OPI December 2012/January 2012 Type A by OPI

Big Interview

The word in office.

magazine

p36 Whose job is it anyway?

Dominique Lyone, CEO of COS p28 December 2012/January 2013

Margin is tight, and the debate on the roles of dealer groups and wholesalers has got people fired up

Big boxes strive for growth p18 The success of FM continues p62

Contents December 2012/January 2013

www.opi.net

News

48 Shows

8 Round-up

48 Vision

Contract award for AOPD, ADVEO reveals its strategy and TriMega launches new programmes

United Stationers’ Vegas success

50 Big Buyer

Italy’s show drew in the crowds

14 Analysis

53 Paperworld

The 2013 EOPA shortlist, a new UK wholesaler, Karnak restructured and big box plans

What to expect for the 2013 fair

56 Category Analysis

20 Green matters

Lyreco has further CSR plans for 2013 and a new entrant in Ireland

59 Office Machines

Design is boosting top brands

22 Facilities focus

62 Facilities management

Takkt sees declines

Features

Still a growing category for many

28 A Complete success

Regulars

Australia’s Dominique Lyone on how his dealership has fended off big boxes for years

7 Editor’s comment 67 Inbox

36 Whose job is it anyway?

Everyone wants to reduce cost and duplication in the channel, so which companies should leave?

69 On the move 71 5 minutes with... Simon Wallis

42 Pilot’s new European journey

72 What’s on

Key dates for your calendar

Complete with new personnel

74 Final word

46 Paagman-style

A prosperous Dutch dealership

“According to the head of one prominent UK reseller: ‘Dealer groups are an ugly wart on the side of wholesalers.’ This opinion certainly lies far to one end of the debate surrounding the roles of dealer groups in the UK... At the other end of the argument is the opinion that groups are of vital importance” ... For the full article turn to page 36

Rick Marlette

This month’s cover is supplied by Pilot w w w.opi.net | OPI Magazine

Editorial Editor Felicity Francis

+44 (0)20 7841 2946 felicity.francis@opi.net

Deputy Editor Ben Sillitoe

+44 (0)20 7841 2942 ben.sillitoe@opi.net

Editor’s comment

Features Editor Heike Dieckmann

+44 (0)20 7841 2949 heike.dieckmann@opi.net

News Editor Andy Braithwaite

+33 4 32 62 71 07 andy.braithwaite@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

VP – Asia Tony Yao

+86 186 021 29588 tony.yao@opi.net

Marketing and Database Executive India Pride

+44 (0)20 7841 2959 india.pride@opi.net

Sales Executive Fergus Cox

+44 (0)20 7841 2952 fergus.cox@opi.net

Events Events Manager Lisa Haywood

+44 (0)20 7841 2945 lisa.haywood@opi.net

Production and Finance Operations Manager Nicky Coulson

+44 (0)20 7841 2943 nicky.coulson@opi.net

Designer Sue Costen sue.costen@talktalk.net

Assistant Designer Charlotte Gerhardt

+44 (0)20 7841 2950 charlotte.gerhardt@opi.net

Accountant Charles Edwards

+44 (0)20 7841 2956 charles.edwards@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 OPI is printed in the UK by This publication is printed on Satimat Silk which is produced on pulp manufactured wood obtained from recognised responsible forests and at an FSC® certified mill. It is polywrapped in recycleable plastic that will biodegrade within six months. The carrier sheet is also made of recycled paper.

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OPI magazine (ISSN: 1360-8460) is published monthly by Office Products International Limited and distributed in the USA by SPDSW, 95 Aberdeen Road, Emigsville, PA 17318. Periodicals postage paid at Emigsville PA. POSTMASTER: send address changes to OPI PO Box 437, Emigsville PA 17318-0437. 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.

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In pursuit of ‘app’iness What started as an investigation into the roles of dealer groups and wholesalers for this month’s Hot Topic quickly became an epic tome on all the lost margin within the OP channel. This discussion is not new, but rises to the surface during economic instability and everyone has a different opinion. The more I delved into the subject, I realised that an analysis of where cost and duplication can be removed cannot be confined to one article. As a result find part one, focusing on the UK, on page 36 and look out for part two, focusing on the US, in February’s issue. I’ll try not to create a part three, I promise! I rewrote the article following OPI’s European Forum, which – trying not to blow our own trumpet too much – is One-click instant ordering, Amazon-style, is an unparalleled opportunity to gauge the mood of the industry what consumers want and discuss challenges. How to reduce cost in the channel was one discussion; I also learned about the importance of hiring and managing the right people, why the OP industry doesn’t have a clue about managed print (though some people disagree!) and new purchasing habits. A presentation on m-commerce highlighted how a lot of OP companies are missing out here. One-click instant ordering Amazon-style, with easy product browsing, is what consumers want. So! A present for you this month is OPI’s brand new magazine app for tablets and smartphones. Reacting to reader feedback, we have created the app to let you download each issue, browse pages and discover related video and web content. Search for ‘OPI magazine’ in your app store, and let us know what you think. ‘Appy holidays everyone! Felicity Francis, Editor Follow us online facebook.com/ opimagazine

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@opinews

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News | Round-up As we come to the end – already – of another year, 2012 has once again shown that the world of office products – which may not seem particularly exciting to outsiders – is far from dull. A new business model in the UK involving dealer group Advantia and contract stationer office2office made it through its first year; Alan Ball is leading Spicers UK & Ireland on a strategy that could transform its business model; in Europe, a new name ADVEO was born; the US saw the announcement of a joint dealer group tradeshow for 2013 and perhaps something even bigger is on the horizon for 2014. We didn't have the mega-consolidating reseller merger or acquisition that might have been expected, but don't bet against this for 2013. Office Depot has an activist investor looking to shake things up, 'Max has taken significant steps in cleaning up its balance sheet which have removed barriers to it being a takeover target, and Staples is eyeing categories such as industrial supplies (think Grainger). Vendor consolidation continues, with the ACCO/ Mead tie-up the pick of the bunch, and Avery's future looks set to be decided within the next few months after the 3M transaction fell through. Here's to an eventful and interesting 2013! Andy Braithwaite, News Editor

Firms fined over Spanish cartel Madrid, Spain

Four OP companies have been fined by the Spanish competition authorities (CNC) for forming a cartel for archiving products. Unipapel (ADVEO), Esselte, Grafoplas and Dohe were collectively fined around 59 million ($11.8 million) after a two-year CNC investigation concluded they had colluded to fix prices for seven years. According to the CNC, the firms’ contacts with each other were also designed to restrict competition in the marketplace by establishing ‘non-aggression’ agreements. ADVEO had the largest fine (54.3 million), followed by Esselte (52.4 million), Grafoplas (51.5 million) and Dohe (5796,000). However, a CNC ‘leniency programme’ has exempted ADVEO, while Dohe’s has been halved after it provided “significant value-added” information.

OPI Magazine | December 2012/January 2013

Bud Mundt

AOPD awarded cooperative contract St Charles (IL), USA

Dealer network AOPD has been awarded a national office supplies and services contract with the National Cooperative Purchasing Alliance (NCPA). NCPA is a public sector purchasing organisation that uses a lead agency to competitively bid for contracts. The lead agency for this new contract is Region 14 Education Service located in Texas, where AOPD has a strong presence. However, the contract is nationwide and open to over

90,000 public agencies. According to NCPA documents, the contract is estimated to be worth between $10-$50 million annually in sales. “We will be working closely with NCPA personnel in the coming weeks to effectively roll out this new award and develop a training schedule for our dealers,” said Executive Director Bud Mundt. The contract is effective immediately and runs for an initial period of 12 months. NCPA’s evaluation document shows that mega-dealer MyOfficeProducts was also made an award on the contract.

Büroring pulls out of dealer acquisition Haan, Germany

German dealer group Büroring will not acquire struggling dealer BT Kopier after all. In October, Büroring announced that its wholly-owned sister company, Büro Forum 2000, would acquire BT Kopier as a temporary solution to allow the dealer to sort out cash flow problems. At the time, Büroring said the move would preserve the economic stability of the group,

presumably referring to money that it was owed by BT Kopier. However, in a statement, the dealer group said it was backing out after taking legal advice. Büroring said the October decision had been based on assumptions as to the overall financial health of BT Kopier, but both internal and external audits performed since then have shown that the situation is worse than previously thought. BT Kopier has since gone into liquidation.

Round-up | News

ADVEO unveils new strategic plan Madrid, Spain

European office products distributor ADVEO (formerly Unipapel) has launched a new three-year strategic plan that it hopes will boost group sales and profit. Commenting at a presentation to analysts and investors in Madrid, ADVEO CEO Millán Álvarez-Miranda said the company is set to diversify its customer offering with new value-added services and consolidate its separate European businesses into one organisation. “ADVEO intends to increase its EBITDA margin 30% up to more than 5%, thanks to a sustained growth previewed for the coming years and to an improvement in the profitability of our product portfolio,” explained Álvarez-Miranda. The new strategy will involve the consolidation of Spicers

Millán Álvarez-Miranda Europe, Adimpo and Unipapel into a single unit, ADVEO. The group is hoping to achieve annual synergies of more than €15 million ($19.3 million) by 2015, with a significant portion of this coming from a 7% cut in the workforce. Álvarez-Miranda will discuss the plan in more detail in the Big Interview in the February issue of OPI.

RapidBuyr adds OP SKUs Maynard (MA), USA

If daily deals e-commerce site RapidBuyr hasn’t been on your radar screen, it should be now. The ‘flash sale’ site founded in 2011 has added 30,000 office products to its assortment. Until now the company has been better known for its office technology products and services. Through a growing series of partnerships with media outlets, RapidBuyr offers discounts on between six and eight products a day, targeted squarely at small business owners and entrepreneurs in the US. RapidBuyr said it saw a demand for additional discounted inventory. The site's stated goal is to offer all products at 10-30% less than the price of the same items sold at OP big boxes. “We decided to offer these products around a key message: ‘Same Stuff, Lower Price’. Our customers wanted more selection day to day and the same great pricing they expect from RapidBuyr, and we listened,” said CEO Tom Aley.

Tulip creates joint venture Tewkesbury, UK

Tulip Innovation, the technology cleaning products business set up by Simon Rex and Doug Skeggs, has formed a joint venture with Volcke Aerosol Company (VAC). The former Systemcare owners set up Tulip in January with the aim of taking the cleaning and hygiene category “a stage further” into the consumer electronics channel. The joint venture with VAC will operate under the name Tulip Innovation NV and the first products are expected to be launched in January 2013. VAC is a family-owned aerosol manufacturing business, established more than 40 years ago and based in Kuurne, Belgium, where the new business will operate from. It has supplied more than a billion aerosol products to 50 countries in a diverse range of sectors including office, household, industrial and electronics, food and party goods. “The initial approach to Volcke had been as a potential supplier for aerosol products, but this very quickly developed into a mutual recognition of the opportunity to

Tulip Innovation will operate from VAC's factory in Kuurne work together to develop the Tulip business,” said Rex, who will be CEO of the joint venture. Jeff Volcke, MD of Volcke Aerosol Connection and VAC, said: "I am convinced the knowhow of Simon and Doug in the market, combined with the expertise and experience of the aerosol filling teams of VAC, will result in successful synergy through Tulip Innovation NV." w w w.opi.net | OPI Magazine

News | Round-up

Aussie dealer group shares growth plans grown this sector by 25% following the development of its WebX platform, while a new national store locator function is attracting up to 500 referrals a day. “With a series of improvements to functionality and capability, we have seen some members grow their online sales by between 30% and 50%,” stated Ward. Gavin Ward, CEO of Office Brands He also said the group planned to grow its private label business, Sydney, Australia currently 10% of total sales. Ward noted that private label and exclusive Office Brands CEO Gavin Ward product ranges provided “significant outlined his plans for growth at the opportunities for differentiation” in a dealer group’s annual conference. highly competitive market. The 2012 Office Brands ‘Turbocharge “We are a group that is committed your Business’ expo and conference to developing the capability to source took place in Adelaide. Office Brands quality China products that will is the umbrella organisation for Office improve our competitiveness in the National, Office Products Depot and market,” he said. O-Net dealers. Meanwhile, the group has expanded Recently-appointed CEO Ward its range in several high-growth addressed delegates during a general categories such as smartphone and session, saying that the group was tablet accessories, furniture, canteen “redefining the way it goes to market”. and janitorial supplies, outsourced Office Brands plans to increase print and workwear. its online sales significantly, having

Ward revealed that a recent member survey found that the group’s sales had declined by around 2% in 2011, slightly better than the industry average of 3% estimated by the most recent Penfold Research report. “2% sounds rather stable,” he said, “but it is only part of the story. In fact, 10% of members have experienced growth of more than 20% while another 10% of stores declined by more than 20%. We need to identify what is working and translate that information across the group so that all members can benefit.” Merchandise Manager Margaret De Francesco gave an overview of the state of the industry from a global and local perspective, including recent initiatives in relation to cost-saving strategies undertaken by the merchandise team. These cost savings will be used to fund a new expanded digital marketing programme. Other Office Brands initiatives include the imminent launch of a major new customer loyalty programme and the extension of the group’s web-to-print services. The group has also engaged leading Australian marketer John Dwyer on a three-month contract to deconstruct the current Office Brands marketing offer and make recommendations about how it can grow basket size and attract new clients.

Colway eyes growth with new lender London, UK

The parent company of leading UK independent dealer RED BOX has broken ties with failed Icelandic bank Kaupthing. London-based Colway has secured a £3.25 million ($5.2 million) revolving receivables facility, incorporating a £700,000 cash flow loan, from ABN AMRO Commercial Finance. The deal will support new investments and will enable refinancing of legacy debt from Kaupthing, which entered administration in 2008 as a result of the Icelandic banking crisis. Colway’s change of lender paves the way for its sub-brands – London Graphic Systems and Turning Point International – to explore new product areas, including 3D printing, digital asset management software and super-fast, large format printing.

OPI Magazine | December 2012/January 2013

Gordon Christiansen, CEO of Colway, remarked: “Dealing with a bank in administration created many challenges. Terminating this relationship involved complexities that are not usually apparent in normal funding situations. Now that we’re with a sensible and stable lender, we’re taking this opportunity to reinvigorate the business.”

Round-up | News

New from TriMega Rosemont (IL), USA

US dealer group TriMega has introduced two new programmes for members. The TriMetrics benchmarking programme collects and analyses business data and operating metrics from TriMega members – all confidentially – and serves it all back to dealer participants. The aim is to help members manage their businesses “better and smarter” through insights into dealer metrics and benchmarking data. Areas covered by TriMetrics include sales, gross margins, payroll and receivables. Data will allow dealers to compare their

individual results against similar sized resellers. TriMega has also launched a managed print services programme – branded as Blink – for small businesses. The programme includes toner, technical service triage, dispatch, service and repair parts. No software or contract is involved, and the intention is for dealers to target businesses with fewer than 100 employees that want to purchase 'as-needed'. Blink currently comprises 80 toner SKUs and related maintenance kits and consumables. Blink-branded cartridges are being supplied by West Point Products and stocked by EOS distributor Supplies Network.

Market consolidation in France Nantes, France

Two major players in the French office supplies industry are set to merge. Distributor Carpentras Sign has agreed to acquire RP Diffusion, a subsidiary of the group 1-Dis (itself a subsidiary of Imperial Tobacco) which is a wholesaler as well as a reseller with its 560-strong Rouge Papier store network. Carpentras Sign has annual sales of around €22 million ($28 million), while RP Diffusion’s revenue is approximately €52 million, about half from its Rouge Papier-affiliated retailers. The transaction still has to get approval from the French anti-trust authorities and a decision is expected in early January. Jan van Belleghem, Managing Director of the Interaction alliance – of which RP Diffusion is a member – told OPI he was monitoring the situation, but hoped it will lead to increased Q-Connect sales in France.

