February 2015 Issue 246 by OPI

Office Products International ISSUE NO.2 4 6

The word in office.

magazine

The new Soennecken: for better or worse? p26 February 2015

FEBRUARY 2015

The art of the entrepreneur p18

Staying in the picture with PBS Holding’s Richard Scharmann

WWW.OPI.NET

Steve Law bids farewell to OP industry p14 p51 Writing instruments – a buoyant sector

p10 United sells MBS Dev

Contents February 2015

www.opi.net

News

Events

6 Round-up

35 EOPA 2015

US dealer acquisitions heat up; HP fights patent infringements; US dealer groups awarded OS3

10 Analysis

36 Paperworld Frankfurt 39 Paperworld ME 41 Big Buyer Feedback

United offloads MBS Dev; Europe’s paper industry in state of flux

44 ADVEO World Review

14 Personal View

Former Lyreco CEO Steve Law reflects on his OP years

Category Analysis

Features

47 Security & Data Protection

18 Holding firm

PBS Holding is looking to be an active player in the European consolidation process

Security and data protection solutions are in high demand, in an ever-changing market

51 Writing Instruments

26 For better or worse?

The death knell of the humble writing instrument hasn’t rung yet – not by a long way

Soennecken’s decision to go direct has attracted both controversy and approval in the German OP community

30 French B2B blues

Regulars

B2B sales in France have been hit by the depressed economy

5 Editor’s comment

32 The ‘Herald’ treatment

Helen Beckett

Versatile in terms of products and services already, Herald Office Solutions is adding another division – breakroom & janitorial

57 5 minutes with...

58 Final word Simon Drakeford

“The purpose of [going direct] is to stabilise members’ business, by generating new revenue streams but mostly through the creation and extension of more and better know-how... We are and we remain a cooperative and our purpose is to promote and support our members. Our aim is to interpret the concept of a cooperative in a modern way.”... For the full story, turn to page 26 w w w.opi.net | OPI Magazine

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

Features & Production Editor Heike Dieckmann

Editor’s comment

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

News Editor Michelle Sturman +44 (0)20 7841 2942 michelle.sturman@opi.net

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

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

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

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

Events Events Manager Lisa Haywood +44 (0)20 7841 2945 lisa.haywood@opi.net

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

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

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

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

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

OPI is printed in the UK by

The carrier sheet is printed on Satimat Silk paper, 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.

CBP0009242909111341

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.

Je suis…? 2015 has certainly started where 2014 left off, with industry consolidation still a major theme. MRO, jan/san and catering supplies reseller Bunzl has continued its recent spending spree, expanding its presence in the safety category with the acquisition of Tillman; while in the US three members of the Pinnacle dealer group have made acquisitions in the past month or two. And most certainly this is a trend which is expected to continue in many markets and channels. The eyes of the world were on France at the beginning of January as the horrific terrorist attacks against Charlie Hebdo magazine and a kosher supermarket played out in and around Paris. The One worker was spotted with a slogan ‘Je suis Charlie’ sheet of paper bearing the (I am Charlie) has words ‘Je suis viré’ (I am fired) become something of attached to his back a symbol around the world for unity against terrorism and the right to freedom of speech, but one of Office Depot’s French employees at the company’s Senlis site (just north of Paris) took inspiration from the slogan for an altogether different reason. With 350 jobs at Senlis set to be axed as part of Office Depot’s European restructuring plan, one worker was spotted with a sheet of paper bearing the words ‘Je suis viré’ (I am fired) attached to his back during an employee demonstration on 12 January. I’m not exactly sure what to make of that, but it does put a bit of perspective on the human aspect and the difficulties faced by many people as a result of the economic challenges facing our industry. Let’s make sure we face these challenges head on. Andy Braithwaite, Editor

Office Products International Ltd (OPI), 2nd Floor, 112 Clerkenwell Road, London, EC1M 5SA Tel: +44 (0)20 7841 2950 Fax: +44 (0)20 7841 2951

@opinews

opi.net/ app w w w.opi.net | OPI Magazine

News from opi.net HP cracks down on patent infringements HP has launched a series of worldwide legal actions in a bid to clamp down on patent infringements. In Europe, the vendor initiated three separate litigation cases against online printing supplies shop Digital Revolution. The cases will be conducted under the accelerated regime for patent matters in the Netherlands, with trial dates set for October 2015. In Spain, HP filed patent litigation cases against 11 different entities. The two main entities involved are Tintas y Toner Shop Ink and Vasco Informática. The claims allege infringement of two HP patents in the sale of newly manufactured inkjet printhead cartridges compatible with various HP print cartridges. In the US, HP is demanding up to treble damages from Ninestar Image Tech of China, Ninestar Technology of California and Apex Microelectronics China for alleged infringement of a number of HP patents involving the sale of newly manufactured ink tank cartridges and related electrical storage devices. Meanwhile in China, two companies – Speed Infotech and Jingying Technology – have been hit with litigation actions involving three different HP patents. For Speed Infotech, it is for the distribution and sale of inkjet printhead cartridges; Jingying faces the same infringements with cartridge manufacturing added to the charge. HP Program Manager for Worldwide IP and Brand Protection Matthew Barkley said: “HP remains committed to ensuring its IP remains protected, and will go where necessary to protect those investments.”

Vendors 6

OPI Magazine | February 2015

Independent Resellers

US dealer acquisitions heat up Large independent resellers Bubrick’s Complete Office and Eaton Office Supply have made acquisitions, boosting business within their local state areas. Wisconsin-based Bubrick’s bought two local dealers – Emmons Business Interiors and Office Supplies 2U (OS2U) – creating the largest independent dealer in the state. Bubrick’s itself was acquired in 2006 by Complete Office, and with these acquisitions the newly combined company will now become Complete Office of Wisconsin. Complete Office Managing Partner Rick Israel told OPI that there was a similar business culture between the firms and Complete Office in terms of customers. Emmons will become a separate division of Complete Office of Wisconsin, while OS2U will be incorporated into the business, creating combined sales of well over $50 million with nearly 150 employees. Israel expects that Complete Office overall – also including Complete Office of Washington and Complete Office of California – will exceed $110 million annually. In upstate New York, Eaton Office Supply has snapped up Integrity Office creating the largest locally-owned, independent office product business in the area and western Pennsylvania. Combined, Eaton’s will now offer around 4,000 customers more than 45,000 office products. Eaton Office Supply President Bruce Eaton commented: “This is another milestone in the growth and evolution of Eaton, which will celebrate its 100th anniversary in 2015. We found a perfect merger partner in Integrity which, like Eaton, is a local, independent office product business that prides itself on offering the highest level of personalised service.”

Dealer Groups

TriMega and IS awarded OS3 Dealer groups TriMega and Independent Stationers (IS) can now offer members access to the US federal government office supplies (OS3) contract, which was recently given the green light. IS joined forces with its member Capstone Office Products through an agreement between the two enabling IS members to sell under Capstone’s OS3 contact. TriMega’s Point Nationwide programme was awarded an OS3

contact for paper products, and its members are also eligible to participate via the consortium award made to EZ Print.

TCPN contract awardees revealed A total of ten companies have been awarded places on the new The Cooperative Purchasing Network (TCPN) office and school supplies cooperative purchasing contracts. Three firms – Texas-based dealer Gonzalez Office Products, Office Depot and Staples-owned Quill – have been awarded places on both contracts. Both leading independent dealer groups are represented on the office supplies contract, Independent Stationers (IS) with its own award and TriMega through its partnership with Gonzalez. Gonzalez is also on the school supplies contract, but IS is able to compete in this space thanks to its US Communities school supplies contract. Each contract is for an initial three-year period with the option of two one-year renewals.

Staples reveals scale of security breach

News ■ Round-up

US & Canada

Staples has revealed that almost 1.2 million customer credit cards may have been affected by a point-of-sale (POS) security breach at a number of its US stores in September last year. The reseller said that 115 stores were affected by the POS malware and that transaction data – including cardholder names, payment card numbers, expiry dates and card verification codes – from about 1.16 million customer credit cards could be at risk. Staples said it immediately took action to eradicate the malware when it was discovered, and that it has since improved the security of its POS systems, including the introduction of new encryption tools. The reseller is offering free identity protection services, including credit monitoring, identity theft insurance and a free credit report, to customers who used a payment card at any of the affected stores during the relevant time periods.

Large Resellers

Dealer Groups

Pinnacle increases membership Three new independent dealers have joined Pinnacle Affiliates – the dealer group for large dealers – swelling its membership to 28. Gateway Printing & Office Supply and Integrity Business Solutions have both left TriMega to join Pinnacle, with Palace Business Solutions joining from Independent Stationers. All three cited a requirement for a buying group that focuses specifically on large dealers. Gateway is one of the largest independent office supply and furniture dealers in Texas with five locations in the state, including Houston and San Antonio. According to Gateway, as the company continues on its growth path, the decision to join Pinnacle became an easy one due to its buying power and the ability to share ideas and best practices. The exchange of information between large dealers was also a major drawcard for Michigan-based Integrity, which has ten locations across the state. Integrity President Bob Knoll added that Pinnacle’s governance model fits that of Integrity, with low operating cost and maximum value for members.

Palace is California central coast’s largest independent dealer with a contract division and retail stores under the Palace Arts brand. Palace VP of Sales Gary Trowbridge said: “We have enjoyed our time with IS, but due to the significant growth we’ve experienced over the past few years, we feel that Pinnacle will be a better fit in offering knowledge that will help us in targeting and obtaining large accounts in the public and private sector.”

w w w.opi.net | OPI Magazine

news n Analysis

United offloads MBS Dev United Stationers’ sale of MBS Dev will help improve relations between the wholesaler and OP software houses

a move which has been welcomed in many quarters of the US independent dealer community, United Stationers sold its MBS Dev ERP software business in December. United’s ownership of a software provider was controversial to say the least, and had led to strained relations with other leading software firms such as ECi and BMI. MBS Dev – which United acquired in 2010 for about $15 million plus add-ons – has been bought by Project AX (PAX), a newly-formed Microsoft Dynamics AX provider that has also acquired Celenia Software, a multinational Microsoft Dynamics Gold Certified partner. The MBS Dev sale price was not disclosed, but United stated that the software subsidiary’s sales for the

United added that it expects to report a loss of between $8-$10 million related to MBS Dev, a figure comparable to the impairment charge it took on the ill-fated SAP Hosted Solution eight years ago.

Strategic fit Speaking to OPI after the MBS Dev sale, United’s VP Sales and Customer Care Harry Dochelli admitted that United’s ownership of the software company could have been viewed as controversial, but asserted that it had tied in with the wholesaler’s strategy to enable independent dealers to be successful. “We’ll stretch the boundaries and take risks to make independents successful, and MBS Dev fitted right into that strategy,” he stated.

“We believe that this sale will create a level playing field for all third party OP software vendors” first nine months of 2014 were $13 million and that its earnings were “slightly dilutive” to the wholesaler.

He called the deal with PAX “the best of both worlds” for the MBS Dev back-end ERP platform and front-end

Harry Dochelli e-commerce solutions for dealers. “The ownership of PAX will allow MBS Dev to strengthen and grow in a way that perhaps we would not have been able to achieve at United,” said Dochelli. “The capabilities PAX has across other distribution channels will be enhancements to MBS Dev that, frankly, we were never going to get to. First and foremost, we wanted to protect our customers on MBS Dev

MBS Dev’s new owner Project AX – which will soon be rebranded – is a start-up company with many years’ experience in the Microsoft Dynamics AX platform. CEO Thomas Ajspur called the acquisition of MBS Dev “the linchpin of our entire strategy”. OPI caught up with Ajspur to find out more about his plans for MBS Dev.

