November 2014, Issue 244, Europe

Office Products International ISSUE NO.2 4 4

The word in office.

magazine

Big Interview Uwe Orgas, Managing Director, OTTO Office p18 November 2014

Solid Legacy, Expanding Vision NOVEMBER 2014

Brands

WWW.OPI.NET

p26 Manufacturer rep groups come to the fore Steve Schmidt on Depot’s European changes

p14 EPIC Review p40

Contents November 2014

www.opi.net

News

Events

6 Round-up

39 European Forum

Manufacturer M&A activity; City of Hope honours Steve Schmidt; BOSS launches women network

18

8 Beyond OP

Category Analysis

12 Analysis

HP to create separate PPS firm; Depot to cut staff in Europe; US umbrella group gets a name

46 Imaging Supplies

Despite the challenges it faces, the imaging supplies market is definitely not in terminal decline

Features

50 Marking & Stamping

18 OTTO Office coming of age

In the mature marking & stamping sector, its leaders look to emerging markets for growth

After 20 years in business, OTTO Office has lost none of its entrepreneurial spirit, and customer service is still at its core

Regulars

26 Their strongest suit

5 Editor’s comment

Manufacturer rep groups play their trump cards as vendors outsource sales functions – and often more

50

52 On the move 55 5 minutes with...

32 Plus points

Rob Abrahams

Office Plus of Kansas is seeing success in diversification

A glimpse into this new research report that scrutinises the Amazon B2B threat

40 EPIC Review

US dealer groups come together for another successful joint convention

Breakroom success for Staples; ISSA launches training standard; WB Mason partners with Keurig

36 Amazon bites!

OP leaders listen as talk of the need to change accelerates at OPI’s premier European event

57 Calendar

40

58 Final word Ronny Van Rossem

26

“Some manufacturers want their products being the only thing a sales person talks about on calls.

They believe that they are not getting enough mindshare of their reps. My counter to that is that our customers no longer sell products...

Dealers want us to provide solutions both to them and to their end users”... For the full story, turn to page 26

This month’s cover is supplied by Fellowes

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

Features & Production Editor Heike Dieckmann

Editor’s comment

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

News Editor Michelle Sturman +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 Operations Manager Nicky Coulson 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

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No part of this magazine may be reproduced, copied, stored in an electronic retrieval system or transmitted save with written permission or in accordance with provision of the copyright designs and patents act of 1988. Stringent efforts have been made by Office Products International to ensure accuracy.

However, due principally to the fact that data cannot always be verified, it is possible that some errors or omissions may occur.

Office Products International cannot accept responsibility for such errors or omissions. Office Products International accepts no responsibility for comments made by contributing authors or interviewees that may offend.

Office Products International Ltd (OPI), Diamond House, 36-38 Hatton Garden, London EC1N 8EB, UK Tel: +44 (0)20 7841 2950 Fax: +44 (0)20 7841 2951

Got any change?

Change. This is a word we are hearing a lot at the moment in the business supplies industry. And note I’m using the term ‘business supplies’ as opposed to ‘office supplies’ – just another example of how our industry has changed and is still changing.

Since our last issue went to press, I’ve been to the EPIC convention in the US and OPI’s European Forum in Amsterdam, and – arguably – the overriding theme at each event was how the players in this industry must adapt to the changing world on a number of levels: category expansion, e-commerce, social media, branding, Perhaps I should really be talking stripping out costs, developing solutions vs here about ‘transformation’ as just selling products, opposed to merely ‘change’ etc, etc.

The most successful companies, of course, are constantly evolving as part of a natural, normal business process, so perhaps I should really be talking here about ‘transformation’ as opposed to merely ‘change’. I might just be becoming forgetful in my old age, but as each month goes by, we seem to be covering more and more transformational stories in OPI magazine and on opi.net.

In the past few weeks alone, we’ve seen a seismic shift in the UK wholesaling channel, news of the split of HP (the biggest supplier for many resellers), and Office Depot announcing it will cut 15% of its workforce in Europe as it strives to remain relevant in the – here’s that word again – changing market.

One of the biggest changes for many resellers in recent years has been the growth of the facilities management (aka FM) category. We’ll be looking at the latest developments and opportunities in this segment in next month’s ‘FM Special’ edition – so don’t miss that!

Have a great month.

Andy Braithwaite, Editor Follow us online facebook.com/ opimagazine

opi.net/ linkedin

@opinews

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News from opi.net Intimus acquired

by Spanish investment firm Shredding and data security products manufacturer intimus has been acquired by Spanish investment firm PHI Industrial. Madrid-based PHI has paid J750,000 ($947,000) for intimus, plus the assumption of certain “related liabilities” that were not specified.

Intimus Managing Director Reiner Eckhardt told OPI that he was “delighted” the transaction had closed and that he is now looking forward to focusing solely on growth and development.

“We are very confident about this transaction,” he said. “We now have a partner that has a clear strategic interest in investing in and growing intimus.”

Last month, PHI acquired the commercial and post-sales activities of global mailroom giant Pitney Bowes in Spain, Portugal, Austria, the Netherlands, Belgium and Luxembourg and there are clearly synergies that can be created here.

Intimus already has a relationship with Pitney Bowes in the US and it will now be able to develop a presence in other markets in Europe through the former Pitney Bowes businesses. At the same time, Pitney Bowes will have access to products such as intimus’ degaussers (hard-drive erasers) and data storage shredders.

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OPI Magazine | November 2014

Fellowes planning more acquisitions

The recent acquisition of California-based action sports smartphone camera gear manufacturer Optrix is just part of Fellowes’ expansion plans over the coming year, CEO John Fellowes has confirmed to OPI. The purchase of Optrix now gives the firm a broader range of mobile accessories which fit into the lifestyle of Body Glove’s projected image and allows it to penetrate the fast-growing action sports segment that is demonstrating a growing appetite for Optrix’s waterproof cases and accessories which lets users take videos or photos while engaging in sporting activities.

“We believe that there is an unmet need in the market. People want to use their smartphone as their primary camera device, but are frustrated by the limitations of its versatility and image quality. The Optrix solution completely protects an iPhone while enhancing the quality of the image through its interchangeable lens system,” said Fellowes.

He also believes that through the versatility of the Body Glove Optrix solution there are opportunities for office resellers to engage with the brand across a broad range of end-user applications, from extreme sports to everyday activities.

The company is also currently working on an undisclosed acquisition – which it hopes to close by the end of the year – with growth expected from a combination of both organic initiatives and acquisitions.

“We believe we now have the capabilities to drive more growth through organic means. However, we will embrace acquisitions where they make sense,” said Fellowes.

Turbon acquires PBTI’s remanufacturing division Aftermarket laser printer consumables manufacturer and distributor Turbon Europe has bought UK-based PBT International’s remanufacturing laser cartridge business.

Although the PBTI division will be integrated into Turbon’s European toner business, the companies said the change of ownership would not affect PBTI’s Xinia or private label customers that will continue to deal with the existing UK sales team. The business will also continue to be run from the PBTI facility in the UK, including system stock feeds and stock-in-channel automated information.

Under the agreement, UK clients will now have access to an extended product range of over 600 remanufactured laser cartridge SKUs – including Dell, Samsung and Lexmark products – and will be able to utilise Turbon’s UK cartridge collection programme.

Financial details of the acquisition were not disclosed.

UK-based dealer group Office Friendly has launched KascAid, a marketing programme offering dealers bespoke content managed on a daily basis.

The service, said the dealer group, is designed to provide marketing for members that lack expertise, resources or time to implement strategies.

Office Friendly will provide personnel to work on individual marketing plans that will include analysing the impact of promotional activity along with regular reports. The tailored content includes social media, personalised leaflets and e-marketing activities suited to the needs of each business.

Office Friendly Managing Director Steve Harrop believes that, with a changing market, new technology and new buyers, small resellers are in danger of being left behind without a professional marketing programme.

“For the first time, we’ve produced a unique service for the office supplies industry that’s fully managed but cost effective and where dealers can

News n Round-up

Office Friendly launches new marketing service

really see the return on their investment,” he said.

