphia-area office products dealers who had met the "superstore monster" four years back.

Last year alone, four dealers closed in Philadelphia and another six consolidated their operations with others. Many blamed fierce competition from superstores and the recession.

That statistic scared Ms. Pusey. It scared her so much that she forgot her fear of public speaking -- the one that makes her bite her nails back to nubs and break out into a cold sweat -- and stood up during a meeting of the Baltimore Office Products Association with an idea last fall.

She didn't want the Philadelphia horror story to travel 106 miles south to Baltimore.

"We were all terrified about what happened in Pennsylvania. We decided that the only way for us to survive was to band together," Ms. Pusey said.

Thus, in November, TOP was born. For $200 a month, TOP dealers join forces to buy advertising. They use their collective volume to negotiate better prices from the four main wholesalers in Baltimore: Fountain Pen Supply, S. P. Richards, Stationers Distributing and United Stationers.

And they are working toward starting a TOP credit card, because small dealers have problems getting paid by customers suffering from the recession. A credit card will allow dealers to be paid promptly from a credit agency, which then deals with delinquent customers.

The association also creates a forum for dealers to talk to each other about the business. They trade secrets about what fax paper works best and which wholesaler offers the best deals.

Although these guys are competitors themselves -- vying after the same small business market in a relatively small geographical area -- they have taken an attitude of "My brother against my cousin."

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