Thomas Ajspur

OPI Magazine | February 2015

OPI: What attracted you to MBS Dev? Thomas Ajspur: MBS Dev has always been known in the Microsoft partner community for having strong Dynamics AX skills and a great culture. Culture is extremely important for us, and there are

significant synergies across the three organisations: Project AX, MBS Dev and Celenia. By acquiring Celenia and MBS Dev, we have a platform that allows us to operate with deep industry focus as well as across industries. MBS Dev provides the leading software solutions for the wholesale distribution market, while our Celenia business has depth and breadth of industry knowledge across all industries as our talent works with many partners and clients. OPI: To what extent will you continue to support existing MBS Dev office products reseller customers and to develop improved solutions for them? TA: MBS Dev will continue to provide strong software solutions for the wholesale distribution market, using its deep vertical knowledge to develop robust distribution

website front end has got to change. Girisha has a roadmap that he is following and now he’s got some additional resources at his disposal.” Dochelli is also looking forward

Plus, D-Force II plus and new Red Falcon platforms. “Our ownership of MBS definitely did have an impact [on our relationship with ECi and BMI],

news n Analysis

and I think we have accomplished that,” he added. On the front-end solutions side for dealers, United has actually maintained a small digital development team in Denver that it had built after acquiring MBS Dev. This means that about six people, including former MBS Dev Web Development Manager Shane Foley, will now report to Girisha Chandraraj, VP of Digital at United. “A key criteria [of the sale] was how we maintain our ability to control and enhance the front end, because winning online is such a critical piece for independent dealers,” added Dochelli. “What I hear most from dealers is that the

“We believe that this sale will create a level playing field for all third-party OP software vendors” to a “fresh start” with firms such as ECi, with whom United announced a three-year collaborative agreement on the day the MBS Dev sale closed. Under the terms of the agreement, United will offer upgraded SmartSearch and premium relationship functionality to customers using the ECinteractive

Andrew Morgan

industry IP for cloud, e-commerce and Dynamics AX. MBS Dev’s offering will be enhanced by utilising Celenia’s services to increase the speed and quality of its product delivery, providing a seamless customer experience.

“Office products and jan/san are major industry segments for the company and will continue to be a focus” OPI: Will the larger office dealers continue to be an important customer segment for you? TA: Absolutely. Office products and jan/san are major industry segments for the company and will continue to be a focus with deeply skilled resources, IP and investments dedicated to product and service innovations for that specific segment. OPI: What will be your relationship with United Stationers going forward?

especially early on,” said the United executive. “But we have worked through these issues; we are starting to enable some of our digital services on BMI already and we have had discussions with ECi on how we can take all the investment that we’ve been putting in on digital services and bring them to life on ECi.” President of ECi’s Office Products Divison Andrew Morgan called the MBS Dev sale “a great thing for the independent dealer”. “It eliminates the conflict in the channel, which we have openly talked about before,” he added. BMI President Larry Schiff also welcomed the move. “We have always had a great relationship with United but, of course, their MBS Dev initiative did not help matters from our perspective, although we have always worked well with the United IT staff and management and, in fact, have done quite a bit of work with them over the past year,” he told OPI. “However, we believe that this sale will create a level playing field for all third party OP software vendors.”

TA: United Stationers will be an important alliance partner and we will work closely together, with a common roadmap for the e-commerce platform. MBS Dev will continue to sell to and support United customers, but will now operate as an independent technology 3PV to United. OPI: Will you aim to work with other wholesalers such as SP Richards? TA: Yes, MBS Dev will continue, as it has in the past, to integrate with all wholesalers. OPI: To what extent do you envisage further acquisitions that could impact the office reseller channel? TA: We have a growth strategy that includes strategic acquisitions as one component. Our near-term focus is to successfully integrate and grow the first two businesses through our range of high-quality services, unique IP and new service capabilities. One potential impact for the OP channel could be a more robust CRM solution to help resellers grow their market.

w w w.opi.net | OPI Magazine

Paper capacity in Europe is set to be cut by 1.6 million tonnes

2014

saw a number of significant announcements from paper manufacturers concerning their European operations. OPI caught up with Darren Clargo, Data Analyst at specialist paper market research and consultancy firm EMGE, for an update. Data from the latest EMGE Cut Size Monitor indicates that from January to November 2014, demand for cut-size office paper in Europe fell by 1.6%. Prices have also fallen, but the report did suggest improving business prospects for the European cut-size sector in the coming few months.

The discontinuation of paper manufacturing by Metsä Board will remove around 600,000 tonnes of paper capacity. According to Clargo, it is believed the Husum mill capacity for cut-size paper, which accounts for a large proportion of the mill’s total paper capacity, represents almost 10% of the total Western European cut-size capacity. However, he said the move should have a limited impact on EU paper merchants as Metsä had recently been active in selling its paper –

Capacity reductions

namely the Data Copy brand – direct to customers. “Merchants still continue to lose out to the OEMs and large office supply dealers. Having said that, the immediate impact would be for merchants to regain a little market share of the European cut-size paper distribution, given that the Metsä volumes were bypassing them,” he added. Less than a week after Metsä revealed its intentions, Stora Enso agreed to sell its Uetersen paper mill in Germany as it continued with plans to transform itself into a renewable materials company. This will reduce Stora’s annual coated/

News n Analysis

European paper industry in a state of flux

speciality paper production by around 240,000 tonnes. Additionally, in a move aimed at drastically reducing costs, UPM’s Europe and North America paper division (Paper ENA) announced in November that it would reduce its newsprint and magazine paper capacity in Europe to the tune of 800,000 tonnes by closing four machines at three mills.

Merger rumours UPM CEO Jussi Pesonen said at the time that the 2015 economic outlook was not particularly favourable and that its operating rates were unacceptably low. Such moves will undoubtedly do little to quash speculation of a merger/acquisition between UPM and Stora Enso. As Clargo points out, there have been rumours of a possible UPM-Stora merger for many years, but it still remains speculative. However, were this to happen, it would “probably result in large capacity cuts across all paper grades”, he warned. The paper industry – like many over the past few years – is grappling with a rapidly changing and technologically-driven world, but it’s not all doom and gloom. International Paper, for example, reported a slight increase in its European paper volumes for the first half of 2014. Double A told OPI recently that it was planning further expansion across Europe after acquiring the Alizay mill in France in 2013. The Thai paper manufacturer also resumed production of the Evolve 100% recovered paper brand at Alizay in July 2014. Portucel, meanwhile, continues to take share and grow sales of its office paper products, notably with its Navigator brand. With over 1.6 million tonnes of paper capacity to be removed from the European market, it will be interesting to see how the paper market reacts and what impact this will have on the OP industry – after all, we still are nowhere near entering the domain of the ‘paperless office’.

“Merchants still continue to lose out to the OEMs and large office supply dealers”

Clargo said that, like with cut-size paper, there is a continuing decline in demand for all commodity paper grades in Europe and capacity is being taken out of the market as a result. This is evidenced by a number of announcements in recent months from paper manufacturers with European operations. In December, Metsä Board said it would completely exit the paper business by the end of 2017. The company’s Husum mill in Sweden will be converted to paperboard, a change due to be largely completed by the end of this year.

Metsä Board’s Husum mill in Sweden: paper production set to stop this year

w w w.opi.net | OPI Magazine

Personal View

Law looks back Former Lyreco CEO Steve Law shares some of the key things he learned during 30 years in the OP business

I step down as CEO after 25 years at Lyreco, it’s interesting to write this Personal View as someone who’s spent his whole life in office supplies by accident. The only reason I ended up in this industry was because when I joined Gillette as a graduate trainee, they mixed me up with another recruit! So, fresh out of college in 1983 I found myself as a sales representative in the Gillette Stationery Products division where, as my first boss used to say: “We’re selling stuff we haven’t got, to people who don’t want it.” But you never forget those days – the wet Wednesday afternoons when you’ve had yet another customer politely tell you to go away. From a start in sales, through a career at Gillette and Lyreco, moving through marketing, general management and finally to the big office in the corner, the only constant business challenge has been the requirement to change. At Gillette in the 1980s: how are we going to compete against BIC, Tippex, Pilot and Pentel in the OP channel?

As a young man moving at 100 miles an hour, I often used to glance at one of the big bosses staring out of the window. One day, I plucked up enough courage (or cheek) to ask him what he was doing. “Thinking,” was his reply. “You should try it sometime.” I had found my first mentor – Chris Dunnett (I owe you a lot, Chris). At Office International in the 1990s: What are we going to do about the invasion of Viking and the spread of the superstores? (By the way,

as possible? How do we keep ahead of the competition? And then, in the past few years: What do we do about the rise of

“The only reason I ended up in this industry was because when I joined Gillette as a graduate trainee, they mixed me up with another recruit!” these operations had a far greater immediate impact on the market than today’s online players). How to sell toner cartridges? How do we compete against the paper merchants? How do we take on Dudley’s in London? In the 2000s: How can we take the business model to as many markets

digitisation, increasing mobility and the impact of the internet? How do we stay relevant in the new competitive landscape? After 30 years in this industry, here’s a summary of the key things that I have learned. Some of the statements might be a bit clichéd, but hey, they worked for me. 1. The customer is king One of my sales directors used to have a small plaque in his office which went something along the lines of ‘the customer might be rude, misinformed and incorrect, but he is never, ever wrong’. Make sure the customer is at the centre of all your thoughts and actions.

Happy days: Steve Law with his UK senior management team

OPI Magazine | February 2015

2. People, people, people When I became a managing director for the first time it took me a while to come to terms with the fact that all of your customers can leave you for a better price and all your employees can leave for more money. People stay because they want to and leave because they want to. Create the right environment for people to stick around. Have a set of values and live by them.

4. Differentiate Study the market, look for windows of opportunity and find added-value solutions. Don’t follow. Never copy.

5. Aim for perfection Tom Peters changed my view on business life. One of his themes was that if you get the little things right, then you’ll do the same with the big things. To this day, I still need to see clean warehouses, shiny shoes and smart work environments. Define your standards and don’t compromise. 6. Take risks I know this might look at odds with the point above, but sometimes you need to move fast. My favourite all-time quote is from racing driver Mario Andretti: “If you are in control, you just aren’t going fast enough.” Sometimes you just have to move! 7. Deal with the bad times Celebrate the good times, but understand that there will be difficult periods. Not everything goes to plan. You will learn more in adversity about yourself and your colleagues than in the good times. Learn from your mistakes.

Personal View

3. Build a roadmap Know where you have come from, where you are now and where you want to go. Have a vision and constantly talk about it.

“All of your customers can leave you for a better price and all your employees can leave for more money” 8. Enjoy Life’s short. Business is full of deadlines, targets, meetings, car journeys, taxis and airports, with early starts and late evenings. Find a bunch of people that you want to spend your time with. The real final word must come from John Lennon: “Life is what happens while you are busy making other plans.” Thanks for the support from everyone I’ve met in the past 30 years. Now it’s time for new plans.

w w w.opi.net | OPI Magazine

News ■ And finally...

Comment OPI CEO Steve Hilleard calculated that there are at least 150 OP dealers in the Greater London area alone. He asked OPI’s LinkedIn networking group members whether this number is sustainable, and if it’s time for dealer consolidation. Below are a few of the comments. Chris Collinson, Managing Director, Superstat I believe it is sustainable. The reality is there are only two dealers covering Greater London with a sales force of 150: if you view the dealer as the direct sales force for the wholesaler that is what you get. Two supersized dealers Spicers and VOW, with a very knowledgeable customer-service-led sales and marketing team. Consolidation will happen because bigger is better up to a point, although the number of actual sales people knocking on doors or picking up the phone may still increase. Mohamed Bhalloo, President, NUHA-EQUIP I think 150 dealers in office supplies in Greater London is sustainable. I would look at it this way: more dealers equal more opportunities. This is also not forgetting that customer service will be more professional.

TWEET CHAT follow us on Twitter @OPInews, @andy_opi

10.1%

Percentage the global managed print services market is expected to grow between 2014-2019

150

The number of times a day average smartphone users check their handset

2.5 billion

@emef Love the innovation products at #nrf15. I made this with a 3D pencil. @memjet Q: What did the mother printer say to the son printer when he got sassy? A: I don’t like your toner mister. #TonerTuesday @perryop @honcompany We’re suckers for extra smiles but a happy anonymous Post-it would be fun! Going to try that :)

Number of devices (PCs, tablets, ultramobiles and mobile phones) expected to be shipped in 2015

@Staples 8 cups of water a day. 8 hours of work a day. Hmm coincidence? We think not.

SNAP SHOT

Gordon Christiansen, Partner, Fremantle Consulting The 150 number doesn’t take into account the dealers from a 100-mile radius that also sell into the Greater London area – the figure could therefore easily be multiplied by five. With falling margins, weak demand and over-supply in the OP industry, consolidation is inevitable. Laurent Goater, International Key Account Manager, Grupo Portucel Soporcel Small is beautiful in this business. What dealers need is to share certain resources and focus on the best brands. Gerard Toplas, CEO, Fillo It’s not sustainable. The Spicers issue is also driving another headache for the dealer and, coupled with the Endless purchase of Banner, there seems to be one outcome building… I personally advocate consolidation. Paulo Matos, Managing Director, ADVEO Portugal In five years’ time, consolidation will be a reality across Europe. Mike Martin, Managing Director, Online Office Products Is bigger better? Look at Tesco and the size of stores that are beating them. It may be the case that a changing market will not provide the answers you expect. Sarah Pask, HR & Project Manager, Quills Office Supplies Bigger doesn’t mean better, especially with regards to customer service. Sectors and offering are key, as is ensuring we diversify to meet the needs of the customer.

