On supporting your local shop, part 2

My last post was about the dilemma I face in supporting my local pen shop and rewarding them for the enjoyment I get from engaging with them, without paying literally double the prices from overseas 1. At this point you say "stop whining and buy something". Which is fair enough, but I see no reason I shouldn't try and combine the Pen Addict and Stratechery into one article.

Ultimately pen shops are suffering the same fate as many other retail businesses - particularly small businesses with little buying power - in the online world. The natural characteristics of the pen market are particularly suited to this disruption 2, however. Pens are small and cheap to ship, they are a relatively fungible item (a Pelikan M200 is the same wherever I get it from), and fall under the $1,000 import tax exemption 3. There are very few disadvantages to purchasing from an online retailer other than "try before you buy".

What this means is that the market for sales to a genuine pen enthusiast/collector will struggle in Australia. The enthusiast will be much more price aware, and much more likely to have researched their next pen purchase. From a sale perspective the store is likely to have much more success on pen sales by focusing on price insensitive buyers. These are likely to be those with little knowledge or inclination to do research, or simply in a rush - most likely buying gifts for graduation/colleagues leaving jobs etc. The truly rich, for whom an expensive pen purchase is simply a drop in the ocean. In Australia this will likely be driven by overseas buyers from Asia.

Unfortunately, following this through will lead to a stock comprised of pens that are deeply uninteresting to the average collector. There will be a surfeit of "safe" gift pens in black - Lamys, Parkers, Cross, and more upscale Montblanc, lots of attractive leather journals, and a rotating selection of ultra high end limited editions. I'd expect these to start at the Visconti Divina end at the bottom end (over $1000), and heading rapidly upwards for the gold covered Cartiers, Dunhills and similar 4. Worse still, diversification into "adjacent markets" such as watches, umbrellas, wallets and the like. In a small shop, less space for pens (even ones that I am not going to buy) will just accelerate the decline.

One day ALL pen shops will be staffed by a virtual Nick Cage. It's the future, I've tasted it.

One day ALL pen shops will be staffed by a virtual Nick Cage. It's the future, I've tasted it.

What this doesn't leave room for are the lower end, non-brand enthusiast pens (e.g., TWSBI), the more interesting mid-level pens (e.g., Pelikan ), and even the higher end aspirational pens such as the mid-level Viscontis or Pelikan M800s. This group is an untapped - and frustrated - market, however. I want this store - and similar - to survive and would like to support them, but not at double the price? While I don't think that my custom is the difference between success and failure for them, if everyone thought like that...

My personal view is that they can capture the pen enthusiast dollar, however, by taking a leaf from the technology sector. Many tech companies that struggled to compete in their traditional hardware businesses have adapted by switching to providing services. I would happily pay for handwriting lessons, or send all my nibs to be tuned by a local nibmeister.

They actually do offer these two services, but they are not actively pushing them, their capacity is very limited and they are significantly overpriced 5. If this is going to be a significant revenue stream they will need to address this. The good news is that my favourite young salesman is bringing a degree of innovation. He is encouraging the owner to film a series of handwriting lessons that will be on Kickstarter soon - I will link to it as soon as it goes live. In my opinion, they should push this much harder. Handwriting is ideally suited to short bursts of coaching, which fits very well for the office workers that they cater to. I'd love a 15 minute coaching session twice a week with homework. It's no more of a break from work than popping out for a coffee. This would also be a fabulous chance to up sell.

They can go further - I would suggest that they embrace their online competition. They have an online store, but it simply replicates the in store prices - they need to think differently. I would love to see them offering pen buying consultations. You could book an appointment and spend an hour with an expert looking at your handwriting style, what you want to achieve, try various pens and end up with a recommendation for a pen/nib grind even if the order will come from elsewhere. It could be priced at $100, with that as a credit off a pen purchase or similar. I would have been delighted to pay for that before placing my order with John Mottishaw for a Nakaya. We spoke over the phone, and he could not have been more helpful, but having someone watch you write would be far more helpful.

Taking it further still, why not partner with someone like a John Mottishaw or a Cult Pens, build up a relationship where they are happy to recommend the quality, and at least make a commission on referrals. This is hard though, because it means letting go of the notion that online is the competition - it may well be complementary in some areas, and local stores should play to their strengths, i.e., what can they deliver that online can't?

So - after that ramble, how am I going to support my local store? First off by offering some unsolicited consulting advice - we'll see if he is still happy to see me after that! I'll buy paper and ink when it makes sense, and won't ask to try pens that I am looking at online. I want to keep my chats with Curtis and get the best deal on pens without being "that guy". We need pen stores to thrive, and anything we can do to ensure their sustainability has to be a good thing.

1 Their cause is not currently being helped by the Australian distributor for Visconti undercutting them on eBay by 50%. Not sure how he is getting away with it - apparently they are his "private stock". They are quite rightly fuming. But an Opera Club Typhoon blue for $400 vs $800, both locally supplied? It's hard to justify buying in store.

2 A word of caution - what follows is a strategy consultant's outside in perspective of the Australian pen retail industry with little to no inside knowledge of the economics. Nothing new there then....

3 One of the first breakthrough online businesses in the UK was a lingerie shop. Genius. High margin, low storage cost, low shipping costs, and a market of men embarrassed to purchase in store, but more than happy to "browse" online.

4 I want to ask them about this - I really hope for their sake that these pens are on consignment. Even a small shop will have over $250,000 of stock on hand. The capital requirements that this would place on a small business would drive significant costs. Even if this is the same globally, Australia's higher interest rates mean that their borrowing would be at a higher cost than online competitors.

5 Handwriting lessons (admittedly from one of Australia's leading calligraphers) is around $300 per hour, and nibgrinding ranges from $100-150 a time. Given that I can have a pen shipped to Mike Masuyama, ground and returned, for ~$100, this is not compelling value for money either.