Office supply store makes a dent in big-box competition

Owner who found niche selling marred furniture sees business expand

August 19, 2002|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

When Staples superstores arrived in Howard County, it signaled tough times for Gary Porter's National Business Products Inc., a small business-supply store. But now Porter uses the competition to drive customers to him.

The 13-year-old company developed a niche in scratched and dented office furniture that has helped it grow at a time when sales have declined or stagnated at other office supply stores, including Staples.

Five years ago, furniture accounted for about 5 percent of his business, and office supplies the rest, Porter said. Furniture sales now account for about 65 percent of the business. Revenue has doubled in the past three years, he said, and the store now sells more new furniture than scratched and dented furniture, Porter said.

The company has combined discount furniture with an extensive database that keeps track of everything in the warehouse and makes shipping details and other information available online to customers. Although the store struggled with strong big-box competitors several years ago, its focus on furniture has propelled revenue to an anticipated $2.5 million to $3 million this year.

"That little niche that we found is why we're doing well and surviving, and actually taking business from them," Porter said. "It's a wonderful feeling."

According to one analyst, NBP might have found a winning combination.

The market for office supplies has decreased sharply recently, in part because of the national economy's decline but also because of saturation in the market, said Mike Porter, a retail analyst with Chicago-based Morningstar Inc. and no relation to Gary Porter.

Big-box office supply retailers such as Staples and Office Depot compete with each other, and deep-discount retailers have begun eating away at market share, Mike Porter said.

"All of these chains have closed stores in recent months," he said. "There's very little differentiation among them. There is nothing to say, `I'd really rather go to Staples than Office Depot.' That doesn't bode well for the business."

Mike Porter said one of the reasons NBP's model has helped it compete against national retailers is that owners of small and medium-sized businesses have few cost-effective options for office furniture.

"At these office supply stores, the [furniture] quality is pretty bad," the analyst said. "If you're looking for a serious office desk, right now you have the choice between one of the [big-box] stores and chipboard [furniture], or you can go to the furniture store, which can get pretty expensive, but there's really nothing in between."

NBP has worked to distinguish itself in many ways. With a warehouse on Oakland Mills Road, a few blocks from the Staples store in Snowden Square, the company draws would-be Staples customers by advertising a 60 percent discount on scratched and dented office furniture on signs placed along Snowden River Parkway, en route to and from the nearby superstore.

National Business Products also tries to use technology as much as possible. Gary Porter, who was an information technology consultant before buying NBP in 1989, built much of the database the company uses to track orders, deliveries, and scratched and dented merchandise. The system allows the company access to customers' order histories for more than a decade, keeps detailed directions for delivery, and allows customers awaiting an order to find out, within a two-hour window, when to expect the delivery and the type of truck the company will use.

Gary Porter said the company updates daily the portion of its Web site dedicated to scratched and dented furniture. Although customers rarely order from only the Web site, the Internet presence has helped the business because it brings in clients. Those who visit find furniture with only minor defects, if any at all, Gary Porter said.

"They're not expecting it to be brand-new furniture that's just had an out-of-box experience," he said. "Most of the people who find us do come back."

The small companies that started with NBP in their infancy tend to grow with them as well, Gary Porter said. In some cases, clients find others for NBP.

Penny A. Friedberg, president of Purchasing Manager Inc., an outsource purchasing company, said she uses NBP for her clients.

"They win a huge percentage of [our] business because of their pricing, their great customer service and the way they work with us," Friedberg said. "When one of our clients moved, [NBP] spent hours with them, helping them get as much of their scratch and dent [furniture] as they could. [The client] must've saved $20,000 in their move because of their help."

Gary Porter said low prices work in his favor all the time, but particularly during a recession: "Our theory has been, if the economy went into recession, people will be looking for a deal. We are the deal."

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