News | Round-up

BOSS in online charity initiative

PaperlinX announces more EU restructuring

London, UK

Melbourne, Australia

UK trade association BOSS is hoping to raise money for its Benevolent Fund via an online shopping scheme. The BOSS Benevolent Fund is taking part in an initiative called ‘Give as you Live’, which turns a percentage of money spent at participating online stores into donations to the charity of the purchaser’s choice. Give as you Live has signed up more than 2,000 leading online stores in the UK such as Amazon, Tesco, John Lewis and Dixons. Signing up is straightforward; you just have to select the charity of your choice, in this case ‘BOSS Benevolent Fund’, and then download a small software application to your browser. BOSS has also announced that OP veteran and well-known fundraiser Graeme Chapman will take on the role of Chairman of the Benevolent Fund, succeeding Stanley Vaughan who is stepping down after 12 years.

Loss-making paper merchant PaperlinX is to cut a further 200 jobs in Europe, mostly in the UK, as it continues to see depressed trading conditions. 150 jobs will go in the UK, in addition to the 50 already announced earlier this year. This means that PaperlinX will have reduced its UK workforce by around 12% . 50 jobs will be cut in the Netherlands and Germany where PaperlinX is suffering trading losses. The company said it would sell these businesses if the additional restructuring actions didn’t result in profitability. Executive Director Andrew Price is to oversee the current round of restructuring and has relocated to Europe for at least six months. At the recent annual shareholders’ meeting, PaperlinX Chairman Michael Barker said

China Stationery and Pelikan in distribution agreement Kuala Lumpur, Malaysia

Pelikan has sealed a two-year distribution agreement with Chinese manufacturer China Stationery. The non-exclusive arrangement will see China Stationery distribute Pelikan office and school stationery products in China and Hong Kong through

its existing dealership network. The agreement will initially run until the end of 2014 and will then automatically be extended annually unless one of the parties gives three months' termination notice. Pelikan said it hoped the move would bring in between $10-$20 million in additional sales over the next two years as it looks to expand into new markets in order to reduce its exposure to the struggling eurozone. China Stationery recently acquired just under 10% of Pelikan in a share swap.

OPI Magazine | December 2012/January 2013

that the company had to redefine its role in a global economy where paper would be a minor commodity and largely replaced by electronic alternatives. He called the diversification into transit packaging and sign and display materials “a good start”, but added there were clearly opportunities for PaperlinX to expand into the wider logistics and fulfilment industries. Barker also predicted that there would be further industry consolidation, although it remains to be seen what role PaperlinX will play in this. The Chairman was relatively upbeat about markets such as Australia, New Zealand and Canada, but said that there was unlikely to be much growth in Europe “for some years ahead”.

Mitsubishi eyeing Indian market growth Kolkata, India

Mitsubishi Pencil’s President Eiichiro Suhara was in India recently and told local press that he was looking to develop the relationship with Indian manufacturer Linc Pens, in which Mitsubishi took a 13.5% stake in 2012. Plans include a possible increase in Mitsubishi’s shareholding in Linc and the construction of new manufacturing facilities. The Japanese firm will initially use Linc production facilities to make uni-branded writing instruments, but has not ruled out building its own factories. Manufacturing locally means that Mitsubishi will avoid paying import duties, which are currently set at around 15%, and therefore be more competitive.

News | Analysis

EOPA shortlist announced The finalists for the coveted European Office Products Awards (EOPA) 2013 have been announced.

independent panel of select OP executives from different industry channels met in Hamburg, Germany, in November, challenged with whittling down the usual large number of high quality entries into a final shortlist.

After a long day that generated a great deal of interesting and enthusiastic discussion and debate, the judges agreed on the final shortlist below. The winners will be announced during a special dinner taking place on 28 January 2013 at the Paperworld trade show in Frankfurt. For more information about how to attend this unique networking event visit www.opi.net/eopa2013.

EOPA 2013 Shortlist Core Product of the Year

New Product Innovation

Dealer Group of the Year

AW Faber-Castell: GRIP MARKER concept Esselte Leitz: WOW Paper Mate InkJoy Newell Rubbermaid: Plus Europe: ZeroMax Expandable File

No shortlist – winner announced on the night

nectere Quantore RKV Soennecken

Technology Product of the Year

ACCO Brands Europe: Rexel Auto+ range of Automatic Shredders Brother International Europe: QL-720NW Esselte Leitz: Complete Multicharger Hewlett-Packard: HP Laserjet Enterprise Colour Flow MFP M575c

Environmental Product of the Year

CCM International: BIOSATIVA Ecover: Multi Spray Newell Rubbermaid: Rubbermaid HYGEN Clean Water System Office Papers range Steinbeis: lotus PRO Aqueous Tersano: Ozone Cleaning Technology

Facilities Management Product of the Year Ecover:

Multi Spray

Kimberly-Clark Professional:

The Healthy Workplace Project

Newell Rubbermaid:

Rubbermaid HYGEN Clean Water System

Sofidel: Papernet Biotech range

OPI Magazine | December 2012/January 2013

Design Excellence 3M: ALBA: Esselte Leitz: Lexon:

Post-it Z-Notes dispensers The Fashionably Fun Line LEDTOUCH Complete Buro Set

3M: Brother: Esselte Leitz:

Scotch Brand – UK Christmas marketing campaign Route 66 – labels are powerful – what does yours say? Passion & Profession

Marketing Initiative

Schneider Writing Instruments: Glide to Honolulu Staples: I’m Grateful to a Teacher

CSR

BIC Esselte Leitz Lyreco Staples Europe WildHearts in Action Office Supplies

Online Initiative

3M: Durable UK: Esselte Leitz: Fellowes Hungary: Schneider Writing Instruments:

Nordic Region Post-it Gallery Online Programme Computer Cleaning Month Restyle Your Desk Shred Benö’s Boredom! The Pen Configurator

Wholesaler/Distributor of the Year Beta Distribution PBS Holding VOW

Reseller of the Year Activa Amazon bol.com Bureau Vallée Plaisio QC Supplies

Vendor of the Year Epson Esselte Leitz Fellowes Kimberly-Clark Professional Stora Enso

Professional of the Year No shortlist – winner to be announced on the night

Industry Achievement No shortlist – winner to be announced on the night

Analysis | News

Beta blocker

solutions, looking beyond price and considering the true cost of trading,” he stated. “Multiple sources add complexity, administration and cost which cannot be ignored. Anyone can be cheaper on a limited range, but there is the service proposition behind the pricing to consider.” The XPD boss also suggested that dealers who cherry picked the most popular products from

EOS distributors are set to start offering core OP and stationery lines

Evolving

relationships between manufacturers, dealers, wholesalers and dealer groups in the UK is the subject of this month’s Hot Topic (see page 36) and one of the talking points is the entry of two leading IT and EOS distributors, Beta and Westcoast, into the OP wholesaling channel. At end of October, Beta announced its intentions in a letter to the trade. “We have received a lot of feedback from dealers, who we supply EOS to, that they would be very interested in purchasing more traditional office products from us – in effect providing some competition to the existing wholesalers,” said Beta Marketing Director Nigel Morris. Morris said that adding stationery would complete Beta’s offering that already includes EOS, IT and audio-visual products. Speaking to OPI, Morris confirmed that the number of OP dealers Beta serves has increased significantly over the last three years and that it has established relationships with a number of buying groups. This has led to the introduction of a more sophisticated service proposition including overnight van runs – so dealers can offer next-day delivery – and EDI links to back-office systems, things the traditional IT/copier reseller doesn’t necessarily require. Morris said that Beta’s OP range would include “several hundred” of the

most popular branded products. OPI understands that some of those behind the Trinity ‘third wholesaler’ project that surfaced last year are working with Beta on areas such as product selection, but that it is not the same model. In fact, Morris laughed off suggestions that Beta was on the way to becoming a third major OP wholesaler in the UK. “This is a service offering to dealers – it’s just part of our package and not a question of us becoming the next major wholesaler,” he stated. “If I was VOW or Spicers, I wouldn’t be losing any sleep over this.” Rival IT distributor Westcoast is also set to introduce an office products selection in the coming months. Sales & Marketing Director Alex Tatham confirmed to OPI that this will involve around 1,000 SKUs and would be aimed at resellers who didn’t want to be tied to Spicers or VOW. He didn’t provide any further details, but it sounds like a similar model to Beta’s, offering existing EOS customers a limited OP range.

Challenges Spicers’ CEO Alan Ball was quick to point out the challenges of the office products channel. He warned: “I am sure Beta will find out the hard way just how much it costs to service this market. Selling EOS is easy in comparison to office products to dealers, as o2o has found out.”

David Langdown, XPD: Multiple sources add complexity

“I am sure Beta will find out the hard way just how much it costs to service this market” Ball continued: “We will be looking closely at the brands on offer and the deals being publicised and liaising with manufacturers to ensure cherry picking lines does not attract best price. Equally, dealers cannot expect the range of extended services Spicers offers if they decide to cherry pick lines.” David Langdown, Managing Director of dealer group organisation XPD, was not surprised by moves by Beta and Westcoast. “The traditional OP wholesalers have been selling EOS for years and it’s no surprise EOS specialists see an opportunity to move into the OP space,” he said. “For me, the biggest surprise is that, given the OP range is seen as easier to understand and the margins are higher, it has taken them as long to do this as it has.” Langdown, though, believes purchasing from multiple sources has its drawbacks. “As groups, we strongly support single-source

alternative sources could run into wider-ranging pricing issues with the major wholesalers. “Cherry picking is already an issue within Spicers and VOW and I’m sure it’s an issue that will be pretty high on their agenda,” he said. “Commercially, they have to be able to make margin on the tail if they are going to be keen at the front end. I expect that dealers shopping around for best price on every line are soon going to find that they will be offered a very different pricing model by the wholesalers. If they rely on the traditional OP wholesalers just for the tail, I think they’ll be paying a very high price for that.” It sounds like a fine balancing act. However, with the current high level of uncertainty in the vendor community over the long-term commitment by the wholesalers to their brands, Beta and Westcoast may find they have a greater chance of success now than earlier initiatives such as Europa.

w w w.opi.net | OPI Magazine

News | Analysis

All change at Karnak Italian reseller restructured under a new name

Italian

contract stationer and mail order firm Karnak is in the final stages of an organisational overhaul that it hopes will clarify its market position and bring operational efficiencies. The location of Karnak’s headquarters in the ‘tax haven’ of San Marino has long been viewed with suspicion by rivals. This has been compounded by tensions between the Italian and San Marino governments, with the republic still on an official Italian tax haven black list. Karnak itself has come under the Italian fiscal authorities’ spotlight. An investigation into the tax status of Karnak’s independent sales agents in Italy is still ongoing and, in a separate and unrelated development earlier this year, Marco Bianchini, Chairman of the BI/Holding group that owns Karnak, was arrested and imprisoned on charges of corruption. He has since been released, but is still under investigation. However, he has relinquished control of the family-owned business founded in 1960, and the group turned to British businessman John Hughes to take on the Chairman’s role. That, in itself, represented a significant cultural and strategic evolution for the company, but sent a clear signal that it was ready to break with certain traditions. Speaking to OPI at the recent Big Buyer trade show in Bologna, Supply

Chain Manager Lorenzo Rudella provided an update on developments at the company since Hughes took the helm in February. Rudella stressed that Karnak had been looking to make changes before Hughes joined, mainly due to the ramifications of San Marino’s presence on the Italian black list and a need for simplification. Hughes’ arrival, nevertheless, has certainly accelerated the process of change.

From nine to three The major development has been a reorganisation and simplification of the BI/Holding group structure from nine separate companies to three. The holding company is still based in San Marino, but operations have been split in two, with separate entities for the Italian and San Marino markets. The new Italian subsidiary – based near Rimini where the company already had offices and a distribution facility – brings together sales units into

English businessman John Hughes is Karnak’s new group Chairman

OPI Magazine | December 2012/January 2013

New structure sees the creation of MYO in Italy a single company known as MYO (derived from ‘My Office’). This includes the former OP reselling companies of Karnak, Titanedi and Yes Office, the EDK publishing arm and the K&K logistics business. The MYO name has been in the marketplace since November and is featured on all 2013 catalogues. Rudella said that the integration process began in June and is on target to be completed by the end of the year. Challenges include the move to a single IT platform, merging customer databases and setting up new accounts with around 160 suppliers – purchasing is now done directly between MYO and its suppliers. The merging of the former business units has led to a number of redundancies in overlapping functions, Rudella noted, and MYO now has a staff of just over 200, excluding the network of sales independent reps. With its strong customer base in the public sector, MYO is certainly feeling the spending squeeze, and Rudella admitted that sales would be down in the double digits this year, although he argued that this was in line with market conditions. The company’s

sales are still in excess of €100 million ($129 million) and profitability has been held steady. Rudella did highlight a number of bright spots. As part of the Interaction group, MYO has access to the Q-Connect brand, and Rudella said that this had been one of the few areas of growth with 2012 sales of the brand set to be around €11 million ($14.2 million). The company is also seeing success in areas that are partly offsetting declines in traditional categories. For example, an e-learning business training offering has seen a number of large contract wins, sales of safety products have risen to €1.5 million and logistics services is a growing area. The company has also revamped its office interiors and furniture brand, Diva, offering 24-hour delivery to most parts of Italy. While 2013 looks like being another challenging year for the Italian office products sector, Rudella says that MYO is on a stronger footing and that its “house is now in order”. “When you cross a river, your feet get wet,” he commented, “but at least we have got to the other side.”

Analysis | News

‘Houston, we have a problem’ Texas city is latest public sector customer to accuse Office Depot of overcharging

audit from the city of Houston in the US has identified overcharging of up to $6.6 million by Office Depot. A report released on 7 December by Houston’s City Controller said that overcharges in a four-and-a-half-year period to the end of 2010 ranged from $1.7-$6.6 million. The high end of that figure represents over 34% of the total contract spend. Houston purchased its office supplies using Depot’s US Communities contract which has been at the centre of numerous overcharging claims in the last four years, and also has a whistleblower case and Department of Justice investigation hanging over it. In his report, Houston Controller Ron Green accused Depot of “a lack of cooperation”, delaying its responses to requests for information and “discrepancies, anomalies and inconsistencies in the data provided”, which forced his team to adopt three different methods to carry out the audit. “Clearly, the data provided to us during the audit was incomplete to

the extent that we had to modify our test work,” said Green in a press release, adding: “Regardless of the methodology, the city is owed a significant amount of money from the vendor.”

‘Pulling teeth’ Speaking to the local press, Houston’s Auditor David Schroeder said that trying to get information out of Depot was like “pulling teeth”, although the reseller claims it had “cooperated”. Depot – as in the past – also disagreed with the audit’s findings. “The City of Houston auditor’s assertion that the city was entitled to certain additional discounts is simply wrong,” the company stated. “The auditor’s report rehashes old claims, originally made by a disgruntled former employee, that are based on inaccurate legal interpretations of Office Depot’s former contract that the city was not a party to. These very claims were considered and expressly rejected by the Florida Attorney General’s office back in 2010, after it conducted a two-year investigation into the same allegations.” Depot has hired big-hitting Washington law firm Williams & Connolly

Houston Controller Ron Green: “The city is owed a significant amount of money”

to represent it. Houston’s Schroeder said he felt that the whole audit process “was set up for litigation”. Historically, Depot has reached out of court settlements with public agencies, but now may be ‘make-or-break’ time over the question of whether Depot was in compliance with the ‘most favoured’ government pricing provision in its US Communities contract. That is one of the key

Depot conducted its own analysis of the Houston contract and determined that “genuine price discrepancies resulted in a small number of overcharges” amounting to less than 1% of total purchases. Furthermore, these overcharges were “dwarfed” by discrepancies resulting in “substantially larger undercharges”. However, “as part of its commitment to pricing accuracy and customer

“It looks like Depot could be bracing itself for a legal showdown” issues in David Sherwin’s whistleblower lawsuit and a ruling on this question is going to have to be made eventually, most likely in the next few months, if that case goes to trial. With $500 million potentially at stake, and Williams & Connolly on board, it looks like Depot could be bracing itself for a legal showdown.

