Big box retailers beware: with the May launch of The Stockroom, a virtual office-supplies destination, Don Mills, Ont.-based Grand & Toy is aiming to become the number one provider of office products to Canada’s small and medium-sized businesses.

The new virtual enterprise is an outgrowth of the office supplies retailer’s earlier direct sales incarnation, G&T Connect, founded in 1997 to stem the tide of customer defections to U.S.-based superstores such as Office Depot.

For almost five years, Grand & Toy had witnessed a number of such operations waltz across the border and woo customers with the promise of one-stop shopping, unparalleled selection, and fetchingly low prices.

Two years ago, Grand & Toy decided it had had enough and determined the best way to tackle the problem was with a direct sales operation.

The reasoning was simple: without the overhead costs of expensive bricks-and-mortar locations, G&T Connect could offer small business customers competitive pricing, in addition to free next-day delivery.

But this was just a preamble – last month, Grand & Toy raised the competitive stakes by rebranding G&T Connect as The Stockroom, and adding a Web component to its direct mail capabilities: www.thestockroom.ca. In addition to browsing the new Web site, designed by Toronto-based Cyberplex, customers can leaf through a conventional catalogue and place orders by phone or fax.

‘We wanted to make a name for ourselves online, in terms of having the most comprehensive online catalogue for office supplies,’ says Alan Berdowski, general manager of The Stockroom. ‘The Stockroom will operate as a separate entity with a different management team – we felt it was important to take a very aggressive, focused stance, purely aimed at the small business segment.’

The new name provides a better means of branding the company’s small business offerings, and alleviates any confusion customers may have had between G&T Connect and Grand & Toy, which services larger corporate clients, explains Berdowski.

‘The Grand & Toy pricing structure [and Web site] is significantly different, and is geared toward the needs of larger customers. Rather than bastardize the approach, it made sense to employ a different site.’

Selling office supplies direct to consumers also provides The Stockroom with a significant advantage over its bricks-and-mortar competitors: it’s much easier to collect customer data online, or through a cataloguing operation than it is in a store.

Although The Storeroom will be building a database largely from scratch, Berdowski says, it will rely on the experience of Grand & Toy’s data mining efforts to jumpstart the process. The Stockroom is already performing some customer segmentation functions, and will employ a number of other tactics that have proved successful for Grand & Toy in the past. For purposes of integrity, however, the two databases will be housed separately, says Berdowski.

The Stockroom has begun to drum up awareness with a direct mail and catalogue effort to its preexisting G&T Connect customers. Additionally, the company has rented lists and distributed some 800,000 prospecting missives to small businesses in Canada.

‘[Offline], we’ll be using database tactics with a cataloguing program to target against different segments,’ explains Berdowski. ‘Online, we’ll use the database with an e-mail campaign to communicate the launch of [The Stockroom].’

Internet-based marketing initiatives will commence in mid-June, with advertising appearing on some search engines and small business-related sites. The Stockroom has also struck a partnership with Air Miles for Business, making it the exclusive partner in the office supplies category.

Berdowski would not quantify the results of the preliminary direct mail initiatives, other than to say the response rates are ‘traditional business-to-business response rates,’ and that they ‘are pleased with it.’

Thus far, a number of agencies have contributed to the launch: FCB Direct worked on the conceptualization stages; Sherman Laws Communications on the catalogue production; and Rapp Collins Communicaide on the online marketing. Bertowski would not reveal the amount of the total marketing spend.