OPI May 2015 Issue 249. EU by OPI

Office Products International ISSUE NO.2 4 9

The word in office.

magazine

Big Interview Brad O’Brien, CEO, Office Choice p18 May 2015

MAY 2015 WWW.OPI.NET

p13 US paper industry on tenterhooks p30 The rise of the millennials Who’s winning in the breakroom? p24 Wellness in the office p34

Contents May 2015

News

www.opi.net

7 Round-up

Soennecken goes direct in German retail market; FTC closes Office Depot ‘Made in USA’ investigation; OP activity in France

30 The rise of the millennials

An ever-growing part of today’s workforce, how do you reach millennials as customers and employees, and how do you retain them as both?

34 Encouraging wellness in the office

10 News Analysis

PaperlinX collapses in Europe; US paper industry on tenterhooks; NAOPA shortlist announced

As healthy snacks become more popular in general, their importance in the breakroom also grows

Features

36 Gorilla in the midst

It may still be small and very young, but Gorilla Stationers has a vision and is running with it

18 A brand of choice

Office Choice CEO Brad O’Brien explains why the Australian dealer group embarked on a new branding strategy

Events 40 BV Show Review

Bureau Vallée kicks off its 25th anniversary celebrations in Paris

24 Make or break

As the breakroom becomes more important in the workplace, a number of trends – for certain snacks, beverages as well as cleaning products – are fuelling growth in the category

Regulars 5 Editor’s comment 45 5 minutes with... Jeff Davison

46 Final word Zena Goddard

“Nobody expects a job for life anymore, but people do expect career progression and personal development and they don’t want to wait for two years to get it. These people work in 140 characters, not in 12 or 24-month periods. So yes, people are more transient in their jobs now, but if you invest in them personally as well as professionally, and create an environment they really believe in, employees are incredibly loyal.” ... For the full story, turn to page 30

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Editorial Editor Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net

Features & Production Editor Heike Dieckmann

Editor’s comment

+44 (0)20 7841 2950 heike.dieckmann@opi.net

News Editor Michelle Sturman

Next stop Chicago

+44 (0)20 7841 2942 michelle.sturman@opi.net

Sales and Marketing VP – Continental Europe, Middle East and Africa Ewan Dickson +44 (0)20 7841 2954 ewan.dickson@opi.net

VP – North America and UK Chris Turness +44 (0)20 7841 2953 chris.turness@opi.net

Director of Growth Services Jeremy Hughes +44 (0)7807 810617 jeremy.hughes@opi.net

Digital Manager India Pride +44 (0)20 7841 2959 india.pride@opi.net

Events Events Manager Lisa Haywood +44 (0)20 7841 2941 events@opi.net

Production and Finance Designer Charlotte Gerhardt +44 (0)20 7841 2943 charlotte.gerhardt@opi.net

Production Assistant Jack Francis +44 (0)20 7841 2950 jack.francis@opi.net

Accountant Dotun Olaniyan +44 (0)20 7841 2956 dotun.olaniyan@opi.net

Publishers CEO Steve Hilleard +44 (0)20 7841 2940 steve.hilleard@opi.net

Director Janet Bell +44 (0)20 7841 2941 janet.bell@opi.net

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No part of this magazine may be reproduced, copied, stored in an electronic retrieval system or transmitted save with written permission or in accordance with provision of the copyright designs and patents act of 1988. Stringent efforts have been made by Office Products International to ensure accuracy. However, due principally to the fact that data cannot always be verified, it is possible that some errors or omissions may occur. Office Products International cannot accept responsibility for such errors or omissions. Office Products International accepts no responsibility for comments made by contributing authors or interviewees that may offend.

It’s been a busy time for the events team here at OPI recently, with our Global Forum taking place in Chicago from 17-19 May. We’ve got another relevant and varied programme in place and an impressive speaker line-up and attendee list. I’m especially looking forward to the Big Interview with United Stationers – soon to be Essendant – CEO Cody Phipps and the closing panel discussion that will try to find ‘10 Big Answers’ to the industry questions posed the day before by EVO Group CEO Robert Baldrey. A popular topic at previous OPI events has been millennials and the impact – at a number of different levels – that this generation is having on our industry. Our Hot Topic this month (see page 30) takes a closer look at these Generation The majority of CEOs Y’ers, as they are also interviewed believed that known, and dissects what the core OP market in their the OP world is – or should country/region had declined be – doing. By the time you read this by 3-5% in 2014 we will have published our latest State of the Industry (SOTI) report, looking in detail at the results and trends from six different key markets. It will be no surprise for you to learn that the majority of CEOs interviewed believed that the core OP market in their country/region had declined by 3-5% in 2014. But what are their growth strategies and hopes for the future? Scan the QR code below to find out how you can order your copy of SOTI 2015. Have a great month and I look forward to seeing some of you in Chicago in a couple of weeks’ time. Andy Braithwaite Editor

Office Products International Ltd (OPI), 2nd Floor, 112 Clerkenwell Road, London, EC1M 5SA, UK Tel: +44 (0)20 7841 2950

@opinews

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News

Large resellers

FTC closes Office Depot ‘Made in USA’ from opi.net investigation Soennecken implements direct retail strategy Germany-based dealer group Soennecken has taken the first steps since announcing its enhanced direct selling strategy following the change of its bylaws last year. Jointly with its dealer member Pro Büro & Kopier, it acquired Cologne-based B2B/B2C retailer Ortloff. Based in Cologne’s city centre, Ortloff was previously owned by Staples, which acquired the company as part of its deal with Corporate Express in 2008 (Ortloff fell under the Staples Advantage banner). It was recently sold to Pro Büro & Kopier – a long-standing Soennecken member with 40 speciality stores and a B2B online store – as Staples wants to focus on its ‘core business’. Acting as somewhat of an intermediary and currently implementing an ERP system, Pro Büro & Kopier will hand over all operational activities to Soennecken on 1 June when the deal is finalised. The cooperative confirmed that it will keep all of Ortloff’s existing employees as well as the company name. In a different move, Soennecken has added an Office Interiors business segment to its overall portfolio. Chairman Dr Benedikt Erdmann said: “The fact that we added this as a standalone business segment clearly demonstrates how important Soennecken believes the category of office interiors is.” Soennecken’s aim now is to come up with new service solutions and train members in how to use and market them. The cornerstones of the current training programme, which was first set in motion over a year ago, will be planning, consultancy and distribution.

Dealer Groups

The Federal Trade Commission (FTC) has ended its investigation into Office Depot’s use of the ‘Made in USA’ label for some private label desks. The investigation was based on the use of the ‘Made in USA’ label on desks where production had moved overseas and the US claims of origin had not been removed from Depot’s website and other marketing materials. The FTC has agreed not to pursue the matter further after Office Depot said it had implemented a remedial action plan to “correct its representations and avoid future mislabelling”. The Depot plan includes: • removing inaccurate claims from its website • reviewing catalogues, signage, packaging and social media content to ensure the accuracy of claims for the affected products • reviewing online descriptions for all products • implementing a procedure where legal personnel review weekly reports regarding any items where production has shifted from US to non-US manufacturers • increasing legal review of the company’s US-origin claims However, the FTC said it reserved the right “to take such further action as the public interest may require”.

Financial

Awardees revealed on new £200m UK public sector contract The Crown Commercial Service (CCS) in the UK has published the awardees of the new Office Supplies for the Wider Public Sector contract. The RM3703 contract – worth £200 million ($293 million) – includes printers, paper, storage media, workwear, toilet paper and stationery, and according to the CCS is designed to provide a “competitive, single route to market for the supply and delivery of office supplies requirements”. The companies awarded the contract are: Banner Business Services, ACS, Commercial, Office Depot UK, OfficeTeam and XMA. In addition, the CCS has negotiated a direct award under the Supplies Big Deal programme with

HP for EOS, including ink and toner, for a period of 12 months. The RM917 Government Office Supplies Contract for central government is held by Banner but comes to an end on 31 July 2015. The CCS is expected to replace this with a new framework agreement, but this time around with a “limited number of suppliers”.

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News n Round-up

Wholesalers

French wholesaler in administration French wholesaler and franchise group RP Diffusion has gone into administration. The firm was placed in administration (‘redressement judiciaire’ in French) by a commercial tribunal near Paris and now has until August to come up with a turnaround plan – or find new investors – during which time it is protected from its creditors. RP Diffusion has annual sales of about J42 million ($45 million) and operates as a general wholesaler and as a franchise

group with a network of more than 500 stores under the Rouge Papier banner. The company continues to trade as it looks for a financial solution. OPI understands that it has written to its suppliers, informing them of the situation and asking for their cooperation and support.