According to Harrop, the introduction of KascAid signals a change for the dealer group as it seeks to move away from being a “group synonymous simply with buying and negotiating” to one that “embraces the core values of a cooperative”.

City of Hope honours Schmidt The US business products industry gathered together last month at the historic Navy Pier in Chicago as President of Office Depot’s International division, Steve Schmidt, collected the 2014 Spirit of Life award.

Schmidt, a member of the National Business Products Council, led the 2014 ‘Connecting Hope’ campaign, helping to raise an outstanding $12.5 million – breaking last year’s record – for the California-based clinic and medical research institute.

The Office Depot Foundation – the independent, non-profit foundation that serves as the primary charitable giving arm of Office Depot – has also been a long-time supporter of City of Hope. The Foundation has raised more than $5 million for the City of Hope’s Direct Mail Corporate Matching Gift Program since 2004.

Next year’s honouree is Steve Sakumoto, VP/General Manager of US Supplies Sales at Hewlett-Packard.

The 2015 Spirit of Life Gala dinner will be held on 17 September at the Chicago Hilton hotel.

BOSS launches network for women The BOSS Federation has announced the launch of the BOSS Women in Business Network.

The network has been created to support and celebrate the success of women in a leadership/ management role in the OP industry and is designed to enable women to share ideas, provide support, training and mentoring.

Managed by Tania Turner (Fellowes), Karly Haley (Superstat), Sammy Bartley (Bartley Business Associates), Jeanette Bresitz (Spicers) and Liz Whyte (BOSS), the network aims to host events and set up regionally based subcommittees to help organise local functions.

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News n Beyond OP

Breakroom in healthy state for Staples Following the announcement of the Staples ‘Refresh.

Recharge. Refuel.’ breakroom tour, OPI talked to VP of Facility Solutions Chris Correnti about this growing industry category.

The tour, which is currently planned only for the US, featured a pop-up truck travelling across the country offering free snacks and beverages for office workers.

Correnti said the goal of the tour was to showcase the power of the breakroom in helping employees disconnect from work and be more productive.

As one of the fastest growing categories at Staples, Correnti said sales and marketing efforts have been bolstered accordingly, with category specialists helping businesses turn breakroom into a strategic tool so clients can keep their employees productive at work.

Staples currently offers over 2,500 breakroom products, supplying everything from the essentials such as snacks and beverages all the way to furniture and cleaning items.

“We are continuously expanding and evaluating our product assortment to better meet the needs of our customers,” said Correnti.

In response to increasing interest and requests for healthier snacks and drinks, for example, Staples has ensured it has made products such as granola bars, nuts and healthier beverages available within its product mix.

Fostering a healthy work environment fits in with Staples’ own ethos of providing a better work environment for its employees. The reseller recently opened a new health and fitness centre at its headquarters, along with a cafeteria serving healthier food to promote health and wellness at work.

Correnti told OPI that the company has had great success cross-selling breakroom products with other categories, but the crux of the success, he added, is making clients understand that the reseller can cater for all business needs, including the janitorial, technology and furniture categories. “Basically, businesses can stock their workplace with all the necessary essentials from one source in whatever format is most convenient for them, whether it’s through stores, online or Staples Advantage.”

Autobar taken over by its lenders

ISSA launches training certification programme

Vending machine and office coffee supplier Autobar has transferred ownership of the business to its lenders after undergoing debt restructuring.

The total debt of around J900 million ($1.1 billion) has been halved which, according to the firm, will allow it to pursue growth and reinforce its credentials as a coffee roaster with multiple distribution channels, vending being the most important.

The company is also changing its name to Pelican Rouge – after its 150-year-old brand of coffee – and moving its headquarters from Ruislip in the UK to Dordrecht in the Netherlands, where its coffee-roasting activities are based.

Pelican Rouge CEO Alain Beyens commented: “We now have the right capital structure in the business to allow us to continue our growth and premiumisation strategy. Accelerating our growth in coffee, capturing a share of the premium coffee market and moving forward as Pelican Rouge will deliver opportunities for further value creation.”

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OPI Magazine | November 2014

Global jan/san association ISSA has launched the Cleaning Industry Training Standard (CITS), a training certification programme for the cleaning industry.

The programme was developed through a consensus-based process driven by jan/san providers representing key vertical sectors including healthcare, education and government.

Developed as a sister programme to ISSA’s Cleaning Industry Management Standard (CIMS), CITS has been designed to address the need for training and improve professionalism in the industry.

The programme consists of three major components – training and curriculum verification, accreditation of professional trainers and cleaning professional certifications – and offers valuable benefits across the entire industry, from manufacturers and distributors to in-house service providers and other key jan/san players, with the ultimate goal of strengthening customer relationships between these groups.

ISSA Facility Services Director Dan Wagner said: “With the CIMS and CITS programmes in place, we can now take a more holistic approach to addressing the needs of the cleaning industry.

Where CIMS focuses on the management of an entire organisation, CITS focuses specifically on the training of frontline cleaning professionals.”

US mega dealer WB Mason is the first Keurig Authorized Distributor to launch its own brand of K-Cup coffee packs.

In something of a coup for WB Mason, the Shazam brand of K-Cups recently launched with three coffee blends – light, medium and dark roast – available exclusively for WB Mason’s customers.

In what WB Mason CEO Leo Meehan called “the most important product launch in our company’s history”, the $1.3 billion dealer has signed a multi-year agreement with Keurig to sell the Shazam brand under its ‘Make your day magical’ promotion in the away-from-home channel.

“We’ve had a long, successful history with WB Mason as a Keurig Authorized Distributor,” said John Whoriskey, President, US Sales & Marketing for Keurig.

“By expanding our relationship and introducing Shazam coffee to the office and hospitality channels, we’ll be able to provide even more variety and choice of beverages to customers across the country,” he added.

Bunzl buys again Catering and jan/san distributor Bunzl has acquired De Ridder Groep, a Netherlands-based specialist distribution business supplying a wide range of products to prisons, police stations and other detention centres. De Ridder has annual sales of about J8 million ($10 million) and the acquisition is Bunzl’s second in the Netherlands this year following the May acquisition of Alkmaar-based Allshoes, a workplace safety and work shoes distributor.

Bunzl has made 13 acquisitions so far this year, spending more than £120 million and adding approximately £150 million to the top line.

CEO Michael Roney said that ongoing discussions are taking place with a number of other targets and the company expects more acquisitions to be completed before the end of the year.

News n Beyond OP

Shazam! WB Mason launches own brand of Keurig coffee K-Cups

News ■ Analysis

HP to split in two The IT giant’s PPS printing and PC division will become a $57 billion standalone company

OPI poll result

HP

What impact will the split of HP into two have on its supplies business?

made a transformational announcement at the beginning of October when it revealed that it would be splitting the company into two parts: an enterprise technology infrastructure, software and service businesses to be called Hewlett-Packard Enterprise and HP Inc, the current Printing and Personal Systems (PPS) division.

HP Inc will retain the recognisable HP logo and will be led by the EVP at PPS Dion Weisler. HP’s current CEO Meg Whitman will take on the CEO role at Hewlett-Packard Enterprise and also act as non-Executive Chairman at HP Inc. HP Inc – and the play on words with ‘ink’ has not been lost on anybody – will become a standalone, stock-market listed company with annual sales of about $57 billion – split approximately 60/40 between the PC and printing businesses respectively. HP has said the transaction will create two more nimble businesses, but a $57 billion company is still a pretty big beast.

HP almost spun off its PC business a few years ago – a move that was scrapped when Whitman took over as CEO in 2011. Since then, print and PCs have come together under the PPS umbrella division, creating synergies in areas such as supply chain and customer account management. This has made spinning off PPS into a single business an easier thing to achieve; what’s also important is that it will retain the recognisable HP name and blue logo – something that the PC business wouldn’t have had the luxury of back in 2011.

Positive

25%

Negative

25%

Make no 50% difference brand strength in the US supplies business (see Sponsored Interview, page 34), while in terms of innovation, HP is promising a “new computering experience” and a development in 3-D printing; with an announcement expected just after this issue of OPI goes to press.

