Like many of our peers in the world of technology analysis & advisory, RSR can expound forever on Omnichannel retailing, the future of the store, eCommerce, next-gen supply chains, IoT, Cloud, Big Data, etc. etc. etc. It’s all good! Our insights are backed by our industry experience and the data we gather via our benchmark studies. And there’s been a lot to talk about! In the ten years since our inception, the retail ecosystem has experienced seismic changes.

But some things don’t change much at all. I was mulling this over as we were making some last-minute back-to-school purchases for the young students in our life. As every parent and grandparent probably knows, there’s a list of stuff students need to bring to class on the first day. Retailers LOVE these lists – they represent almost guaranteed demand for paper, glue sticks, calculators, rulers, pocket dictionaries, highlighters, and even some technology – for example, earbuds or even a laptop. But in my spot check of several school districts’ lists, the #1 item on them all was the lowly #2 pencil. Yup! the very same one your great grandparents used before TV, jet airplanes, personal computers, and the Internet.

In fact, the famed yellow #2 pencil has been around in the U.S. since almost before there WAS a U.S. – the late 1700’s, and it’s virtually unchanged since then. Dixon Ticonderoga company is credited with inventing the yellow #2 pencil like the ones we all chewed on at one time or another. Sometimes the design of a product is “good enough “, and it speaks to the resiliency of the product and the steadfastness of the market that buys it. But finding much information about that market for #2 pencils turns out to be surprisingly difficult. One reason for that is that pencils are either made nowadays by large multi-national office supply manufacturers (for example, Dixon is now part of a multi-national), or by privately owned companies here in the U.S.

I reached out to one such company, the General Pencil Company, and as you might imagine, the person on the other end of the line was tight-lipped about the company’s business metrics. Undeterred, I went to the company’s website, and learned that it has two manufacturing facilities, in New Jersey and California. The manufacturing process for the basic pencil is almost unchanged since the company’s earliest days in 1889, and its website features a nice tutorial that answers the age-old question, “how do you get the lead into the wood? ” (so parents! Here’s your chance to look smart – take a look at the tutorial!). The company also received some good coverage in a December 2016 piece that was a part of ABC News’ “Made In America Christmas ” segment.

One of the great joys about being a privately held company is you don’t have to grow for growth’s sake. That’s especially true if you make a product that, (1) flies under the radar of the giant manufacturers, (2) everybody has a use for, and (3) seems to be a touchstone to a simpler time. That seems to be the case for General Pencil. We should all be so lucky.

There’s More To It

The market for pencils goes well beyond schoolkids, of course. For example, the market recently experienced a sharp surge as a result of the growth in popularity of “adult coloring books ” (marketed as “stress relief for these troubled times “). In 2015, adult coloring books were declared to be “the hottest thing in publishing ” (what would Gore Vidal think of this?). According to the website Vox[1], “<Adult coloring books> were extremely popular and extremely profitable, and they more or less came out of nowhere. The coloring book craze even drove an echo boom in coloring pencils, with sales increasing by 26.4% in 2015 from 2014. “

But the trend apparently was short lived. Again according to Vox, “By December, booksellers reported that coloring book sales had begun to sag, leading to Barnes and Noble’s worst holiday quarter in 10 years. This March, Barnes & Noble reported that its store sales had fallen 8.3 percent over the quarter and blamed the decline, in part, on decreasing coloring book sales. ” We can argue about the wisdom of basing your quarterly hopes on a fad… but let’s not.

The Pencil As Memory Tool

So, back to school lists. Being a tech-oriented person, since 1987 I’ve tried to ensure that my children had an Apple “something ” with a reliable Internet connection to help them with their studies. And of course, regardless of our age we all use our mobile phones routinely to communicate. This leads to a question, doesn’t school-age familiarity with the keyboard obviate the need for a pencil and paper?

In 2015, Entrepreneur magazine decided to find out whether that’s really true. This was triggered at least in part by a comment made by Lia De Cicco-Remu, Microsoft Canada‘s Director of Partners in Learning, who had a message for teachers skeptical about using new technologies in the classroom: “Shift or get off the pot “. According to Entrepreneur[2], Cicco-Remu furthermore said at an Educators Summit in 2015 that, “educators should allow kids to communicate in the classroom the way they do outside of the school…Kids don’t express themselves … in cursive. Kids text. “

That elicited a sharp response from parents and teachers alike, and it wasn’t based on nostalgia for the gold ol’ days. It turns out that for many of us, writing something down helps retention (I know this is true for me, and I always carry my college-ruled composition books around with me to conferences, client visits, etc.).

The Entrepreneur article referenced a study conducted by Psychological Science that discovered that, “while the students who typed their notes were able take more of them (in many cases, producing near verbatim transcripts of the lecture), when tested on conceptual understanding of the material they performed worse than their longhand note taking peers…. “

So… pencil and paper helps students retain information better. Think about this the next time you go to a technology conference and see all the industry analysts madly tweeting away….

The Bottom Line

There you have it – my foray into a “back to school ” commentary. It appears that while the pencil market may experience its ups and downs, as long as there are schools and students, a #2 pencil will be on the School Supply List, and thus there will “always ” be a baseline demand for the business. I doubt that I’ll venture down this path again – after all, the story hasn’t changed much since Benjamin Franklin was flying kites.

Bottom line: help your young students to retain more of what they are taught in school – go out and buy them a box of pencils. Your local retailer will thank you and so will the practitioners of the old art of putting the lead into the wood.

[2] www.entrepreneur.com/article/234560