Contract interpretation Controversially, in its response to the Houston audit, Williams & Connolly contends that most favoured government pricing on the US Communities contract was only applicable to LA County, the lead agency, and not to other participating agencies. Houston’s audit division retorted: “To take the position that LA County had more favourable terms than the participating agencies makes the [cooperative contract] of no benefit to any public agency.” The Williams & Connolly response also stated that

satisfaction” Depot would reimburse the overcharges. That sounds like the door is still open for a settlement, but there is a big gap between Depot’s ‘gesture’ to refund around $190,000 and Houston’s claim of $6.6 million. The audit refers on several occasions to the fact that Depot agreed to pay the city of San Francisco around 80% of its reported claim, so perhaps Houston will hold out for a payment of around $5 million. It’s unlikely that Houston would want to begin onerous legal proceedings, but perhaps Depot would now see that as the preferred option if it feels that it has no choice but to try to obtain a favourable ruling on the most favoured government pricing issue. Hiring a powerhouse law firm that defended Oliver North in the Iran-Contra scandal and US President Bill Clinton at his impeachment trial might be the signal that Depot intends to do just that.

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News | Analysis

Thinking out of the box Can the big-box initiatives drive growth?

expected, it was another challenging set of quarterly results that the three global power players – Staples, Office Depot and OfficeMax – reported in November. Log onto opi.net for fuller coverage of the actual numbers, but the general sales trends were pretty much the same as those we have been seeing all year: relatively stable delivery

results in North America, single-digit decreases in North American retail and alarming declines in international markets with the exception of Depot and ‘Max’s operations in Mexico. The upshot is that the overall top line is continuing to shrink, margins are being squeezed due to competitive pressures and important categories such as traditional paper-based products and ink and toner are – most people would agree – in secular decline.

Add to that the rapid move to online and mobile shopping, the looming shadow of Amazon, the Eurozone crisis and the possibility of the fiscal

But we are in an industry which has seen – and coped with – change before, albeit perhaps at not such a fast pace as we are witnessing today. As someone

“Big box bashing seems to have become something of a habit, but to underestimate them would be churlish” cliff in the US in January, and you can see why the office supplies sector isn’t exactly the darling of Wall Street at the moment.

pointed out at the recent OPI European Forum in London, no-one really knows what the future will hold, but what we do

‘Every product your business needs to succeed’ Staples has a reputation for taking the lead when it comes to expanding into new product categories and services, and nothing coming out of Framingham recently suggests that this is about to change. Expanding the product assortment and accelerating the growth of product-related services are two of the key priorities in Staples’ growth plan. Facilities and breakroom is a prime example of where Staples moved first and this

has developed into a billion dollar business in North America. Ron Sargent described facilities as a “home run” during the most recent quarterly conference call, and Staples is starting to load the bases in other categories as it aims to develop into a true single-source supplier for business customers. According to Staples, nearly 75% of its customers have said they would consider buying additional products from the company if it offered a broader assortment. When you have more than ten million customers, then that represents a lot of potential. Sargent didn’t want to give too much away to analysts, joking that if he did then he’d be revealing competitors’ strategies six months down the line, but said that Staples

OPI Magazine | December 2012/January 2013

had identified five verticals that it would go after. Safety products is undoubtedly a priority category. The product assortment has been greatly expanded and Staples recently teamed up with the National Safety Council in the US to promote its offering. In the form of the appropriately named Bob Risk, Staples also has its very own Senior Strategic Safety, Health and Wellness Manager. Industrial supplies, an expanded furniture assortment, packaging and mailroom would all appear to be other areas that Staples will focus on.

A couple of interesting news items have also come out of Staples’ International operations recently that could signal moves into other non-traditional areas. There’s nothing new about the expansion of copy and print services, but the announcement that Staples Europe had struck a deal to offer 3D printing to customers was an unexpected one. The company is launching Staples Easy 3D in partnership with 3D printing firm Mcor. Mcor’s technology uses paper to produce 3D models that Staples thinks will appeal to professionals such as architects, surgeons and engineers in what it describes as a “more affordable and more accessible” solution. Customers upload electronic files and then pick up the models at their nearest Staples store or have

Analysis | News know is that if we just sit still and do nothing, then we don’t have a chance of surviving. Big-box bashing seems to have become something of a habit recently, but to underestimate these multibillion dollar companies would be churlish. They’re not exactly going to lie down and wait to get flattened by the Amazon steamroller, although some would argue that this will be the final outcome regardless of their moves. Here is a closer look at two major initiatives that were revealed during the latest round of earnings conference calls.

them shipped to their address. The online platform for Staples Easy 3D will initially be made available in the Netherlands and Belgium in Q1 2013 and, if successful, will be rolled out quickly to other countries. News is also coming out of Australia of a major print management contract win for Staples with drinks giant Schweppes. This three-year multimillion-dollar contract reportedly encompasses print management, point of sale materials, asset management, warehousing and web-to-print, and Staples was chosen for its ability to provide a single-source solution. This is certainly an indication that Staples has the capabilities to play in the highly competitive print management space. The key is how quickly Staples – and the other big boxes – can ramp up profitable sales in these new areas. As we have seen, even adding a billion in the facilities category hasn’t been enough to offset declines elsewhere.

Smaller is better

Office Depot provided details of its retail portfolio strategy in the US at the beginning of November. The company has committed to spending $60 million a year over the next five years to downsize or relocate around 500 stores – 45% of its current store network – into a small or mid-sized format. During the same timeframe, Depot will also close up to 100 stores as leases expire. In 2013 at least, the majority of the 100 downsized or relocated stores will be remodelled into 5,000-7,000 sq ft (500-700 sq m) format outlets, a far cry from the 25,000 sq ft ‘sheds’ that typified the heyday of big-box expansion in the 1990s. Depot has been promoting the new, smaller format stores as they have been opening, even producing a video about the concept which can be seen on its corporate website. A main goal of the new stores is to encourage customers to interact more with the products and store staff. There is a clear focus on technology products. The shop features a store-within-a-store from tech and mobile accessories retailer bluwire – best known for its outlets in US airports – and there are product islands for a variety of PC, tablet and printer products. Depot’s Print Shop occupies a key place at the centre of the store as the office supplier looks to develop this higher margin service offering. A Tech Shop provides services such as computer repair, network set-up, software installation and virus removal. There is also a ‘PC Bar’ where people can work, taking advantage of free wi-fi, a recharge station and free coffee at certain times of the day. Cynics would say that this just gives customers a comfortable place to browse online before purchasing their tech products cheaper on Amazon! Touch screen displays at the ends of aisles allow customers to browse for products online

and purchase them from officedepot.com if they are not available in the store. This is a key concept of the multichannel strategy of all three big boxes: carrying a broader assortment of products online that customers can pick up later or have delivered. Obviously, the smaller stores cannot carry the broad range of inventory available on the web. In fact, Depot’s new store format is not a million miles away from the Business Centres that OfficeMax’s Canadian subsidiary Grand & Toy transitioned to a couple of years ago, and there are certainly question marks over how successful that move has been. Despite the store transformations, the office suppliers are still in something of a quandary when it comes to retail. They want to reduce exposure to low-margin tech categories, yet are upping the proportion of tech products on their shelves and are among the first to advertise great deals at times such as Black Friday. However, in most markets they are still locked out of the tech brand which causes the greatest excitement amongst consumers: Apple. Where Apple products are stocked – by Depot in France for example – tests have clearly shown that there is an improvement in store traffic. Elsewhere – at least for the time being – Depot will just have to hope that customers are tempted to abandon Starbucks for free coffee at one of its new-look stores.

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News | Green matters

Do you have green news? Contact Ben Sillitoe ben.sillitoe@opi.net

Office supplies firms in green list USA

HP, Dell, Office Depot and Staples have faired well in Newsweek magazine’s annual Green Rankings list. All four were included in a list of the top ten green large companies in the US, behind number one green business IBM. Consumer electronics retailer Best Buy (23) and technology distributor Ingram Micro (43) made it into the top 50. Companies were judged on a number of areas, including environmental management, impact and disclosure. Yalmaz Siddiqui, Senior Director, Environmental Strategy for Office Depot, which was ranked ninth, said: “Our environmental strategy is a business strategy. We start with what our customers want and align our internal and external environmental efforts toward meeting their needs. “What’s great about the recognition that comes from Newsweek’s rankings is that it encourages more eco-conscious customers to choose Office Depot. And through their greener purchasing efforts, we collectively drive long-term environmental footprint reduction across the whole value chain.”

Lyreco outlines carbon reduction programme Telford, UK

Lyreco UK has provided details of how it intends to reduce its carbon footprint. The France-based group recently launched its sustainability policy with the goal of reducing overall carbon emissions by 20% by 2017. Its UK subsidiary has already taken steps to reduce its carbon footprint in two key areas: transport and energy consumption. Combined, movement of employees/business travel and transport of goods account for around 54% of Lyreco UK’s total carbon footprint, while an additional 17% comes from energy consumption at its headquarters and distribution centres. A vehicle fleet ‘health check’ has been carried out on all company vehicles with a gross weight of 3.5 tonnes or less, and this has identified the potential for annual savings of over 1,000 tonnes of CO2 emissions, representing savings of 15%. In addition, an energy survey at Lyreco UK’s Telford headquarters has identified opportunities for energy reduction in the region of 21% in consumption and CO2 emissions. Recommended actions cover reductions in a number of areas such as lighting, heating, air conditioning, conveyors and the implementation of green energy. Lyreco said that there were several opportunities for implementation with very low investment, and that staff engagement was highlighted as being a key factor. The company said that it would be looking to implement many of the energy and carbon reduction recommendations in its 2013 Environmental Protection Plan. Lyreco’s CSR programme was featured in OPI’s recent Green Thinking supplement.

Xerox pushes reman compatibles Uxbridge, UK

Depot’s new store format store in Portland, US

OPI Magazine | December 2012/January 2013

OEM Xerox has expanded its range of remanufactured toner cartridges for non-Xerox machines. The company has introduced a new line of cartridges called Responsible which it says are “low cost, high quality and environmentally responsible”. The Responsible line is designed for use with most OEM brands, including Brother, Canon, Epson, HP, IBM, Konica Minolta, Kyocera, Lexmark, OKI and

Panasonic. More than 90% of the original cartridge parts are re-used and Xerox claims cost savings of “at least 50%” compared to branded OEM cartridges. “The cartridges are manufactured using the same high-quality standards Xerox uses for all its products,” said Patrick de Jong, European Business Manager for Xerox Document Supplies Europe. “With our brand behind these cartridges, users can be confident of superior performance.”

Green matters | News

Xinia opens in Ireland Officeworks in new DHL recycling scheme Wells, UK

UK printer cartridge remanufacturer Xinia officially launched its operations in Ireland last week. Xinia Ireland includes a warehouse and office located in Rathcoole, County Dublin. Managing Director William Fox said the expansion into Ireland reflects the EU office

sector’s growing thirst for environmentally friendly supplies. “Our recycled, replacement laser printer cartridges help our customers to conform to their corporate social responsibilities, while not compromising on quality and cost,” he stated. With its manufacturing based solely in the UK, Xinia says it offers customers in the UK and Ireland an “ethical low carbon footprint alternative”. Leading the sales effort for Xinia Ireland is recently-appointed Sales Manager Paul Goulding.

PPI Awards 2012: and the winners are… Brussels, Belgium

The 2012 PPI Awards were announced during a gala dinner in Brussels, Belgium, in November. Leading companies in the pulp and paper industry were acknowledged for leadership, vision, innovation and strategic accomplishments during the event, which was run by RISI, the information provider for the global forest products industry. Awards handed out on the night were as follows: • Business Strategy of the Year: DS Smith, UK • Environmental Strategy of the Year: Mondi Group, Austria • Green Energy and Biofuels: Tamilnadu Newsprint and Papers, India • Managing Risk and Safety: Mondi SCP, Slovakia • P romotional Campaign of the Year: Finch Paper, USA – Digital Field Guide Campaign • I nnovative Product of the Year (Graphic Papers): Cascades Fine Papers Group, Canada – Checksecur Platinum Enviro • B reakthrough Technology of the Year: Sanata Technologies, Canada – DAS Technology • Global CEO of the Year: Miles Roberts, DS Smith, UK • M ill Manager of the Year: I.N Guha - Bilt Graphic Paper Products, Bhigwan Unit, India • Environmental Strategy of the Year: UPM, Shotton Paper Mill, UK • Water Efficiency: BILT Graphic Paper Products, Bhigwan Unit, India • A dvances and Innovation in Speciality Papers: Sappi Alfeld GmbH, Germany – White liner for corrugated board production • Efficiency Improvements of the Year: Mondi SCP Ruzomberok, Slovakia dvances and Innovation in Sustainable Packaging: Smurfit Kappa – • A Eco Tray. Following such a successful night for his company, CEO of Mondi Uncoated Fine Paper Peter Orisich said: “Safety is a key concern in all of our Uncoated Fine Paper mills; therefore it is especially motivating to see Mondi SCP’s success in risk and safety management applauded on an international scale by PPI. We have also recently celebrated two million lost-time-injury free hours at the mill.”

Melbourne, Australia

OP reseller Officeworks is one of a number of Wesfarmers brands involved in a new recycling partnership with global logistics firm DHL. As part of the National Television and Computer Recycling Scheme to ‘Bring IT Back’, the Australia-based business has established a number of computer equipment collection points to encourage greener thinking across the country. The Bring IT Back initiative will give consumers and businesses an opportunity to drop off unwanted computers and related goods such as printers, laptops and monitors free of charge for recycling. DHL will then collect and recycle the products on behalf of Wesfarmers. Terry Ryan, CEO South Pacific, DHL Supply Chain, commented: “DHL’s agreement with Wesfarmers will cover such retail stores as Kmart, Target and Officeworks. The Wesfarmers group will form an integral part of our collection strategy with the intent to have an initial ten collection points at Officeworks available for computers and computer products, expanding over time.” Consumers or businesses are able to bring back up to five items of IT equipment per visit. Cameron Schuster, Sustainability Manager at Wesfarmers, added: “Wesfarmers places a high priority on its sustainability agenda, implementing strategies to minimise our waste.”

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News | Facilities focus

Do you have facilities news? Contact Ben Sillitoe ben.sillitoe@opi.net

Jan/san vendors on EOPA shortlist Hamburg, Germany

The growing importance of the jan/san and facilities management (FM) categories to the OP industry was well highlighted in the shortlist for the 2013 European Office Products Awards (EOPA), (see page 14 for the full shortlist). Companies operating in these fields dominate the shortlist for the Environmental Product of the Year prize. Products in contention for the eco-accolade are CCM International’s BIOSATIVA, Ecover’s Multi Spray, Newell Rubbermaid’s HYGEN Clean Water System and Tersano’s lotus PRO Aqueous Ozone Cleaning Technology. Tellingly, the Office Papers range from Steinbeis is the only non-cleaning item on the list. Meanwhile, Kimberly-Clark Professional (KCP) is on the shortlist for Vendor of the Year and Durable UK’s Computer Cleaning Month is one of the candidates for Online Initiative. Nominees for Facilities Management Product of the Year are: Ecover’s Multi Spray; KCP’s The Healthy Workplace Project; Newell Rubbermaid’s HYGEN Clean Water System; and Sofidel’s Papernet Biotech range. All winners will be revealed at the annual EOPA dinner, held at Paperworld Frankfurt on 28 January 2013.

Dyson collected the FM EOPA prize in 2012

OPI Magazine | December 2012/January 2013

Takkt reports organic decline Stuttgart, Germany

Business equipment reseller Takkt saw like-for-like sales decline by 1.8% in the third quarter of its financial year. The company said that the decrease – due to a lower number of orders – was in line with expectations given the economic conditions in Europe. Organic sales in Europe fell by just over 6%, while the group’s growing North American business reported an organic increase in sales of 4.6%. Takkt America now accounts for almost half of the reseller’s sales.