OPI Magazine | February 2015

Fellowes demonstrated its athleticism through Body Glove demos at the recent CES event in Las Vegas.

opi.net poll results How serious a threat to resellers do you think the new Amazon For Business platform is?

A very serious one indeed 44% Just another 25% competitor to deal with It will never work

What is Amazon For Business?

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

25%

Big Interview | Richard Scharmann

Holding firm Austria-based multichannel group PBS Holding is continuing its development across Central and Eastern Europe. CEO Richard Scharmann explains the group’s strategy

by Andy Braithwaite andy.braithwaite@opi.net

the not-too-distant past, PBS Holding’s multichannel combination of wholesaling, dealer franchising and direct sales to end users looked a bit of an old-fashioned business model amidst the trend for nice, clear lines separating who did what in which channels. However, business models have been changing. Just look at Spicers and Vasanta in the UK, Quantore in the Benelux region and Novexco in Canada, where wholesaling now sits squarely with direct operations. Maybe PBS had the right idea from the start! Richard Scharmann has been with PBS Holding for the past ten years, in what is his second spell with the firm, and has been CEO since 2008 following a management buyout. OPI spoke to the 47-year-old Austrian following another year of growth for the group. OPI: Richard, perhaps you could start with a quick overview of PBS Holding’s 2014 performance. Richard Scharmann: Well, we grew quite significantly last year to around H250 million ($295 million) in sales, but this was mainly due to the acquisitions we made at the end of 2013 and the beginning of 2014. Organically, in Austria and Germany we achieved growth of between 1-2% compared to 2013 and in Eastern Europe it was a bit higher – about 3-4% – in a region where the market grew by about 1%, so we did take some share. OPI: Could you remind us of your operations in your different markets? RS: Our two main markets are Austria and Germany, where sales are about H92 million and H90 million, respectively. In Austria, we

OPI Magazine | February 2015

run both the wholesaling and B2B channels and we are clearly the market leader here and achieved really solid results last year. We have a very well-developed IT and logistics infrastructure in Austria and I think we’ve raised the bar significantly in this market. In Germany, we are still very focused on the wholesale channel and are not doing any direct business there. We had a significant change when we took over the Kugelmann business at the end of 2013 and were busy last year with the integration work. Again, over the past 2-3 years, we have invested heavily in infrastructure – last year we spent about H2 million improving our systems and we are really happy with the set-up we have right now. Eastern Europe accounts for the remaining H70 million of sales. A relatively new market for us there is Poland and that has really grown since we acquired the Biella wholesaling business at the end of 2013. We achieved about H19 million in sales in Poland in 2014 and I believe we are now the market-leading wholesaler in this market. We’ve finished the integration process and will now really start to invest in our systems and logistics infrastructure and broaden our offering in terms of products and product groups and really drive the market in Poland. The Polish business is already profitable, which is important, and we see good opportunities there. It’s still wholesale only, similar to Germany where the dealers wouldn’t like to see us operating in two channels. OPI: So you don’t have plans to go direct in Germany then? RS: Definitely not. But it is interesting to look at the changes taking place in the OP market, especially in the UK with Vasanta and Spicers and their wholesaling/direct models. I don’t think anyone would have predicted that two or three years ago. From my point of view, that’s wonderful to see because for years we were the ‘strange

“For years we were the ‘strange kid on the block’, with people saying no one would understand our concept […] and now it’s almost the norm”

PBS Holding | Big Interview kid on the block’, with people saying no one would understand our concept because we’re doing wholesaling, we’re doing direct and we have different approaches in different countries. And now it’s almost the norm. What’s interesting is the direction of ADVEO because they are still very much focused on their wholesale-only approach, so now they are almost the strange kid on the block in that sense. OPI: You mention ADVEO. How has it emerged as a competitor over the past couple of years with Spicers and Adimpo coming together? RS: It’s been a major development. And as a competitor I do have a lot of respect for them: they are providing a comparable concept to the market in terms of logistics, ERP and ordering systems, and a franchise concept. We just recognise that they are busy with their integration work in much the same way as we were last year in Germany. We are lucky enough now to have a structure which is set and ready while ADVEO is still in this integration phase; they are thinking about the right logistics set-up in Germany and whenever you touch those structures it’s a huge change. OPI: You’re going head to head with ADVEO’s Calipage group in Germany with your Büroprofi dealers. How’s that been doing? RS: Yes, it’s a franchise concept comparable to Calipage. We have almost 100 dealers in Austria and about 40 now in Germany, growing very well. In both countries around 80% of sales we do with the Büroprofi partners are direct deliveries to the end consumer, so it’s stockless 80%. The second franchise network we have in place in Austria and Germany is Skribo, which is more on the retail side. We have

w w w.opi.net | OPI Magazine

PBS Holding | Big Interview 70 shops in Austria and we are close to 100 right now in Germany – 2014 was a really strong year in Germany; we added almost 30 Skribo partners. OPI: It sounds like good growth in Germany both with Büroprofi and Skribo. Where are these new members coming from? RS: Some are joining us from other groups, but this is the minority of new partners. On the Büroprofi side we are seeing some new members coming from the globals – sales reps who want to start their independent company and we believe we have the perfect set-up for them. In fact, they are among the most successful players in our groups because they’re very customer focused and they know how to deal with high-end systems, so they are strong competition even for the globals. Then we get new members from the cooperatives because these cooperatives are still very much focused on the purchasing side and less on the marketing side. So we have dealers joining our franchise networks because they need the last mile in terms of marketing and communications to the end customer where we, I believe, can provide better and more sophisticated tools. OPI: Turning to product assortment, how have you been developing in areas such as hygiene, catering and facility supplies? RS: We are shifting to these new product categories in much the same way that others are. In certain areas like managed print services, we simply decided not to enter that because we don’t have the right set-up, so maybe we have to live with more downside on the EOS side, but then make up for that by growing in other product groups like facilities management (FM) and promotional products. When you look at the past two or three years we have been able to keep our organic sales more or less stable, so we’re not growing that much but we’re not losing sales either; if we can balance the portfolio right now and if we can keep it on that level, I’m quite comfortable with the situation. OPI: We’ve seen, for example, the two main wholesalers in the US acquiring companies from outside the traditional office products space. Would that be a strategy you would look at? RS: It could be interesting, but the point is I don’t think we are at that stage yet. It is a

potential scenario, of course, but we don’t see any real opportunity to grow the businesses with those product lines. Right now we still can grow the FM category in the double digits – albeit from a low starting point – and this compensates, to a certain extent, for the declines we have in other product groups. There will come a day when those growth rates cannot be maintained and then it will be a question of seeing how we can deal with the next stage of development. That may involve acquiring businesses outside our field of expertise, such as jan/san distributors, but it’s a category where we don’t have any real experience and where these existing operators have their own issues right now. So we are not at the point of being able to execute acquisitions in that direction, but maybe there will be a day when we will have to.

“In Austria and Germany we service more than 1,000 customers with this ERP solution and we plan to triple the base within the next two years”

OPI: Yes, but are you currently able to offer a sufficient product assortment for your customers to be able to sell these products profitably? RS: We select the most important products where we can at least gain some volumes that make it feasible for us in terms of pricing levels to be able to stock them ourselves. But there is a clear strategy that we are not expanding the assortment to where we’d need to run a separate warehouse for these products. Our approach is to work very closely with jan/san and facilities management distributors, linking them virtually into our assortment. So, for example, we provide 30,000 items on stock in Austria and an additional 75,000 items to our customers on a virtual basis, and we expect this number to grow to more than 200,000 items within the next two years; all items that can be ordered for next-day delivery. OPI: What do these facilities, catering and cleaning products represent as part of the total sales mix? RS: It depends on how exactly you define these product groups, but the figure is in the region of 15%. w w w.opi.net | OPI Magazine

Big Interview | Richard Scharmann – Computer Integrated Paper Shop. In Austria and Germany we service more than 1,000 customers with this ERP solution and we plan to triple the base within the next two years. This is a very significant investment, in addition to the logistics investments we are making, and is another area where we believe we differentiate ourselves from our competitors – not too many companies in Europe are providing tools on that kind of level. During 2015 we will have the full roll-out of these new tools in Germany and Austria so this will be a major focus. OPI: What about acquisitions? RS: As we have recently seen in the German market, OTTO Office is for sale and some other big players are also unofficially open for sale and these are major players in the market. So you can see that consolidation is still going on and we are monitoring some projects; I don’t expect us to announce anything in the next few months, but we plan to be an active player in the consolidation process, at least in the countries where we are present.

OPI: You are Chairman of the Interaction wholesaling/distributor group in Europe. You’ve certainly been boosted by Quantore coming in at the start of this year. RS: It has always been our strategy not to be too aggressive with member recruitment and to bring in partners that add synergies and structural benefits to the group, so it does take us quite a long time to pick our new partners. With Quantore it was a very successful development because within the Benelux market, apart from Quantore, there are really just the globals left, and we hadn’t had a partner there since Timmermans was acquired by Spicers. Obviously, we’re very happy with their decision and we think that we will see other new partners in the coming years, but there is no hurry and no sense that we have to introduce a new partner every year. We have a very solid foundation and I believe we are a very powerful network compared to the others left in Europe – and there are not too many. OPI: How is the Q-Connect brand developing at PBS? Do you use it in all of your markets? RS: Yes, we do. It’s the major private brand. In certain markets we have different additional ones, but Q-Connect is the key brand on the private label side and it’s growing every year. Last year we grew between 3-4% on an organic basis. Of course, it does well in an economically difficult environment because customers focus more on the best price levels. OPI: Any strategic projects you are working on at the moment? RS: We are always looking for opportunities that fit perfectly into our network and into our strategic direction, and we will keep investing in logistics and IT as we have been doing. We’re just about to roll out a new version of our ERP dealer system called CIPS

OPI Magazine | February 2015

OPI: And just to end on a personal level; it’s been ten years or so since you rejoined PBS Holding. How do you see your future at PBS? RS: Personally, I would expect that 2015 will continue as 2014 ended: working twice as hard to achieve comparable results in a very challenging environment. But that is not something negative at all for me personally, as long as I have my plan in mind and see opportunities we can work on.

“We plan to be an active player in the consolidation process”

OPI: What about longer term, say in three years’ time? RS: Still working and still selling office products (laughs). But maybe ongoing consolidation could open doors to take PBS to the next level in terms of structure and international footprint, and clearly that excites me. OPI: What is the ownership structure of PBS Holding? RS: 51% is owned by the management team, so we own the majority of shares, and there are two families – the former majority shareholders of the business – who own the rest of the company. OPI: So you haven’t got private equity people looking to cash in? RS: No, nothing like that. So it’s still more of an entrepreneurial approach and that makes it very enjoyable.

Hot Topic | Soennecken

For better or worse? Soennecken’s decision to go direct has undoubtedly been controversial. But those believing it’s a stab in the back to members are finely balanced by those that believe it’s a savvy move by Heike Dieckmann heike.dieckmann@opi.net

dealer group going into direct competition with its members is a drastic move, made perhaps even more surprising if said members actually own the group. Yet that’s exactly what happened at Soennecken where last November at an extraordinary general meeting (EGM) a resounding 84% of voting members gave their nod to a change in the bylaws of the Germany-based dealer cooperative, thereby allowing it wide-ranging freedom to operate its own business to commercial and private end users. Not too long ago, this kind of proposal would have been unheard of, but considerable industry changes – upheavals even – call for unprecedented action, even in a market as historically traditional and clear-cut as Germany.

Brave new world As Soennecken’s Chairman Dr Benedikt Erdmann told OPI: “During the many discussions we’ve had with members over the past few months, there was a consensus that we needed to react to the massive changes in the market. Essentially, it was just the ‘how’ that needed to be discussed and that, at times, was hugely controversial.