Large resellers

Bruneau acquisition finalised

The acquisition of leading Nicolas Potier French direct reseller Bruneau by Weinberg Capital Partners was completed at the end of March this year. Weinberg has been joined by two private investment firms, Halisol Group and SGPA, both of which have taken minority stakes in Bruneau and will work with the management team on the company’s growth and development strategy. Founded in 1955, Bruneau has grown to become the leading pure-play direct office supplies reseller in France with sales of around H300 million ($330 million), although a portion of that comes from other markets such as Belgium. It also owns the Maxiburo website which was formerly OTTO Office’s French business. “Weinberg Capital’s expertise in this segment of B2B distribution will be particularly useful in order to successfully carry out our development strategy,” said Managing Director Nicolas Potier.

OPI Magazine | May 2015

Starboard forces Staples board changes Staples has nominated Kunal Kamlani for election to the board of directors at its 2015 annual meeting in June. Kamlani was COO of Prestige Cruise Holdings and also served as Head of the Global Investment Solutions division of Bank of America/Merrill Lynch. Kamlani’s nomination came as part of a Staples agreement with Starboard, the activist investor which owns about 4% of Staples’ common stock. In return for his nomination, Starboard has agreed to support all of Staples’ director nominees for the upcoming general meeting. The deal has resulted in the resignation from Staples’ board of former Sainsbury’s boss Justin King who has decided not to stand for re-election after expressing “significant reservations” about the agreement with Starboard. In an email, King said that Starboard’s investment in Staples was “recent and opportunistic” and that its shareholding in Office Depot – Starboard owns about 10% of Depot’s shares – “means that their interests are clearly not aligned with the vast majority of our other shareholders”. King added in his email: “Kunal Kamlani does not bring skills that we have previously identified as lacking on the board and I do not believe we would have appointed him subject to our normal process. Given the circumstances I think it also entirely reasonable to question whether he can be viewed as truly independent.” Staples may have lost Justin King from its board, but that was clearly the price it was prepared to pay to avoid a likely ugly proxy fight with Starboard.

Justin King

Large resellers

News n Analysis

PaperlinX collapses in Europe PaperlinX puts UK and Benelux subsidiaries into administration after years of restructuring attempts fail

SOme

might say the writing was on the wall, but it still caught PaperlinX UK employees at the paper merchanting and signage and display (VTS) divisions by surprise when it was announced the company had been placed in administration.

– but equally desperate – supplier strategies in terms of direct sales. The company itself blamed a decrease in demand for paper in Europe, which it initially responded to by diversifying into other areas and revising its logistics operations. Numerous sources told OPI, however,

“The shocked reaction we had from PaperlinX employees made it clear no one thought it was as serious as it turned out to be” The announcement on 2 April will result in around 700 redundancies – some of which were made immediately – following the closure of 14 out of 19 of the company’s sites. ZenOffice Group Commercial Director Bruce Davie said news of the company’s voluntary trade suspension on the Australian Stock Exchange on 30 March clearly indicated something was wrong, but that service had been good until 24 hours before the administration news broke. “The shocked reaction we had from PaperlinX employees made it clear no one thought it was as serious as it turned out to be,” he told OPI. However, for anyone following the PaperlinX trail over the past few years, it should come as no surprise as internally the paper merchant suffered from boardroom backstabbing, declining market demand and an inability to provide a solid restructuring strategy in its struggling European operations. Paper industry consultancy EMGE said the collapse had been a long time coming for a number of reasons, including falling paper demand, a company struggling to find its place in a dynamic but declining sector, weak paper pricing, intense competition and changing

OPI Magazine | May 2015

that one of the main problems was the company’s credit control, or lack thereof. As one source, who asked not to be named, told OPI, PaperlinX’s main problem was its financial strength.

Others pointed to former CEO Andrew Price who, charged with restructuring the European operations before taking the top job, spent too much time blaming suppliers for the company’s woes instead of concentrating on adapting the business to run profitably in a declining market.

Picking up the pieces The UK paper and OP industries seem relatively upbeat regarding the PaperlinX debacle. David Jones, Group Marketing Director at Premier Paper, said the merchant industry will adjust to the new situation in the long term, to achieve a good balance between supply and demand. However, he added that, as PaperlinX had owned a significant chunk of the market, a great deal of pressure will be placed on paper supplies in the near term. ZenOffice’s Davie echoed Jones’s sentiments, adding that the channel

PaPerlinX uPdate – WHat nOW? Online auction Administrators Deloitte has given the go-ahead to sell off assets from the PaperlinX UK business in an online auction on 11-13 May. Items on offer from three UK sites – Northampton, Macclesfield and Manchester – include office furniture, digital and lithographic printing equipment, warehouse equipment and paper and board converting units. The sale will be cancelled if Deloitte finds a buyer for the company before the auction date. Premier Paper buys PaperlinX division UK-based Premier Paper Group has bought the PaperlinX Reel Paper and Savory Paper business. Premier has offered over 30 former PaperlinX employees positions in the new division, which will be renamed Premier Reel Paper. Premier Paper Managing Director Graham Griffiths said the purchase provided an “excellent” opportunity for the company to expand in the business forms, direct mail and digital inkjet markets. Interest in PaperlinX Benelux According to Dutch media, there is strong interest from around 35 companies in buying the assets of PaperlinX Benelux, which include two offices based in Flanders, Belgium. Negotiations with interested parties were expected to start towards the end of April. Crowdfunding A crowdfunding project to save the VTS division by an ex-PaperlinX UK employee was rejected by Deloitte. When OPI visited the crowdfunding site, a total of £67,744 ($102,000) had been pledged towards its £500,000 target and its Facebook page had closed down. According to media sources, former PaperlinX CEO Andrew Price was involved in the project.

Credit check

initially doesn’t have the capacity to take all the volume overnight, which will result in some issues. However, given time, it will adjust, he said. As is often the case, where there is misfortune, there is gain. And while this is still speculation, Antalis is expected to be the main beneficiary of the PaperlinX demise, picking up volume and new clients in the UK. EMGE analysts agree with the Antalis prediction, but also said new players such as Papyrus may pick up some of the business.

Double A General Manager of International Network Ben Veldman said that, as Double A is a new entrant into the UK, the PaperlinX impact on the company is limited. He also pointed out that Double A uses credit insurance. “Still, for the market, this is a worrying situation as it could potentially reduce customer choice to fewer merchants, wholesalers and distributors,” he added. The situation will be further exacerbated across the continent as

What was made abundantly clear by all those OPI spoke to was that credit, rather than supply, would be the main issue facing customers. EMGE said that while in terms of paper supply, there are probably enough tonnes readily available – PaperlinX’s demise removes around 50,000 tonnes from the UK market – credit is such an important part of the business that it may hurt many smaller operators/printers. Nevertheless, Denmaur Independent Papers Managing Director Mike Gee said that the PaperlinX collapse should stabilise the market “somewhat” at least in terms of pricing. The advice from paper merchants to dealers was to ensure that suppliers are forthcoming with information on credit terms.

NAOPA shortlist announced Who’s up for a 2015 North American Office Product Award? Here’s the shortlist for the vendor awards, hot off the press...

Best Product – Core Office Products 3M Clor Group HSM ShurTech Brands Victor Technology

Post-it Dry Erase Surface Justick Triple Function Dry-Erase Whiteboard SECURIO AF500 Autofeed Document Shredder GeckoTech Reusable Hooks High Rise Dual Monitor Sit-Stand Desk Converter

Best Product – Cleaning and Breakroom Hisense USA Impact Products Newell Rubbermaid P&G Professional Sofidel America

Hisense Chill Barricade Odor Defense System Executive Quick Cart Bounty with Dawn Heavenly Soft Dissolvetech

Best Product – Furniture Ghent Mayline MooreCo Safco Victor Technology

LINK Board Keep Modular Wall System Cloud 9 Collaboration Tables Vamp LED Lighting High Rise Dual Monitor Sit-Stand Desk Converter

Best Product – Technology Fellowes Imation Logitech Paris Corporation Smead

AutoMax 200C Auto Feed Shredder LINK Power Drive Keys-to-Go Ultra-Portable Keyboard For iPad Weego Jump Starter Battery+ Equil SmartPen 2

Product Innovation of the Year Bi-silque

MasterVision 360° Gold Ultra Magnetic Dry Erase Multi-Use Mobile Easel Ghent LINK Board Hisense USA Hisense Chill ITW Professional Brands Sertun Rechargeable Sanitizer Indicator Towels Victor Technology High Rise Dual Monitor Sit-Stand Desk Converter The winners will be announced at the SP Richards ABC event in Las Vegas on 24 June. NOTE: OPI readers can still influence the winner of the People’s Choice award – go to opi.net/votenaopa2015 for more information or look out for the June issue of OPI.

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News n Analysis

PaperlinX – at the time of going to print – had failed to find a buyer for its Benelux subsidiary which, despite a two-week extension, was placed into administration on 15 April. However, the true impact of the PaperlinX collapse – both in the UK and the rest of Europe – will only fully emerge in the coming weeks and months.