Including a favourable currency impact and acquisitions, Takkt’s year-onyear sales in Q3 increased by almost 10% to €695.4 million ($900 million). Profit margin in the quarter remained relatively stable with an EBITDA margin of 15.5% of sales, although this represented a 9% increase in cash terms to €38.4 million. Pre-tax profit increased by almost 7% year on year to €28.3 million. Takkt recently announced the €212 million acquisition of Germany-based transport packaging firm Ratioform as it looks to diversify its product portfolio.

United makes industrial wholesale acquisition Deerfield (IL), USA

United Stationers has agreed to acquire Ohio-based industrial products wholesaler OKI Supply. United had been hinting at an acquisition in the industrial space for some time and has now revealed that it will pay $90 million for OKI, the largest independently-owned welding, safety and industrial products wholesaler in the US. OKI has annual sales of around $150 million, offers 80,000 products and sells to more than 9,000 independent distributors across multiple channels through nine distribution centres. The Ohio firm also conducts business in Canada and the United Arab Emirates. United CEO Cody Phipps commented: “The OKI acquisition represents a very important step forward for our wholesale industrial products platform. It is a highly-respected company with a strong and growing position in the welding and safety industries.” He continued: “OKI’s deep product knowledge, commitment to customer service, and dedicated employees complement the same capabilities in our ORS Nasco business, and will benefit from the logistics capabilities and financial strength of United.” United said it planned to fund the acquisition through a combination of cash on hand and funds available under its revolving credit facility. The transaction closed in November. Todd Shelton, President, United Stationers Supply, told OPI: “This represents a very important step forward for our wholesale industrial products platform and accelerates our progress toward building the premium pure-wholesale distribution network in the US.”

Facilities focus | News

Green Mountain in new Costco partnership Waterbury (VT), USA

Keurig coffee brand owner Green Mountain Coffee Roasters (GMCR) has announced that it is the exclusive manufacturer of Costco Kirkland Signature brand K-Cup packs for the Keurig single cup brewing system. Two blends – Breakfast Blend and Pacific Bold – have been developed especially for Costco, and will became available from the wholesaler’s warehouses and website in mid-November. Costco, which has more than 600 warehouses around the world, already sold GMCR’s K-Cup packs. TJ Whalen, VP of Marketing and Sales at GMCR’s Specialty Coffee business unit, said: “This collaboration aligns with our strategy to partner with strong brands that help us expand the adoption of the Keurig system to a broader consumer base.”

Jan/san boost continues at leading OP firms USA

The office products industry’s leading resellers continue to report strong sales of jan/san and breakroom products, while other more traditional categories stay flat or falter. Staples’ Q3 results indicated that its North American Delivery (NAD) division saw year-on-year sales rise by 0.9% on a local currency basis, with the company attributing much of this growth to facilities and breakroom supplies. NAD sales in the quarter were $2.61 billion in total. On the wholesaler side, United Stationers said that while its overall sales in Q3 were roughly flat, it continued to enjoy double-digit growth

rates with its e-tail customers in all product channels. Steve Schulz, head of United’s jan/san, breakroom and industrial categories, revealed that e-enabled specialised janitorial products resellers had seen their sales rise by around 26% in the quarter. CEO Cody Phipps confirmed the shift away from bricks-and-mortar sales to online as one of the key growth opportunities in an OP market which remains soft and where there is little expectation for overall growth in the near term. “We expect online growth in all categories,” he stated. “This represents a unique opportunity [and] a path for growth for ourselves and our customers.”

ISSA recognises leading cleaning firms Lincolnwood (IL), USA

Worldwide cleaning industry association ISSA has named the five winning products in its 2012 Innovation Awards. Presented at October’s ISSA/INTERCLEAN North America trade show in Chicago, the prizes went to Clorox, Kimberly-Clark Professional, ProTeam, CleanTelligent and Unger Enterprises. Cleaning industry distributors, wholesalers, building service contractors and in-house service professionals cast their votes from a selection of 51 products in total. The trade show also saw 16 companies, including SCA, Georgia-Pacific Professional and Lagasse, recognised for “exemplary” customer service during the course of the four-day event. Visitors to ISSA/ INTERCLEAN, which was held at the McCormick Place convention centre, used the show’s mobile app to cast votes based on their experiences at the event. The 2012 Innovation Award winners are in full below: Cleaning Agents Clorox Hydrogen Peroxide Disinfecting Cleaners (Clorox Professional Products) Disposables MOD Dispensing System (Kimberly-Clark Professional) Equipment Super Coach Pro (ProTeam) Services & Technology CleanTelligent Inspector (CleanTelligent) Supplies HiFlo nLite (Unger Enterprises) The 2012 Customer Service Award winners were as follows: Afflink, Aluf Plastics Division, American Paper Converting, Aqua ChemPacs, Claire Manufacturing, Combined Distributor, Georgia Pacific Professional, Golden Star, Hospeco, Kutol Products, Lagasse, Northwest Enterprises, OMI Industries, SCA, Step1 Software Solutions, and Windsor.

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And finally... | News

Comment

tweet chat Holiday shopping statistics, according to comScore

The end of the year is an ideal time to reflect on the previous 12 months and look at what might lay ahead. Senior management from the US wholesalers have their say on the current business environment. Todd Shelton, President, United Stationers Supply “To some extent, industry growth will follow broader economic growth, which could be impacted by governmental policies in the wake of the election. There will likely be continued consolidation on both the reseller and supplier side. Buying groups may look for member diversification and partnerships with different channels. Non-traditional jan/san competitors are gaining market share and changing the service expectations of the end-consumer. E-tail will continue its rapid growth.” Jim O’Brien, SVP, SP Richards “I believe there are significant opportunities for smart, well-run companies who embrace change and take advantage of technology to operate as efficiently as possible. Margins will continue to be a challenge as we all continue to be impacted by a shifting product mix and extreme competitive pressure. I expect there to be continued merger and acquisition activity as there are a number of dealers looking for opportunities to expand while others search for an exit strategy. Print will not go away but we’ll continue to see a migration to the online world and this will also continue to impact the types of products we sell.” Doug Johnson, SVP, Supplies Network “Every category from what we see in the entire industry is flat and declining except for janitorial supplies – IT supplies will be flat at best. Print is becoming less relevant and with the trends will only become less relevant. From file folders, sort paper, file cabinets, organise paper, pens and pencils to write on paper – everything is affected. The IT supplies industry is especially touched by this trend. It is a challenging time for the industry – we need to see some re-invention, as well as see our economy come back before we can see these trends change.”

$1.04 billion Online spending in the US reached $1.04 billion on Black Friday (23 November), representing an increase of 26% on 2011

$633

million Thanksgiving (22 November) saw US online spending increase 32% year on year to $633 million

$13.7

billion

Overall online spending in the US between 1-23 November was $13.7 billion, up 16% from $11.8 billion last year

@tellittoal

Is HP’s CEO Meg Whitman digging her own grave with her accusations against Autonomy? @OSNOW

Thanks to all new followers :) stationery it ain’t sexy but everybody needs it! @IntegraOffice

Aidan has finished the first session, and for the first time in 15 years has kept to schedule! #integraevents @benshiro

Need give thanks to @Steelcase. Your products have helped every office that I have worked in look, feel, and become more productive. Bravo! @Laura_Gale

Back in #Chicago after a great #VSN2012 conference! What will the marketing team do with all their spare time now? #unitedstationers

Snap shot

opi.net poll results Can Beta be successful in UK wholesaling?

Yes 74%

No 26%

Office Depot’s booth at the recent Greenbuild trade show in California, US. The reseller turned to North Carolina firm Boxman Studios to create a booth out of a refurbished shipping container, highlighting its commitment to environmental friendliness.

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Big Interview | Dominique Lyone

A Complete success

The story of Australia’s last remaining independent nationwide office products reseller Complete Office Supplies is the stuff of entrepreneurial dreams. OPI caught up with founder Dominique Lyone to find out how he takes on the global giants

by Andy Braithwaite andy.braithwaite@opi.net

It’s

unusual for the big boxes to refer to specific competitors in earnings conference calls, so the fact that Staples singled out Complete Office Supplies (COS) as a serious threat in Australia during its Q3 webcast speaks volumes for the influence that the business founded in 1976 by current CEO Dominique Lyone (pronounced lee-y-own-ee) is having in the contract segment. Not that Lyone is unaccustomed to taking on the big guys; that has virtually been engrained in the company’s DNA since day one. Indeed, he has regularly had to turn down buyout offers over the years from the international players present in Australia – Staples, OfficeMax and Lyreco. With Staples and ‘Max in turnaround mode in Australia and struggling to reverse declining sales, COS is looking at double-digit top-line growth in the current financial year. Time for OPI to find out more about this dynamic reseller. OPI: Let’s start with a quick introduction to the business: how did it begin and how have you developed it over 35 years? Dominique Lyone: Well, I was born in Egypt where my father owned a tiny typewriter shop. He had been a typewriter mechanic by trade and I was following in his footsteps in Australia when I decided that stationery was a better option for my future, and at the age of 22 I started this company called Complete Office Supplies. I worked as a specialist,

OPI Magazine | December 2012/January 2013

selling typewriter ribbons and carbon paper, the toner and paper of today. OPI: So you started as a one-man-band? DL: Yes. At the beginning it was really about not working for the man and being able to earn enough money for myself. I built the business to a size where we had a couple of retail stores and a commercial business, then things went horribly wrong in the mid-1980s and we came very close to bankruptcy. OPI: But you made the decision to persevere and it looks like it paid off. DL: We decided to get out of retail – which was a little bit too early for its time – stay in commercial and go from there. Not long after that, in the early 1990s, the big Americans and so on started coming in and buying all the private operators out. I made a call not to sell the business and to remain and compete.

“We’ve been used to playing the David and Goliath game for 30 years” OPI: Why did you choose not to sell? DL: The core thinking behind that was that I couldn’t see anything that the big guys had that we didn’t, except access to a lot of capital. The supplies were the same, the tactics were the same; they had fundamentally more access to capital than what we had, so my vision was that if I could run a profitable business and create capital that way, I should be able to compete.

Complete Office Supplies | Big Interview OPI: Have you had a call since then? DL: I’ve had many calls. All of the majors have had over the years what I would call ongoing courtship of this business, but it remains not for sale. OPI: OK, so give me a quick overview of the business as it is today: the size, locations, that kind of thing. DL: So today, we focus completely on B2B in the medium, large and government sector. We have seven DCs in Australia, one in every capital city. All DCs work off the same IT system so it is a highly leveraged network. The core of the promise is order by 5.30pm today and receive the products tomorrow morning. And we’re doing that about 98.4% of the time; that’s the fill rate. OPI: How does that compare with the competition? DL: It’s better, we believe, than the two Americans, Staples and OfficeMax. Lyreco has a smaller range, so they’re in our space and not in our space, if I can put it that way. OPI: And in terms of the size of the company, how many staff do you have? DL: We’ve got about 300 staff at the moment. This last year we closed at the end of June, we did A$105 million (US$109 million). OPI: How has your growth been in the last couple of years? Obviously, the economy has been tough. DL: We’ve grown year on year for the last 15 years really. We haven’t had a year of going backwards, including the global financial crisis (GFC) year. So a lot of this operation is really about gaining market share from the two majors in the corporate and government space. OPI: How have you been able to do that? DL: I think fundamentally we consider that local ownership ultimately delivers a better service to the market and we match them head to head on any value-add that they w w w.opi.net | OPI Magazine

www.opi.net | OPI Magazine

Big Interview | Dominique Lyone have. I think the other thing that’s helped us is that, where technology years ago was something that big business had, today technology is an equaliser and you don’t have to be huge to be able to provide similar services. I mean, this business is all about systems and logistics and getting things done on time again and again and again. On the flip side of that we have had good support from the vendors in enabling us to bridge the gap between ourselves and the majors. OPI: Sorry, could you just explain that? DL: We believe that the pricing that we’re getting from vendors is close to the international players. It’s probably silly to say the same, but I think our terms are close, so providing I can keep my costs lower than them I should be able to compete. OPI: I think if you said that your prices were the same, your vendors might get some calls from Staples and OfficeMax pretty soon. DL: Well, our invoice costs are the same, which is how we work in this country, but we have slightly different back-end terms. OPI: Based on volume, I suppose? DL: Yes, based on volume, growth and other

incentives that the suppliers might put to us. The other thing that’s helped us is that globalisation has opened up supply beyond our shores so products are not only available to me from within Australia. Now in 2012 I have a global buying platform and we’ve started bringing in an increasing amount of product direct from factories for our private label ranges. OPI: What does that represent now in terms of your total supplies? DL: Probably in the vicinity of 35% where we’re by-passing local suppliers completely.

“I think there has to be some level of consolidation at the contract level” OPI: That’s quite a high number already and seems to compare with the globals. DL: Yes, we’ve been pretty aggressive with it. OPI: Do these products tend to be in the traditional stationery categories or is it more widespread than that? DL: No, primarily stationery. I guess where the product is getting commoditised the brand owners’ value has diminished, so it’s primarily in those high commodity areas such as stationery, toner, ink and paper. OPI: Most markets have reported declines in traditional categories. Is that what you’re seeing as well? DL: No doubt about it. There are a few things happening there. One that’s evident now, beyond a shadow of a doubt, is that the GFC reduced consumption and it hasn’t recovered to where it was. I think the other thing is technology; it’s obviously changing the filing and related areas of our business and there is, from what I’m reading, an overall reduction in paper consumption, so that has to affect everything else that lies under that. I’m not experiencing it personally because my paper sales are growing, but that’s because we’ve got a growing business. OPI: What about categories such as jan/ san? Are there opportunities there? DL: We have a number of growth categories such as canteen, janitorial, furniture and a part of our business we call ‘creative’, which is promotional products. Janitorial is the fastest growing and is about 10% of our business, furniture is at around 10% and canteen now accounts for about 5%.

OPI Magazine | December 2012/January 2013

Complete Office Supplies | Big Interview

OPI: I saw that you launched something called Managed Services earlier this year. Can you talk a little bit about that? DL: Yes, I guess the reason we did that separately to the core business is that it’s a service model as opposed to a product model. I think this channel is late in its run with managed print services (MPS); we tend to get into categories once there is enough mass and see that as a next part of growth of the business. But from outside of our channel the competition towards my toner business and paper business is increasingly being threatened by MPS players. OPI: OEMs such as Xerox are pretty strong in Australia, aren’t they? DL: Exactly. So one way to potentially combat that is to get into it ourselves and sell toner and paper by the click. OPI: Are you working with established third-party providers for that or are you launching from scratch? DL: No, no, I’m green fielding it. I’m investing in it completely as a green field versus taking a small percentage of the play. That’s not my style. I more want to establish a new business with a new model. OPI: So how’s that been going? DL: It’s proving challenging so far. I haven’t made any money out of it yet (laughs). OPI: It’s what you would call a longer-term investment, then? DL: Exactly. OPI: I know you’re a member of AOPD. How do you benefit from that? DL: It’s really about being connected to other independents around the globe. Initially it

was about doing international deals; there hasn’t been a great deal of that type of action, but the infrastructure is there for it to happen if opportunities come up. OPI: Let’s take a quick look at your main competitors. Staples and ‘Max seem to be having some challenges; they’ve been downsizing and consolidating some operations in Australia and New Zealand. How do you view that? DL: I think they do their thing and I do my thing, but whenever they go into major structural changes and redundancies and so on, over the years that’s been an opportunity for us because suddenly companies in that mode tend to go internal for a little bit. But I’m well aware that my major competitors are doing it tough in this market right now. They’ve made some big investments and business has reduced.