OPI Magazine | February 2015

“Different people had different ideas of what it means to be a stakeholder in a cooperative, and we had to find a solution that everyone could agree on. We were able to do that with the predominant share of members. The few ‘no’ votes were largely determined by individual interests.” Erdmann also emphasises that the ownership structure of the

but Kaut-Bullinger’s Group Managing Director Johannes Peter Martin admitted that the reseller completely abstained from the voting process, and did not attend the EGM that decided the cooperative’s future either. The aforementioned EGM, incidentally, fell within a week or so of ADVEO World Germany, held in

“I want to be very clear on this: the change in bylaws has not changed our overall remit at all” cooperative has in no way changed as a result of the new bylaws. “I want to be very clear on this: the change in bylaws has not changed our overall remit at all. Neither has our ownership structure – Soennecken is still owned by its members,” he says. One of the sticking points, for the group’s larger members especially, has been the direct key account business. This has existed for several years, even under the old bylaws, with Soennecken, as Erdmann admits, ”not being as free to act as we would have liked”. Players like Kaut-Bullinger in the south of Germany or Plate in the north are key operators here and arguably among the ones with the most to lose, competing now not just with the global players in the German market, but also with its own cooperative. Both companies preferred not to elaborate on this occasion,

Munich in early December, and was certainly a talking point. When OPI spoke to Ulrich Paulus, the European wholesaler’s German Marketing and Merchandising Director, he said: “We saw a lot of Soennecken members visiting us at ADVEO World. The large dealers in particular are not happy about the situation – at least that is what they are telling us – so for us it’s an opportunity. Dealers may not switch completely over to us, but they want to talk to us and start doing business with us.” Increasingly, ADVEO’s wholesale-only route to market appears to be becoming the exception rather than the norm. This is certainly the case in Europe where the UK has recently seen plenty of shake-up in the form of the two main wholesalers VOW and Spicers joining forces with large resellers (see opi.net and also the Hot Topic in OPI December 2014/

Soennecken | Hot Topic January 2015, page 20). PBS Holding in Austria, meanwhile, has long been the odd-one-out multichannel operator (for more, see our Big Interview on page 18).

Paving the way That said, even PBS Holding Group CEO Richard Scharmann remains cautious about the potential ramifications of a direct foray into the German market, given the longstanding and tightly adhered to channel segmentation. He says: “If we were to announce that we’re going direct to the end consumers in the German market, it would be a nightmare from a political point of view – our customers wouldn’t like it. “On the other hand, however, it’s interesting to see that even the cooperatives are starting to go direct and into competition with their own dealers. We’ll be closely watching this unfold and find out if the market is getting more flexible in the way it thinks about the competition and about the role of the various players.” Erdmann’s stance is simple: a more successful dealer group makes for a more successful dealer member. “As we have done in the past, we will continue to grant our members wide-ranging rights with regard to large customers and we will keep our promises. We have considerable experience in the tendering business and while we wish to maximise that experience, we are already passing that know-how onto our members who can then use it successfully to generate new sales. “Over the past few months, they’ve already been able to win some major contracts with our support.” He adds: “Together, we are increasing our market share. What’s important to understand is that it doesn’t matter to us whether it’s the members or Soennecken itself

that get the business. What’s vital is that we increase the sales of the cooperative as a whole.” Also important to note is that the key account business remains only a fraction of both Soennecken’s, as well as its members’, overall sales, with the vast majority of the overall cake still going to the globals. And Soennecken picking at that cake might be a disruptive move in the long term. Arnold Theuws, Managing Director of Benelux dealer group cum wholesaler Quantore, comments: “I think this is a very good initiative by Soennecken. The tender business is a big part of the market that is currently only really being served by the big boxes. I’m convinced

Founded: 1926 Chairman: Dr Benedikt Erdmann Members: 500 Ownership: Members Total revenues (2014 est): H590 million ($696 million) Business areas: Retail, B2B contract, printing/copying/systems, direct Logistics: Soennecken (formerly called LogServe); revenues (2013): H107 million members are a further option, but only if they are to remain ongoing businesses. Acquisitions are also on the cards as far as Soennecken’s proposed B2B web shop is concerned, with Erdmann emphasising that a

“It doesn’t matter to us whether it’s the members or Soennecken itself that get the business. What’s vital is that we increase the sales of the cooperative as a whole” that organisations like Soennecken (and indeed Quantore!) have a better proposition to offer than the global players. It’s a market with a completely different approach and the question is really if you want to play this game.” The key account business, of course, is just one strand to Soennecken’s new direction. The cooperative is also keen to create its own B2B web offering as well as becoming directly involved in the industry’s retail landscape. The idea, it was revealed during Soennecken’s supplier day last December, is to buy a maximum of four sizeable and well-established retail outlets that will act as so-called ‘concept stores’. To that effect, Soennecken has tasked a specialist firm with finding suitable candidates, starting at the beginning of this year. Acquisitions of existing dealer

‘building from scratch’ web operation would be the “last possible solution”. Crucially, none of the direct businesses will be branded under the Soennecken name, making any comparisons to other models in the market such as franchise operations or dealer group-led dealer service models somewhat redundant.

Demotivated Still, such a full-on foray into a good proportion of members’ core business – the B2B/B2C retail business with a store front (the so-called papeterie) that remains so important in the German market – begs the question what made Soennecken dealers agree to the change in bylaws that allows for this to happen? Thomas Veit, Managing Director of German wholesaler soft-carrier, has his own interpretation: “In my view, the reason for members agreeing to their cooperative competing with them is due to the fact that much of the small dealer community in Germany is so disastrously demotivated. Dealers essentially admit that they can’t do what their competitor – in this case Soennecken – can do. To me, this is defeatist in the extreme. w w w.opi.net | OPI Magazine

Hot Topic | Soennecken

The dealer’s voice

Dealer: Dauelsberg (Twistringen, Germany) Owner/Managing Director: Heinz Dauelsberg Business model: Retail (60%), B2B (40%) Sales: H800,000 SKUs: 14,000 Logistics: Soennecken (LogServe)

I think the change to Soennecken’s bylaws is a good decision. Not because the cooperative needs to be active in every single business segment, but because I believe it’s not helpful trying to hold on to old and sometimes redundant business models given the current and rapid changes that we’re seeing in the sector. Years ago, I was also in favour of Soennecken going direct with its key account business, and I believe many members have really benefited from this move because Soennecken gained some very important experience that is now helping them in all tender business. What’s happening now is a natural progression of that initial step. There’s enormous change going on in store-based retail businesses in Germany. We’re losing more and more of the shining lights – beacons as it were – of our sector, ie well-run and well-known businesses. Part of the reason for this is that it’s so difficult to make enough money to pay the rent/ leases for the shops we have. In addition, there’s a huge succession problem. Even well-run businesses cannot be sold easily, because people simply don’t want to be in this business anymore as it requires so much more engagement and involvement than a regular 9-5 job. Soennecken’s retail interest is not about it building up comprehensive coverage with many branches across Germany. I would be very much against that. It’s also not about taking over struggling retailers and rejuvenating them – I would be sceptical about that, too. The idea, as I understand it, is to buy businesses that are well organised and have ongoing potential in good locations, but that perhaps haven’t got a successor and as a result would end up being closed down. If Soennecken can buy one of these shops and keep it going successfully, surely that’s a good thing for the industry? Is it competition? Not to me. But what is competition? Either the business dies and shuts down or the cooperative takes it over, generates sales and profit and thereby increases my dividends as a shareholder. It’s been obvious for several years that it’s almost impossible to generate increased revenues from just existing members and existing models. That’s just a fact. By the same token, having a more full-on online approach also makes sense to me. Soennecken has about 500 members, but the overall dealers’ share of the online market is virtually zero. Yes, we have a couple of members that are in that market and are doing well, but their volume of the online business is not even 1%. So should we as a group just sit back and say ‘no, we’re not getting involved’? Not in my opinion – we have to get involved. Not every member – that’s not realistic – but as an entity. That is the future.” “The same is true for the proposed online business. Because the new business models of online operators like Büromarkt Böttcher are taking away some of their business, dealers are simply accepting that Soennecken might as well have some of that business instead – because they can’t.” Whether dealers’ attitude is defeatist or indeed pragmatic is of course extremely subjective. Heinz Dauelsberg, Managing Director of a small dealership in northern Germany, falls very much in the pragmatic camp and adds his thoughts above. The point perhaps is to recognise how to best play to your strengths.

OPI Magazine | February 2015

Dr Benedikt Erdmann

For fellow dealer group Büroring, for example, the notion of a direct business and competing with its members is a non-starter, despite the fact that its own bylaws would already allow for that to happen.

Dealer power Managing Director Ingo Dewitz sees the group’s core strength in supporting its members, not just with tried and tested models and initiatives but with new ones, too. He says: “All the power and know-how lies with our members and it’s our job to support and enhance that power and know-how. Independent dealers continue to be the mainstay of our industry and we feel confident that with the advisory and service proposition we as a cooperative offer, we can help them stay that way and fight against the competition without becoming competitors ourselves. “That said, we’re not about to beat the poaching drum to coax dealers away from Soennecken to us. The two cooperatives have existed happily alongside each other for a long time without members substantially moving across either way, despite both organisations having gone through a variety of challenges in the past. And while Büroring is not going to go down the direct route, if done properly and with the interest of its members at heart, I don’t see why Soennecken’s current initiatives can’t result in some winners all round.” Erdmann, of course, is keen to point out that the future of Soennecken does not lie in the direct business. “The purpose of it is to stabilise members’ business, by generating new revenue streams but mostly through the creation and extension of more and better know-how that will be available to members,” he says. “We are and we remain a cooperative and our purpose is to promote and support our members. Our aim is to interpret the concept of a cooperative in a modern way. All I can say is that new challenges require new forms of support and collaboration.” For an in-depth interview with Dr Benedikt Erdmann, look out for our European Annual Review 2015.

Market Focus | France

B2B drags French market down The

French office and stationery market fell in the single digits in 2014 according to the latest figures released by local trade association UFIPA. UFIPA’s most recent monthly update – which includes sales to the end of November 2014 – indicates that the market declined year on year by an overall rate of about 1%. However, it was a mixed set of results depending on the sales channel, with B2C sales generally outperforming sales to commercial customers and results being boosted by what was regarded as a strong back-to-school (BTS) season. The superstore channel – which includes success stories such as

(%)

bumpy ride this year. The 1% overall decline was, in fact, quite a resilient figure, thanks in the main to a successful BTS season for those resellers that focus on this time of the year. BTS sales at superstores jumped 9% and were up in the low single digits in the mass and traditional stationery retail channels. There was also a spot of cheer for the manufacturing community: although volumes were down in the

The [French] OP industry could be in for another bumpy ride this year Bureau Vallée – was the standout winner, gaining share in a declining market. Superstore sales to the end of November were up about 3.5% year on year and were mostly positive throughout the year. On the other hand, the mail order direct channel experienced negative year-on-year comps for ten of the first 11 months of 2014, and was down by an overall figure of about 5% versus 2013, with November – at -9% – the weakest month of the year. In fact, all reported specialist reseller channels saw sales drop in November, in line with worsening consumer spending and industrial output figures in the French market as a whole, suggesting that the OP industry could be in for another

OPI Magazine | February 2015

French office and stationery market November 2013-November 2014 Monthly sales change compared to same month a year earlier

(Source I + C)

B2B sales have been hit by the depressed French economy, although there was some cheer for back-to-school resellers

year, a better product mix and the fact that brands took some share from private label products meant that sales increased by about 1%. These branded product market share gains only occurred in the B2C and SMB channels. Fierce price competition in the contract channel once again led to price erosion here and a continued move to own-brand products.

Bruneau for sale? Leading French reseller JM Bruneau was said to have Nicolas Potier been acquired in December by Weinberg Capital, according to reports in the French financial press. According to Les Echos, JM Bruneau had been acquired in a H100 million ($120 million) deal by Weinberg Capital Partners from its owner Argosyn, a joint venture established in 2013 by the Otto Group and France’s Mulliez family as part of the arrangement that saw OTTO Office and 3 Suisses taken over 100% by the Otto Group. Argosyn had reportedly been seeking a buyer for JM Bruneau for several months after hiring financial advisory and asset management firm Lazard. JM Bruneau – founded in 1955 by French mail order pioneer Jean-Marie Bruneau – has sales of about H300 million and also operates outside France in Belgium, Germany, Luxembourg, the Netherlands and Spain. However, according to OPI sources, the acquisition has not yet taken place, although discussions between the parties are ongoing. JM Bruneau’s Managing Director Nicolas Potier declined to comment to OPI on the acquisition rumours.

Dealer Spotlight | Herald Office Solutions

The ‘Herald’ Herald Herald’ treatment

Already varied in terms of its product as well as services offering, Herald Office Solutions is this year adding a breakroom and janitorial division to its portfolio, hoping for yet another trump card

“We’re finding that our average customers are trending to be ‘millennials’ and as we all know, this is an evolving audience”

by Heike Dieckmann heike.dieckmann@opi.net

HAVING

started out as the The Dillon Herald newspaper and a small printing firm in Dillon, South Carolina, in 1893, The Herald Group in 2015 is a very different business from what it was all those years ago. The Herald name stuck, however, and permeates every part of the group which today includes regional OP dealer Herald Office Solutions, local bi-weekly newspaper The Dillon Herald, a commercial and forms printing facility called Herald Multiforms, and in-house financing Herald Leasing for business machines. The Herald Group is now in its fifth generation of management as a small family business, with Thomas Jordan being President and his brothers Art and Cooper acting as VPs. Thomas has earned his stripes at the company in many guises, from being a delivery driver, a pressman on a small offset press and a salesman building ads at the newspaper. He became President of the group in 2014 From left: Thomas, Cooper and Art Jordan succeeding AB Jordan and Ronnie Lee.