Imports of uncoated paper are under investigation by the US government

January this year, four US paper manufacturers and the United Steelworkers (USW) union filed antidumping petitions against unfairly priced imports of certain types of uncoated papers. The petition was filed with the US Department of Commerce (DOC) and the US International

injured or threatened with material injury” by imports from the aforementioned countries that are allegedly sold in the US at a less than fair value, with some allegedly subsidised by the Chinese and Indonesian governments. As a result, the DOC is proceeding with its investigations. The

“Our goal is a level, competitive playing field [...] and the marketplace will determine what the price of paper will be, based on appropriate factors” Trade Commission (ITC) against sheet paper imports from China, Indonesia, Brazil, Portugal and Australia, and countervailing duty (CVD) petitions against subsidised imports from China and Indonesia. The US paper manufacturers involved – Domtar, Packaging Corporation of America (PCA), Finch Paper and PH Glatfelter – alleged that the importing companies are selling paper at prices considered to be less than fair value. The CVD petition alleges that Chinese and Indonesian companies benefit from government subsidiaries that enable them to reduce prices (see opi.net for more on the initial petition).

Downward spiral As the general US uncoated paper market continues on a downward spiral – at an average of about 3% for the past 15 years – US manufacturers have been closing paper mills. USW President Leo Gerard blamed foreign imports on the closure of the mills, stating: “Since 2011, eight US mills that produce uncoated paper have been forced to close in the face of increasing unfairly traded imports, resulting in the loss of thousands of paper jobs.” In March, the ITC determined there was “a reasonable indication” that the US industry is “materially

preliminary CVD determination was due in mid-April, but at the time of going to press had not been made available. The AD determination is due at the end of June. The actual investigations are expected to take around 14 months in total to complete and return a verdict. Portucel – the only European paper company named in the petition – told OPI: “Portucel disputes both the claim that its exports to the US have been at dumped prices and that its exports have been a cause of material injury to the US industry.” Adding that the group is “cooperating fully” with US authorities, Portucel said the evidence it will provide will “disprove the petitioners’ allegations”. What this has done in the meantime, however, is cause concern for the OP industry in terms of supply and pricing issues, particularly as it is expected that some foreign manufacturers – most likely from Asia – will simply stop supplying the US, while others will raise prices if

duties are imposed. Rumours in the industry say there could be a hike in imported paper prices of as much as 10%.

Well-known names A read-through of the list of US importers named in the petition reveals why this issue has the OP industry in a state of distress. Well-known names include Bunzl, CCL Label, CNG, Frank Parsons, Gould Paper, Office Depot, RR Donnelley, SP Richards, Staples, United Stationers, Walmart and xpedx. While most of those we contacted refused to comment on the issue, one dealer told OPI that some paper suppliers had put up prices immediately after the continuation of the investigation was announced. One dealer group also began advising its members in March to contact suppliers to confirm their supply, lead times and pricing. Domtar VP of Business Papers Rob Melton told OPI that there is “ample” domestic capacity to meet the declining demand and Domtar is confident about continuing to meet the needs of its customers. “Our goal is a level, competitive playing field and our hope is that, once balanced, the marketplace will determine what the price of paper will be based on appropriate factors, without being destroyed by illegal trade practices.”

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News n Analysis

US paper industry remains on tenterhooks

Following the announcement of the demise of the paper merchanting and signage and display (VTS) operations of PaperlinX UK, ZenOffice Group Commercial Director Bruce Davie asked the OPI LinkedIn group what the impact will be on the supply lines for both the office and commercial print markets. Below are a few of the answers. (For a full analysis of the PaperlinX saga, see News Analysis, page 10). This is not good for the UK paper industry. But it is also a sign of the times for us all – box-shifting a major product for very little or no profit. I wish the PaperlinX employees all the best. Martin Gander, Sales Director, George Rose Office Products I agree what happened is not good especially for the staff, but to use that old cliché ‘As one door closes...’ Identity Papers’ (a specialist supplier in personalised watermarks) long-term plans to develop its fine paper range into the market further have now been brought forward due to current events. Paul Stenning, European Product Development, Identity Papers I wonder how long it will take the remaining merchants to absorb the volume. Everyone cuts their cloth according to existing business volumes, so surely there will be disruption as the market adjusts to the loss of a major player. Having said that, after a week into this we saw no service disruption even though PaperlinX UK was a major supplier to our business. Bruce Davie, Group Commercial Director, ZenOffice I think the overall reduction in the volume of office paper and commercial paper indicates a shrinking market for paper merchants. The market in Europe is limited to three or four players and my understanding is that there is too much competition in the region. Siegfried Broska, formerly with Papyrus Deutschland and Schneidersöhne Deutschland I believe the other merchants were starting to struggle with logistics the week after it happened and taking, into account we have had the Easter holidays, it could be a whole different scenario. I feel it is never healthy when the market is left to so few suppliers. Denise Eden, Sales Manager, Principal 1

Don’t forget to take part in the discussions on the OPI LinkedIn page

News ■ And finally...

Comment

TWEET CHAT follow us on Twitter @OPInews, @andy_opi

$750 million

Coffee sales in the US in 2015

$965 million

Size of the SMB market for paper towels

40%

@Staples Email at 9:00 am: “Free donut holes in the breakroom.” 9:01 am: Is this some sort of joke? #OfficeLife @buroplc Everyone knows that people commune around food so why not make more spaces that accommodate that? @umblepi I moved into a new office whose breakroom doesn’t have a Keurig machine, so now I have to pour my coffee out of a pot like a Neanderthal. @astrotweeps Our office coffee bell has strict rules: 1 ring: time for coffee; 2 rings: alcohol/ pub; 3 rings: White Walkers

Percentage of US adults who drink tea

57%

Percentage of US employees who want healthy snack options

@MarsDrinks Fact: #Coffee is America’s top daily beverage choice after water. Via 2015 #NCDT @

SNAP SHOT TriMega’s EVP of Marketing Michael Morris couldn’t resist visiting the world’s tallest filing cabinet during a trip to Burlington, Vermont, for a Volunteers for Peace board meeting. He told OPI: “As a true office products junkie, if I am in the home of the world’s tallest filing cabinet, it would be remiss not to pay it a visit. How often do you get the chance to stand next to office product greatness... larger than life?!”

opi.net poll results What is your biggest growth category in breakroom?

Coffee 33% Food 5% Breakroom disposables

Cleaning products 57% w w w.opi.net | OPI Magazine

Big Interview | Brad O’Brien

A brand of choice

Brad O’Brien talks to OPI Editor Andy Braithwaite about the brand revamp he has been driving at Australian dealer group Office Choice

THIS

month’s Big Interview takes us ‘down under’ to the Australian market as we speak to Brad O’Brien, CEO of Office Choice, one of the ‘big two’ dealer groups in the country. O’Brien took over from the long-standing Max Ritchie towards the end of 2012, bringing a ‘fresh pair of eyes’ to the business supplies industry following a career in the computer software and electricals sectors. One of O’Brien’s main achievements since he joined Office Choice has been to drive the group’s brand awareness in the marketplace. Here, he explains this new brand strategy and discusses the key challenges and opportunities for independent business supplies dealers in Australia.

“We need to have a point of difference, need to be memorable and need to have relevance and credibility”

OPI: This is our first Big Interview with Office Choice. Perhaps you could start with a quick overview of the group. Brad O’Brien: The business was formed back in 1993 and it has gone through a number of iterations in terms of structure, dealer numbers and strategy since then. We’re a co-op that is a public unlisted company, so the bulk of the dealers in our network are also shareholders in the entity, which really contributes to the family nature of our organisation. Numbers-wise, we’ve got about 110 business owners with around 145 outlets in total, and they’re generally split across two different membership types: an Office Choice branded membership – about 110 outlets – and then there is what we call the Connections membership, which is an unbranded membership. OPI: To what extent do your members tend to have retail outlets? BO’B: We are predominantly a B2B business;

OPI Magazine | May 2015

however, in essence we’re a pseudo retailer in that we take a box and sell it to an end user – the end user just happens to be a business in our instance. Our business mix is about 80% B2B vs 20% retail, with the retail coming primarily from our regional dealers. OPI: What are your total end-user sales? BO’B: It’s a very varied membership, so at the top end we have dealers doing A$20-plus million ($16 million) and at the smaller end in some of the regional markets there are members doing sub-A$1 million. But if you take the average turnover by dealer across the group, that sits at circa A$2 million. OPI: What have been your business priorities since you took over? BO’B: Just prior to joining the business, our board undertook a strategic planning process that culminated in the establishment of our three-year strategic plan. To the board’s credit, they gave me the opportunity to review and refresh this by applying a number of my views, and that’s what we’ve been working to for the past couple of years. OPI: Can you provide some more details of the strategic plan? BO’B: We broke it down into four key elements: branding (having that point of difference), merchandise maximisation, IT integration and operational efficiencies, and helping the dealers to reduce their cost of doing business (CODB). We started first and foremost with our dealers’ market positioning, point of difference and our brand – so in layman’s terms, who and what we are as a group and who our target market is. Independents can’t be everything to everybody and there are a number of issues that don’t allow them to