“We consider that local ownership ultimately delivers a better service to the market”

OPI: Are you seeing some very aggressive pricing? Is that an issue? DL: Yes, we are. Staples has been extremely aggressive, particularly in the last few months. You’ll be aware there’s been a new CEO appointed to Australia and we’ve seen massive discounting and there seems to be a large pool of funds to prebate customers with something like 10% of their next three years’ spend right up front. OPI: And how do you combat those kinds of tactics? DL: I don’t believe it’s sustainable, so at the moment we’re doing what we tend to be good at and that’s retention, just staying close to our customers and playing our service card. In some cases we have lost some business to that offer, but in the majority so far we’ve been able to hold on. When you start doing w w w.opi.net | OPI Magazine

Big Interview | Dominique Lyone some numbers on it, 10% of the next three years’ spend is some substantial dollars. OPI: To what extent have you been able to pick up some sales talent from these guys as they let people go? DL: I wish my managers wouldn’t hire ex-competition; ex-large competition specifically. OPI: Why’s that? DL: My view is that they don’t make their best people redundant. They also come with some baggage. If it’s been short term it can work, but if they’ve been there a long time the last thing I want to hear is: “This is how we did it at the other place.” OPI: I understand that you won a place on the pan-government contract earlier this year. DL: We did. OPI: It sounded like quite a coup for COS. DL: It was a coup and so far we’ve implemented about $15 million of that business, which is not appearing in published numbers yet. So this current year (to the end of June 2013) will be a double digit growth year for COS. OPI: We hear about these public sector contracts, that they might look nice on the top line but they’re difficult to make money on. DL: I think that all big chunks of business are difficult with margins and that’s certainly true about this piece of business as well, but it is almost a decade opportunity, or a two decade opportunity. Some of this business has not been in the market for 20-odd years so we’ve been quite aggressive in getting it. It is obviously at lower margins, but that’s just got to make us smarter and run our business sharper.

“We’ve seen massive discounting and there seems to be a large pool of funds to prebate customers with” 32

OPI Magazine | December 2012/January 2013

OPI: Going back to the key strategy of grabbing share, how do you organise your sales teams? DL: I guess one thing that we probably do better than others is that we’re relatively aggressive with business development and having hunters on the road. I think that was really a turning point in our business, differentiating hunters to farmers. In the last 18 months we’ve restructured more to a segmentation model. Simply put, organised by size of customer and some verticals such as government and education. Then the sales force is backed up by a team of telemarketers who do what we call ‘leakage recovery’. OPI: What about the SMB space? Is that something that you’re looking to develop? It seems everyone else is. DL: COS hasn’t focused on that section of the market, but we do have some business there. There are some internal discussions at the moment about having an online retail style offer, like Staples, ‘Max or Officeworks do. Although 80% of our business is done through our website, it is very much designed for a contract-style business as opposed to retail-type business. OPI: So you could be making a move into this online retail space? DL: It is in discussion at the moment. OPI: What’s your view of the smaller independent channel? DL: I think a lot of the independents are doing it tough. It’s a tough market and, as the majors are pushed down into more mid-markets and the smaller accounts, that’s creating some challenges for the independents. The other major challenge they’re facing is online; you can google ‘office supplies’ in Australia these days and come up with a number of players who are doing a reasonably good online job. The smaller independents that do well are the ones that have got a nice, local niche, but it’s pretty tough for them to really grow to any significant size. OPI: You’ve never had a desire to join one of the main dealer groups like Office Brands or Office Choice? DL: No, unfortunately their value proposition doesn’t really suit what we do; there’s no real benefit – once you’re of this size – of being in a buying group. We did actually used to have our own COS group. We led the group with an independent dealer in every city, and then one by one they were poached and sold. And

Big Interview | Dominique Lyone

“All of the majors have had over the years […] ongoing courtship of this business, but it remains not for sale”

COS at a glance Founded: 1976 Ownership: Sole owner, Dominique Lyone Headquarters: Rydalmere, near Sydney FY 2012 sales: A$105 million (US$109 million) Staff: 300 2012 pre-tax profit margin: 6.5% of sales Dealer network partner: AOPD

as they sold we started in that city. That was how we got to be national in the first place. OPI: I haven’t asked you about Officeworks. I know they’re more retail focused, but I understand they’re trying to develop a B2B offer. Is that likely to encroach on your customer base? DL: Yes, it will be another competitor for us to deal with. They’re definitely pushing into the online business, and endeavouring to push into the contract business. We haven’t seen any, what one would say, real wins there yet, but they’re a smart operator with some smart people and plenty of money behind them. So if they choose to be in the space, they will be in that space. OPI: And obviously they also have that Australian-owned argument. DL: I guess that neutralises one of our big arguments, but we’ll have to work through that as a management team and see how we combat it. We’ve been used to playing the David and Goliath game for 30 years, so this is just another Goliath. OPI: If I was Officeworks I’d probably try to buy you guys, so have they been knocking on your door recently? DL: They haven’t come to talk to me yet but I can see what you’re saying; that would make sense, but I’m not sure whether acquisition is part of their strategy. OPI: You’ve still got the ‘not for sale’ sign hanging up on your door? DL: We do. Ultimately, the market probably

OPI Magazine | December 2012/January 2013

can’t continue with this many players, so something’s got to give. We don’t know whether anybody will retreat out of this market and put up the white flag and say ‘we give up; it’s too hard in Australia; there’s better money somewhere else’. OPI: If you were a betting man, who would you put money on to raise the white flag first? DL: I’d say ‘Max. OPI: There were rumours that they would exit Australia and New Zealand, but they’ve committed to these markets in their recent conference calls and highlighted their profitability. DL: We’ll see. It is a profitable operation – I guess that’s probably why it would make sense to let it go. I don’t focus too much of my time on worrying about it, but as you asked me, I think that’s where I’d put my money. I think there has to be some level of consolidation at the contract level, anyway. It’s a very, very hot market today. OPI: Do you think ‘Max and Staples could feasibly merge or would that run into anti-competition issues? DL: I think they would run into some anti-competition issues. OPI: Right, so you’ve got to look at a third player like Lyreco being involved somewhere, or someone else? DL: Potentially, yes. OPI: Or Officeworks if they want to get… DL: Officeworks may run into the same problem. OPI: Even on the contract side? DL: I guess it’s how good they could argue the segmentation of the market. The authorities tend to look at the total market, but usually in an acquisition the parties involved want to argue the segments of the market itself. OPI: What are your plans for yourself and for your business over the next few years? Are you ready to take a back seat? DL: I have the occasional thought of me taking on a chairmanship and have a CEO run it, and that’s a possibility in the next five years or so. I have family in the business: two executive positions are held by my daughters. They’re very passionate about the business and they seem to have the same burning desire in them, so I’m hoping they’ll take it forward.

Hot Topic | Wholesalers/Dealer groups

Dealer groups are dead, wholesalers are out of touch; do you agree? Felicity Francis plays devil’s advocate in a debate focused on evolving roles, and addresses the UK industry in the first of two articles

According

to the head of a prominent UK reseller: “Dealer groups are an ugly wart on the side of wholesalers.” This opinion certainly lies far to one end of the debate surrounding the roles of dealer groups in the UK; groups are creaming off margin by offering services that aren’t necessary or that are offered elsewhere. At the other end of the argument is the equally strong opinion that dealer groups are of vital importance, using their independent support to mediate between dealers, wholesalers and manufacturers to allow products to flow through the supply chain. So who’s right? To an outsider, it’s becoming increasingly difficult to understand why there are so many layers in the office products supply chain. The diagram to the right illustrates one view of the channel, and just how many layers of ownership or control that a product can travel through to reach the end-user. And there is clear overlap between wholesaler and dealer group services. If a wholesaler offers services such as marketing – perhaps for free in return for loyal spend – are group benefits such as networking or independent mediation enough to please members? On the contrary, do wholesalers do a good enough job at supporting dealers to take away the need for groups?

OPI Magazine | December 2012/ January 2013

Wholesalers/Dealer groups | Hot Topic The debate surrounding who should be doing which job in the OP supply chain was the focus of a panel discussion during OPI’s recent European Forum, and it isn’t new. In the UK the discussion can be heard in almost every organisation – the US industry, which is going through

In a recent Big Interview, Aidan McDonough, head of dealer group Integra, said that consolidation is necessary; perhaps 2013 will be the year that some UK groups join together. When asked if there are too many, Steve Harrop, CEO of Office Friendly, says: “It depends on

“I don’t know why wholesalers don’t just buy dealer groups” an equally thorny period, will be the focus of part two of this article in February’s OPI. “This topic grows in scale when margins are under pressure as many begin to question the value the groups offer within the distribution chain,” says Kim Gladstone, Head of Business Development at XPD, which owns three dealer groups. “Historically some trade organisations made a lot of money for doing very little. But all parties within the chain need to take stock and review what they do, the benefits enjoyed by the recipients, and why they do it.” According to a recent poll on opi.net, 89% of readers believe we are seeing a major shift in the relationships between wholesalers, dealer groups, dealers and suppliers. The question that is becoming more pressing as the tough economy tightens its grip on business strategy: is there really enough margin left in the channel for all these players to operate profitably?

what they’re offering and whether it’s a viable return on investment. In total, we’ve given cash returns of £6.5 million ($10.5 million) back to dealers, which has cost them £1.8 million. That’s a pretty good return on investment with some exciting sales and marketing programmes.” Going back to the industry member who made the “warts” comment, he adds: “I don’t know why wholesalers don’t just buy dealer groups.” There’s been a rumour circulating that Spicers has become interested in acquiring one of the dealer groups,

though Ball was quick to put this down to speculation: “What would the value of buying a buying group be? It’s not guaranteed turnover as dealers only have a yearly membership.” Getting down to the question whether there should be any at all, among dealers that OPI spoke to there are murmurs of dissatisfaction with groups’ “scattergun” approach to working with all suppliers, rather than focusing on getting great deals with a few. There are reports of “dealer apathy” and a growing lack of interest in groups, and if wholesalers continue to increase their support offerings in order to win customers from each other some may stray from membership. A lot of what dealers value about their membership is networking, and if money’s tight that may become a nice-to-have rather than a necessity. It’s a mercenary world out there and loyalties are pretty thin. There are reports from vendors that more dealers want to establish their own relationships with manufacturers, though this would

The dealer group debate The UK has a very high number of dealer groups. In contrast to the US industry where there are two main large groups, as well as more specialist groups such as Pinnacle, in the UK most people settle on nine as the figure. Do they really offer diverse enough services to each have a different attraction? “Some dealer groups have a very unique offering,” says Alan Ball, CEO of Spicers UK & Ireland. “Various groups have certain nuances that add value in their own right. Although as margin tightens I’d question if some can survive going forward.” www.opi.net | OPI Magazine

Hot Topic | Wholesalers/Dealer groups take more resource for everyone. Gordon Christiansen, CEO of Colway which owns London dealer RED BOX – not part of a group because it is “self-reliant on a lot of the value added services” – raises an interesting point: “I understand that most dealer group incomes accrue from manufacturer and wholesaler soft margins, a little bit out of sight, out of mind. I wonder what would happen if the soft margins were taken away and resellers paid a (much) larger fee?”

Strong support The words “independent” and “intermediary” often spring up in support of dealer groups. “It’s a lonely world out there when you

don’t know who to trust,” one dealer said to OPI when asked about how he values his group. Robert Baldrey, CEO of Vasanta Group which owns wholesaler VOW, certainly believes groups are still as important as wholesalers: “Dealer groups are still big customers of wholesalers and offer services that we don’t. There are inevitably some services that we both do, but dealers still value their independent support and the networking that comes with it. To what extent they still have value as purchasing conglomerates I don’t know, as their real value comes from helping dealers to sell more, such as through marketing.” When asked whether Spicers and VOW threaten their services through

● Against a backdrop of economic uncertainty in mainland Europe, consolidation and market contraction are happening quickly. In France wholesaler Carpentras Sign is set to acquire RP Diffusion, a wholesaler as well as reseller with its 560-strong Rouge Papier store network. ● Germany’s model probably most closely resembles the UK and US, with two leading dealer groups, Soennecken and Büroring, more or less aligned to wholesalers PBS Deutschland and Spicers respectively. However, both groups have their own delivery and warehouse structures. ● Netherlands-based Quantore is a not-for-profit cooperative group owned by its members, and also a wholesaler. It believes that each business arm “strengthens the other”. Robert Driessen, Procurement Manager and Director at Quantore, says: “We follow a volume strategy and invest the money we earn with our warehouse into our dealers. And of course a dealer group with a warehouse is much more independent and powerful than one without.” ● Swedish dealer group RKV also has an import business in cooperation with the Nordic Office Alliance, in order to combine volumes of products under private brand. The cooperation is now looking to include brand name products. On the importance of dealer groups, Managing Director Stefan Sonesson says: “In the OP industry of today dealers face fierce competition from ‘the globals’ and also from local competitors. In that environment it is almost impossible as an independent dealer outside a dealer group… The tools and services we provide really need to add value. During recent years we have also worked hard at developing our relationship and cooperation with our suppliers – today we talk more in terms of partnership.” ● One of the biggest questions surrounding wholesalers is where ADVEO is heading. The recently announced strategic plan from ADVEO will see its European businesses – Unipapel, Adimpo and Spicers Europe – all rolled up into one organisation, and it is also planning to extend its service offering. CEO Millán Álvarez-Miranda will be OPI’s Big Interview in February.

OPI Magazine | December 2012/January 2013

duplication, the answer from groups is a resounding “no”. “As a dealer group, XPD considers its relationship with its wholesale partners of critical importance, not as competition,” says David Langdown, Managing Director of XPD. Mark Austen, CEO of dealer group Office Club, has a similar view. “The equilibrium of dealer groups, wholesalers and vendors in the UK has kept dealers’ market share higher than in almost any other developed country,” he says. “The raison d’être of a dealer group is different to that of a wholesaler, which exists to maximise its own profit. Dealer groups focus on vendors that bring profit to dealers. The better groups provide marketing material that uses a common theme for dealers, rather than, for example, an Avery leaflet that looks like an Avery leaflet.” Going beyond marketing material, dealer groups provide varied services. For example, XPD, within its three dealer groups, has a top tier of elite members that receives one-to-one business consultancy support rather than marketing materials. Nectere, in contast, offers entire business management services aimed at small dealers, leaving the dealer to focus entirely on selling if they so wish. But offering these different levels of services doesn’t come easily, as Gladstone explains. “The biggest challenge for groups is offering the right level of customised service to their members who are developing at different speeds, looking to exit/acquire or diversify,” she says. “Groups therefore need to employ enough people and the right people who can take a consultative role on board to ensure we are truly effective and deliver returns.” Giving a final word in support of dealer groups, Simon Moate, CEO of office2office – whose Advantia/ Truline model will be explored later – says: “I think the industry would be a sad place without them. Their role in the supply chain has got blurred and confused, but those that come forward and innovate are what the dealers need. Groups need to bring innovation to the table and help dealers sell more different things.”