OPI Magazine | February 2015

In a nutshell, Herald Office Solutions is predominately B2B-focused – 98% of revenues is B2B business – but five of its nine locations in North and South Carolina also have shop fronts with walk-in customers. Over the years, the Jordans have separated the business into three major product divisions: business machines, furniture and office supplies.

OP and furniture focus The office supply division makes up nearly 45% of its annual sales and since the year 2000, the Herald team has serviced customers from its 40,000 sq ft (4,000 sq m) distribution centre in Dillon. Here it stocks nearly 5,000 items and pulls the balance of office products from its first-call wholesaler SP Richards. The furniture division accounts for a further 50% of company sales and has showrooms with dedicated furniture sales representatives and designers throughout its nine locations. Also located in Dillon is a large furniture warehouse where truckloads of furniture are received, staged and prepared for installation. Lastly, the business machines division generates the remaining 5% of annual sales and, like furniture, also has showrooms throughout all locations for demos and a full service department with service dispatch from Dillon. Each of Herald’s divisions has a dedicated sales team and manager and works with a SMB-focused customer base that comprises many vertical markets, including the medical, insurance, legal and hospitality sectors. The company’s strategic USP, says Jordan, lies in the relationship it nurtures with its customers. “We have for many years and continue to treat our customers the way

Dealer Spotlight | Herald Office Solutions we want to be treated. Our team of account executives, associates and support staff are all an integral part of our infrastructure. They all work well together, keeping our customers’ needs the foremost desire of our day.”

Resilience Herald’s story perfectly mirrors that of many other resilient US dealers that have successfully withstood the cornucopia of changes the OP industry has thrown at them. Among them, of course, have been the threat of the big boxes that dates back to the 1990s, the move of customers online (not to forget the dominance of the omnipresent Amazon), and the wider onward march of technology that has considerably contributed to the general decline in traditional OP sales. Despite all those challenges, Herald is growing. Last year it acquired two dealerships and is confident that it will do the same this year. As Jordan says: “Our furniture division just finished a record-breaking year and both the machine and office supply divisions are growing.” The success of the furniture division is in good part due to divisional Manager Becky

Herald Fact Box: Founded: 1893 (1924 for office supplies) President: Thomas Jordan Sales: 45% office supplies and printing; 50% furniture; 5% business machines Employees: 190 Business model: Mostly B2B Geographical coverage: South Carolina, part of North Carolina, US First-call wholesaler: SP Richards Dealer group: TriMega

“Our growth strategy includes the development of a janitorial and breakroom division and by selling deeper in our current customer base” Osmond who structures the furniture sales and design teams and their daily activities. Herald also worked hard to get approved as a GSA contractor with a sched ule 71.1 that allows it to combine multiple manufactures on a single purchase order from the government. The GSA business now accounts for 50% of its contract furniture business, with Herald performing 90% of its own installations with its in-house teams. In line with what’s happening in the industry as a whole, the expansion into adjacent categories and often also service-related contracts has been a core focus at Herald. From MPS and printing services to a variety of in-house leasing options, the combination of products and services is ever increasing. Importantly, the company’s portfolio will be further complemented this year with the addition of a fourth division to its line-up – janitorial and breakroom. The reasons for this are manifold, says Jordan. “Our traditional office supply product line-up is trending down for the company. As such, our growth strategy includes the development of a janitorial and

OPI Magazine | February 2015

breakroom division and by selling deeper in our current customer base. Our ultimate goal is to be a true single-source supplier.” Cost pressures have become more relentless than ever and Herald is acutely aware of the need to save costs wherever possible. In 2000, the company consolidated inventory from six locations and combined all accounting, purchasing, logistics, software management functions into one company and under one roof.

Dealer group support Its cooperation with dealer group TriMega is also something that Jordan is cultivating and that he believes helps in keeping the company’s cost of goods down. He says: “I first became involved with TriMega in the mid 1990s. I thoroughly enjoy the relationships that I’ve made, the education from other dealers and the cost of goods savings derived from the group. I feel that the ROI within TriMega is strong and the various programmes offered keep the independent dealer competitive.” The greatest challenge going forward, adds Jordan, is keeping up with the ever-changing office environment and the needs of its customers. “We’re finding that our average customers are trending to be ‘millennials’ and as we all know, this is an evolving audience. Their methodology and way of doing things is very different to how business was done in the past. For example, will they order online, do they prefer an app that can be used from their smartphone, do they want to email rather than a call?” He adds: “Being familiar with online technologies and SEO has become absolutely vital for being successful. Our team works diligently to be both innovative and proactive in keeping up with technology trends and software solutions.”

Herald’s furniture installation teams in Charleston, South Carolina

EOPA 2015 | Preview

Alright on the night Join OPI to celebrate greatness at the European Office Products Awards 2015

THE

Who’s Who of the business products industry will be gathering in Amsterdam on 4 March 2015 for the annual European Office Products Awards (EOPA). Held for the second time as part of OPI’s Partnership 2015 event, all that is innovative, imaginative and resilient about our industry will be celebrated during a special presentation dinner in this must-attend event in the European OP calendar. For more information and to book your place (bookings for the EOPA, incidentally, are open to anyone, not just attendees of the Partnership event), please visit: www.opi.net/eopa2015

EOPA 2015 Shortlist Traditional Product of the Year ACCO Brands: Nobo Prestige Whiteboards COLOP: The Printer Hamelin: Oxford SOS Notes Uploadable Notebooks Legamaster International: Custom Printed Whiteboards

Wholesaler of the Year ADVEO JGBM VOW

Technology Product of the Year Brother International Europe: PT-P750W CEP Office Solutions: Ice Blue LED Desk Lamp Esselte Leitz: Leitz Icon Smart Labelling System Fellowes: AutoMax 300c and 500c Shredders Jalema: JalemaBox Marketing Initiative 3M: Post-it Super Sticky Notes MAKE IT HAPPEN Western Europe Integrated Campaign Avery UK: Creating a social connection with consumers Fellowes Europe: ‘Getting The Nation Working Well’ Ergonomics Awareness Campaign 2014 Nestlé Professional: Nescafé Azera Workplace Launch United Managed Office Services: United Vantage Programme FM Product of the Year CEP Office Solutions: Take A Break range Decosense: Office Deco Transfers Nestlé Professional: Nescafé Azera 500g

Dealer Group of the Year Calipage, an ADVEO Group brand NEMO Group Office Friendly Dealer Association Office Power Vendor of the Year 3M ACCO BIC Clover Technologies Group Fellowes Europe Reseller of the Year Amazon Coolblue Lyreco RTC Professional of the Year No shortlist – winner to be announced on the night Industry Achievement No shortlist – winner to be announced on the night

w w w.opi.net | OPI Magazine

Interview | Paperworld

Keeping pace… FACED

with exhibitor fatigue, declining visitor numbers and a new show contender, Paperworld Frankfurt has introduced a number of initiatives and innovations for its 2015 show to ensure it remains on top of its game. OPI caught up with Messe Frankfurt VP of Consumer Goods & Entertainment Cordelia von Gymnich to find out why Paperworld 2015 is still the premier show for the paper, office supplies and stationery industry. OPI: What makes Paperworld a must-attend event? Cordelia von Gymnich: Paperworld has become a must-attend event because of its unique mix. It is the only trade fair for the paper, office supplies and stationery industry where manufacturers from 58 different countries exhibit their products at a single location. Moreover, it brings together both small start-up companies and successful brand manufacturers of many years’ standing. The complementary programme also makes an important contribution: visitors can see the current trends, specialist knowledge is disseminated in lectures, and

Messe Frankfurt’s Cordelia von Gymnich talks to OPI about Paperworld 2015 and with the speakers themselves. Messe Frankfurt is also inviting everyone to the Plaza Academy for the daily get-together after 5pm. The entire international sector meets up in Frankfurt to look at new products and to make contact with other business professionals. OPI: What are your expectations of the 2015 event? CvG: I expect Paperworld 2015 to be just as colourful, lively and inspirational as ever. We are reckoning on similar numbers of exhibitors and visitors as last year, and I am sure that the many additional events will be greeted with great enthusiasm on the part of the visitors and will launch them into the new year of business with a feeling of real added value. OPI: What’s new for 2015? CvG: One of the new things in 2015 is the Paperworld Plaza in Hall 3.1. It is based on a cooperative venture between the two German manufacturer associations Altenaer Kreis and PBS Industrieverband

“Every day in the Plaza Academy, experts in their field will be giving talks on current issues in the sector” the special shows provide ideas for supplementary ranges of products. There will also be sufficient time after every specialist lecture in the Plaza Academy, for example, to discuss the issues with colleagues

OPI Magazine | February 2015

(now merged as the Verband der PBS-Markenindustrie – Office Brands Industry Association). We are delighted that the active member companies have reacted so positively and see the Paperworld

Plaza as a valuable opportunity to present themselves, their products and services to the national and international wholesale and retail trade. The excellent number of registrations confirms to us that we are on the right track towards a future-proof international platform for the sector. OPI: Could you explain more about the Paperworld Plaza concept, the thinking behind it and why it was created? CvG: At Paperworld we need to meet the needs of the industry – as well, of course, as those of the wholesale and retail trade – with flexibility and that brings with it new ways of approaching things. There are adjustments that have to be made at key points. As a result, we have sought to engage in cooperative ventures with the professional associations involved, and a number of working groups were created. You will see the result at Paperworld 2015 – the Paperworld Plaza. The member companies that belong to the association determined the structure of this exclusive exhibition space. So alongside traditional office supplies and writing equipment, you will also find stationery products and accessories for a home office from paper, office supplies and stationery companies from German and international vendors. Additionally, every day in the Plaza Academy – located in the same hall – experts in their field will be giving talks on current issues in the sector while, at the same time, the Plaza Lounge offers a place to network.

Paperworld | Interview OPI: What is happening in terms of events that is noteworthy? CvG: Paperworld brings together the world’s largest range of products and a broadly diverse complementary programme – a unique combination. New for 2015 is the Plaza Academy that I mentioned before, where there will be a revolving programme of lectures. We are particularly pleased, in this regard, about the collaboration with OPI which will be dedicating Monday, 2 February to topics of international interest within the sector. The day begins with a talk by keynote speaker Jeanette Huber from futurologist consultants Zukunftsinstitut called ‘Look into the future – trends and megatrends that are driving change in the office supplies sector’. This will be followed by two discussion sessions on changes in the paper, office supplies and stationery sector. All lectures last 45 minutes and will be translated simultaneously into English. There will be, also for the first time, a ‘Future Store’ at Paperworld in 2015. Here, visitors will discover new ways of integrating digital elements into the high street shop. For instance, the linking of an online shop and the high street business helps with stocking and ordering.

On top of that, there will be presentations on future trends such as beacon technology whereby a mini transmitter in a shop sends product information to customers’ smartphones. Of course, we have also retained visitor magnets such as the Trend Show in Hall 6.1 and other popular highlights. OPI: What was behind the decision to move Remanexpo and what has been the reaction from exhibitors? CvG: The Remanexpo product group will be moving to Hall 6.0 in 2015. This location is ideal, both for visitors and for exhibitors: it is close to the Torhaus entrance (and the S-Bahn station) and can be easily reached by the Via Mobile. The hall has been recently renovated and is the ideal size for the number of exhibitors involved in remanufactured and OEM printing accessories. We are delighted to have received so many positive reactions from the exhibitors – the central location in Hall 6 is, after all, a very good argument.