A $57 billion company is still a pretty big beast

Complex process The change won’t happen overnight.

A complex decoupling and disentanglement process will now begin and the split isn’t expected to be completed until the end of the company’s 2015 financial year ending 31 October 2015.

HP Inc will, of course, face the same challenges PPS faces now in the PC and printing spaces. Both categories have come under pressure in recent years from changing market forces; print sales have been declining in the low-to-mid-single digits over the past couple of years and PC declines have generally been higher than that despite something of a recovery this year due to Microsoft’s ending of support for its XP operating system and a business technology refresh cycle.

So basically HP Inc will have to grab larger slices of two shrinking pies and/or come up with new growth areas and strategies. On the former, there are some green shoots with initiatives such as Instant Ink and a longer-term project to increase

What HP Inc will also have is the ability to generate mountains of cash, essentially from the printing side. How it uses this – especially in terms of acquisitions – will be another determining factor in its future direction.

Clarification

Dion Weisler will lead HP Inc

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OPI Magazine | November 2014

Patricia Barber, President and CEO of The Supply Room Companies (TSRC), has written to us in connection with the Big Interview with Mike Maggio that appeared in the October 2014 issue of OPI. “I want to correct a possible misconception in Mike’s response to your third question.

TSRC did not purchase Rudolph’s as implied by Mike Maggio’s response. We did acquire Frank Parsons in May 2010. Mike was hired to manage our Frank Parsons acquisition.”

New ‘group of groups’ for larger dealers incorporated and moving forward

The

name for the large dealer umbrella purchasing group that is being facilitated by AOPD has been revealed as American Purchasing Alliance (APA). OPI first reported on moves to create this umbrella organisation in September (see ‘Under my umbrella’, OPI

Mundt will also serve as an ex-officio member of the committee.

It should be stressed that APA is not an AOPD operated or owned buying group – AOPD’s role is that of a facilitator and advisor working with the group’s administrative committee.

The new organisation – through which

“[This] may be the best opportunity to implement a level of consolidation and collaboration that our channel needs” September 2014, page 17) and APA has now been incorporated and is moving forward.

As expected, the initial participants in APA are the member of TriMega’s Dealer Supplier Collaborative (DSC) sub-group and the dealers of the Direct Purchasing Catalog Group (DPCG). APA’s Administrative Committee members are Jay Godwin and Yancey Jones for DPCG, David Kenworthy and George Wood for DSC, and Pat Crowley and Mark Leazer for AOPD. AOPD Executive Director Bud

primarily larger dealers will negotiate preferred vendor contracts – is driven, operated and managed by the dealers themselves.

Facilitator’s role “Working closely with the APA Administrative Committee, AOPD’s function in the facilitator’s role will be to ensure that the general purposes of this ‘group of groups’ remains consistent with the initial operating plans of the organisation,” explained Mundt.

The APA contract negotiations team – an experienced quartet of Greg Fish and Ed Walper for DSC, and Doug Whetstone and Gordon Pepper for DPCG – have now begun meetings to discuss contract negotiations, compliance requisites and programme goals.

Commenting on the need for a group like APA, Leazer said: “We may never see the existing buying groups merge because there are just too many differences to overcome. A newly formed ‘group of groups’ may be the best opportunity to implement a level of consolidation and collaboration that our channel needs.”

One of the primary goals will be to keep operating costs and dues to run APA to a minimum.

“Simply put, this concept is meant to drive costs out of the independent dealer channel, not increase them.

The umbrella concept will be a low-cost model,” Leazer told OPI, adding that expense was a “major driver of BPGI’s demise” in the US.

News n Analysis

American Purchasing Alliance announced

News n Analysis

Depot to slash jobs in Europe OPI talks exclusively to Steve Schmidt, President of Office Depot Europe

It

wasn’t announced in a press release, but a 15 October filing with the US Securities and Exchange commission revealed that Office Depot had approved a plan to cut 1,100 jobs from its workforce in Europe, about 15% of its European employee base. This latest round of redundancies comes in addition to 300 positions that have already been eliminated in the past 12 months or so as Depot – much like its arch-rival Staples – struggles to achieve profitability in Europe.

Consultation process The company isn’t revealing any specifics just yet about which jobs are to go in which markets because it is currently in a consultation process with works councils in several countries.

Speaking to OPI from Office Depot’s European headquarters in Venlo, Netherlands, where he has been spending a lot of time recently, Steve Schmidt – who in addition to being President, International, also assumed the role of President of Depot’s European business following the departure of Dirk Collin in early 2012 – told OPI in a telephone interview that he hoped the consultation process would be largely completed before the end of the year, although it would most likely continue into the new year in some places.

It has been public knowledge for some time that Depot has been taking steps to restructure its European

operations along channel lines as opposed to the current geographic organisation, and the 1,100 job losses are the result of this strategy. Schmidt pointed to a number of key reasons and trends why it was felt “critical” to take this action, including: steady low-single sales declines over a number of years; the explosion of e-commerce; the commodity nature of the office products business that has led to low barriers to entry; the need to be a low-cost operator.

“We felt very strongly that we needed to do something bold and decisive,” he stated. “But I want to make it clear – everything we are

Steve Schmidt going on for several years and the European economy in general has been soft for some time.

“What we are doing is something that is extremely complex and we wanted to make sure we did it the right way,” he explained. “When I took over two and a half years ago, what I found was a European leadership team that wasn’t working well together, an organisation that was very bifurcated by country – with an ‘I’ versus ‘we’ attitude – and which lacked a defining culture or strategy.

“Over the first year to 18 months, we spent a lot of time bringing the entire leadership team together as one, working on the culture, building what we see as the ‘foundations of the house’ that would enable us to go forward.

I believe very strongly that you have to create a strategy first, then create the structure that supports that strategy and then build processes that enable the organisational structure to operate efficiently.”

“Everything we are doing is about moving forwards and growth, not about cutting back or pulling out of markets”

Office Depot’s European headquarters in Venlo

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OPI Magazine | November 2014

doing is about moving forwards and growth, not about cutting back or pulling out of markets.”

Depot currently operates in 12 core markets in Europe and European sales are about $3.5 billion, which is just over 20% of the reseller’s total.

Schmidt said that the company at board and senior management level was “100% behind” this restructuring move and Depot’s future in Europe.

“The willingness to spend $120 million on this restructuring demonstrates the commitment […] to the European business,” he declared.

But why didn’t Schmidt take action sooner? The market trends and challenges we are seeing are really just a continuation of what has been

Inefficiencies Schmidt revealed that there were “hundreds” of examples of inefficiencies and process redundancies across Europe that were adding in extra costs and making Office Depot’s cost structure in Europe unsustainable. He stressed that this was a purely European restructuring programme without direct implications for Office Depot’s other international businesses, although he added: “I’m constantly evaluating our portfolio and will continue to look at what’s right for the businesses; where there are opportunities to eliminate redundancies, we will do so.”

Read the complete article on OPI’s interview with Steve Schmidt on opi.net.

Which companies are leading the way in Europe?

Which products offer something new in the European market place?

Which executives have made an outstanding contribution to our industry?

Winners of the fourteenth annual European Office Products Awards will be announced on 4 March 2015 at the Hotel Okura, Amsterdam For more information or to book your tickets visit www.opi.net/EOPA2015 or email awards@opi.net

Presentation Dinner

4 March 2015 Hotel Okura, Amsterdam

LED lighting is a ‘hot’ category right now, particularly as enhanced US and EU legislation spell the demise of traditional incandescent light bulbs. But who’s buying LEDs? OPI asked those involved with the category for their views. Read the full feature in our upcoming Green Thinking supplement.

Marcus Brodin, Commercial Director, Future Energy Solutions

Manufacturers are likely to be targeting wholesalers/ distributors and contractors. All of these routes to market are, in turn, trying to attract end-user clients in a variety of market sectors – from car parks to petrol stations, warehouses to offices, car dealerships to manufacturers.

