The paper tiger roars

Did someone say notebooks, the ones that are crafted from paper, would die a slow, but sure death? That their fate would be similar to audio tapes, camera-film rolls and other such categories that had suffered a similar fate in the past? As even schools began to use digital devices to educate children, many had said that it was only a matter of time that the sword of Damocles hanging over the category fell.

In India, well before tablets and smartphones began to rule, the general expectation was that the stationery market, and specifically notebooks, did not offer much to write home about. Traditionally the stationery market in the country was an unorganised one. From small retailers to independent sellers, many depended on Chinese imports. But if recent market reports are to be believed, paper has found a new status in the digital age and market experts believe stationery is a segment of promise. What has changed and how did notebooks make themselves relevant in the digital age?

The growth of notebooks over the last few years, from a humble Rs 6 for a book to a premium product that can cost as much as Rs 1,000, demonstrates that along with challenges there are also several opportunities.

In the notebook category, brands such as Navneet, Bluebird and ITC have had a significant say in how the market has moved over the last decade. Last year Japanese stationery major Shachihata Inc announced a large investment in India.

A few years before that, the Kokuyo Group entered this market after purchasing majority shares in Camlin, a well known stationery manufacturer in India.

ITC’s Classmate notebooks, which target the educational segment, have had several sales highs over the years. The notebooks business of the tobacco-to-hotels conglomerate is now ten years old. One of ITC’s advantages was that its notebooks business could rely on its existing value chains of production – the company has a large paper business division-- to “create a new engine for growth”.

Chand Das, Chief Executive, Education and Stationery Products, ITC says, “The branded component of the market in India when we kicked off was about 6-7 per cent. Today it’s about 35 per cent.” ITC claims to have a 20 per cent share of the organised market.

“Notebooks, especially of the Classmate kind, are a seasonal category. That back-to-school period of May and June are good for us. In about six months, we manage about 75 per cent of our total sales across the country, with the rest of the year catering for top-up demand,” explains ITC’s Chand Das.

Even online players like Flipkart and Amazon have a significant interest in the category. Flipkart, for instance, claims to stock 10,000 SKUs of notebooks.

An Amazon India spokesperson says that notebooks and diaries account for substantial sales in the stationery category. Online purchasing behaviour in notebooks is more prevalent in premium notebooks like BILT and Paperkraft than in the mass range of notebooks which account for approximately 50 per cent of the market. For Flipkart too, diaries and notebooks are “key traffic drivers which contribute to about 15 per cent of the total stationary segment.” Ankit Nagori, Chief Business Officer, Flipkart, says, “Fuelled by a growing economy, a burgeoning middle-class, and higher literacy levels, the notebook market in India is expanding at a fast rate. With capital being invested in the book and education industries, this sector is going to be the ground for experimentation and innovation in the coming years.”

Das of ITC says, “Our premium products are stocked first with our e-commerce partners. Those strong partnerships help our overall business in notebooks.”

“Industry growth is driven by increasing literacy and enhanced scale of initiatives in the education sector. But there’s also the shift from inexpensive products to quality products.” Flipkart’s Nagori says, “Among the technology-savvy generation, a small percentage of our users have shifted to digital mediums like laptops, smartphones and tablets. Despite this, a majority of customers prefer a notebook. We have close to 10,000 products under this category. With customised diaries seeing takers across age groups too, we believe that product innovation in this category can further add to the ‘collectible’ value of notebooks.”

ITC too has over 200 premium products. While the average price of a Classmate is Rs. 30, its premium notebooks cost a lot more.

Even for the brick-and-mortar bookstores that take the burden of heavy rentals in urban centres across India, notebooks make serious business sense. Competition among bookstore brands means the clear demand for notebooks and related stationery products has to be met.

“Stationery is the second-best selling category across all our retail stores. It makes up about 30 per cent of our total revenue. “About 10 per cent of our revenue is generated from notebooks alone. We sell notebooks from as low as Rs 6 and it can go up to Rs 1,000 or more. The organised notebook market in India is about Rs 5,000 crore, which is about 20 per cent of the entire stationery business in our country,” says Darshit Shah, Vice President – Product, Sapna Book House.

Store 67 is a premium stationery brand from Sapna Book House. Shah says, “We have seen an increase of 15-20 per cent year on year in our notebook business. In India from 2009 till 2012 stationery business has grown at over 30 per year every year.

In the coming months to a couple of years, there’s likely to be added interest from foreign brands for a share of the notebook and stationery pie. Already, Relay, a book press and traveller convenience brand, is making inroads in India. Airport lounges across India may prove to be an added point of traction for premium notebook brands. Going by the scale of demand and the range of offerings here, the notebook is nowhere near extinction.

To allay fears that notebooks are not good for the environment or that they play havoc with corporate sustainability missions, ITC has spotted an opportunity. It sees the notebooks business as an opportunity to showcase sustainability across the chain of production. The company’s R & D reportedly helps it consume fewer trees and water in its production of Classmate.

A simplistic interpretation means there may be enough resources for a longer period of time and therefore notebooks and paper-based businesses will endure for years to come.

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