OPI: Any plans for a show every two years? There has been pretty much constant speculation about that for the past few years. CvG: The idea of a two-yearly cycle was a major topic last year and we spent a lot of time discussing it extensively. It is very important to us to secure the Cordelia von Gymnich

close agreement of the sector before we undertake major conceptual developments. Polls were conducted among the exhibitors and the professional associations, and a large number of personal consultations and discussions undertaken. What emerged from this was that the vast majority of exhibitors are in favour of an annual cycle. We suggested several possibilities in this regard and discussed how exhibitors can best take part on a biennial basis and how they might make optimum presentations of their company, their goods and services – and that resulted in the Paperworld Plaza. OPI: What about changing the show date? CvG: We are sticking with the date of the last weekend in January. This was also the preference that emerged from our poll. In the questionnaire, we suggested a show date in the second half of the year and also offered an alternative at the end of August. Our exhibitors and partners turned down all these suggestions. OPI: Is there room for two shows – do you see Insights-X as competition and a threat to Paperworld, potentially losing exhibitors and visitors? CvG: Paperworld is, and is set to remain, the most international and largest platform for the paper, office supplies and stationery sector – and not only because of its ideal geographical location. Anyone looking for a global overview of the sector, at one time and in one place, comes to Frankfurt. w w w.opi.net | OPI Magazine

Paperworld Middle East | Event Preview

Opening doors With Paperworld Frankfurt barely over, the focus shifts to the Middle East

OPI

talks to Michael Dehn, Group Exhibitions Director of Epoc Messe Frankfurt, about his hopes and aspirations for Paperworld Middle East 2015. OPI: Where is the geographical focus of Paperworld Middle East in 2015? Michael Dehn: We’ve seen a significant boost in local participation at Paperworld Middle East 2015: exhibition space occupied at the show by companies from the United Arab Emirates (UAE) has so far increased by 10% year on year. Indeed, UAE companies have booked more space than any other exhibiting country since the inaugural Paperworld Middle East in 2011, and we expect this trend to continue. Having said that, international participation is also strong for 2015: we have seven country pavilions confirmed so far, with more in the pipeline. The German pavilion will lead the way, showcasing 15 top exhibitors including Durable, Hamelin, Krug & Priester, Schneider, tesa, UHU, Herma and Esselte Leitz. Meanwhile, the Sri Lankan pavilion is returning for the first time since 2012, while other country pavilions are coming from China, Hong Kong, Taiwan, Italy and Pakistan. OPI: What should visitors be looking out for this year? MD: One new feature we have is a recycling competition. This is a dedicated area on the tradeshow floor where children from 169 schools across Dubai will display useable items that they’ve created from everyday school stationery items – newspapers, writing paper, napkins, cardboard, etc. Visitors will Michael Dehn be invited to

select their favourite project and the winners will be announced on the final day of the show with a range of back-to-school items up for grabs. OPI: Is sustainability an important topic at the event? MD: Absolutely. Many stationery items and school articles are showcased at Paperworld Middle East and, with the recycling competition, we hope to highlight the importance of using sustainable materials in school stationery items. On that same theme, another popular feature returning this year is the Green Office Area, a section promoting environmental products. OPI: So what is the core target audience for Paperworld Middle East, in terms of exhibitors as well as visitors? MD: We’re keen to attract exhibitors that are involved in the manufacturing and marketing of office supplies, school articles, printers, computers, gift articles, children lifestyle products and sporting equipment. These exhibitors use the event to introduce their latest products and services to the Middle East and Africa region and offer solutions to wholesalers, retailers, importers and distributors. Significantly, Paperworld Middle East attracts thousands of real decision-makers and traders from across the region. This allows exhibitors to build expansive business networks and consolidate their expansion plans in this fast-developing market. OPI: Are you complementing the exhibition with an information-type event?

MD: It’s always important to include educational and informative industry content. Every year we brainstorm what areas we can expand on to keep the event relevant, particularly in an age of fast-changing technology that significantly impacts this industry. I’ve already mentioned the sustainability focus; we believe that being environmentally friendly with a range of sustainably-made products is the way forward for the industry. This was one of the reasons behind launching the recycling competition. But this is just one of many value-added features we plan to introduce in the next 5-10 years. OPI: What are other key trends in the business supplies industry in the Middle East right now and how are manufacturers and resellers addressing them? MD: Sustainability, technology and digitisation are key words that roll off the tongue when assessing the opportunities in the regional office supplies and stationery industries, and we are excited to increase our product profile at Paperworld Middle East as the stationery market continues to evolve. Industry players can flourish if they adapt and find niche markets that come about as a result of fast-changing technology. Our aim is to always keep ahead of the curve and find new sectors that will experience growth over the coming years. Exhibitors will then have a platform to present their latest solutions that are advancing the industry. w w w.opi.net | OPI Magazine

Italy | Reseller Focus

On the way up At November’s Big Buyer show in Italy, OPI caught up with some of the country’s leading OP businesses to find out what’s happening locally

THE

consensus at the 2014 Big Buyer show in Bologna was that the Italian OP industry had hit rock bottom and was now slowing inching its way back up again. One of the major topics of conversation was the move to a digital world. While many people OPI spoke to lamented the lack of willingness to enter the digital world on the part of small dealers, major wholesalers and franchise groups were implementing systems for resellers to take advantage of technology. Below is an update from some of the wholesale and reseller players in the Italian OP and stationery market that OPI met at the show.

ADVEO In the face of a still declining Italian OP market, wholesaler ADVEO managed to grow 6.5% during 2014 in Italy. Speaking to OPI, ADVEO Sales Director Maurizio Ferri said one area of growth was that of drop shipments due to dealers evaluating their cost structure. Following the global trend of diminishing traditional OP sales, ADVEO has experienced significant growth in segments such as jan/san, facilities management and back-to-school (BTS). The European wholesaler will continue focusing on its growth areas in 2015, in particular stockless dealers, BTS and retail. For stockless dealers, ADVEO has launched a cloud-based ERP system with an integrated B2B web portal. End users can purchase through a dealer’s portal and the order is sent straight to ADVEO. Other benefits include automatically updated product and price lists, stock levels that can be checked in real time, and access to customer details and order history.

MYO 2014 was a period of ‘settling down’ for the contract stationer after a few tumultuous years. Managing Director of parent company BI/Holding Lorenzo Rudella said the company had now completed its reorganisation and sales were growing again as it focused on the SOHO market and added key accounts and larger customers. MYO spent 2014 broadening its non-traditional OP category products and will make a huge push for specialisation in 2015, starting with jan/san. “We are trying to move out of general OP and become specialists. Today, presenting clients with just a stationery catalogue is simply flogging a dead horse. While the stationery segment remains stable, it’s difficult to keep a customer interested with just those products,” said Rudella. For 2015, Rudella’s goals are to develop the business in terms of new customers and increase turnover. Adding more products for MYO’s sales force remains a priority in the face of declining margins and high costs in a shrinking market.

Office Distribution Wholesaler Office Distribution (OD) started 2014 by taking control of its logistics and bringing it back in-house. The logistics acquisition and flat sales led to zero growth for the company in 2014. CEO Andrea Ghidini said the company “chose not to grow” as it refused to follow competitors in “dumping prices”, but instead elected to concentrate on building customer relationships and services. The net result, according to Ghidini, is a larger base of customers. Office Distribution has also been expanding considerably outside traditional office supplies and electronic office supplies, with its security segment growing exponentially. For 2015, OD has created a ‘hybrid’ e-commerce website aimed at bringing back customers to the traditional stationery store. “The website offers a marketplace similar to Amazon but with the face-to-face customer service of the traditional store,” said Ghidini. The click-and-collect service means end users can only pick up purchases at a preferred store. The website will also offer non-stationery related products that a traditional stationery store would not normally sell and which OD will deliver direct to the store.

w w w.opi.net | OPI Magazine

Reseller Focus | Italy In Ufficio Adriano Alessio, President of Italian OP reseller association AIFU and CEO of dealer group In Ufficio, told OPI that for the nine months until the end of September 2014 he considered the Italian OP market to be relatively stable at just -1.9%. The consumables market, however, was down 12% with compatibles down by 4%. Even more disturbing for Alessio was the growth of grey market products. “The grey market affects everyone and eventually destroys the ethics of the industry,” he warned. Still, bright spots included a 10% growth for the furniture segment and stationery growing 4%. For In Ufficio, meanwhile, up until the end of October members’ aggregate sales were down about 2.2%. In light of 50% of available products affected by price

Gruppo Buffetti Franchise retail chain Buffetti reversed declining revenues in 2014 with slight growth. Buffetti General Manager Francesco Villa told OPI the company had maintained its position in the pure OP business and is experiencing double-digit growth in the education market, which it entered a few years ago. The group also branched out into the international market with a shareholding in Campo Marzio, a high-end gift retailer with a presence in Australia, Canada, Japan, China, Malta and Puerto Rico. “With Buffetti’s strong financial position, we are always looking for possible acquisitions with synergistic businesses,” said Villa. Developing its business model over the past four years to make local points of sale the heart of the system, this will continue through its franchise network. However, the company also recognises that the internet is forcing change and now is the time for small dealers to outsource many services such as accounts and logistics and take advantage of the web and e-commerce. “Buffetti is well placed to offer these services to our franchisees,” said Villa.

sensitivities, Alessio is looking to a wider range of products to offer dealers. “I am giving my dealers the opportunity to deliver to their customers a promise – they should be able to offer between 20,000-40,000 SKUs. We will supply the products within 48 hours so they can deliver on time for their customers,” he stated. To make good on this promise, In Ufficio has expanded its online catalogue and implemented a comparable IT products website. The group is also preparing to launch a new database and software to help its members grow.

C’ART In 2014, gifts and stationery retailer C’ART grew 32%, although 20% of this growth came from the opening of four owned stores and four franchises. Working in C’ART’s favour, according to the company’s CEO Stefano di Veroli, has been the increasing closure of stationery stores based in shopping centres where C’ART has retail outlets. He said this, coupled with supermarkets devoting less shelf space to stationery, has led to an increase in market share for the retailer. The back-to-school (BTS) season for C’ART was especially good, according to di Veroli, but he was reluctant to attribute it to increased general consumer spending. “Sales were good, but I think we were lucky in 2014 and benefitted from poor weather during the summer. This makes it difficult for us to buy for the BTS season in 2015,” he said. C’ART is eyeing the international market – most likely China – for the second half of the year. A stumbling block, however, will be to retain the 30% of sales the retailer currently derives from the education market. “The education market is very particular to each market so we have to replace school products in international markets. We would also go direct for our first experience, but look at a master franchiser to take the business further,” explained di Veroli.

In brief… Durable announced a name change for its bestselling Megaframe product line to Duraframe. The reason for the change, according to Durable Italy Sales and Marketing Manager Alfredo Bonazzola, was the necessity to brand the family. Growth for the company was up 10% from January to September 2014, and Bonazzola said the company would be looking at new distribution channels for industry areas such as catering and visual communication. Stamp manufacturer Trodat recently bought Italy-based Porta and C, a sales representative and distributor of Trodat. The acquisition gives Trodat its first subsidiary in Italy, extending brand awareness across the country. Fellowes and its Italian partner Leonardi said the company’s double-digit growth in Italy was due to a sharp focus on distribution and sales. The company improved its brand awareness through an enhanced website and 2014 was likely the last time a physical catalogue was produced. Fellowes Italy is also expanding in a completely new direction when it launches mobile accessories Body Glove and the recently acquired Optrix into the Italian market.

OPI Magazine | February 2015

Event Review | ADVEO World Germany

A catalogue of success For ADVEO Germany, the printed catalogue is still the key selling tool

THE

hardback version of ADVEO Germany’s annual catalogue is a highly sought-after item judging by the rush of dealers trying to get their hands on one at the end of the 2015 catalogue presentation made by Ulrich Paulus, Director of Marketing and Merchandising at the German wholesaler. Any talk of the death of the office products catalogue is certainly premature, at least in Germany where, Paulus revealed, 75% of ADVEO’s dealer orders are still placed using the printed catalogue. That was one of the interesting figures thrown up by ADVEO’s latest end-user market research. Astonishingly, about 50% of customers still use the fax order form that is printed in the catalogue, while only around 10% of orders made are purely electronic from start to finish.

Steady SKUs Those numbers are changing, of course, as millennials increasingly take on positions of responsibility in the workplace but, Paulus added, ADVEO’s research was conducted across a broad range of age groups, suggesting that catalogues still have a few years’ life left in them yet. Consequently, ADVEO Germany is printing 250,000 catalogues in 2015 – the same as last year – featuring around 20,000 SKUs. The overall SKU figure is also steady, but some traditional products have made way for newer, growing categories such as facilities management (FM) supplies and 3D printing (see box, ‘3D printing set to take off’).

OPI Magazine | February 2015

Paulus added that the end-user research also revealed some important data about what customers want from dealers. The top three reasons that customers use dealers are: high service levels; having a named contact person at the dealer; and product knowledge. “They don’t use dealers because they see them as having the best price,” he noted. “It’s important for dealers to realise that, because sometimes they can be too focused on price.” The catalogue presentation was made on the second day of the ADVEO World Convention, the annual gathering of ADVEO’s dealer customers in Germany Ulrich Paulus which took place at the Olympic Park in Munich at the beginning of December. About 1,000 visitors attended the Convention which featured a vendor expo with almost 90 suppliers.