Due to the still fairly high cost of LEDs, they tend to be marketed towards vertical sectors that have a better return on investment criteria.

John Hauptstueck, CEO, Rosa’s Office Plus Almost all of our clients have fluorescent lighting in their offices and warehouses – both fluorescents and high-intensity discharge lamps which are older and consume much more power. Both the private sector and government need this [LED] solution.

Number of internet-connected devices that will be in use worldwide by 2020 – the equivalent to 4.3 devices for every person on the planet

100 million

Number of smartwatches in use by 2019

87%

Percentage of office workers that put a barista standard coffee maker top of the list of ‘most wished for’ in a dream office

News ■ And finally...

Comment

33 billion

TWEET CHAT follow us on Twitter @OPInews, @andy_opi @IntegraOffice All the best to TheClimbingTeam @OPInews doing the Climb of Life on 7 Nov for the Institute of Cancer Research – we have donated! @EdwardACrowley #Transform2014 @Photizo_Group “More 2-5 year olds know how to play Angry Birds than how to tie shoes” Are you ready? @PhilJones40 My lad asked me last night – ‘What’s dial-up?’

‘The technology after yoghurt pots + string and before broadband’ came my reply. He got it. @exworld4 3D-printed gun maker in Japan sentenced to two years in prison #3DPrinting...

SNAP SHOT

Petri Kautonen, Managing Director, Wulff LED Operations Our main target group are customers that are interested in energy efficiency and green values. Primarily, our aim is to sell concrete savings – in euros and in CO2 emissions.

By updating a lighting solution to LED, our customers will start to see cost savings after a short time.

Scott Zintz, National Account Business Development Manager and Sustainability Strategist, Independent Stationers Sales opportunities abound, and the first targets are businesses that keep lighting on for 24 hours. Healthcare, hospitality, government offices, petrol stations, retail businesses and property management companies would be the perfect places to start.

Harry Peters, President, Strategic Sales and Marketing

I have worked with bulb manufacturers for over 20 years, selling bulbs to SP Richards and United Stationers, and see bulbs as a category sales people very often take an order for – not sell. LED lights are the absolute best value of all bulbs customers can buy as they are a long-term investment and the proverbial ‘no brainer’.

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

Members of the TriMega Next Committee stayed on in Florida after the EPIC event in September to cook food as part of the Ronald McDonald House Adopt a Meal programme (for more on the Next Committee, see our EPIC Review on page 40).

opi.net poll results How has your company’s environmental and CSR policy evolved over the past 12 months?

70% Something we are giving less of 15% a focus to at the moment

It’s part of our DNA – no change

We don’t have an environmental and CSR policy

15%

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17

Big Interview | Uwe Orgas

Laying the foundations for the future is what it’s been all about at OTTO Office for the past 18 months. Heike Dieckmann spoke to Managing Director Uwe Orgas to find out what that really means...

One

of the many brainchildren of the mighty Otto Group, OTTO Office has come of age, this year celebrating its 20th anniversary. Managing Director Uwe Orgas has carved his entire career in the Otto Group, the world’s second largest online retailer – predictably Amazon is the top dog – in the B2C business.

And he was there right from the start at OTTO Office when, in 1994, he and two of his colleagues founded and started from scratch this particular subsidiary of the Otto Group.

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OPI Magazine | November 2014

OTTO Office | Big Interview

OTTO Office

coming of age Mail order remains an important part of the German shopping psyche, but the original remit of OTTO Office has evolved into a much broader concept, making it now a well-oiled multichannel operator that combines the catalogue business with web and mobile shops. Customer service sits at the very heart of it and after 20 years in business, it’s time to take stock…

OPI: Let’s start with your anniversary celebrations. How have you been marking the occasion?

Uwe Orgas: Right from the planning stages, it was clear for us that all our activities should be totally focused on our customers.

It’s due to them that we are even in a position to celebrate this anniversary.

So over the course of the year we’ve been offering initiatives like celebration rebates, sales promotion activities, special offers, raffles and so on and we’ve used all of our on- and offline channels for these. They have all been well received by our customers. We have, for example, noticed an additional three-digit number of contacts via Facebook for the first half of 2014 compared to last year. That’s been very encouraging and we are very happy with the interest our initiatives have generated.

OPI: Going back to the very beginning of OTTO Office, what were the objectives then and what are they now? What have been the major milestones along the way?

UO: In the early years we were viewed as some kind of pioneers among the Otto Group.

The biggest challenge initially was to build up a professional team and to develop from a start-up to an efficiently structured company.

While our first catalogue in 1994 contained around 4,000 items, our offer now extends to over 20,000 SKUs and more than 150 leading brands. But in spite of the strong growth and extension of the business, the ‘pioneer spirit’ has stayed alive and today remains a vital

part of our company culture. We consider the needs and wishes of our customers in any decision we make, and that is exactly what motivates us to continue reinventing and improving our business.

As far as milestones go, one of them was definitely the start of the online business in 2000, but also the launch in Belgium in 2007, the opening of our online shop in 2008 for B2C customers – everything had been purely B2B up until that time – and the launch of our mobile shop in 2011. With the successful introduction of new IT systems for all business areas in May 2014, we now feel we are perfectly placed for future tasks.

OPI: You pulled out of the Czech and Slovakian markets in 2012 – what was the reasoning behind that; was that part of the business unprofitable?

UO: Winning market share at all cost is not a sustainable and long-term business model for us. Pulling out of these markets was a decision based on economic sense, not desperation. We started very successfully in both countries but due to the economic crisis in 2009 these markets had been negatively affected, which also majorly impacted on our business.

We couldn’t really foresee an improvement going forward short term or long term, so decided to withdraw from those markets.

OPI: So what is your current geographical coverage?

UO: We cover the German and Belgian market with the OTTO Office brand. Our home market Germany of course is the most important and profitable side of the business.

Our Belgium business is very much linked to the size of the market and 99% of the assortment is the same as in Germany. All marketing and call centre activities are done with a small and efficient team in the country, and thanks to the high synergies and efficient cost structure, our business in Belgium is also profitable.

“Winning market share at all cost is not a sustainable and long-term business model for us”

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Big Interview | Uwe Orgas definitely growing and for that reason we opened our online shop for this target group a few years ago. In addition, we offer parts of our assortment on the otto.de platform for these customers.

To be quite frank, extending our offering to the B2C customer has been a real win-win for us and it’s definitely profitable.

OPI: Do the two markets differ significantly in terms of how business is done?

UO: I wouldn’t say that it’s a significant difference although there are differences in the marketing mix. But what we see in Belgium, for example, is that after only seven years in the country, the online share of the business is already higher than it is in Germany now.

OPI: What’s the ownership structure of OTTO Office today?

UO: The Otto Group is the 100% owner of OTTO Office. But the business is completely autonomous although we benefit from all the synergies that the group structure brings.

OPI: How many staff do you have in total and how is that split up geographically?

UO: We have a team of about 300 people.

About half of them are working at our HQ in Hamburg, while the other half is based in our warehouses in southern Germany. In Belgium we have a small team taking care of daily operations.

OPI: Who is your target customer? And has that changed much over the years?

UO: Not really. Our primary customer is – and always has been – the small to medium-sized professional end user. All our expertise is linked to this target group.

Questioning that group is quite right, however, and I have to admit that the non-business customer is also a growing part of our customer portfolio. It’s still small, but

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OPI: So how do you position yourself today? Are you a mail order operator or an online player?

UO: Neither. Essentially, our customers decide how they want to be approached – purely online, purely offline, a mix of both... As a result, we believe it’s crucial to have seamless links between all media and all channels, be that our online shops, the phone, the catalogue, the mobile shop, social media, etc etc.

We have been working extensively on this over the past 18 months or so and now have all the systems in place to serve our customers in whichever format they like.

OPI: So do you regard yourself as a true omnichannel operator? My perception is that the whole omnichannel debate is still somewhat in its infancy in the German market – would you agree with that?

UO: It has been one of our key focus areas over the past few months to successfully renew our complete IT environment, but also to seamlessly organise all workflows at OTTO Office to transform us into an omnichannel operation.