Office Choice | Big Interview compete in the top end of town, so we really honed in on that SME market sector. More importantly than that, we asked ourselves how we were going to position ourselves in the market differently; so we went through a whole customer research, brand architecture piece that said we need to have a point of difference, need to be memorable and need to have relevance and credibility. Out of that we’ve developed very much a brand-driven strategy. So we’re driving an Office Choice branded proposition in the B2B market which, as far as I can see, is unlike the dealer groups in many other markets. Our brand proposition is about reliability, and that’s been supported with a brand ambassador – Joan, the Office Manager – and our new tagline, ‘Consider it sorted’. Then the execution part was how we make ourselves memorable. We’ve done that with our ‘office hacks’ campaign, which includes half a dozen TV ads about alternative use of office products in an office environment. Our brand strategy is about creating credibility for our independent dealers, so when they knock on a door they’re not an unknown independent; they’re an independent that is connected with a brand which has volume, scale, credibility and competitiveness. Our focus has now moved to merchandise maximisation with our new Head of ‘Merch’ executing his category review programme which is well underway. The key outcomes of this process will be greater operational efficiencies, more aligned ranges to our customers’ needs, more full-solution ‘new category’ expansion and, ultimately, improved profitability. OPI: Who foots the bill for all this – the members? BO’B: Ultimately, yes, because under any cooperative banner surplus income is distributed back to the dealers via a special rebate or dividend. We are fortunate in that our business is in a really solid financial position, having built a ‘war chest’ of retained earnings over the past 5-6 years. This being the case, we were able to utilise a portion of those retained earnings to fund the programme, which meant the dealers didn’t have to dip into their own pockets – so this was a positive.

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Big Interview | Brad O’Brien OPI: What have the results been like? BO’B: We are nine months into the programme and I must say the results have been positive. There is no doubting the market is tough and in a tough market we have been able to increase year-on-year purchases and, more importantly, rebate income. We believe this can partly be attributed to the fact that we’ve been progressive – in our market at any rate – and delivered a very strong digital marketing and customer-engagement programme which has really driven our web traffic and greater brand exposure. If you look at the statistics, our average weekly web traffic has gone up exponentially, and during our promotional months we have enjoyed a fourfold increase versus the already improved base run rate. That is great from a brand exposure perspective, but more importantly the click-through rate to dealers’ websites sits at around 80% of web entrances, which means our target market is hearing us and is willing to engage. All that said, make no mistake about it, like all independent groups we were coming off a couple of really tough years, so to see the business performance indicators heading in the right direction is promising, but we still have much to do. OPI: Let’s look at your performance last year. I’ve seen 2014 described somewhere as “a groundbreaking year” for Office Choice. BO’B: I’m not sure I’d use the term ‘groundbreaking’, but certainly, if you look at our purchasing, rebates and customer reach results, we are pleased to be showing growth on last year. All the intel sources on our local market suggest that the industry is still down and continues to decline by low-to-mid-single digits, so this means we must be doing something right. Notwithstanding this, our focus is on continued growth; we’re chasing growth on the back of our brand strategy, on the back of our merchandising category-expansion initiatives and on our market-share push. OPI: You’ve got this brand strategy. What is the role of private label in that? BO’B: We’ve had a really strong private label range for a number of years and currently have about 350 products. We’re a little bit different from most groups I’m aware of in that our private label carries our primary brand on it, so the Office Choice brand is our private label; we don’t run a price fighter or a non-name brand.

OPI Magazine | May 2015

With that being the case, how we position that product is really important, as are the product specifications, as it’s reflective of our greater brand. So at the end of the day, it has to reflect our brand positioning: one of good quality and good value, not in that ‘down and dirty’ space. OPI: What is your take on the market and the traditional OP dealer in general? BO’B: If you look at the independent market in Australia, it is very crowded in what is a small market, and in one form or another there are four independent groups. That raises lots of questions around efficiencies, competitiveness, the ability to compete and customer relevance in the space. Couple this with the declining overall market and there is no doubt that it is tough work. Add in the competitive landscape and there is a lot to contend with. Take Officeworks, for example. While they’re predominantly retail, their B2B space is gaining a bit of momentum. OPI: It’s one of their strategic focuses. BO’B: I believe so. However, from what I can gather the B2B space is proving to be challenging for them because it is difficult to establish that relationship, the connection that is required. Nonetheless, they continue to chip away and are making inroads. You then have the likes of the multinationals and you have a really crowded market. That puts additional pressure on the independents and, once again, if you do not have a position in the marketplace – a point of difference, customer awareness, relevance and credibility – you are in trouble, hence the approach we have taken. OPI: How is the BPGI partnership going with Office Brands and New Zealand’s Office Products Depot? BO’B: From a functional perspective, it is working well. Whilst the BPGI arrangement is global, the practice is very regional; most, if not all, of the activity and contracts facilitated are with the local suppliers at a regional level under the global BPGI banner, and it’s the three groups that drive the agenda around those supplier category commitments.

Joan, the Office Choice brand ambassador

“To see the business performance indicators heading in the right direction is promising, but we still have much to do”

Big Interview | Brad O’Brien OPI: How does the BPGI membership bring concrete value for members? BO’B: Consolidating the volume across key categories without question benefits suppliers and translates into improved trading terms and rebate programmes for the dealers, and paper is probably the best example of that. We’ve changed the structure slightly with our BPGI arrangement, so are now more hands on managing that process ourselves. We no longer have the BPGI North American representative come out to Australia to coordinate our meetings, which has allowed BPGI to restructure its service and cost base, ultimately reducing the cost of membership.

“We’ve changed the structure slightly with our BPGI arrangement, so are now more hands on”

OPI: How is your relationship with Office Brands at the moment? I saw some mud-slinging at the end of last year in the local press. BO’B: (laughs) There is absolutely no problem with our working relationship. I think what you are referring to is that there was some inaccurate reporting regarding some of our numbers in the local industry publication and we felt the need to set the record straight. That was several months ago and we’ve all now moved on. We are working together on the new paper tender as we speak. OPI: On the subject of paper sourcing, I see you have had some issues with environmental groups that don’t like you working with APRIL.

BO’B: Greenpeace has taken aim at us in the past few months based on their view of APRIL’s commitment to sustainability and its sustainability policy, so there has been a bit of bad press associated with that. OPI: Does that mean you are reconsidering your paper supplier? BO’B: It’s interesting that this has come out when the paper tender is up for review! Like always, there are a number of factors to take into consideration apart from the specs and the price; so the first question we ask ourselves collectively is if we are happy with the sourcing and sustainability practices of the mills that are bidding – and that gets asked every time. In APRIL’s defence they have been very proactive in countering any accusations against them. No one wants to get into a public spat with the ENGOs; but behind the scenes APRIL has been very proactive providing us with the information and the intelligence around their sustainability programme and how that is audited by an independent committee including KPMG. As is often the case, what is reported publicly and what is fact can vary. Importantly, as a business we have a very fixed position on our obligations to the environment and sustainability, so the sourcing practices of our suppliers are paramount. We are also conscious that we don’t want our brand to be affected unfairly in the public arena, so we continue to manage this issue very carefully. OPI: What are your priorities for the next 12-18 months? BO’B: Whilst we’ve had really good cut-through on our brand strategy, there is still a lot of work to do and that will continue during this period. We are also six months into our merchandise, category management and supply chain enhancement, so that will carry right through to the end of 2016. This will be complemented with our integration and technology focus, ensuring our dealers are efficient, informed and providing a high level of customer service and shopping experience. All in all, it will be about ensuring that the dealer network is strong, enjoys growth and is profitable in what will no doubt be interesting times for the industry.

Make sure you check out the full interview online at opi.net and on the OPI app.

OPI Magazine | May 2015

Category Analysis | Breakroom

Make or break As companies place increased importance on the breakroom area, this sector is seeing strong growth. OPI talks to the key players for the full story behind the figures

by David Holes

THE

provision of an inviting breakroom, stocked with good-quality food and drink options is increasingly seen as making good business sense by employers. It’s a relatively simple way of keeping their staff happy and sending them a subliminal ‘thank you’ for their efforts. As Thea Thanas, Breakroom National Account Manager at Nestlé Professional in the US, points out: “Today’s consumers have more sophisticated tastes and offices want to offer more than the basics to their workforce. It’s more cost-effective to offer them premium drink options and their favourite snacks on site at the office. This increases productivity and keeps employees from going out for their cappuccinos or lattes.”