75% of ADVEO’s dealer orders are still placed using the printed catalogue

Mixed results for ADVEO Germany 2014 was a year of mixed fortunes for the different segments of ADVEO’s business in Germany. Overall, sales were down by about 5% year on year, but this number was dragged down by double-digit declines in the IT and EOS business which was affected by some logistics issues caused by the announced closure of a distribution facility in Winkelhaid, near Nuremberg (although the site will now stay open until 2016). Strong growth was seen in sales to retail customers, where the wholesaler is reporting some success in cross-selling traditional office supplies to IT-focused retailers. ADVEO is also winning customers in non-OP channels such as industrial supplies where B2B resellers are increasingly adding OP to the assortment. Sales to what ADVEO terms as ‘systems’ dealers – including the Calipage and OfficeStar groups – grew by about 5% in 2014. Calipage membership in Germany has stalled at around 60, but the wholesaler is hoping to attract more dealers after introducing a fully-integrated marketing plan for 2015 and relaunching the Calipage web shop.

ADVEO World Germany | Event Review

3D printing set to take off There was a real buzz at the ADVEO World Germany event surrounding the catalogue launch of the wholesaler’s 3D print offering. UK firm Environmental Business Products (EBP) has been awarded a pan-European contract Aleem Hosein by ADVEO for its St3Di 3D printing brand, and owner Aleem Hosein and his team were rushed off their feet throughout the two-day expo in Munich. EBP is offering two 3D printer models, the 200 and 280 (the numbers refer to the width of the printing plate), which have a recommended retail price of around H1,400 and H2,000 ($1,660 and $2,370) respectively, excluding sales tax. Hosein said that dealer margins for the printers and for the range of filament supplies that go with them are likely to be very appealing. Dealers have the option of transactional selling (selling customers the machines and supplies) or offering a 3D printing service. Amy Horn, EBP’s Head of Collections, told OPI that most dealers were more interested in the first option as it was an “easier sell”. Service selling, on the other hand, requires more of an investment in systems and expertise. Given the strong interest from dealers, it looks like 3D printing could really take off as a new category for the office reseller channel in 2015. EBP was also in Paris in January at the ADVEO World France event and was expected to be making a major announcement for the UK market just after this issue of OPI went to press.

The vendors that OPI spoke to were generally happy with the turnout, although some noted a decline in visitor numbers compared with previous years, and there were some question marks about the need for a two-day expo. “This is a good opportunity for us to have direct contact with the smaller dealers that we don’t normally see,” Falk Butterwegge, Head of Office Supply/Stationery & Online International Sales Consumer & Craftsmen at tesa, told OPI. Butterwegge explained that tesa was using its market-leading position in the DIY channel to introduce new products for B2B resellers as they offer more FM products. “To a certain extent, we can copy and paste that DIY success story into the dealer channel,” he added. Falk Butterwegge The Germany-based vendor has been running a major campaign for its double-sided adhesive tape

for use at home and in the office. “More and more offices are for rent only, so you are not allowed to drill into the walls,” Butterwegge continued. “That means dealers can offer solutions using our adhesive tape.” Bi-silque’s Key Account Manager Alina Chaberska Da Costa also noted the need to find new niche markets to drive growth. “While the overall viscom market is stable, there are interesting growth opportunities with, for example, eco-friendly products which go down well with German customers,” she said. She also pointed to the need to adapt product and service offerings to the needs of specific dealers. “For online dealers, delivery is a key factor, while an education-focused dealer will require an educational range that meets national certification requirements.”

Connecting with end users Markus Eppensteiner, Sales Manager, Commercial & MMR at Avery Zweckform, revealed that the labels manufacturer is placing a lot of emphasis on e-commerce and social media to connect dealers with end users. “We are trying to attract a younger generation through things like our recently launched Facebook account,” he said, adding that the company was also trying to tap into the general consumer market with its Avery Living concept (which is known as Avery Home in markets such as the UK). “We are also trying to help dealers improve their online shops,” he continued. “Like everyone, we are seeing the shift to online; it will be the purchasing channel for the younger generation, so we are providing our resellers with resources like banners and video and other online content.” Preceding the Convention was the ADVEO Congress, a one-day invitation-only event for about 180 key trade partners. Held at the Allianz Arena, this featured a keynote presentation on the future of business and a talk by Stefan Kuntz, Chairman of the Kaiserslautern football club, who described how the football industry has had to adapt to the enormous changes that have taken place in the past 25 years – with a clear message to the OP world about the need to embrace and adapt to change.

T3L Group Business Development Manager Peter Achterberg talked to OPI at the ADVEO World event in Germany about the state of the German office products market. Scan the QR code to watch a video interview with Achterberg.

w w w.opi.net | OPI Magazine

Security and Data Protection | Category Analysis

News stories about internet security breaches are rife. Are businesses and individuals doing enough to ensure they don’t fall victim, and what opportunities exist for those offering solutions?

by David Holes

DATA

loss is no longer seen as just an unfortunate incident. Apart from the reputational damage, there’s now a high likelihood that if a data leak occurs, an organisation or individual executive will be subject to legal action. As such, in addition to the value of the data itself, any data loss is now a significant legal and regulatory issue. As Dagmar Strunz, Head of Marketing at Spanish-owned data destruction firm intimus, warns:

Claire Cully, Technology Product Manager at UK wholesaler VOW, also sounds the alarm bells: “90% of companies that suffer a significant data loss go out of business within two years, so it’s absolutely vital that all organisations have systems in place to protect their data.”

Legal ramifications European law, under the Data Protection Directive, requires that all organisations protect personal data and keep copies of financial and business records for at least seven years, so it’s critical that records are safe, secure and accessible. Cully continues: “Organisations must have back-up systems in place

“90% of companies that suffer a significant data loss go out of business within two years” “Modern legislation means that data breaches and the penalties that come with it quickly become public knowledge. As such, the financial penalty is only part of the cost – it’s the damage to an organisation’s image that’s more serious. CEOs are now taking this topic seriously and security budgets are more readily available.”

which allow them to restore and recover data at any point in time. The bottom line is that businesses must encrypt their data if they want to avoid a fine of up to £500,000 ($785,000). Several serious data breaches in recent years have led to a significant rise in sales of encrypted flash drives, with companies and

individuals better recognising the need to protect confidential data.” To date, the US has no single national data protection law comparable to the EU's Data Protection Directive, but is covered by a patchwork of federal and state laws, regulations and guidelines. Most states have enacted some form of privacy legislation. However, California leads the way with multiple laws that most resemble the European approach to privacy legislation. The business of destroying data when it has served its useful purpose is big and growing. Once it was all about shredding paper, but with the growth of digital storage devices that’s altered significantly over recent years. Strunz at intimus charts the movement away from the classical paper shredder over the past decade: “15 years ago, paper was the most frequently used media, but this has completely changed. We’ve since w w w.opi.net | OPI Magazine

Category Analysis | Security and Data Protection seen the rise and fall of media such as floppy disks, ZIP, CD/DVD, all of which we nowadays see as outdated. At intimus we even consider a spinning hard disk drive to be a medium of the past, but there are billions of them out there and they’ll all need to be deleted or destroyed sooner or later. “The amount of information stored on modern media is many times larger than could ever be possible on paper. Thankfully, intimus – once purely a manufacturer of paper shredders – recognised this trend at an early stage and now carries a range of products that can deal with almost any modern media and reliably destroy the information saved on them.” Shredder vendor HSM has also moved on from only manufacturing products and now offers a data security consulting service. As

HSM produces a hard dive destruction shredder, the HDS 230. This beast of a machine (see below) grinds a hard drive up into thousands of metallic pieces ensuring all data is lost forever. Paper shredders still have a part to play, of course. Chris Gaskell, Marketing Director Office Products Group at ACCO Brands EMEA, says: "Although the shredder market has remained largely flat over the past few years, we’re seeing a move away from very low-priced shredders, as consumers are frustrated with their quality and durability, and are instead now actively seeking out branded products with better reliability and performance." There have been plenty more developments in terms of technological advances, adds

“Consumers continue to mature with respect to shredder knowledge and experience” Stefanie Keller, PR & Market Research, points out: “Our aim is to keep companies from a data ‘meltdown’ and the significant reputational damage and fines that follow. We point out the gaps in data protection and present individual solutions.” She sees future growth in the destruction of all types of digital media, adding: “With hard drives, the recommendation is to remove and physically destroy them. If the information they contain ends up in third-party hands, the penalties can be up to H300,000 ($371,000).”

OPI Magazine | February 2015

Gaskell, often driven by a need to improve productivity. Maureen Moore, VP Marketing and Communications at US manufacturer Fellowes further explains: “Business consumers are now interested in ‘smart machines’ that offer hassle-free shredding. Our 100% Jam Proof shredders remain a popular solution and the new AutoMax shredders, which can deal with all types of paper, offer businesses a truly automatic, walkaway shredding experience.” Meanwhile, Sam Lee, VP Marketing at shredder manufacturer Intek America, says that microcut shredders show the strongest sales growth: “Consumers continue to mature with respect to shredder knowledge and experience, and the increased security and the greater bin capacity these products offer due to smaller,

compacted waste particles mean that they are the new buying choice for more and more consumers.”

Personal responsibility In addition to just organisations, Doug Nash, President/CEO of US e-tailer Mobilegear, believes that individuals also have a responsibility for keeping their own data secure. He comments that, with the trend towards larger screens, ‘eye-hacking’ is now the number one security issue for people working in public environments. “We estimate that people's laptops, tablets or smartphones are eye-hacked around five times an hour when they work in a public place like a Starbucks,” he states. “Walk down the aisle of an aeroplane and you have probably eye-hacked someone yourself! While most eye-hacking is not malicious, having sensitive bank information or important corporate presentations viewed by strangers is never a good idea. Privacy screens from Fellowes and 3M do a great job at reducing this risk.” Additionally, he thinks that similar simple solutions can be applied to other potential security hazards presented by working in a public place: “Your briefcase, bag or backpack carries all your most valuable devices and the information they contain, so make sure they have some security features like a locking zip. Vaultz has just launched a locking backpack that not only locks in your laptop, but can be tethered to immovable objects to stop it from being stolen. It makes zip-locked cable cases where you can keep small devices, thumb drives and other valuable items secure.” Dick van Baarlen, Managing Director at security firm Safescan in the Netherlands, also believes that in this era of ‘big data’ the security and data protection sector still offers plenty of scope: “The OP industry needs to focus on these niche markets. When well supported by professional online marketing, this category can bring added value to the end customer and, crucially, much-needed additional sales and profit for manufacturers and distributors.”

Category Analysis | Writing Instruments Writing Instruments | Category Analysis

The market for traditional writing instruments is in decline as consumers shift to writing on laptops and tablets. Or is it? OPI uncovers some surprising trends

by David Holes

misquote Mark Twain – rumours of the death of the writing instruments category seem to have been grossly exaggerated. In fact, when OPI contacted the sector’s main protagonists, a picture of a burgeoning industry that’s full of confidence about the future emerged. As Simon McLoughlin, Head of Traditional Office Products at UK-based wholesaler VOW, puts it: “I would argue that writing instruments are not in decline at all and are, on the contrary, a beacon of growth in the OP market. We are seeing a move back towards branded products and growth in all the major sub-categories.”

Favourable figures The data from both sides of the Atlantic backs this up. GfK in the UK reports strong growth for the writing category throughout 2014, with value

OPI Magazine | February 2015

growth in the consumer channel up 12.5% and an increase of 8.2% in the business channel. According to Leanne Whittaker, GfK Senior Account Manager – Retail World, this is being driven by several factors, including an increased presence and sale of branded items, the recovery of own label products, retailers increasing ranges and promotions, plus a strong back-to-school period. She comments: “The top writing products have grown year on year, with the highest volume growth from writing felt pens. Ballpoint pens

value increase of 2%. Leen Nsouli, NPD’s Office Supplies Category Specialist, reports: “Writing instrument dollar growth at retail can largely be attributed to the growth seen in pens and pencils, with fine writing instruments (+7%) and markers (+5%) leading the pack. Based on what we’ve seen in the market, it seems some of the penny-pricing strategies at retail in this segment have shifted to consumer basket-building.”