I do agree that the concept is still new in the German OP market, but it’s also highly relevant for any reseller.

OPI: Who do you primarily compete with and is that changing? Amazon, eBay, Mercateo – are they already real head-on competitors? And if not, will they ever be, in the same way that Printus or Viking are now?

UO: We are very closely monitoring the companies you mention – and several others.

But we have to differentiate between the possibly ‘negative’ impact an Amazon could have on the OP industry as a whole and the impact specifically on our own business model. If Amazon really starts focusing on the B2B office supplies segment in Germany, the whole distance selling channel for office supplies will benefit.

So on the one hand Amazon will be a challenge for the industry, but on the other there is also a chance for OTTO Office in

“Our primary customer is [...] the small to medium-sized professional end user. All our expertise is linked to that target group”

OTTO Office | Big Interview particular to attract new customers that are moving – due to Amazon – from offline, local retail outlets to a distance selling model.

We know that B2B customers typically use a minimum of two sources for ordering their office supplies. We want to be one of them.

OPI: It’s been a tough year for OP players in Germany, with mostly stagnant performances. Have you witnessed this too within OTTO Office? And is there light at the end of the tunnel?

UO: After the collapse in 2009 the market is more or less flat and there hasn’t really been any recovery.

We’ve seen a number of developments: some categories, like writing or gluing, are growing, while others – paper and furniture for example – are declining. Overall, these fluctuations balance each other out, but there are certainly no clear positive signals coming out of the market.

But while the outlook overall is rather cautious, we are optimistic about the future.

Over the past 20 years we have never stopped investing in new initiatives and concepts and because of that managed to defend our market position. We intend to continue this successful formula with exciting news, both in terms of products and services.

various marketing campaigns. The crucial point is that we approach our customers in a very individualised way to meet their needs.

OPI: How is the German OP reseller channel shaping up in your opinion?

UO: The borders between traditional OP and other industries have blurred quite strongly on the reseller side. Just to focus on OP is not enough anymore to satisfy the needs of today’s customers.

The best growth now comes from adjacent product ranges, not from more aggressive pricing in traditonal categories.

This is great news for any OP reseller, but also a real challenge as it is considerably more complex than just being focused on monitoring pricing levels.

OPI: Do you use the wholesalers?

UO: Managing the supply chain right from the manufacturer until the goods leave our warehouses is one of our core jobs. Our team takes care of the quality of the products as well as the packaging, paying close attention to the various CSR standards of production, delivery, etc. All that makes it necessary to have direct contact with the manufacturers.

“If Amazon really starts focusing on the B2B office supplies segment in Germany, the whole distance selling channel for office supplies will benefit”

OPI: So what are your latest initiatives?

UO: I could mention many single activities.

Throughout 2014 we’ve continued to extend our assortment with completely new segments, such as white goods for professional use. We have also created

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OTTO Office | Big Interview That said, we do use the wholesalers for some ranges where it makes more sense, such as IT supplies. But even for those products, we discuss all our requirements directly with the manufacturers and use the wholesalers only as the source of supply.

OPI: What kind of logistics facilities do you have yourself then?

UO: We operate two warehouses with a capacity of 50,000 sq m (500,000 sq ft) located in the area of Karlsruhe in southern Germany. From there we can serve both Germany and Belgium in less than 24 hours, which is a basic requirement in our market.

A long-established partnership with DPD as our third-party provider insures the highest delivery performance for our customers. We closely monitor every package that leaves

generated online. Our mobile shop has existed since 2012 and the share of visits and orders there is growing as well.

OTTO Office is always open to new technologies and methods to interact with customers. One of the ways of reaching those customers is through modern, progressive communication channels like social media.

We see really good opportunities here for getting into direct contact with existing as well as potential customers.

I’m not sure if we were among the early adoptors in our industry, but we started our own blog, entitled ‘ Rund um’s Büro’ (Office Stuff) in 2010. It’s all about productivity in the office. In 2011 we joined Facebook and today we are also active on Google+ and Xing.com.

Although OTTO Office is essentially a mail order retailer, we aim to reduce the

“Social media can also be helpful in getting in touch with new potential customers” our warehouse until it’s handed over to the customer. To guarantee the high service levels that are so key in our sector, DPD’s performance control includes far more than the usual ‘where is my package?’ tracking module.

OPI: What’s your opinion on further consolidation in the industry?

UO: We’ve seen consolidation in our industry for many years now, both on the retailer and the manufacturer side. In the German market in particular, I believe that the trend for smaller retailers to join buying groups or organise themselves somehow to bunch their power will continue.

OPI: OTTO Office is regarded as a tech-savvy operator in the market, specifically in terms of its e-commerce structure, web capabilities and foray into social media. What is your strategy here and where are you now?

UO: E-commerce is one of the strategic pillars of the company. We began back in 2000 with our first internet shop and have year by year optimised its visibility, usability and the state-of-the-art presentation of our products.

Several service features and customer-oriented functionalities like special shops within a shop and highly individualised shopping and product options have all been tested extensively and are well accepted by our customers. Today, more than 60% of our sales in Germany are

‘distance’ to customers and create as much interaction with them as possible. We believe that close contact is crucial. It should be simple for customers to contact us, and it should be possible through any and all desired channels.

And, like I said, social media can also be helpful in getting in touch with new potential customers. Especially during our anniversary year this year, we’ve boosted many of our activities through the social media channels.

OPI: Talking of social media, I noticed a lot of activity on Facebook, for example, during the FIFA World Cup in Brazil in the summer – congratulations, by the way, on Germany’s win! What has been your experience during an event like that – I believe it’s been detrimental to many businesses? Have special campaigns like “Jeder Preis ein Treffer” (“Every price a goal”) mitigated the lack of business during such periods?

UO: Firstly, thanks for your congratulations on the Germany win; it was a great time for everybody in the country. And as we expected, it was one of the most talked about topics among staff in our office.

Anticipating this high interest, it was just a short step to think of a way to capitalise from it with strong online and offline sales promotion activities. Our World Cup marketing campaign was very successful in terms of social media activities and also in terms of profitability. w w w.opi.net | OPI Magazine

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Big Interview | Uwe Orgas OPI: With the internet becoming ever more important, where does that leave the printed catalogue?

UO: In short, we still need the printed media for our marketing mix today.

From customer surveys we conduct we know that printed media among B2B customers still play an important role in the buying process.

Yes, the transactional part of buying has moved online to a large extent, but offline media are still very important in the overall process. To amalgamate both, we have over the past years created ‘theme worlds’ in an innovative way. They seamlessly connect offline and online media, offering an up-to-date offer online with a much larger selection of products. This direct link between catalogue and our online shop works as a comfortable bridge between the media.

OPI: You’ve already alluded to the importance of branching out into adjacent categories. OTTO Office now offers white goods, including refrigerators, freezers, pizza ovens, etc.

Where do you see the best opportunities?

UO: We don’t think in terms of traditional OP categories only anymore, and haven’t done for a long time. Customers want to cover their complete needs around the office from one source, for very practical reasons such as time, avoidance of ordering costs and to have just one contact for all service issues.

But increasingly also, we see the border between ‘work’ and ‘life’, especially among SMBs, blurring, hence our focus on offering products that could feasibly be used in many walks of life.

As a result, our approach is to be considered an ‘office and work-life specialist’ rather than an ‘office products reseller’. So we offer most things that would fall into the facilities management (FM) category. But even lifestyle products like gifts, consumer electronics, household and travel items play a certain role in our sales statistics and we definitely will continue to extend our range with new categories like that.

OPI: What’s your view on own brands, particularly for these adjacent categories? I believe you’re quite prolific with own brand products.

UO: The quality requirements for our own brand are as a minimum the same as for an A-brand. In some cases we decided not to create an own brand product because of quality reasons. So it’s not really a question of category type, but a question of quality.

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At the end of the day our name is on the box and what’s in that box is what we as a company stand for. At present we primarily offer private label in the more traditional categories, but we are about to extend this into other areas. The first steps have already been taken in the FM category. So far we are happy with the results and we definitely see more potential here.