Better workplace Elizabeth Eberle, Director of Marketing at Safco, also sees a shift in the way breakrooms are perceived and used: “They are no longer forgotten spaces, but centralised areas where informal, spontaneous meetings can take place. Companies are redesigning their breakroom spaces to make them more inviting, allowing people to connect informally and be more effective in a relaxed environment. Breakrooms are becoming more important to the office culture and can be the building blocks to a better-connected workplace.” Those providing breakroom products are benefitting from these trends, with many reporting strong sales and excellent future prospects. Thanas says: “The office channel has contributed to some of the

OPI Magazine | May 2015

most significant Nestlé sales growth. And the breakroom category has plenty of potential for further growth, as independent office dealers venture into or expand their presence in the breakroom business.” SP Richards (SPR) also reveals sustained growth in this area. Merchandise Marketing Manager Kelly Wilson comments: “The breakroom category has been growing in double digits for years and is strategically important for us and our dealer customers going forward. We expect continued growth as we leverage the development of new programmes and marketing materials. Disposables and snacks/beverages are the biggest growth categories as employers have found it beneficial to provide an improved workplace environment.” Jeff Bobroff, Director of Category Management, Breakroom and Food Service Disposables at rival wholesaler United Stationers, adds: “United continues to find and create unique opportunities in the booming $4 billion US breakroom industry. It became a unique category in our company’s Supply division two years ago and has evolved to become a key component of our business. Now that we have a critical mass of resellers that have come on board, we’re experiencing double-digit growth across all breakroom channels.” Snacking is becoming increasingly popular in the workplace, especially as more information is published that suggests it’s healthier to eat numerous smaller meals throughout the day, rather than a few large ones. These studies, and the greater focus on decreasing obesity, mean that the appetite for nutritious, low-calorie snack options continues to expand. Bobroff explains that this is a very strong trend right now, as busier lifestyles and

“[Breakrooms] are no longer forgotten spaces, but centralised areas where informal, spontaneous meetings can take place”

Breakroom | Category Analysis

changing work demands influence consumers’ eating habits: “One of the hottest trends right now is healthy snacks that are full of taste and flavour. A recent survey showed that about 50% of consumers have a snack 2-3 times per day. [see also our Breakroom Special Feature on page 34] “With busier lives comes less time available to sit down for a complete, balanced meal, making snacks as a meal replacement a rising trend.” He adds that consumers are paying more attention to the nutritional value of their snacks, looking for choices that are antioxidant-rich or serve as good sources of protein: “We now offer low-fat, fat-free and sugar-free snack options that serve up convenience and flavour.” Snacks are also evolving to keep up with consumers’ changing tastes, with more emphasis on hotter, spicier Asian flavours, says Bobroff, adding: “Grab-and-go and guilt-free snacks are popular as health-conscious consumers seek to combine the convenience they need with the health benefits they want. We are answering that by offering a wider selection of options that curb their cravings but don’t leave them feeling guilty for snacking.” Hydration is another key trending category, and United Stationers has expanded its range to include sparkling and mineral water, juices, milk, energy drinks and powdered drink mixes. The company has also seen double-digit sales growth with tea as more consumers look to tea as having health benefits. An interesting comment on these trends comes from Debbie Nice, Head of Facilities Supplies at UK wholesaler VOW: “The taste for healthy snacks in the UK workplace should be

growing, but we aren't seeing many products available to us that can help us provide a comprehensive range. I think one of the reasons for this is that if you are looking for the healthy option, often fresh is best. We look forward to seeing what we can find in ambient products to develop the range in the next year. We’re also increasing our range of herbal, spiced and fruit teas as we see an increased demand for choice and personal preference.”

Clean and tidy Of course, it’s not just food and drink items that are needed to create an attractive breakroom environment. Keeping the area clean, sanitary, furnished and organised is also vital. Safco’s Eberle says that its key customers are now requesting more breakroom cabinets, receptacles and beverage and snack organisation products: “It’s a growing category and a key interest area for us. There’s now an office need to organise and present the large varieties of coffees and teas in an inviting and attractive way while also keeping supplies within easy reach. We currently feature breakroom organisers for coffee pods and utensils, tables and seating options, as well as several recycling and waste receptacles. We’ll be launching our new range at NeoCon in June 2015.” More and more manufacturers are going beyond their traditional remit in an effort to capture some of the precious breakroom revenues. Véronique Roussel, Trade Marketing Manager at France-based CEP

Debbie Nice

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Category Analysis | Breakroom Office Solutions, confirms that although breakroom is a new category to the company, it quickly spotted the potential opportunities this sector offers: “No complete concept existed around the coffee break," she says. "So we launched the ‘Take a Break’ line at the end of 2014 to offer consumers a full, coordinated range perfectly tailored to their needs. It’s early days, but sales are in line with forecasts and we’ve won a European Office Products Award for this line.” [see EOPA Review, OPI April 2015, page 27]

Cleaning the breakroom Meanwhile, breakroom cleaning products are a continued source of growth at US-based ITW Professional Brands. Strategic Accounts Manager Andy Bolin says the channel remains robust and believes this growth trend will continue for the foreseeable future: “The main opportunities are in ready-to-use cleaning supplies, such as quart sprays and pre-moistened wipes. These types of products are quick, easy and convenient for professional cleaners as well as the workers who will clean up after themselves. Up to 90% of cleaning costs are labour-related, so

anything that can reduce the number of steps in cleaning saves time and money. “When you provide staff with products packaged for convenience, it’s a win-win scenario all the way. They use them and in turn stay healthy and are able to do their job.” Reckitt Benckiser also sees cleaning products as a lucrative sub-sector in this category. Bill Marsh, Division Manager - East, explains: “The breakroom continues to be a major emphasis for us in the office channel. We expect this to continue, even in those settings where professional cleaning people are used to clean buildings. It’s about fixing those problems – spills, for example – that occur during the day, before the cleaning staff arrives. And it’s about taking care of your personal workspace which cleaning personnel don’t often touch.” Leen Nsouli, Office Supplies Industry Analyst at The NPD Group in the US, reports that it’s the ‘hardware’ of beverage cups, tissues, paper towels and dispensers that represent the top performing breakroom products, with sales of these items up 15% year on year in January 2015. She says: “Sales of breakroom and associated

Smell the coffee Coffee is 70% of category sales, according to industry statistics. “It’s an incredible opportunity,” says Jeff Bobroff, Director of Category Management, Breakroom and Food Service Disposables at United Stationers. “That’s why we say ‘win coffee and win the breakroom’.” Thea Thanas He adds: “Traditional brew coffee is still the majority of share; however, single-serve options continue to expand, providing customers with the custom-quality cup of coffee, tea or cocoa they crave.” Data from GfK tells a similar story on the other side of the Atlantic in the UK. Natasha Fernando, Senior PR and Marketing Executive, reports: “Hot beverage makers continue to be one of the best performing categories within the small domestic appliances sector over the past 12 months, growing at 21% in volume and 15% in value. Single-serve machines are the largest segment, accounting for 69% of total value. These machines are chosen for their speed and ease of use. This segment has grown by 35.5% in volume over the year as a whole and enjoyed uplift every month compared to the same period last year.” Thea Thanas, Breakroom National Account Manager at Nestlé Professional in the US, notes that today’s consumer is more sophisticated and has developed a taste for espresso, cappuccino and latte drinks: “The consumer wants great taste, customised their way with a wide array of flavoured coffees, creamer and breakroom drinks that are convenient and cost effective. Nestlé is meeting that need with our new coffee machine, the Nescafé Alegria 510. This machine provides five European-style drinks – espresso, lungo (tall

OPI Magazine | May 2015

espresso), americano (black coffee), cappuccino, and latte – all at the touch of a button. The machine isn’t offered in retail, thus the office dealer becomes the source for placing the machine and selling coffee and creamers.” Bobroff warns that failing to address today’s more sophisticated tastes can indeed have a detrimental effect on a company’s bottom line: “Coffee sales continue to rise, but changing habits have resulted in increased demand for better-quality coffee. In an effort to keep employees from running out to the local coffee shop, many companies are enhancing their own coffee selection by offering a wider variety of flavours and brew types. Research shows that when companies do not supply the appropriate refreshments, employees leave the building to purchase their beverages, resulting in a significant loss of employee productivity.” A recent trend identified by Nestlé is the increasing popularity of iced coffee, with one in five US consumers now drinking it. The company predicts 30% growth in this area over the next two years. “We are ahead of that curve,” says Thanas, “and have launched a new product – Coffee-mate Iced Coffee Liquid Concentrate Pump Bottles. This is an innovative way to serve iced coffee one glass at a time. The pump bottles can be kept on the breakroom counter with no need for refrigeration. Just two pumps of the concentrate over ice, add water, stir and enjoy! It doesn’t get any easier. We can’t wait to see it take off this summer.”