Wholesalers/Dealer groups | Hot Topic The wholesaler debate To open the conversation about what role wholesalers should play, Gladstone makes a good point: “The reseller channel has perhaps forgotten what the true definition of a wholesaler is.” She continues: “How many or how much of the additional services or marketing offered to the resellers by wholesalers is being used? They needed it 20 years ago but generic solutions are not so attractive now. Useable, strategic solutions can only really be developed successfully when both parties have a detailed understanding of what each other is striving to achieve and can tailor something to suit. With increasingly limited sales resource this will be a challenge for the wholesaler, but working with groups, this level of tailoring can be achieved.” Indeed many of the dealer groups, content as they are that their

the manufacturers push demand and let the dealers, ideally through the groups, pull it through. In my opinion neither wholesaler needs to put hard earned cash into poor quality promotions and too wide-reaching activities. There’s only so much the dealers can concentrate on.” Colway’s Christiansen adds the dealer voice: “I believe wholesalers should focus their efforts on maximising the efficiency of product distribution rather than being quasi-dealer groups.” Offering a contrast, Paul Musgrove, CEO of Nectere, says: “Inevitably there is a clash between the services supplied by wholesalers and dealer groups. However not all dealers are in a group and they do need these services from somewhere, as they

“I would like wholesalers to spend their marketing budget more effectively and to stop wasting cash as they aren’t close enough to consumers” services aren’t threatened by what the wholesalers offer, believe the wholesalers need to change their focus in order to help dealers. Harrop says: “I would like the wholesalers to spend their marketing budget more effectively and to stop wasting cash as they aren’t close enough to consumers. Let

Steve Harrop

cannot afford and do not have the skills to do these things themselves.” Speaking up for the wholesalers’ predicament, Ball says: “If we take the services away the dealers complain, but wholesalers haven’t been offering them efficiently so dealers have gone to the buying groups. It’s a difficult situation to balance.” Fairly or not, there is quite a lot of criticism echoing through the industry about the wholesalers’ distance from the dealer. Harrop says: “We spend in excess of £50 million a year with VOW but want more discussion and action. I would like a senior VOW person sitting in my offices joining up everything that’s not joined up.” One example focuses on facilities management (FM), a growing opportunity for OP. The accusation is that wholesalers simply create a catalogue for FM products, rather than invest in the expertise needed and, through training, pass this knowledge on to dealers (but then

one might argue that the dealer groups should offer the training…). Ball again defends the wholesaler approach. “Both wholesalers have taken a lot of time and effort to employ people that are specialist in this sector,” he says. “Research has gone into what sells, and we have had some positive feedback from dealers that are finding it difficult to sell against own brand products.” As a result Spicers is looking to develop a 5 Star equivalent product, which brings us to the next debate surrounding wholesalers: brands. Both Spicers and VOW are operating under venture capital owners with profit high on the agenda after a few years of uncertainty, and they are following diverging strategies. Spicers has been open about its new approach to doing business with vendors, which sparked a trend of wholesaler exclusives such as with the Pantum printer brand and ousting long-term supplier Pilot. Vendors that OPI has spoken to suggest that we have certainly not seen the end of this trend. Spicers is also sourcing more products from China and developing its 5 Star brand. VOW, on the other hand, is vocal about its strategy to continue supporting brands. Commenting on these strategies, one vendor told OPI: “Dealers are concerned that they are locked into deals with a wholesaler that doesn’t stock the brands anymore. w w w.opi.net | OPI Magazine

Wholesalers/Dealer groups | Hot Topic But the marketing initiatives and so on offered by wholesalers make it difficult for dealers to go direct, as they are tied in.” This could be a chance for dealer groups to step up. As Gladstone says: “The more there is uncertainty about the future of the market and the direction of the wholesalers, the more dealers seek independent advice about their own direction and that of others within the trade.”

A new model? Whether or not they agree with the groups’ argument that they need to be more in touch with their dealer customers, both wholesalers agree that something needs to be done to make the channel more profitable. Baldrey says: “There’s too much duplication of cost in the channel. We can’t continue with a model that was built 20 years ago in a time when everyone made more money. For example, why do vendors keep stock in their distribution centres? Why not send it straight to the wholesalers? And for dealers I believe the stockless model is where it has to go.” Stockless is one solution; Gladstone suggests another: “Perhaps wholesalers should consider a more specialised wholesale service, as both seek and expect 90% overall commitment on spend yet dealers need to diversify and specialise themselves in order to satisfy customers and develop in a declining market.” All this debate and speculation is attracting new players. In April OPI interviewed Joe Hemani, the CEO of IT distributor Westcoast, who was candid about his intention to step into office products wholesaling, and OPI understands the distributor is set to introduce a core OP range in the new year. And another new player has been in the headlines recently: Beta. With its aim to launch an OP offering early in 2013, the EOS distributor is, to a certain extent, directly taking on VOW and Spicers. Beta’s model is based around offering the fastest-moving OP lines as a complement to its core EOS and audio/visual products. Turn to page 15 for more on Beta’s initiative.

Opinions about whether the distributor will be successful are mixed; some, including many vendors, welcome Beta as a new, lean alternative without the extra services such as marketing that VOW and Spicers offer – leaving these for the dealer groups to provide. Others believe that the tactic of only stocking the most popular products will mean that dealers will stick to their current

by financial results, Moate now says the initiative is reaping rewards. Criticism of the Truline model focuses on whether it leaves enough space for the dealer to maintain its own brand. Christiansen says: “As all resellers look to take cost out of the supply chain there is an inevitability that our delivery services will look more and more the same. The Truline Robert Baldrey offer to

“There’s too much duplication of cost... We can’t continue with a model that was built 20 years ago in a time when everyone made more money” wholesaler that offers full ranges, and that Beta won’t be able to make money if it has to slash margins by offering low prices. Either way, the new entrant is certainly getting the industry talking. O2o’s Moate says: “Those entrants’ messages have got us all on edge, but whether they can perform on the level that [current UK distributors] have crafted is another matter.” Moate has crafted a different model himself. In 2011 o2o set up Truline, a full logistics service for Advantia members including last-mile delivery. Members have access to fast-moving SKUs via Truline, and VOW fills in the gaps with next-day delivery on less frequently purchased items. According to Moate, Truline “is about enabling a stockless model quickly and efficiently”. From its own perspective, rather than attempt to compete in the SMB space, through its logistical service Truline partners with dealers, who already know their customers and are good at retaining relationships on a local level. While Truline got off to a slow start, judging

Advantia members is interesting. One member has described it as ‘better than a courier company, not quite as good as your own drivers but good enough’. Resellers need to be very clear on what their point of differentiation is if they no longer have direct control over fulfilment – the online players like Euroffice understand this very well already.” The subject of maintaining a dealers’ brand versus adopting a national brand, through partnerships with groups and wholesalers, will be explored in part two of this article. There are those that argue that it is down to dealers alone to bring the debate to a close, and support their own businesses. But we all know that it’s a tough world out there right now. Musgrove says: “In terms of strategy dealers certainly need help. The issue is where to get this help. In reality the problem for both dealer groups and wholesalers is they are not a dealer and do not have the experience to provide this help… Both are doing the best job they can but the model is broken.”

Tune in next time This dealer group/wholesaler debate will be continued in the February issue of OPI, with a look at the channel in the US, Canada and other countries.

w w w.opi.net | OPI Magazine

Vendor Focus | Pilot

Pilot’s new

European journey Personnel changes at Pilot’s European team in recent months mark a new direction for the writing instruments manufacturer

has been a busy 2012 for the European arm of global writing instruments manufacturer Pilot, with experienced figures retiring and new recruits jumping on board as the company looks to embark on a fresh direction across the continent. Although not immune to the turbulence caused by the fragile economic climate in Europe, Pilot has remained in the ascendancy thanks

Name: Hugues Chatelain Job title: Pilot Corporation of Europe, VP Western Europe Info: Joined Pilot in 2002 as Country Manager France, spent three years enhancing the supply chain and now oversees business operations in Pilot’s largest European markets. to an innovative product range and investments in its commercial team. Helping to oversee the Japanese firm’s European operations as Vice President Western Europe is Hugues Chatelain, and the ten-year Pilot veteran is confident the business is upwardly mobile right now. “We are facing a difficult economy in Europe but we are lucky enough not to suffer as much as others, as our sales are still growing in this continent,” he explains. “Currency movement and the weak euro compared to the Japanese yen has had the largest impact on the business, but in terms of overall sales performance and

market share we haven’t felt the crisis in general.” GfK data for the period between October 2011 and September 2012 shows Pilot’s writing instrument market share in its leading European markets of France, Germany, the UK, Italy and Spain grew to 12.4% – up from 12% one year before and cementing its position as one of the leading companies in its sector. Chatelain, who is deputy to European CEO Marcel Ringeard, expects the trend to continue, driven by the retail channel: “Since we launched Frixion in 2006 we’ve been able to enlarge our consumer base from professional to a more scholarly type of consumer. As a result we’re nicely growing in the retail channel, offsetting the decline in B2B which started at the beginning of the crisis in 2008.” Although a Japanese company first and foremost, Pilot’s history has shown that regional autonomy is part of the company’s culture – and that in itself is proving to be a catalyst for creativity.

OPI Magazine | December 2012/January 2013

The UK New to Pilot’s cockpit in the UK are Managing Director Paul Phelan and Sales and Marketing Director Mark Knibbs, who assumed their positions at the beginning of the summer. Since replacing the retiring Don Skelton, who departed in May after six years in the role, Phelan has been working closely with Knibbs to establish a new business strategy for the years ahead. It is clear that the ranges such as Frixion and the newly launched V5/V7 refillables, which picked up the ‘Product of the Show’ award at the Integra National Conference in November, will be used to drive growth in 2013. “Frixion and other refillable products will be our biggest focus in the UK,” notes Phelan. “However, the UK market hasn’t traditionally been into refilling and we want to start educating consumers and the dealers about the value of selling refills. In Europe we’re probably selling as many refills as we are pens – so there is a massive opportunity for that in the UK. The

Name: Paul Phelan Job title: Pilot UK and Ireland, Managing Director Info: Joined in 2012 from Mitsubishi Pencil. Has extensive OP industry experience, having previously worked in various sales and marketing roles at ACCO.

Pilot | Vendor Focus Name: Mark Knibbs Job title: Pilot UK and Ireland, Sales and Marketing Director Info: Joined the business earlier in 2012 from Pentel UK. Has previously worked for Gillette, BIC and ACCO. V5 and V7 are good examples of this type of product coming through.” Naturally, as greater attention is placed on the retail channel, much more of Pilot’s marketing and sales will be conducted digitally. Indeed, e-tail giant Amazon is expected to be in the company’s top two to three accounts in the UK in the coming years. Knibbs states: “WH Smith, Ryman and Paperchase are all examples of regular customers, as well as pure e-tailers – both well known and some less known, so it’s not all about Amazon. “We have to bear in mind that these resellers are increasingly selling products online so it’s a key focus for us to get in a position that supports this trend. This includes bringing the relevant expertise on board.”

Scandinavia Pilot Nordic will also soon have a new captain, with long-serving Managing Director Kjell Karlsson stepping down in April to be replaced by experienced OP professional Urban Martel. Karlsson joined the Pilot group as General Manager in 1999 at the time its Swedish arm was initially formed and has seen the region grow to incorporate the Finnish market (in 2001) and then ten years later Denmark, Iceland and the Baltic territories. Since 2002 Karlsson has been Managing Director for Pilot Nordic, and he believes the business is in good shape ahead of his successor’s arrival in March.

Name: Kjell Karlsson Job title: Pilot Nordics, Managing Director Info: Will be retiring from Pilot in 2013 after 14 years at the company. He will hand over responsibilities to Urban Martel, who has agreed to join the business from Durable. “Pilot in Nordic is a very strong brand – Urban will continue to build the brand and continue the work we

have started to get the communication to the end-consumer – he will arrive at a clean table,” explains Karlsson. “Urban’s key quality is that he already has good networks in the Nordic market. His experience at Durable over the last ten years, where he has done a very good job, stands him in good stead for the role.” Karlsson looks set to continue in a part-time advisory role, in between spending more time with his family, playing golf and participating in another great hobby of his, downhill skiing. He still believes that he can offer some important input to the business too. “I’ve been in OP for more than 30 years, so hopefully I have learned something!” With each individual Pilot division naturally having its own area of focus, it is important that there is still a joined-up approach to developing the business’s brand and overall marketing activity across Europe. Each of the new recruits talks fondly of Pilot’s propensity to act as an international business and share good practice between divisions, but two recent arrivals are partly responsible for maintaining this philosophy.

Europe Ken Schoellhammer and Marta Espadas joined the company on the same day in July 2012 as European Brand Manager and European Marketing Operational Manager respectively, and they are tasked with driving marketing on a continental level. “My role is considered with that of Marta’s because we are two sides of the same marketing coin,” explains Schoellhammer.

“I am in charge of the strategic dimension of marketing and she is in charge of the operational aspect. We work very much hand in hand and there is not a linear process to the way we operate.” The pair took over from Jacques Collomp, who was European Marketing Director until his retirement last spring, and there are a variety of important messages they must convey in the year ahead, including raising awareness of the green credentials of refills. Says Schoellhammer: “Today, our range is made up of a large percentage of products that are eco-designed, i.e. they are made from recycled plastic and are refillable. The ability to refill is what allows customers to make savings, and also gives them the opportunity to generate less waste. “The use of recycled plastic is becoming more and more common

Name: Ken Schoellhammer Job title: Pilot Corporation of Europe, Brand Manager Info: In his first year at Pilot, responsible for branding, advertising, communication, market insight, product development and research – as well as international relations. at Pilot, and an increasing number of our products are using this. “We are EMAS-certified, which means each year we have to prove that we have met binding quantitative green targets. Annually, an independent controller checks that we have met these goals otherwise we lose the certification.” However, promoting the green agenda is not the marketing team’s only task at hand. Espadas adds: “We have to instil a more European approach when launching or promoting our product ranges. How do we do that? Let’s say that the classic adage ‘think global, act local’ explains it perfectly; we have to develop European ranges by taking into account local specificities in order for the Pilot brand to penetrate more effectively into every single market. “I would say that our main concern for 2013 will be to maintain and reinforce Pilot’s position in a w w w.opi.net | OPI Magazine

Organised by

in cooperation with

Category

Analysis

Round-up Office furniture

Category Analysis calendar February Writing instruments Arts and crafts March Managed print services (MPS) Security and data protection April Breakroom supplies Green products May Paper June Core office products Visual communications July/August Health and wellbeing Furniture September Jan/san Marking and stamping October Mailroom and packaging MRO and safety November Imaging supplies Back-to-school December/ January Office machines Facilities management

UK and Ireland wholesaler Spicers has announced that office and workspace brand GLO will debut in its 2013 Complete Catalogue. Exclusive to Spicers, the range includes fashion-led products in filing, steel storage, seating, writing instruments, books and pads, with further products set to be launched throughout 2013. Alan Ball, Spicers CEO, said the inspiration for the range came from the US, where it appears design is starting to play a more prominent role in purchasing decisions.

MPS

Konica Minolta Business Solutions Europe is set to acquire European marketing services company Charterhouse PM. The takeover is expected to be completed by the end of 2012, subject to clearance, and is part of Konica Minolta’s plans to invest in managed print services. Following the deal, Charterhouse will continue operating under the same name based at its existing network of offices throughout Europe. Charterhouse provides outsourced marketing production and management services to global brands across 35 European markets. It has 240 employees and an annual turnover of approximately £100 million ($159 million).

Marking and stamping

Stamp manufacturer Trodat is to extend the number of its products which are recognised as being carbon neutral. From 2013, more than 70 of the company’s best-selling products will come with carbon neutral certification. Trodat said the products are being made with the highest content of recycled plastic that it could technically achieve, with the residual CO2 footprint of these products being offset by investments in Gold Standard climate protection projects recommended by the World Wildlife Fund.

Core office products

Design-led Scandinavian stationery brand ORDNING&REDA has arrived in Canada for the first time, opening concessions in Toronto and Vancouver. Known for its notebooks, planners and office organisational items, ORDNING&REDA has opened shop-in-shops at the department store Hudson Bay Company. The company, owned by Bodum Group, now operates in 15 countries around the world.

OPI Magazine | December 2012/January 2013

Paper

Paper manufacturer Domtar has reported a year-on-year decline of 7% in uncoated freesheet shipments. North America’s largest office paper manufacturer said that it didn’t expect to see any changes to the long-term decline in demand for paper and has been switching production to other products such as packaging and speciality grades, and made investments in other categories such as personal care products. Speaking on October’s earnings conference call, Domtar CEO John Williams said that the office supplies superstores were “finding life difficult” at the moment, but added that he “felt pretty good” about his company’s relationship with Staples, with Domtar a major supplier to Staples Advantage.