OPI: Lastly, where is OTTO Office going for the next 20 years?

UO: Well, very short term, we are on track with our stated plans for this year and have throughout 2014 finalised the major renewal of our entire IT environment, including SAP. With this fully up-to-date IT set-up, we feel we are well prepared for any future challenges.

Additionally, many of us from OTTO Office, myself included, had the privilege to experience the development from a start-up to become one of the relevant players in the German OP market. There is a culture with a real entrepreneurial spirit here and this has definitely contributed to our success over the past 20 years – and will be very important in the future too.

OPI: Thank you Uwe for this interesting glimpse into OTTO Office.

“We don’t think in terms of traditional OP categories only anymore and haven’t done for a long time”

Hot Topic | Manufacturer Rep Groups

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strongest suit

Economically not sustainable Avery is an industry stalwart that has gone through a major reorganisation process over the past 2-3 years, first through internal restructuring and then as a result of the purchase of its Office and Consumer Products (OCP) division by Canada-based labels and packaging firm CCL in a $500 million deal at the beginning of 2013.

Many people – in sales, marketing, HR – lost their jobs in that period, explains Barry Lane, VP of Sales, Commercial, at Avery:

Barry Lane

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of all trades, master of none – that’s how one person OPI spoke to said manufacturer rep groups sometimes used to be referred to in the past. Whether that rather harsh statement was ever true is debatable in itself, but it’s certainly unlikely to carry much weight these days.

In the US at least, where the concept of rep groups is long-established and accepted, manufacturers have come to rely on these groups a lot more over the past few years.

The reasons are manifold. The need to take cost out of the supply chain has been a hotly debated topic of late and has resulted in a host of new – sometimes unexpected and eyebrow-raising – initiatives and ventures.

Manufacturers are far from exempt from these cost efficiency pressures and are indeed the first link in the chain.

Couple that with the consolidative trends overall in the industry and the growing need to broaden your skills to address multiple channels and product categories, and it’s no surprise that outsourcing the sales function at a very minimum has its advantages.

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“We’ve let all of our direct sales people go and that was tough.

Some of them had been here for thirty years or so, but our model just wasn’t economically sustainable anymore. It was the right thing to do and something we had to do, and because we got sold, the process was perhaps even more radical.”

And while Avery had been supporting the rep firm model for many years, the need to become more efficient further cemented that support. Says Lane: “We now have a sales business model whereby we have our own national account managers that manage the mega channels as well as the headquarters of our large dealers and wholesalers; in other words TriMega, Independent Stationers, WB Mason, United Stationers and SP Richards.

“Our own folks manage that class of trade while the rep groups manage our independent dealer channels. So our manager for TriMega, say, would cascade all the information, objectives and strategies down to the rep groups at local independent dealer level.”

Naturally, some dealers, especially the larger ones, may prefer a direct manufacturer relationship. Historically, one of the gripes of dealing with a rep group had to do with the speed – or indeed the lack of it – of decision-making, but a direct relationship with all customers countrywide simply isn’t economically viable anymore.

Lane adds: “We believe that every customer across the country deserves the same coverage. We don’t pick and choose and say, ‘Well, I’m sorry but that’s Montana and that’s not important to us’. And the best way to make sure our brand gets represented and marketed in all geographies is to have rep groups who go there with multiple lines.”

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Manufacturer rep groups are part of the make-up of the US OP landscape, but ongoing consolidation, the pressure to cut costs and need to branch out into adjacent categories have meant that they too have had to up their game

Manufacturer Rep Groups | Hot Topic

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Those multiple lines can be another sticking point – rep groups don’t just represent one manufacturer, they represent several and that’s perhaps one of the reasons why the concept hasn’t really caught on in any other part of the mature OP world, particularly in Europe where the challenge of expansive geographies isn’t as acute as it is in North America.

As Ron Zusovsky, Principal of rep group firm The Source Group, says: “Some manufacturers want their products being the only thing a sales person talks about on calls.

They believe that they are not getting enough mindshare of their reps. My counter to that is that our customers no longer sell products.

Whether it is furniture, office supplies, MRO or jan/san, dealers want us to provide solutions both to them and to their end users. We are specialists, solutions sellers and consultants all wrapped into one.”

We realised that a national footprint coupled with investments in talented leaders who are knowledgeable about facilities would give us a clear competitive advantage with facility suppliers looking for representation. As a result we now have a comprehensive bundle of blue chip facility suppliers.”

Branching out Whether it’s facilities management (FM), furniture, industrial supplies or education – all categories mentioned by the various rep groups OPI spoke to – this branching out is exactly what many resellers want to see.

For the manufacturers too, it’s an opportunity to penetrate reseller channels where they’ve previously had a low-key footprint or indeed are new to entirely.

Beth Wright, VP Americas of Bi-silque, says: “Throughout my career, I’ve always

“The good old days of your salesman going out, having a couple of drinks with the customer and you’re getting all the business – they’re over” Indeed, from a reseller perspective, one of the other core advantages of a rep group is the fact that representatives go in with a whole range of products. That not only addresses the time pressures resellers are facing, but also allows them to picture entire product themes in different categories rather than just single lines.

Also, and importantly, says Darlene Akers, President of Akers Business Solutions, if a manufacturer’s direct sales rep were to call on a customer and got turned down, it would take months to get back into the dealership to present its products again. “A manufacturer rep has many reasons to call on a dealership and is back in there the next week,” she adds.

There’s no doubt that the remit of rep groups has changed and has, in fact, become considerably more comprehensive.

And while consolidation in the traditional OP manufacturing community has removed a substantial amount of commission dollars from the market, the upside is that, for rep firms just as much as for the resellers they sell to, the pool of manufacturers they can draw from has increased hugely.

Says CEO of The Highlands Group (THG) Bob O’Gara: “There has been considerable investment by facility suppliers as the channel has gained more strategic importance for them.

worked with rep groups across the country from a field-selling perspective. But with my current role of running North America for Bi-silque, as a fast growing national brand – MasterVision – when you start looking at brand recognition and getting into the dealer community, that’s really where rep groups add the most value.

“Our largest rep group is Frey Gaede (which also runs Blazer Brusa and Tri-Gold) which serves the south-east and middle of the country. The reason why I hired them is because they have the ability to look at a business differently. They know that in the industrial channel, for example, customer needs are a little bit different and for that reason we have to approach that channel differently. The good old days of your salesman going out, having a couple of drinks with the customer and you’re going to get all the business – they’re over. These sales organisations have to arm themselves; they have to be more technologically savvy than they’ve ever been and they have to think outside the box. And the rep groups really do that.”

How far a manufacturer wants to take its representation various enormously. Avery’s Lane comes from a w w w.opi.net | OPI Magazine

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Hot Topic | Manufacturer Rep Groups “Rep groups should do what they’re really good at – sell, persuade, problem-solve, build business for customers”

long-established traditional manufacturer and for him it’s all about getting in front of the customer to sell. “One of the things that I believe manufacturers need to be very sensitive to is that manufacturer reps are sales people for a reason,” he explains.

“We have said to our rep group: ‘We don’t want you sitting in front of a computer all day; we don’t want you to do an analytical spreadsheet. We‘ve got people who are category experts and who do our trade marketing – we want you to sell. Take the tools that we’ve developed, sit in front of customers and sell.’ In my opinion, rep groups should do what they’re really good at – sell, persuade, problem-solve, build business for customers.

“Of course, financial and business acumen is the price of admission today – you shouldn’t be in sales if you don’t have those

two things. But the key is not to overburden the manufacturer reps and try and turn them into category analysts.”

Comprehensive offering Yet overall, it’s arguably the deep level of cooperation between rep groups and manufacturers that has changed the most over the past few years. From data entry and marketing functions to a variety of administrative tasks being outsourced to rep groups, they’ve all become part of the mix, with real partnerships being developed between manufacturers, their rep groups and indeed the resellers.