Breakroom | Category Analysis

janitorial products are doing especially well across all channels, as schools and businesses recognise the importance of having sanitation products in stock to keep their environments clean and germ-free. As more offices expand their breakrooms for employees with the hope of increasing workplace productivity, sales of breakroom items will continue to grow.”

Service and convenience VOW’s Nice believes there is still an opportunity for resellers to gain breakroom business that is currently going to supermarkets and cash & carry outlets: “Buying catering and cleaning supplies is often seen as a chore for many companies, but these products are critical to the running of a business, and with companies reducing their staff overheads there is a growing need for convenience. Resellers can continue to provide a valuable daily delivery service to keep customers happy, but they must also keep reinforcing the message that they can save their customers valuable time while providing a wide range of supplies for breakrooms, boardrooms and receptions.” While the wholesale channel has been very open to new products and ideas, independent dealers have been more hesitant, says Nestlé’s Thanas: “They should not be afraid to act as stockless dealers to test their business opportunities in the breakroom. As business then grows, they can stock those items that sell well for them and begin to purchase full cases at reduced cost.” Indeed, dealers must focus on winning the entire breakroom business, according to SPR’s Wilson. She explains: “Dealers should, for example, create a service agreement with their end users based on the leverage of a free or leased coffee brewer. By winning the follow-up coffee, cups,

“[Dealers] should not be afraid to act as stockless dealers to test their business opportunities in the breakroom”

The Nescafé Alegria 510 coffee maker

sweeteners, creamers and snack business, they will then be compensated for the initial investment in the brewer while growing their profit. Ultimately, they will become more valuable to that customer. “OP dealers have already taken market share from the office coffee service operators. They are now well equipped with programmes and a vast array of products from pens to facial tissue to coffee. This single-source, next-day-delivery solution that OP dealers offer provides a compelling value proposition to consumers.” Bobroff agrees that it’s this excellent service proposition and convenience factor which allows resellers to leverage their existing relationships: “OP resellers have a fantastic opportunity to grab share and grow the breakroom business significantly. There is still lots of opportunity and share to be gained as companies seek to procure all their business essentials more efficiently. We are committed to helping our resellers in terms of their evolution and sophistication in the breakroom, and to assist them in capturing a bigger share. “That means thinking beyond snacks and coffee to create even more value in the breakroom category. We can do this by offering a wider assortment of food and beverage products that are perceptive to trends and target customers’ wants and needs; by providing value-added services such as brewer installation and training; recognising the breakroom as a valuable business space and providing a fuller assortment of products that support it — from appliances and furniture, to cleaning supplies.” And it’s good to strike while the iron is hot, adds Marsh: “The opportunity is here right now. But, like any other great new thing, once the market recognises there is money to be made, dealers will all rush to get their share and that naturally will begin to drive dealer margins down. Dealers must act now to maximise their opportunity.” As Bobroff concludes: “Breakroom is here to stay. It will continue to be critical to our success as well as to the viability of our resellers. As companies recognise that breakrooms are the central hub or heart of the office, they will be valued as a location where employees go for a rest, a snack and a great cup of coffee. The breakroom is an ideal place for employers to give something back to their employees and, as such, it’s critical that we respond by having the right consumables, furniture, supplies and accessories in place that will make it attractive, well-stocked and inviting.” w w w.opi.net | OPI Magazine

Hot Topic | Millennials

The rise of the

millennials... :) Millennials are a hot topic right now – how to reach them as customers, how to treat them as staff, how to engage and retain them as both. How’s the OP industry faring in dealing with this group of people? OPI finds out... by Heike Dieckmann heike.dieckmann@opi.net

TECH-SAVVY,

community-conscious, brand-loyal and team-driven – here come the millennials. But is the OP industry any good at dealing with this group, ie people that were born after 1980 and now range in age from barely entering the workforce to indeed moving up to leadership positions? The answer, as ever, depends on who you ask, but the best that can probably be said about it is that “we’re getting there”.

into their business strategy now will benefit tremendously down the road.” So what is it that this type of customer – now making up 47% of the US workforce – wants and needs? ■ Convenience & technology Cam Marston, President/CEO at Generational Insights, points to convenience as one of the core characteristics of this group and that is very closely linked to technology. He says: “Millennials are a convenience-driven group and that

■ Customisation Kim Lear, Content Director and Generational Expert at BridgeWorks, says: “When you look at millennial buying patterns, there’s a lot of focus on customisation and solutions – this is the generation that doesn’t have to go through an entire CD to find a track they like; the generation of iTunes, of playlists, of everything being totally customised for them. And that attitude is carried over into the workplace. It’s not necessarily specific to millennials, but just the new way of buying. The difference, however, is that for millennials, it’s a barrier to access, not a nice-to-have – they simply demand it.” ■ Information Millennials are all about information. And when they want that information,

“Millennials want to be part of the big picture, so [...] including them in strategic decision-making and dealer-wide initiatives is critical in retention”

The customer Stating the obvious, Amazon is playing an ever-growing role for millennials, even in the B2B space. According to United Stationers’ 2014 USI CORE Live Study, 61% of millennials have made a supply purchase on Amazon for their workplace (see also chart, page 31), and once this group of customers go to Amazon, it’s hard for independent dealers to get them back, according to the wholesaler. “Of course,” says Kris Colt, President at US OP dealer Mono Machines, “millennials are not the most important generation to sell to now.” But, he adds: “They will be and any business that incorporates them

OPI Magazine | May 2015

convenience often manifests itself in less and less human interaction. “The OP industry is traditionally a face-to-face business, a business where salespeople go in and pick up orders. That’s changing and resellers have to move towards a point-and-click model versus a shake hands-and-order model. So at the very least, you have to have an online presence to keep that business.” Millennials, he adds, in order of preference, want to use a simple website as a means to placing an order, followed by watching a video or having an online chat to solve any issues. Only in fourth place do they actually want to talk to a human being.

they want it now. Giving them that information, at the depth they require, is a very difficult job indeed, comments Colt, as content remains a real challenge in the OP industry. “In most cases, we are creating our own content because often manufacturers and suppliers don’t provide us with anything that offers the customer any value. “For example,” he explains, “a manufacturer tells us that a coffee cup is white, weighs 12 ounces [340 grammes] and is made of paper. This tells a customer the basics, but not much else. We then, so to speak, try to tell the story of the coffee cup. Yes, it’s white and weighs 12 ounces,

Millennials | Hot Topic

■ Be involved Millennials want to be involved. As such, incorporating them in the buying process can make a real difference, says Bob Shulman, VP at US independent dealer Suburban Stationers. “Millennials want to be part of the big picture, so – when appropriate – including them in strategic decision making and dealer-wide initiatives is critical in retention. They thrive on being in the know, having their opinions heard and being part of the solution. “This notion of inclusion ties into how dealers and manufacturers need to engage millennial customers. In a

Baby Boomers 51 to 69 years old Gen X 36 to 50 years old Millennials (or Gen Y) 15 to 35 years old

Products bought from Amazon (past year) for work Source: 2014 USI CORE Live Study

but how does it feel on your lips when you drink coffee from it? Does the coffee seep through the paper after ten minutes of use and create a coffee mess everywhere? How long does it keep the coffee warm? Does it fit in a cup holder?” Improving on the information provided and offering it in a format – including the all-important social media applications – that is useful to resellers and appeals to all customers, including millennials, has become high on the list of priorities for segments of the industry. A variety of stakeholders, notably the Business Solutions Association in the US and a number of other platforms in Europe, have been working hard towards creating and implementing a range of standards. It remains a work in progress.

B2B setting, it’s not about selling just to the CFO or the purchasing manager, it’s about selling to all relevant stakeholders. The feeling of relevance and inclusion goes a long way in establishing deeper relationships within a prospect and/or account. In terms of supplier-customer relationships, the days of looking up to someone with 20 or 30 years of industry experience are over for today’s millennial OP buyers. “The best way to sell to millennials is to put a peer in front of them,” says Marston. “Having that cultural fit can be really important and gives more credibility and urgency. “If I were a millennial and through my office door walked a peer of mine and said. ‘We’re selling office supplies, why don’t you have a look at our website’, I would be much more likely to do that than if it’s someone who’s 20 or 30 year older than me and says, ‘I’ve been in the industry forever, I used to have this account and I’d love to have it again’.”