Rising demand Manufacturers are joining in with this chorus of encouraging comments. Todd Kehley, Director of Trade

“I would argue that writing instruments are […] a beacon of growth in the OP market” command the largest value share, but the highest value growth has come from markers. This indicates that consumer and business confidence is up in what was once thought of as a traditional and mature market.” US data from The NPD Group also shows encouraging, if not quite so dramatic, growth. The sector as a whole has returned a year-on-year

Marketing at BIC Consumer Products USA, says: “Over the past year, sales have been strong in the writing instruments category, both in-store and online. Back-to-school sales were particularly good due to an improving economic environment and greater consumer confidence. In a similar manner, the industry has seen a strong rebound in the B2B w w w.opi.net | OPI Magazine

Writing Instruments | Category Analysis side as businesses are replenishing stocks after being very conservative for a long while. In addition to the US, we’re also seeing positive results in both North America and Europe, as well as in the emerging nations of Latin America and Africa.” Wendy Vickery, Marketing Manager at Pentel in the UK, agrees: “The writing instruments industry is now showing encouraging growth. In particular, our results in the mechanical pencils and permanent markers sectors are experiencing very healthy signs: 13% above the market average in the case of mechanical pencils.”

Quality focus She continues: “This indicates that the market for quality writing instruments is resurging as OP purchasers recognise that getting more for their money does not mean they have to buy a cheaper, and usually inferior, products. Now the economy is expanding, buyers are once again investing in better-quality products. The year ahead will continue to pose challenges, but the evidence suggests that demand will continue to rise.” Shannon Blake, owner of pen manufacturer Cello North America, remarks: “Reduced consumption of writing instruments caused by the rise of technology has been a discussion point for 20 years, but the categories are actually still growing. Although we’re not experiencing double-digit increases, it’s still a steady category that has not experienced any significant declines. People still need pens and are buying them on a regular basis.”

A similar Indian perspective is given by Harpreet Duggal from the PR and Communications department at the Luxor Group in New Delhi. She comments: “India currently has around 1.4 million schools

BIC’s Kehley picks up on this educational theme: “While back-to-school is the main seasonal driver, consumers are increasingly aware of the educational need for students’ writing skills to be

“The industry has seen a strong rebound in the B2B side as businesses are replenishing stocks after being very conservative for a long while” and over 35,000 higher education institutes – these numbers are rising, making huge demands on the writing instruments industry. There’s also a growing shift from basic functionality to quality as consumers demand aesthetics and plush features, with products increasingly being bought for flaunt value.” Explaining the continued demand for traditional writing instruments, Duggal continues: “India has an 80-89% youth literacy rate, and although there has been a technological shift, pens have not become obsolete from our daily lives. Indeed, everyday writing still accounts for 90% of the market in developing countries like India. Once the pen was only a writing instrument, but these days it’s more of a style statement and fashion accessory. “There’s growth in all segments as literacy rates improve and there is a strong trend in giving writing instruments as a premium gift. With increased government focus on education, the sector will witness continued robust growth.”

developed all year round. They recognise the benefits that writing plays in a child’s growth, cognitive development and overall educational success, and so they are actively seeking out products that are designed to help facilitate the learning process and make it fun.” BIC’s desire to bring greater awareness to the importance of handwriting led to the launch of its Fight For Your Write mission. The www.BICFightForYourWrite.com website provides information to parents, teachers and students about the benefits that writing can bring. Horst Brinkmann, Director of International Marketing at Stabilo in Germany, is also an advocate of the benefits of handwriting: “Learning to write with your hand is, according to current science, very important for a child’s development. There is a proven positive correlation between writing with your hand, the development of fine motor skills and general cognitive and school development.” To support this, Stabilo is preparing to launch what it calls the ‘Digital Learning System’. This will feature an app for tablets that allows children to have fun while learning to write, and is based on a scientific training method with which children can hone their motor skills.

Technology in tandem It’s clear that the market for traditional writing instruments has plenty of life left in it yet. Pentel’s Vickery points out that new technology and traditional products can quite happily live in tandem in a mutually-beneficial arrangement: “How many times have we heard about the paperless office and the w w w.opi.net | OPI Magazine

Category Analysis | Writing Instruments demise of traditional communication tools? Undeniably, the rise of technology has had an impact on the volumes of writing instruments sold, but the demise of the pen is certainly not on the horizon yet. It’s this point we make in our current social media campaign #SaveThePen, which illustrates some of the more unusual and amusing uses of writing instruments to show that the pen is still the most convenient tool for self-expression. “Ultimately,” she adds, “we believe that traditional writing instruments and today’s technology can co-exist and, in fact, complement each other quite successfully. What we’re seeing as things evolve is niche markets opening up and products finding new applications. To witness first-hand the renewed interest in ‘old technology’, look no further than the fountain pen market, which is experiencing a renaissance few would have predicted several years ago.” A good example of this approach of blending the old with the new is the BIC Tech 2-in-1 Stylus and Pen featuring a pen on one end and a stylus on the other, allowing consumers to easily switch back and forth from writing on paper to writing on a tablet or smartphone. This year, the firm is also launching the BIC Cristal Stylus & Pen, which offers the iconic BIC Cristal pen and a stylus in one product.

OPI Magazine | February 2015

As Kehley points out: “Writing and technology do not need to be in conflict with one another – there is room for both in consumers’ lives. There are times when using technology is appropriate and efficient, and there are times when writing by hand is the right choice.

“Schoolchildren are increasingly being asked to mark their own or their peers’ work, writing any corrections in a different coloured ink so that teachers can assess how they’ve understood the process and the subject itself. Equally, teachers are also using different coloured inks to mark homework. They’ve always

“We believe that traditional writing instruments and today’s technology can co-exist and, in fact, complement each other quite successfully” "And, of course, there are times when the two can work seamlessly together. Writing is transforming: as a result of laptops, tablets and smartphones, people are writing less out of necessity, but they are still writing because they enjoy it and recognise that it has numerous benefits.”

Pen pushing It may be tempting to think that there’s only so much that can be done with a pen. Not so. Pentel, for example, has spotted what it believes is a gap in the market that could benefit a significant minority of pen users – left-handers. Left-handed writers often complain that ordinary gel ink leaves smudges on their hand as they move across the paper, because the ink doesn’t always dry quickly enough. So Pentel developed EnerGel, which is a fast-drying ink that it claims has made smudging virtually a thing of the past. Vickery also explains that what starts as a trend can become an everyday essential once it's accepted into the mainstream, citing coloured ink as an example. “Back in the mid-1990s, gel ink was in its heyday and coloured inks sparked a major fashion trend. The trend subsided, but we’re now seeing renewed interest in it and, interestingly, the demand is coming from the education sector.

done this, of course, but nowadays the most popular ink colours are violet and green rather than red.” BIC’s Kehley further believes that consumers look to their writing instruments as a source of self-expression and creativity, and this means they are enthusiastic about selecting the writing instruments that fit their personality and lifestyle. He sees this as a great opportunity to benefit from the trend for product personalisation and says: “By offering a variety of barrel and ink colours and fashion inks, together with a range of tip sizes from extra fine to bold, we can help transform the task of writing into a fun and meaningful act of self-expression. And there is an opportunity to trade consumers up from core writing instrument offerings to value-added products.” BIC has also introduced several new products that tap into different specialist needs. Its new Xtra Fun cased pencils are aimed at children and use Ultra-Solid Break-Resistant lead which should make them more durable in the classroom environment. It’s also launched its Window Marker designed for writing on glass – perfect, says Kehley, for special events or for business owners who want to advertise on their store windows. Clearly, the humble pen is still widely seen as a vital everyday item. Indeed, in many parts of the world it’s also viewed as a status symbol or fashion statement. And while technological advances have given us different ways of writing, the pleasure and benefits of writing by hand have not yet diminished.

Your OPI

5 minutes with... Helen Beckett, Creative Account Director, Headroom

Describe what you do in less than 20 words. I support clients with their business development and marketing plans and align Headroom’s services to its objectives. Your first full-time job. Market Sector Coordinator for Kingfield Office Supplies; I was responsible for catalogue and mailer production for machines and consumables. Your childhood ambitions. I wanted to be a singer, an actress or a midwife! Your first car. My dad bought me a 20-year old Cavalier in bright orange – it was like something from The Sweeney, but it was 1997! The first record you bought. Get into the Groove by Madonna – classic 1980s pop! The best moment in your career. I’ve had lots of great moments, but I’d like to think my best is yet to come! Your best piece of advice to a colleague. Take time to really understand your customers and never assume or stereotype. If you weren’t doing your present job, what job would you like to be doing? I’d be running my own vintage clothing business or managing my own events agency.

“I’d like to think my best is yet to come!”

Your favourite office product. Can I have two? Coffee has to be my favourite and VOW has added Haribos to the 2015 range – I’m sure they might quickly overtake coffee! What do you like best about the OP industry? That it’s always changing and evolving; it’s unrecognisable from the industry I joined 15 years ago. The most memorable travel experience you’ve had while in the OP industry. When organising the VOW Whiteout event, the group arrived in Geneva to learn that no luggage had been loaded onto the plane at Gatwick – I had 45 customers and suppliers in France with no luggage for two days. Thankfully, everyone took it in good humour, but now I always pack some essentials in my hand luggage. Your greatest strength. I’d say it’s my enthusiasm for this industry and my ability to motivate others to feel the same way. The types of TV programme you find most irritating. That programme on a Saturday afternoon which just features other people watching football matches you can’t see. I don’t mind watching a football match on TV, but watching someone else watching a match – I don’t get it!

Your favourite event on the OP circuit and why. The VOW Whiteout event – a really unique event that just seems to get better and better. I can’t think of a better way to network and really get to know your customers. What do you like least about the OP industry? That we call it ‘OP’. We limit ourselves to the office when we should be looking at the entire business or workplace. The biggest change that has taken place in the industry since your career began. The web. In 1999 we were still selling primarily from catalogues and direct mail. E-commerce has brought with it huge opportunity as well as interesting challenges for our industry.

If you won the lottery, what would be the first thing you would buy? A ski chalet in France. I’m desperate to convince my husband to learn to ski, so maybe that would help persuade him. www.opi.net | OPI Magazine

Your OPI

Final word Your industry, your opinions Simon Drakeford, CEO, Euroffice Group

Multichannel: why it can’t be ignored

MUCH

has been written about multichannel retailing in the past few years. Often, when new business models are surrounded by so much hype, businesses believe they can choose whether to listen or not. When it comes to multichannel, however, I firmly believe that office supplies dealers ignore it at their peril.

Channel crossing By 2025, 75% of the workforce and, therefore, the holders of the majority of purchasing power, will be millennials, or Gen Y – the first generation to grow up in a world powered by technology. However, long before this time, millennials will demand a multichannel offering. Even now, customers expect some multichannel options and there is no longer such a concept as a single channel purchasing journey. Customers might have a preferred channel, but they no longer interact exclusively through that channel. In order to compete in the future, office supplies dealers must be able to start a dialogue – or transaction – on one media or channel and continue it across others.

• Be ‘brand self-aware’ when attempting to penetrate social or personal environments. • Never forget the importance of big data.

Making the switch to multichannel Key points to consider in implementation include: • Creating a single database recording all customer interactions across all touchpoints, matching channels to meet demand. • Using econometric modelling to understand the cost to transact across the different channels. • Mapping the propensity of your customer base to interact/transact across the different channels. • Understanding it’s ok for pricing and proposition to be different on different channels. • Adopting different channel experiences as long as your brand message is consistent.

“There is no longer such a concept as a single channel purchasing journey”

How to become a multichannel retailer At Euroffice Group we considered what our multichannel strategy should be a few years ago. In the end, we decided to focus on what we are good at – marketing and technology – and built a white label system and support platform to enable traditional offline dealers to leverage online platforms to deliver a multichannel offering. This model – Office Power – allowed us to take advantage of the skills and experience of an offline sales channel through enabling it, rather than doing it. It’s an unusual approach but it demonstrates there are multiple approaches to integrate multichannel. Other options include extending the channels you use in your current media or entering new channels. Whichever you choose, the following checklist is useful: • Always trial and test new channels before making any significant investment. • Model the competitive landscape and choose your battlegrounds carefully. • Consider what the size of the investment/appetite for risk will be if you are looking for first-move advantage in emerging channels.

OPI Magazine | February 2015

Benefits to your business

Ignoring the shift to multichannel could be fatal for your business. Making the move isn’t easy, but there are significant business benefits to be had such as: • enhanced brand loyalty • larger share of wallet from less intra-channel leakage • future proofing/psycho-demographic trends • order/customer growth in price elastic channels • margin growth in inelastic channels • rich customer data for enhanced CRM The maturity and adoption of different channels varies greatly by industry and any change or investment needs to be cognisant of this. However, even if some of the terminology is a little over-marketed and the urgency a little over-hyped there is no doubt that the move to a multichannel interaction model will come and stay, so doing nothing in this industry is no longer an option. Want the Final word? Email editorial@opi.net

IN THE NEXT ISSUE • Big Interview with Weeks Lerman’s Sid Lerman • Education Special: a variety of in-depth interviews and features looking at the education market