Steven Glass, Managing Partner of the Midwest Resource Group, says: “We are now having great conversations with manufacturers that we traditionally haven’t had about how they can protect the market

Reaching Europe Manufacturer rep groups have been part and parcel of the US OP landscape for many years. It’s partly because manufacturers need to cover large geographical distances in the US to reach their customers, but it also has to do with the fact that many have reduced their internal sales teams considerably – or even completely – much earlier than their Bob O’Gara counterparts in other parts of the world, particularly Europe.

That is beginning to change with the increasing concentration and consolidation in the distribution chain. And as much as the reseller community in the UK has jumped on the ‘cutting costs’ bandwagon, resulting in all manner of deals and partnerships, so too are some entrepreneurial set-ups now keen to help vendors cut down their costs as well as reach out towards new potential customer groups.

Product Promotion Services (PPS) was set up by Martin Eames and David Stevens as a field marketing agency in 2012. PPS has five contract clients on board now – one of them the UK business of leading office products manufacturer Esselte Leitz, another facilities management (FM) distributor Robinson Young – plus a variety of other customers without ongoing contracts. The agency has stretched itself across several product categories as well as target partners (Robinson Young being a distributor rather than a manufacturer).

Eames explains: “In the OP channel, the primary source for FM products is Robinson Young rather than the manufacturer. So we represent the distributor at reseller level, but the product is actually sourced through Spicers or VOW from those resellers. We are essentially promoting the whole category of FM through the resellers, with the actual sales going through Spicers and VOW.” The real advantage of an agency like PPS, Eames adds, is the direct contact with resellers: “About 85-90% of our revenues come from face-to-face selling on behalf of the manufacturer. We do some merchandising and some market research for vendors too, but the majority of what we do is sales calls. Resellers are not actually short of

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products and promotional information. The opposite is true – they are swamped with information, but it typically comes in two forms and that is either e-communication or hard copy communication. And because they get so much of it, it’s often relatively ineffective. We’re finding that face to face is often the most effective form of communication because it guarantees the attention of that reseller to that particular product or promotional initiative.”

Another group that has recently made a splash in the UK market is The Highlands Group (THG), the US-based group that earlier this year struck a deal with UK OP business development specialists The Business Performance Group (BPG).

The agreement has facilitated THG’s entry into the UK market (as well as giving BPG access to the US market). It’s early days yet, however, says THG CEO Bob O’Gara, and the initial launch date of April wasn’t particularly well timed as suppliers had already established budgets for the year. That said, he adds: “We have engaged in a variety of projects for a cross section of suppliers that have validated our belief that an organisation focused on selling products will be successful in the UK market. As a result we have a strong portfolio of suppliers under contract for 2015.”

Once firmly established, THG is keen to push the model into continental Europe. With the cost to serve in many European markets remaining very high, O’Gara is acutely aware of the opportunities, but also of the challenges. Germany, for example, which would potentially be his first port of call, is a market where manufacturers have maintained quite large direct sales forces as so much business is still being done directly with the resellers (as opposed to the wholesalers or the dealer groups).

He says: “Our study of the continental European market thus far suggests that there could be resistance to a model like ours if it is not carefully explained well ahead of its introduction. If we elect to expand it will be done with deliberation and a great deal of feedback from the market.”

differently, how they can engage and increase their sales, maybe not even just in traditional OP, etc.

“Our vantage point and our value proposition to the reseller, meanwhile, is that we see all the other channels and product distribution networks and know how they operate. So we have a knowledge base that has a real value.”

That’s good for the vendors too. New manufacturers to the business supplies channel, in particular, benefit from employing a rep firm. Says Nick Aronis, President at The Godfrey Group. “We offer a turnkey solution for manufacturers that are new to our industry so the learning curve is eliminated. For example, many jan/san manufacturers have chosen to hire rep groups to help them understand the channel ALL

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Manufacturer Rep Groups | Hot Topic inside sales support for field sellers. This coupling, along with digital marketing, is the most cost-efficient and effective path to market for agencies in the future.”

Susan Roberts, Principal at Unified Sales Associates, agrees: “Technology is dissolving traditional boundaries between people, countries and industries. There’s a real blurring of the marketplace. Successful manufacturers, resellers and rep agencies are taking full advantage of this shift in the way people shop and buy.”

Collaboration – within the restrictions of competition – is key, she adds, saying that Unified Sales has developed relationships with other sales agencies and developed and launched a best-in-class technology platform.

Indeed, what’s interesting is that despite the competition that exists and the numerous

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“Many jan/san manufacturers have chosen to hire rep groups to help them understand the channel” and significantly grow sales. Our channel doesn’t seem complicated to all of us because we do this every day, but it is daunting to a manufacturer that is new to our business.”

Whether manufacturers partner with a variety of rep groups, both regional and national – Avery is a keen exponent of this – or just one firm is a case of individual and often historical preference. For instance, earlier this year, GMi Companies, consisting of Ghent, VividBoard and Waddell, made a concerted effort to switch from over 20 different rep groups to one national one, believing that it would streamline and simplify its go-to-market strategy.

Tech-savviness From left: Nick Aronis, Darlene Akers and Steven Glass

To efficiently do all the jobs that have become part and parcel of the rep group’s role, tech-savviness has been vital. And here, adds O’Gara, rep groups have historically not been the first in the queue.

“Market coverage is accelerated and vastly broadened through the effective use of email marketing campaigns and social network marketing.

Investments in a robust CRM system allow representatives to engage in multilevel selling campaigns coupling

guises of rep groups – regional or national; focused mainly on core and/or adjacent categories; offering a pure sales function as opposed to a fully-fledged sales, marketing and administration model – there is a great deal of collaboration going on between them.

There exist already some umbrella groups that comprise regional rep groups – Harbinger National is just one of them, bringing together firms like Frey Gaede, John Motley and The Godfrey Group – while operators like THG have been steadily expanding their reach through acquisitions and partnerships, most recently into Europe (see ‘Reaching Europe’).

Even within the vendor community, Bi-silque’s Wright points to collaborative ventures that may from the outset seem surprising. She says: “What you will increasingly see is non-competing manufacturers having some very strategic alignments with rep groups.

“We may not talk about it, but we are definitely looking at what the other one is doing to make sure that there’s not conflict.

But ultimately there has to be alignment and collaboration in how manufacturers go to market and in my opinion having supplier cooperation and working together with the rep groups is a good go-to-market strategy that will help resellers grow their business.”

Rather than just another link in the supply chain, rep groups have – in the US at least – stood the test of time and are now arguably more effective than ever. Whether that perception will ultimately travel to other parts of the world remains to be seen. w w w.opi.net | OPI Magazine

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Dealer Spotlight | Office Plus of Kansas

Plus points

Office Plus of Kansas has developed a diverse offering over the past ten years

“We have brought all these businesses together and now single-handedly deliver foodservice, breakroom and office supplies”

Bryan Kristenson

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by Andy Braithwaite andy.braithwaite@opi.net

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Bryan Kristenson and business partner Laurie Jones went into business together in 2004, it was not an office supply dealership they acquired, but a Wichita-based concession distribution company called American Fun Food that specialised in foodservice products and supplies and jan/san, supplying customers such as movie theatres and restaurants. It wasn’t until two years later that they moved back into the office products side after an acquisition opportunity arose, marking the start of sister company Office Plus of Kansas.

Since then, three further acquisitions – the most recent being the 2013 acquisition of Steelcase furniture dealer Scott Rice – have taken annual sales to about $14 million. The business now operates from five locations covering a 180-mile radius out of Wichita and employs about 50 staff.

“Things have worked out well for us from a distribution viewpoint because we have brought all these businesses together and now single-handedly deliver foodservice, breakroom and office supplies – it’s a mix that our customers appreciate,” explains Kristenson.

It has also helped Office Plus of Kansas develop a more efficient distribution model

OPI Magazine | November 2014

and cope with seasonality in its main product categories. Foodservice is usually busier in the summer months while office supplies typically see more orders in the new year.

“Bringing these businesses together allowed us to reduce our reliance on temporary staff, attract more talented people and created a better business platform,” says Kristenson.