The employee As Marston explains, like-minded people are the best groups to sell to each other and that notion pretty much works for any industry. As such, the emphasis for OP resellers and manufacturers needs to be on recruiting a younger workforce. And therein can lie a real challenge. How do all parts of the supply chain attract employees in an industry that is not as glamorous or tech-orientated as, say, an Adobe, Google or Apple which have set the bar very high? Understanding what staff want from their work environment and their employer is crucial in being able to address the challenges. A number of them, including the need to become involved – and that is as important from a staff as well as a customer perspective – have already been mentioned, but there are several more factors that are important. ■ Relationships & community Relationships are hugely important to millennials, says Bridgeworks’ Lear. “What we see a lot in our focus groups is that people say they’re working really hard, very long hours and have less time with their families. And they don’t want to be miserable during all that work time, but like their colleagues and enjoy working with them.” Elliot Jacobs is Managing Director of UK-based OP dealership UOE which has a split B2B and retail focus. At the age of 40, he’s no longer part of the millennial generation himself (though in OP terms, he falls very much in the ‘young’ category which begs the question how old ‘old’ is), but he has a good idea of what makes his staff – 80% of whom are millennials – tick. w w w.opi.net | OPI Magazine

Hot Topic | Millennials He says: “Our staff are very community minded. They, for example, have a WhatsApp group among them to chat, take part in a bake-off at Christmas, and generally spend quite a lot of time with each other. They are also engaged in the wider company community. Job applicants now ask us about our environmental policies, whether we recycle, how many ‘likes’ do we have on our Facebook page, what do we do in terms of social media. All this is important to them.” ■ Workspaces To foster that community spirit, employers also need to look at the workspaces in their operations. Getting rid of cubicles and creating more collaborative workspaces, and overall creating environments where employees can have fun, in addition to working hard, is what some companies have been doing (see also ‘Gorilla in the midst’, page 36). Fellowes is one of them. Voted for the past few years by Workplace Dynamics as one of the best companies to work for in the Chicago area, the manufacturer has completely remodelled its facilities to create more open, inviting and flexible workspaces.

Decisions, decisions…

■ Career progression Everyone likes I make better decisions at work to be valued, appreciated when other people provide input and be given a career path 56% millennials, 64% Gen X they can follow, particularly in an industry that Team consensus is important they have most to me likely stumbled into rather than chosen as a 55% millennials, 61% Gen X, destination. After 39% baby boomers all, how many Source: IBM Institute for Business Value young people today would say – unless they come well as professionally, and create an from a family-run business – that environment they really believe in, they absolutely want to work in the employees are incredibly loyal.” OP industry? Being flexible as an employer is Traditionally, the recruiting process another bonus, adds Colt, and this has gone like this, says Marston: is something that has really paid off “‘We’re a long-standing company, for Mono Machines. “We may hire we have roots in the community, we someone to be a customer service offer a good pay package, retirement rep, but we also let them know that

“Don’t look at us as an office products company; look at us as an opportunity to develop skills that you can use for the rest of your life”

options, etc.’ This is the wrong focus. Companies need to be telling potential recruits what they can do Millennial consumers: to develop that individual, what they the power of consensus can offer as an employer. They need to say, ‘Don’t look at us as an office products company; look at us as an Uses opportunity to develop skills that you the digital grapevine can use for the rest of your life’. “It needs to be forward focused and it’s a huge amount of work, Trusts their but if you want to attract the peers first best talent, set out a six-month 93% usually read reviews plan and how the recruit can before making a develop in that time and what purchase he/she can learn.” 89% believe friends’ Jacobs echoes that comments more than sentiment: “Nobody expects a company claims Depends on word job for life anymore, but people of mouth do expect career progression and personal development and they don’t want to wait for two years to get it. These people work in 140 93% bought a product after characters, not in 12 or 24-month hearing about it from a periods. So yes, people are more friend or relative transient in their jobs now, but if you invest in them personally as Source: Adweek

OPI Magazine | May 2015

the opportunities are endless and that, if they show an interest and expertise in another area, we try to accommodate them,” he says. ■ Technology Almost needless to say, technology – for the employee as well as for the customer – has become an essential tool. Again, it’s expected rather than a nice-to-have, and social media is becoming ever more important in that context. Michele Pitner, Channel Manager, Global E-commerce and Mobile Accessories at Fellowes, says: “Social media in a B2B environment is always a challenge, but as the younger generation moves into the workforce, they’re less and less going to look at the printed catalogue. You really have to strike a good balance here, and I would question how progressive a company really is if it can’t leverage new technologies – and all the various applications within that – with traditional media like the printed catalogue.”

Millennials | Hot Topic Colt adds: “Technology has changed everything and if you don’t change with it, you will fade away into extinction. Most manufacturers make a product, create a spec sheet, put it in a catalogue and then think it will miraculously sell itself. This is not the case anymore.”

How millennials interact with suppliers today – and how they would like to interact in the future

Moving in the right direction By and large, it seems that OP manufacturers do a better job in attracting millennials than resellers, particularly small independent dealers. The reasons are manifold: companies like Fellowes, ACCO or 3M not only have a lot of brand equity, they are typically also more structured and offer better career opportunities due to their infrastructure. And because of the lack of resources that independents typically face, it’s generally easier for the vendor community – assuming they are progressive in their outlook – to understand best practice and implement it. Exceptions, as ever, prove the rule. Michael Morris, EVP of Marketing at TriMega, is confident that the dealer community is beginning to appreciate that it really has to bring millennials into their organisations

Source: IBM Institute for Business Value

to fully understand what’s driving them, as a customer as well as a potential employee. He comments: “The dealer community is still quite underrepresented in terms of attracting millennials and the younger workforce, but I believe there’s a slow but increasing level of understanding as to how important this is as independents are bringing in that next generation.” Morris refers to the NEXT Committee which was set up in 2013 by TriMega to champion the next generation within the dealer group’s members, giving them a voice within the organisation

and enabling them to provide input on potential group initiatives. With over 100 members now, Morris is pleased with progress so far. He says: “We’ve still got some work to do to be able to compete with some other industries out there for the best and brightest young talent, but I believe we’re moving in the right direction.”

Offering apprenticeships or internships is one way of bringing millennials into the workforce at an early point in their career. Read more on opi.net and on the OPI app about the success stories – and failures – of some of the initiatives companies in the OP space have taken.

w w w.opi.net | OPI Magazine

Special Feature | Breakroom

Encouraging

wellness in the office AS

busier schedules and changing work demands influence employees’ eating habits, the use of snacks as a meal replacement continues to rise. Simultaneously, employees are working towards a healthier lifestyle and paying more attention to the nutritional value of their food.

Towards a healthier lifestyle At many offices, snacking at work has increased over the past few years. A recent survey conducted by United Stationers shows that about 50% of consumers have a snack 2-3 times per day, as opposed to 25% of respondents surveyed in 2010. Additionally, as employees’ lives become busier, there is less time during the day to sit down for a complete, balanced meal. As a result, employees are using snacks as a meal replacement. Snacking is often associated with junk food or unhealthy eating habits, but 40% of respondents of Americans expressed that they are trying to eat healthier now eliminate gluten than they did two from their diet years ago. It is still important, however, that office snacks are both healthy and substantial. As initiatives promoting healthy behaviours have become more commonplace in our daily lives, it comes as no surprise that these attitudes have carried over to the workplace. More employees are making Jeff Bobroff changes

United Stationers Director of Category Management, Breakroom and Food Service Disposables, Jeff Bobroff, highlights the growing demand for healthy snack products in the marketplace

33%

OPI Magazine | May 2015

in their diet and creating a healthier lifestyle; they are using their lunch breaks to squeeze in a brief workout and then reward themselves with an apple or granola bar upon their return to the office. It is in employers’ best interest to support this trend, as healthier lifestyles among their staff can help reduce overall healthcare costs.

Healthy snack offerings abound In order to meet the growing customer demand for more nutritious breakroom products, resellers should acknowledge this trend and offer an assortment of snack options as part of their inventory. In particular, products containing antioxidants and protein are becoming more popular, as well as those that are gluten-free and have reduced sugar and fat content. Snacks high in antioxidants have become extremely popular because antioxidants fight free radicals that harm healthy cells in the body. They are found in foods such as berries, pomegranates and dark chocolate, and in drinks such as coffee and green and black teas. Although coffee and tea have served as staples in the breakroom for years, their recently recognised health benefits continue to increase these products’ appeal. Having snacks high in protein is beneficial for every employee, but

50% of consumers have a snack 2-3 times per day

especially those who use their lunch break as a time to work out. Foods high in protein include peanut butter, nuts, protein bars, beef jerky and chicken and tuna salad. In addition to what foods contain, consumers are also paying close attention to ingredients that are absent from their snacks. Foods low in fat and sugar are a good alternative to high-calorie snacks that are often picked up on the go. Eating gluten-free is becoming a reality for more Americans, with 33% trying to eliminate gluten from their diet as it has been linked to digestive issues and celiac disease. An increasing amount of foods being offered as gluten-free are pretzels, crisps, cookies and brownies – all of which are simple for resellers to incorporate into their breakroom offerings.