Green products

Office Depot had a novel idea for showcasing its green products at the recent Greenbuild trade show in California. The reseller turned to North Carolina firm Boxman Studios to create a booth out of a refurbished shipping container (pictured on page 24). Boxman was set up during America’s housing downturn in 2008 by entrepreneur David Campbell and now customises old shipping containers for individual and commercial use. At Greenbuild, Depot also displayed several eco-friendly ranges, its reusable delivery containers, and sponsored local ‘pedicabs’ in the area offering free, human-powered transportation to the event’s attendees.

Writing instruments

OfficeMax has accused a Singapore firm of infringing on a design patent for its TUL private label pens. In a lawsuit filed on 15 November in an Illinois district court, ‘Max accused Singapore manufacturer Arctic Accessories and its owner Kendrew Wang of infringing on a design patent (patent ‘755) for highlighter pens which have a cut-out loop in the cap. The US reseller said that a letter it wrote to Arctic in April requesting it to stop selling the item in question was ignored.

Office Machines | Category Analysis

big

Is still beautiful? Larger products for the office now come in all shapes, sizes and designs. OPI assesses the current state of the office machine market

3D printing: the lowdown by Ben Sillitoe ben.sillitoe@opi.net

if anyone in the office supplies sector needed reminding, it’s tough out there. For businesses manufacturing and reselling office machines – be it IT/ printing equipment, shredders, laminators or binding machines – it certainly pays to keep refreshing ranges, and many companies have had to keep up with changing workplace demands, new consumer fashion trends or more emphatic fiscal pressures. Major players in printing and IT equipment such as HP, Dell and Lexmark have embarked on significant journeys involving division mergers, headcount reductions and new focus areas. Doug Johnson, SVP at US EOS distributor Supplies Network, has a few suggestions of what they may face next. He says: “Mobile printing will become a necessary part of most companies’ documents workflow strategy in 2013. The explosive growth of PDAs and tablets in the office has created a growing need to print documents from those mobile devices. “The market has been slow to address the need with agnostic solutions that take into consideration the diversity of brands (both mobile and output devices) and the necessary ease of use and security.” Johnson also indicates that environmental printing and imaging products continue to grow in importance. There is also a suggestion that 3D printing could bring opportunities later down the line (see box ‘3D printing: the lowdown’).

Techies have been developing it for years now – predominately getting to prototype stage – but it appears 3D printing is becoming mainstream. Lower technology costs are driving this trend, and the range of objects the technology can manufacture is expanding. 3D objects are created by sending a digital file or scan to a printer which then develops the products layer by layer – a system known as ‘additive manufacturing’. Staples announced the launch of a 3D printing initiative in November, but should the wider OP market take note? Supplies Network’s Johnson says: “3D printing shares many supply chain similarities with the printing and imaging market, albeit with a consumables revenue opportunity that has a much higher ratio to the equipment revenue. “Growth in 3D printing is expected to grow in solid double digits over the next few years, creating a large market opportunity for some resellers. Likely the market will develop initially through sales channels that provide complementary solutions for 3D printing (such as CAD/CAM solution resellers).”

“Product innovation driven by new technology is the key to growth in any category”

With regard to other office machines, there have been mixed fortunes for the key players. When announcing Q3 results in October, ACCO admitted that some customers had reduced inventory levels to record lows, hitting durables such as shredders. However, European Director of Channel Marketing at ACCO Chris Gaskell says that new ranges are still proving popular. Rexel Auto Feed shredder sales grew strongly throughout the year across Europe, he explains, before adding: “It highlights that product innovation driven by new technology is the key to growth in any category particularly in tough trading conditions.” For the year ahead there’s a lot of hope being placed on a new line of Fusion Laminators. Says Gaskell: “Making lamination faster, easier and more instinctive than ever before will stimulate growth in the pouch lamination equipment market, and by w w w.opi.net | OPI Magazine

Category Analysis | Office Machines encouraging more frequent lamination will help grow the market for lamination supplies.” Emily Duan, Director at Paris-based firm DSB France, suggests turnover at her business has been rising annually for a number of years now, with multi-function, serial binding machines and the auto feed shredder driving “tremendous growth”. “Nowadays, [environmental concerns are] trendy and we have got the great opportunity to match end-users’ green thinking expectations. We are continuously investing in the research of green raw material.” Elsewhere in Europe, Germany-based HSM is also experiencing success with green models, such as the Securio range, but it’s not all plain sailing as spokesperson Stefanie Keller notes that the company’s Shredstar entry level shredders “have had a tough year in a competitive, low margin market”.

Products in focus In keeping with the trend of growing demand for mobile printing devices, the leading manufacturers in this field are acting accordingly. This year has seen HP announce a number of developments, including amendments to its ePrint cloud printing solution for mobile devices. And after the failure of the TouchPad last year, it has unveiled details of the new ElitePad tablet, aimed squarely at the business market. Businesses currently find themselves caught at a printing choice junction and are not yet sure of how to proceed down the tablet route. There is an overwhelming rhetoric that tablet devices will be firmly part of the office’s future due to design and usability, but the business tablet device is still in embryonic stage. Supplies Network’s Johnson is confident this is about to change, saying that Windows and HP are working on tools

OPI Magazine | December 2012/January 2013

in tablet form that will “drive our industry”. “[Vendors] are offering a business tablet so an executive can utilise the same programmes to manage their business as they do in the office, but with the mobility, reliability and portability needed today,” he explains. “These business-focused tablets have removable glass so you can get to the innards of the product easily for fixes.” Other machines that look set to form part of the new office landscape include those

“We have got the great opportunity to match end-users’ green thinking expectations” marketed as hugely reliable, green and design-led. Duan from DSB France states: “There is an innovative product range – WiAir serial green-packaging office machines – which will be our product development focus in the coming years, our growth driver and a game-changer in the office machines field. It satisfies the market demand and the e-business trends.” On the subject of market demand, Esselte says its Leitz iLAM laminator series meets the typical office’s requirements. The iLAM touch and iLAM easy (pictured below) – for professional and SOHO customers respectively – are made with sensors that detect the strength of the pouch and adjust speed and temperature accordingly, improving safety and reliability. In shredding, HSM’s latest additions to the market, the Securio C16 and C18 models, have automatic shutdown mechanisms for safety and environmentally-friendly reasons. And HSM’s Keller acknowledges: “Our Securio models have been very successful with consumers who are very interested in saving up to 90% of energy. HSM’s policies harmonise with environmental legislation and we have products that assist consumers to be compliant.” It is evident that the way an item looks is becoming increasingly important in OP, and both HSM and Esselte’s office machine ranges make a significant nod to design. The former offers tattoos that can easily be attached to its shredders, with online videos providing guidance to end-users. Esselte distinguishes between office and SOHO customers, with its iLAM easy laminators featuring either grey and white or apple green and white designs for the respective markets. When looking at today’s office machines market, it is encouraging to note the fresh eye for design.

Category Analysis | FM

Managing facilities Support for dealers eyeing expansion into the FM category continues to grow

The Orange Project route by Ben Sillitoe ben.sillitoe@opi.net

Much

has been said and a lot has been written about how facilities management (FM) supplies continue to provide opportunities for traditional office products companies, but just what information is out there for dealers hoping to clean up in this category?

Wholesaler support Whether it is through specially-organised events, the provision of dedicated FM catalogues or updates given at dealer group shows, the wholesalers are working overtime to inform independent resellers about the ways they can benefit from adding FM-related products to their inventories. It is clear that the process of shifting these items, which include cleaning goods, food and beverage, and general maintenance supplies, differs from the methods used to offload traditional OP – so the guidance is proving crucial. Debbie Nice, Category Head for FM Products at VOW parent company Vasanta Group, remarks: “As well as our printed publications [such as FM catalogues] we have a range of email marketing and flyers to help with regular contact and offers. Seasonal

OPI Magazine | December 2012/January 2013

Dealer support for capitalising on growth channels is not just offered by the wholesalers. Dealer groups on both sides of the Atlantic provide initiatives and guidance to boost success in categories such as the FM sphere. Back in June, US dealer group TriMega launched The Orange Project with the aim of helping its members take advantage of the multi-billion dollar jan/san and breakroom business. Currently being rolled out in phases, a greater number of promotions from suppliers are set to be provided when stage three of the programme is unveiled in the first quarter of 2013. Tom Hoffman, TriMega’s Director of Purchasing, and head of The Orange Project, believes that sales success with cleaning and sanitary items may provide something of a springboard for selling FM products later down the line. Says Hoffman: “FM products represent another lucrative opportunity for OP dealers to sell as they move into the uncarpeted area within their accounts – through additional sales of the more industrial jan/san products to their customers. We do, however, believe that for most office products dealers, this is probably down the road a way. “Along with the opportunity they present, FM products offer their own challenges for dealers from an industry dynamic, product knowledge and overall learning curve standpoint. Traditional OP dealers may likely find FM a more difficult category to enter compared to jan/san. However, certain FM product categories such as safety, spill management, adhesives and sealants, may be an opening entry as these categories are most adjacent to jan/ san and present fewer challenges to understand and sell.”

FM | Category Analysis

Delegates at a VOW FM road show marketing works really well in FM, for example hot drinks in winter, fans in summer, spring cleaning, etc. “VOW has had two reseller FM road shows, where dealers could meet the new suppliers and hear about the facilities management market opportunities. Both were really well attended and everyone showed a real interest in developing this category.” The UK-based wholesaler is also increasingly training its own staff on how to sell FM goods, which is becoming increasingly common among OP wholesalers globally. Indeed, The Highlands Group VP of Cleaning & Breakroom Supplies, Healthcare & Technology, Butch Ellis, says one of the major

changes in the last 12 months has been the “significant pressure” now being placed on sales organisations to up their competency levels in this area. So what has been the response in the US? Chris Whiting, Category VP, Cleaning & Breakroom Supplies at SP Richards (SPR), believes his firm has reacted accordingly. “SPR has made a significant investment in expertise by hiring a team of experienced facility supply professionals who are training dealer sales reps every day,” he says. “We’ve held a multitude of seminars and forums for small and large groups, but we have found that the shoulder to shoulder training and making joint sales calls to qualified end-users has the most lasting impact.”

“Along with the opportunity they present, FM products offer their own challenges” And the majority of FM product suppliers OPI caught up with seem happy with their wholesaler relationships. One example is David Krumwiede, Partner at breakroom products vendor OfficeSnax, who acknowledges that US wholesalers

Category Analysis | FM United Stationers and SPR have been “great partners” for his company over the years. “In addition to [the wholesalers’] national shows, OfficeSnax participates in hundreds of consumer shows sponsored by the wholesalers and their dealers,” he notes. “Presentation of FM products, like what is offered by OfficeSnax, increases the awareness of the consumer that FM products are available through the OP channel.” Even Paradigm Group, which tends to favour a more direct reseller relationship model, sees the value of the wholesaler platform. Ralph Bianculli Jr, LEED GA Director for Emerald Brands at Paradigm Group, says these companies will always play a key role in many office supplies industry categories, including FM. “Eventually we’ll see wholesalers playing a larger role with [our] brand,” he adds. On the flip side, Chris Goodwin and Scott McCrickard, directors at urinal cover vendor DUC, are finding progress slow in the OP field. Describing the relationship building in the channel as “laborious”, Goodwin says the company is continuing to connect with new buyers and organise meetings but it appears certain barriers to entry exist. “At the moment, most suppliers are reluctant to bring in new SKUs and most OP firms appear to use the same vendors and

“The knowledge gained from global FM events could prove invaluable” products rather than looking at new vendors – even when new products come to market offering competitive margins for resale,” he argues. It seems the OP industry as a whole, though, is happy with its current direction into the FM world.

The main event While the local events are valuable, it is difficult to beat the larger scale exhibitions when it comes to showcasing products and learning about the latest trends in the cleaning and facilities industries. The ISSA/ INTERCLEAN series, which this year hosted events in Amsterdam, the Netherlands, and Chicago, Illinois, have helped generate further interest in the sector. Office products resellers represent a small but growing percentage of the visitors to such events – and OPI itself was present at both the aforementioned shows in 2012. Resellers that have already expanded into

OPI Magazine | December 2012/January 2013

this business area or are planning to in the near future could do a lot worse than visit one of the ISSA/INTERCLEAN expos lined up for 2013. Stephan Kopietzki, Marketing Director EMEA at Rubbermaid Commercial Products (RCP), says: “The OP industry visitors are still a low percentage in these events. We have become more relevant to the OP channel in the last few years due to OP’s increased focus on the FM sector. “Our product portfolio offers a one-stop solution for cleaning systems, surface care, skin care, air care and recycling/waste management solutions – this product breadth from one brand makes it easy for the OP channel to partner with RCP.” ISSA/INTERCLEAN’s scheduled shows next year are as follows: Latin America – 13-15 March 2013, World Trade Center, Mexico City, Mexico; Central & Eastern Europe – 24-26 April 2013, Warsaw International Expo Centre, Warsaw, Poland; and North America – 18-21 November 2013, Las Vegas Convention Center, Las Vegas, Nevada. Estimates as to the value of FM to the OP industry vary – with Vasanta saying that OP firms are only currently addressing a small proportion of a potential £5 billion ($8 billion) market solely in the UK. Whatever the true worth of FM globally, it is safe to say the knowledge gained from global events could prove invaluable and the opportunities for OP players in the category are manifold. As OfficeSnax’s Krumwiede succinctly explains, office supplies firms have an established market in which to sell new categories: He says: “Our industry still has a lot of growth to come from just selling existing customers more FM products.”

Your OPI

Inbox

Your industry, your opinions We would love to hear from you. Email editorial@opi.net or you can write to us at OPI, Diamond House, 36-38 Hatton Garden, London, EC1N 8EB, UK

Letter of the month I think the idea of Independent Stationers and TriMega combining forces is the best news out in a long time. We also need United Stationers and SP Richards to join forces into one company. It would bring the cost of doing business down and make one show a year instead of multiple ones. Prices would go down, giving the dealers better margins on office products. The dealers would not have to be concerned about the cost of goods and would empower the sales force to give better service and become consultants to endusers. As a result, all concerned would make more profit. Joe Danchak, Sales Manager, Nolans Office Products Do you agree? Tell us!

Write in and win!

The result of November’s US Presidential election sparked some lively debate among the US business world, and you can read a number of comments on the OPI Networking Group on Linkedin. Below are some extracts from the discussion: Neil Van Malderghem, CEO, Chesapeake Business Solutions Barack Obama won the election. So now we proceed with punishing the productive and giving the spoils of their hard work to the unproductive. Chuck Ehlers, President, GS Direct I agree with Neil. It will be an interesting few months trying to get out from underneath the ‘fiscal cliff’ mess that we find ourselves in. Government can’t be everything to everyone. We need to tighten our belts and cut spending so that all companies can survive the economic collapse should it occur. James Martyn, Regional Account Manager, My Office Products Wow when did this group become a board for the extreme right? Obama has done more for this country in four years that the Republicans did in eight! He ended the war in Iraq saving God knows how many American lives. He passed legislation that provided equal pay for women. He saved the US auto industry from collapse. He saved Wall Street from collapse. And he started LNG overdue changes to healthcare in this country. And yes he is raising taxes on the 1% who never have and never will create a job for middle Americans! Tom Bersch, Account Executive, Warehouse Direct Business Products & Services My words are simple: “A very disappointing outcome.” Here in Illinois they voted in Jesse Jackson Jr again... Are you kidding me!!! They also voted in a State Senator who was thrown out last year for ethics violations and he ran again and WON... This is the worst of all states when it comes to honourable people who are supposed to represent us. The last three governors ended up in prison. Good Lord why do people in this state stand for this?

Each month the writer of our ‘Letter of the month’ will win one of three prizes from either Gino Ferrari, HP or Parker Pen. Each letter is picked by the Editor at her discretion.