Future growth predicted While employees’ lifestyles are increasingly on the go, they are also interested in making healthier lifestyle choices. Because of this trend, resellers can expect to see an increase in sales of nutritious snacks. They should prepare for this growing demand by adding healthy snack products to their repertoire in order to stay competitive in the marketplace and ultimately yield higher revenue.

Dealer Spotlight | Gorilla Stationers

Gorilla in our midst by Heike Dieckmann heike.dieckmann@opi.net

THE

office products space is not what you would describe as a particularly trendy or, for that matter, even growing industry. So, to have setting up your own OP dealership on your bucket list seems rather unusual these days, especially for a young and ambitious professional. But that’s exactly what Rosemary Czopek always dreamed of and in 2012 Gorilla Stationers was born. Based in Huntington Beach in California, the location is, as Czopek puts it, “a basin of opportunity”, southern California being “the 7th largest economy in the world” and often touted as the next Silicon Valley.

Living the dream At 33 years of age – the ‘senior citizen’ in the office, by her own admission, and still scraping into the millennial generation – Czopek typifies a modern and progressive approach, with a vision that runs like a thread through the company. But she’s also something of an old hand in office products terms, having worked at an independent dealer for ten years before realising her dream. She says: “I have been fortunate that our clients, partners and staff have all supported my vision. As anything in life, it’s all about preparation and perseverance. “I take pride in running a financially sound business platform, and my education at the UCLA Anderson School of Management has certainly been invaluable in terms of financial acumen. All small businesses by definition are owner-driven, and my experience has helped me to shape a vision and execute the tactical strategy required for success.” The way Gorilla Stationers is organised and run is very much mirrored by a point made by Cam Marston, President/CEO of Generational Insights, who OPI spoke to for our millennials Hot Topic this month (see page 30). He said:

OPI Magazine | May 2015

OPI takes a look at California dealer Gorilla Stationers and finds that the ‘p’ in OP needn’t just stand for products. It also stands for passion with a capital ‘P’

“Gorilla Stationers is [...] a millennial environment... We’re the Google of the office products world”

“The best way to sell to millennials is to put a peer in front of them.” Czopek agrees and believes that her staff know exactly how to sell to this age group which is becoming ever more important in the business world. “Gorilla Stationers is, I would say, a millennial environment. We offer an exciting workplace: we have video games such as Rock Band in our breakroom and also offer table football and air hockey during breaks. We also have a lot of collaborative workspaces and wi-fi all around the building. “Millennials are also very brand-focused and we’ve incorporated that into everything we do. It’s Gorilla Stationers everywhere, with bright green walls and a cutting edge atmosphere where creative juices can flow. To me, we’re the Google of the office products world. And it certainly attracts people to us. It’s not just a monotonous ‘let me file this office supply order’ job, but an environment where we encourage staff to be creative to better the company.” So what, then, do Gorilla Stationers’ customers want to buy, beyond what’s been on the OP table for a long time? “Millennials right now are looking for a whole host of products to differentiate their workplace,” explains Czopek. “That often goes way beyond your typical file folders and desk accessories. They’re also looking for flexible workspaces and products that engage

Gorilla Stationers fact box: Founded: 2012

Business model: Stockless B2B

HQ: Huntington Beach (CA), US

Geographical coverage: US

Founder/President/Owner: Rosemary Czopek

First-call wholesaler: United Stationers

Staff: 16

Dealer group: TriMega

Dealer Spotlight | Gorilla Stationers them and that are fun to have in the office – office stress relievers are a good example of that, or Safco’s ball chairs. And who better to sell these products to them than like-minded people who use them themselves?” Gorilla has also just launched a website aimed at millennials. Called www.fungilla. com and created in collaboration with its first-call wholesale partner United Stationers, the site specifically targets millennials in the workplace, with products and services favoured by that age group, such as the aforementioned stress relievers and Razor scooters in addition to the more predictable OP and adjacent category offerings.

Rosemary Czopek

Focus on reliability As well as being a single-source destination with a SKU-count of 150,000, what Gorilla Stationers is really all about, says Czopek, is reliability. “I have learned that reliability is often the bottom-line benefit that customers want. They are busy with projects and pressing deadlines of their own, so we make sure our service reduces their stress levels and makes their jobs easier.” This customer service ethos, ranging from choice/availability of product, delivery speed and returns policy to specific product or solutions-related questions, permeates everything Czopek and her staff do. It’s interesting, then, that she views the competition predominantly as the big box players and Amazon – scale-wise on an entirely different level to Gorilla, but not known for the personal touch that independents typically offer – adding that “we provide service to our clients that others just can’t”. While Czopek prefers to keep company financials to herself, she is clearly confident about where the business stands today and, importantly, where it is headed. “We are growing all the time, particularly in our core areas of office products, breakroom and technology, and the majority of new business,

OPI Magazine | May 2015

“Reliability is often the bottom-line benefit that customers want”

as well as a large portion of our existing business, is generated on the web.” And she’s allowed plenty of room for growth. With currently 16 staff on board, including interns (see opi.net for more details on Gorilla’s international internship programme), programme) the Huntington Beach facility Gorilla moved into last year will ultimately support about 50 staff. But in terms of staff requirements too, things have changed thanks to the great enabler that is technology, a forward-looking approach and/or a combination of both. Says Czopek: “I used to work for a traditional OP dealer in the US and we had about 20 employees. In the first couple of years of business at Gorilla Stationers, we were able to handle what those 20 employees did with a staff of five. “I believe we can now do with one employee what traditionally in OP was done with two because of our use of technology. We also don’t have any feet on the street with outside sales reps. Our sales team is 100% internal, so we can manage a lot of different things at the same time and that leads to very high productivity rates. “So much can be done with the right technology. We have a completely stockless business model and leverage the resources of United Stationers to provide top-quality best-in-class services to our end consumer. We also use cutting-edge technology for our websites, for our targeting, for our remarketing and for our CRM systems.” Gorilla Stationers may not be representative of where the OP industry at large stands today in the US in terms of its focus on the ‘new customer’, but perhaps it’s indicative of where it’s headed.

Review | BV Show 2015

25 years young

Bureau Vallée’s BV Show marks the retailer’s 25th anniversary

FRANCE-BASED

office supply retail chain Bureau Vallée traditionally holds two trade events a year: its Papet’ Show which takes place towards the end of the year covering the traditional stationery and office supplies categories, and the BV Show in the spring that focuses on office technology and services. The first day of this year’s BV Show in Paris coincided with the kick-off of Bureau Vallée’s 25th anniversary celebrations, 8 April marking 25 years to the day that founder and CEO Bruno Peyroles left mass-market retailer Auchan to set up his office superstore network. In fact, 25 is something of a symbolic number for several other reasons: Bureau Vallée has just opened its 250th store, the sales figure of H250 million ($265 million) was surpassed in the financial year that has just ended and the company continues to expand its retail network at a rate of about 25 stores a year.

25 220 of them in mainland France and a further 17 in France’s overseas departments and territories. In addition to these markets, international expansion continues to develop: the company now has ten stores in Spain, three in Belgium and has just opened its first store on

number of technology wholesalers, including ALSO, Tech Data and Ingram Micro, and several mobile accessories and aftermarket supplies vendors. Services were also well represented. These included environmental initiatives such as cartridge and battery collection and equipment recycling, as well as a range of services – for example, legal advice, accounting services and website design – that Bureau Vallée is introducing as part of its strategy to cater for all the needs of its small business customers. At the BV Show reception at the end of the first day, two loyalty awards were presented to recognise a person and a supplier that have demonstrated outstanding commitment to Bureau Vallée over the years. These awards – which included the unusual ‘prize’ of a foot from one of Bureau Vallée’s original storage racks – were presented to former supplier, employee and now franchisee Alain Le Bihan, and printer compatibles supplier Armor.

The BV Show was supported by about 80% of franchisees

Steady growth Peyroles and his team have come a long way since 1990, overcoming the odds and those who said his discount retail model would never work. Things were tough in the beginning, and by 2000 Bureau Vallée still only had four stores. It then adopted a franchise model and the number of store openings has since climbed steadily. Now the chain Bruno Peyroles has 250 stores,

OPI Magazine | May 2015

the Mediterranean island of Malta. Entry into other European countries is also on the cards, Peyroles told OPI, possibly working with partners that are already established in their respective markets.

Good support The BV Show was supported by about 80% of franchisees – some of them travelling from far-flung places such as New Caledonia and the French Antilles – so the show floor was busy. Approximately 50 exhibitors included technology vendors HP and Brother, business machines suppliers Fellowes and ACCO and stamp manufacturers Trodat and COLOP. There were also a

Read about Bureau Vallée’s full-year results and its new retail concept on opi.net