Industry advisory panel Mark Baccash – President and CEO, Office 1 Superstores International

Christian Langvad – Director of Purchasing, OTTO Office

Jay Baitler – Executive VP, Staples Contract

Andrew Morgan – President and CEO, Red Cheetah

David Fasbender – SVP Sales and Marketing, Smead

Marcel Ringeard – CEO, Pilot Corporation of Europe

Mike Gentile – President and CEO, Independent Stationers

Jonathan Smith – VP European Sales, Avery Dennison OP Europe

w w w.opi.net | OPI Magazine

Your OPI

On the move

OP personnel changes from around the globe We would love to hear from you. Email editorial@opi.net or you can write to us at OPI, Diamond House, 36-38 Hatton Garden, London, EC1N 8EB, UK

USA

OfficeMax named former Walgreens exec Kim Feil as its Chief Marketing and Strategy Officer as it looks to expand its traditional marketing platforms. Feil will have responsibility for all aspects of marketing, but there will be a particular emphasis on brand management and digital/social. Prior to Walgreens, Feil held senior roles at firms such as PepsiCo, Cadbury Schweppes and Sara Lee.

Newell Rubbermaid’s new Writing business segment will be headed by Eduardo Senf. Senf’s appointment came after an organisational reshuffle which saw the departure of Pat McIntyre, President of the now-defunct Newell Consumer division. Gordon Scott has been named as Newell’s General Manager for the EMEA region and will lead the writing and labelling businesses. The Highlands Group has appointed Aubrey Baumann as an e-commerce National Account Manager. Baumann, who arrives at the US-based manufacturer rep group

with over eight years’ experience in OP, will be responsible for driving revenue and profit for the internet reseller business. Packaging and paper manufacturer Boise has appointed the SVP of its paper business, Judy Lassa, to COO, effective 1 January. She will succeed Bob Warren, who is set to take on a non-officer advisory role at Boise. Lassa has been at Boise for 30 years, holding various operational and marketing roles.

Europe

Peter Birks, Head of Retail at Staples Europe, has left following “a mutual agreement”. John Wilson, President Staples Europe, has assumed responsibility for the European retail team. News of Birks’ departure does not come as a major surprise following the appointment of Wilson to succeed Rob Vale in September and the ongoing restructuring process. VOW parent group Vasanta is on the search for a new Group Chairman after Alan Barclay announced he will step down next year. Barclay is now in his 20th year at the company and plans to continue working in a non-executive director and advisory capacity once his replacement has been appointed.

Keurig brand owner Green Mountain Coffee Roasters has a new CEO. Brian Kelley took on the role from 3 December, succeeding Larry Blanford who had stated his intention to step down back in February. 51-year-old Kelley joined Green Mountain from Coca Cola where he had only recently been named as COO of its Refreshments business unit. He spent five years at the drinks giant and has also held senior positions at Ford, General Electric and Procter & Gamble.

Meanwhile, VOW has added two regional sales director roles to its management structure. Martin Weedall and Ian Oakes have been promoted to the positions of North & Midlands Sales Director and South Sales Director respectively, reporting directly to Adrian Butler. The move adds another level to the VOW management structure, which the wholesaler says will enhance collaborative relationships with supporting reseller customers. European OP distributor ADVEO has promoted Juan Antonio Meroño to Corporate Technology and Supply Chain Director. Until now Meroño was Logistics and IT Director, but his new responsibilities reflect the continued business integration following the acquisition of Spicers Europe earlier this year. Meroño will oversee supply chain integration in Spain, France, Germany, Italy, Portugal and Benelux. German dealer group Soennecken has appointed Karlheinz Stiewi as Director of Member Marketing. Stiewi is responsible for the development and implementation of all marketing efforts for B2B, contract and retail members as well as for marketing in its LogServe wholesale operation. Former Spicers Regional Director Bruce Davie has been appointed Commercial Director at fast growing independent dealer ZenOffice. Davie – who spent eight years to July 2012 at Spicers – is joining the Manchester-based dealer which has more than doubled its sales from £4 million ($6.4 million) in 2010 to a projected £9 million this financial year. Peter Renz, owner of binding and laminating products manufacturer Renz, has retired as CEO. The 67-year-old has taken a seat on

UK dealer group organisation XPD has made several appointments recently across a number of its teams. Experienced OP executive Kath Edwards was named as the Northern Senior Business Development Manager in September. Gary Billington has been promoted to Southern Senior Business Development Manager, while Jerry O’Sullivan has moved from his previous role within the telesales team to the new role of Internal Business Development Manager. Nina Summerton has been appointed Corporate Tender Analyser & Responder. the firm’s advisory board. Michael Schubert has been appointed new Managing Partner, and has been at the company since 2006. Pukka Pads is aiming to further develop its brand on a global scale following the appointment of Simon Rostron as its Head of Overseas Sales and Marketing in Hong Kong. Rostron comes from stationery exporter Stellar Solutions and has more than 25 years’ experience in the print and paper industry. Anabel Blat has joined compatible printer consumables manufacturer Armor to head up the company’s new B2B technical marketing team in Spain. The aim of the team is to increase sales by contacting end-user organisations which previously would not consider compatibles.

International

Former Lyreco and Staples exec Anders Kristiansen has been named CEO of fashion retailer New Look. Kristiansen, 45, will take up his new role in January, joining the UK-based company from Chinese retailer Bestseller. He joined Bestseller last year after a brief spell running the Staples business in China, although he is probably best known in OP circles for his ten-year career at Lyreco which included the roles of Managing Director Europe and Managing Director Asia.

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Your OPI

5 minutes with... Simon Wallis, Business Development Director, Spicers UK & Ireland

“I clearly don’t do a good job at articulating what I do.”

Describe what you do in fewer than 20 words.

The first record you bought?

I am responsible for the Synergy Partner Sales & Marketing programme and added value services including managed print services.

Adam and the Ants, Stand & Deliver, in 1981.

What’s your most amusing industry-related experience?

If you could invite two famous people for dinner, who would they be and why would you invite them? John Frusciante, Red Hot Chili Peppers guitarist, so he could teach me Under the Bridge one to one. And, if I could turn back time, author John Steinbeck so I could simply begin to understand the genius behind the novels.

I recently overheard one of my wife’s friends asking her what I did for a living. “He works in WH Smith or something,” she replied. I clearly don’t do a good job at articulating what I do.

What makes you angry? What’s your biggest achievement?

Litter bugs. I just don’t get why people drop litter.

Creating and implementing a sales and marketing programme, Advant-edge, at ISA that went from zero (in 2005) to represent over 30% – or £30 million ($48 million) – of the business within three years.

The best concert you have ever been to? Lenny Kravitz in 1991, at the Brixton Academy on his Mama Said tour. Closely followed by Kings of Leon in 2005, at the Birmingham Carling Academy on their Aha Shake Heartbreak tour.

What do you think will be the biggest single issue affecting the OP industry over the next five years?

How would you like to be remembered? He made a difference.

Managed print services (MPS). The solution may evolve and mutate, but I am convinced that it’ll migrate down into the 50 to 500 employee space. I liken it to the importance of resellers having a web store to offer to existing customers ten years ago. It’s critical that resellers have a solution and start the ‘MPS journey’ with their chosen partner now.

What is mankind’s greatest invention? It has to be Microsoft Excel. People who know me will understand. It changed everything.

If you could change one thing about yourself, what would it be? I am a passive vegetarian. I think I need to start being more assertive in persuading my friends of the many benefits of turning vegetarian.

What business or management book would you recommend as essential reading? The Power of Now by Eckhart Tolle is a life-changing read that is relevant to business and personal life. Even reading chapter one will change the way you think forever.

What do you like best about the OP industry? I love the community of proactive partnerships and healthy competition. It drives constant evolution and is a catalyst for investment, innovation and change.

If you had one day to live what would you do? I’d probably waste it building a to-do list in Excel, turning it into a pivot table and then finally a pie chart! w w w.opi.net | OPI Magazine

Your OPI

Calendar Key dates in your industry If we are missing an event please let us know. Contact editorial@opi.net

Do you have an event that you would like to promote in the OPI Calendar? Please contact Fergus Cox for further information about having an extended entry and pricing. Email: fergus.cox@opi.net Web: www.opi.net/calendar

JAN 07-10 Hong Kong International Stationery Fair, Hong Kong JAN 08-11 International CES 2013 Las Vegas Convention Center and World Trade Center/Las Vegas Hotel & Casino, Las Vegas (NV), USA JAN 16-18 National School Supply & Equipment Association Ed Expo Georgia World Congress Center, Atlanta (GA), USA JAN 26-29 Paperworld 2013 Messe Frankfurt, Frankfurt, Germany

FEB 14-15

VOW+ conference Heythrop Park, Oxfordshire, UK

FEB 18 AOPD annual meeting Hyatt Regency Hill Country Resort & Spa San Antonio (TX), USA MAR 05-07 Paperworld Middle East Dubai International Convention and Exhibition Centre, Dubai, UAE MAR 05-09 CeBIT 2013 Exhibition Grounds, Hannover, Germany MAR 11-12 City of Hope Tour City of Hope Medical Center, Duarte (CA), USA MAR 13-15 ISSA/INTERCLEAN Latin America World Trade Center, Mexico City, Mexico

JAN 28

European Office Products Awards (EOPA) 2013 Messe Frankfurt, Frankfurt, Germany

Contact: Lisa Haywood Tel: +44 20 7841 2950 Email: lisa.haywood@opi.net Recognising the best products, companies and individuals in our industry. The winners will be announced at a glittering dinner held as part of the Paperworld fair. This is the largest networking evening at Paperworld and has become a must-attend event on the OP calendar. 72

OPI Magazine | December 2012/January 2013

MAR 19-20 Office Depot Foundation Charity Invitational 2013 Boca Raton Resort & Club, Boca Raton (FL), USA MAR 19-21 Office Depot Vendor Partnership Summit 2013 Boca Raton Resort & Club, Boca Raton (FL), USA APR 03-06 World of Stationery 2013 ACCO International EC Kiev, Ukraine APR 03-07 Istanbul Office and Stationery Show 2013 Istanbul Expo Center, Istanbul, Turkey APR 18 Integra Expo Welford Road, Leicester, UK APR 21-25 TriMega’s 2013 One-on-One Meeting Waldorf Astoria, Naples (FL), USA

APR 23-24

Stationery Show

Business Design Centre, London, UK Contact: Chris Leonard-Morgan Tel: +44 20 8462 0721 Email: clm@firstevents.com Web: www. stationeryshow.co.uk The only UK exhibition dedicated to stationery products, writing instruments and accessories for the home, school and office. Organiser of National Stationery Week.

APR 24-26 ISSA/INTERCLEAN Central & Eastern Europe Warsaw International Expo Centre, Warsaw, Poland MAY 01-02 Bob Parker Memorial Golf Outing Kiawah Island Resort, Ocean Course, Kiawah Island (SC), USA MAY 07-08 Photizo Group’s Transform Global 2013 Scottsdale Resort & Conference Center, Scottsdale (AZ), USA MAY 19-22 National Stationery Show 2013 Javits Center, New York City (NY), USA JUN 10-12 NeoCon 2013 The Merchandise Mart, Chicago (IL), USA JUN 13-14 UFIPA Convention France JUN 20-22 Superstat Conference 2013 Majestic Hotel, Harrogate, UK JUN 26-28 International Stationery & Office Products Fair 2013 Tokyo Big Sight, Tokyo, Japan JUN 26-30 SP Richards Advantage Business Conference 2013 Orlando World Center, Marriott Resort & Convention Center, Orlando (FL), USA

Your OPI AUG 19-21 Office Brazil Escolar 2013 Anhembi, S達o Paulo, Brazil SEP 18-20 EPIC 2013 JW Marriott Hill Country, San Antonio (TX), USA SEP 24-26 Paperworld Russia 2013 Expocentre, Moscow, Russia SEP 25 Howard Wolf Golf Classic Contigny Golf Club, Wheaton (IL), USA

SEP 25-27 Paperworld China 2013 Shanghai New International Expo Centre, Shanghai, China SEP 26 City of Hope Spirit of Life Gala Navy Pier, Chicago (IL), USA OCT 04-05 XPD Annual Conference East Midlands Conference Centre, Nottingham, UK OCT 08-09 office* National Hall Olympia, London, UK

OCT 10-11 EMGE Office Papers & Printing Conference Amsterdam, the Netherlands OCT 14-18 WB Mason Annual Sales Convention & Trade Show MGM Grand at Foxwoods Resort Casino, Ledyard (CT), USA OCT 29-31 BSA Forum 2013 Hyatt Regency Coconut Point, Bonita Springs (FL), USA

NOV 03-05 Global Forum 2013

Chicago (IL), USA Contact: Janet Bell Email: janet.bell@opi.net Web: www.opi.net Planned dates for Global Forum 2013.

NOV 18-21 ISSA/INTERCLEAN North America Las Vegas Convention Center, Las Vegas (NV), USA

w w w.opi.net | OPI Magazine

Your OPI

Final word Your industry, your opinions Rick Marlette, President, OP Software

Choose your true colours At

United Stationers’ recent Vision show, I was acutely aware of a growing red/blue split in the US office products industry. Red is the colour of wholesaler SP Richards’ logo while blue is the colour of United Stationers’ logo; I just found it easier to start identifying these wholesaler alignments as red/blue versus spelling out or saying the whole name. At Vision I caught myself several times staring at particular attendees as if they were these red floats bobbing along in a sea of blue. What are they doing here, I thought? It’s not just dealers anymore. Most service providers in the industry show pretty obvious red/ blue alignments. Some try to hide it, claiming instead to be neutral, but it’s not hard to spot. You could argue that the top two buying groups in the US are also split along colour lines. Recent news from the UK seems to point to a similar division. While the two largest US groups are holding a joint convention next year, they appear at least to remain split when it comes to a red/blue bias. I don’t think it is a coincidence that I am starting to notice this split more and more. Your colour choice is becoming the determining factor in who you are, where you are going, and how you’re going to get there. These ever-clearer divisions come about at a time when some continue to demonise and vilify the wholesalers. For a dealer, this is equal to cursing the ground you walk on. Any honest dealer will admit that the one thing that they could not survive without is the wholesaler. As a dealer, you could dump all other relationships and survive with a single wholesaler relationship. It is this potential of thriving through a single relationship that is very upsetting to some. It is, after all, putting all your eggs in one basket – which makes such decisions supremely important. I still have dealers ask me to help them determine if red is cheaper than blue and vice versa. Who has the best cost? I believe this to be an exercise in futility and one I refuse to take part in. Things change so rapidly today that by the time a thorough and comprehensive evaluation can be completed, the pricing is different.

This is exactly what dealers sell against all the time. There is more to consider than price alone – and this comes from a person who makes his living selling pricing data. Yet all too often, many dealers fall into the same old trap. I knew one dealer that told a large customer: “Don’t you realise that the big box is going to get that pre-bate back many times over?” And then turned right around and made a similar shortsighted decision when it came to their business. This industry will change more in the next five years than it has in the last 30. Locking into a five-year agreement with the wrong partner will be the difference between failure and success. This is especially true if you make that decision for the wrong reasons. If a few dollars one way or the other sway your decision, you’re telling me that you are already hurting and probably won’t make it. Where do you see the industry in five years? What are the trends? Where do you want to be in five years? Now, who is the best wholesale partner to get you there? These are the questions to ask, not what their price on copy paper is. If any of us are going to survive the next five years, we are going to have to work ever closer with likeminded partners. No one is perfect and no one has a crystal ball, but there are probabilities of what the future will look like. Turning honest and forward-thinking evaluations of our businesses into swift actions will be the ultimate competitive advantage.

“Where do you see the industry in five years? What are the trends? Where do you want to be in five years? Now, who is the best wholesale partner to get you there?

OPI Magazine | December 2012/January 2013

Want the final word? Email editorial@opi.net or write to OPI, Diamond House, 36-38 Hatton Garden, London, EC1N 8EB, UK

in the next issue • In the Big Interview, OPI questions ADVEO CEO Millán Álvarez-Miranda on the distributor’s new plans • Part two of the investigation into dealer groups and wholesalers focuses on the US industry • Soennecken head Benedikt Erdmann discusses strategy