The next leap “Some of the acquired dealers were at a stage where they had grown to a certain size and would not have been able to grow organically without serious investment,” he continues.

“The $1-$2 million dealer, typically with the owner involved in sales or the lead salesperson; their problem is how they make the next leap, and bringing them in has worked well for us and them.”

On the subject of acquisitions, Kristenson notes that dealers should not underestimate the challenges of integrating different sets of systems. Scott Rice had been using the Hedberg office furniture system for about a decade and Kristenson admits that trying to bring that over to ECi’s DDMS system was a challenging experience, but thankfully one that is now behind them.

Traditional office supplies and foodservice/ janitorial each account for between 30-40% of the sales mix with the balance coming from the furniture business, which has transitioned from mainly transactional sales towards a larger service-oriented contract offering over the past few years, especially since the Scott Rice acquisition.

Office Plus of Kansas | Dealer Spotlight

Bryan Kristenson and Laurie Jones

“I’ll be a healthier dealer longer term if I can find what my customer wants in a more timely fashion” Office Plus of Kansas Fact Box Founded: 2006 Owners: Laurie Jones and Bryan Kristenson Annual sales: $14 million (approx) Employees: 50 First-call wholesaler: SP Richards Dealer group: Independent Stationers Model: Stocking dealer

Starting the business on the foodservice side has given Kristenson a good perspective on different wholesaling models and – like many – believes that those on the office supply side that work with the likes of SP Richards (SPR) and United Stationers can make good inroads into the jan/san category.

“I think our channel is more flexible and more responsive to customers’ needs,” he states, adding: “As SPR and United have expanded their product ranges that has been good for us too. We are now able to access products that our customers didn’t realise they could have the next day – it’s a new concept for them and means we can provide something the traditional jan/san resellers can’t.”

New opportunities With jan/san a key category, the person in charge of Office Plus of Kansas’ supplies business has a strong background in janitorial. “Whereas office supplies is largely reliant on the seated employee count, jan/ san changes how you have to prospect,” says Kristenson.

“Suddenly you are interested in a manufacturer that’s got 300 people behind a wall our sales people have never been to the other side of. It opens up a new set of opportunities, but also a new set of challenges: it’s a different buyer, a different message and a different sales process, so it was important that the person heading up our supplies business has a good understanding of these.”

While Kristenson certainly appreciates the roles the wholesalers play, one of his bugbears is how to bridge the e-content gap between what the end users want to buy and what the wholesalers stock and want to sell.

“We struggle with the breadth of the product

and the timing that we can go to market,” he states. “Manufacturers have product available, but when things are wholesale driven it can be a challenge.”

He continues: “I understand the wholesalers’ investment in inventory and what they are trying to merchandise, but I’ll be a healthier dealer longer term if I can find what my customer wants in a more timely fashion.”

Kristenson believes the whole e-content issue – what Independent Stationers (IS) CEO Mike Gentile has coined the ‘digital destiny dilemma’ for dealers – is one of the areas holding the independent dealer community back in terms of its e-commerce capabilities, with individual dealers lacking the resources needed.

“We have to be easy to do business with,” he argues. “I’m not unappreciative of the investments the software providers make, but at the end of the day we do not provide that ‘easy-to-do-business-with’ experience.”

Changing habits Kristenson also points to changing purchasing habits as younger people – who have grown up with the internet – take on more positions of responsibility in the workplace.

“Where we’d like to be is if you can’t find a product, let us know and we’ll help you to get it. But as customers get younger, the likelihood that they will make that call to us reduces dramatically.

“We are also seeing examples of orders that used to come in regularly at certain times of the year now not showing up. Why? Because someone new has come in and ordered online – but they didn’t order it online from us. How we correct that is, I believe, one of our biggest challenges.”

Kristenson is the current Chairman of the IS dealer group and says he was initially attracted to the group because it was a better fit culturally in terms of what he wanted out of a dealer group, in particular how it developed programmes that would help his dealership grow. The regional distribution centre programme was a factor, tying in as it did with Office Plus’ stocking model.

The IS national accounts programme has also opened doors into new accounts that probably wouldn’t have opened otherwise, Kristenson confirms.

Looking ahead, Kristenson says growing jan/san and developing better e-commerce functionality will be key focus areas. And he doesn’t rule out the next Office Plus of Kansas acquisition coming in the jan/san category. w w w.opi.net | OPI Magazine

33

Sponsored Interview | Customers at the center of HP’s Qualified Program

Are you qualified?

HP

caused some ripples in the US supplies reseller channel last year when it moved from an open to an authorized distribution model.

Now, from 1 November, HP is requiring its resellers to conform to a stricter set of “customer-centric” reseller criteria to achieve ‘Qualified’ status. Only resellers that are qualified will be able to continue to sell HP’s ink and toner supplies in the US. In the latest in a series of interviews with OPI, Steve Sakumoto, HP’s VP and General Manager, US Supplies Sales Organization, shares his thoughts on this major development.

OPI: How many resellers have made it past the authorized stage to achieve qualified status?

Steve Sakumoto: I would say out of the approximately 8,000-10,000 authorized resellers we currently have we’ll probably end up with about 5,000-6,000 qualified partners.

That’s still a very large number, but you can see that many did not meet the qualifications.

OPI: That’s a big drop and a pretty substantial change to the way HP operates with the channel. Why do you see this program as so beneficial to your channel partners?

SS: When you go from 20,000

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OPI Magazine | November 2014

HP’s Steve Sakumoto provides an update on the Qualified Partner Program for ink and toner supplies in the US resellers – which is where we were three years ago – down to 5,000-6,000 resellers, we believe those remaining are the ones that will have the capabilities, the financial resources and the will to properly present the HP brand to the customers. We’re of the strategic belief that a more qualified channel with fewer, high quality reseller partners will enable HP to provide a superior customer solution to their end users who will actually buy and use our products.

We believe that is what our customers want; they don’t need more choice.

There still is a lot of choice with 5,000-6,000 qualified resellers, but the ones that are

available are of a superior quality to where we were two years ago.

One thing I do want to highlight is the qualified program was designed with the customer at the center.

Reseller partners will be requalified every year based on HP’s customers’ needs and how we continue to make the customer purchase experience better.

OPI: You’ll recall that there were some delays and backlog when you implemented the authorized program. How is this transition going to qualified? Did you learn any lessons from that previous process?

SS: Yes, this time around we actually started the process months in advance and we have been in the process of qualifying all of the resellers that have requested to continue in our programs; we are going through that and we have pretty much completed that assessment.

OPI: So by the time this interview is published, are you confident that any authorized reseller that meets the criteria to become a qualified partner will have done so and will have that medallion on their website?

SS: Yes, if a reseller has been in part of the process from when we started in May of this year and has gone through the normal qualification process and has fully met all the criteria, they will be qualified by 1 November. We decided to issue Qualified Partner

Customers at the center of HP’s Qualified Program | Sponsored Interview we did that, we had anticipated that revenue would have flowed back into the first tier. We have recovered most of it but there was some bleed off to other parts of the channel; we believe that could be from these former tier two distributors either buying indirect from tier one distributors or purchasing from the gray market – and these are two areas we are working hard on to ensure compliance.

medallions to those resellers that have met our program criteria. We will be telling our customers to look for this ‘seal of approval’ and we’re encouraging resellers to place their medallion on their website to help drive differentiation and program awareness. The rollout of qualified medallions has started and we expect that to be completed in January.

There is a discrete set of resellers that applied but did not meet the criteria and were rejected. As part of our process they’re allowed to reapply after they have made the proper changes to their business models and practices. Many of those may not be fully qualified by 1 November because of the time it takes to process their applications, but we’ll get to them over the coming weeks and months as we move into the new cycle.

OPI: Is reporting end-user data a requirement for qualified resellers?

SS: The new US Qualified Reseller Program requirements supersede the standard HP Authorized Reseller Program requirements for HP’s supplies product lines. As such, end-user reporting data is not a requirement for US supplies qualified resellers.

OPI: Let’s talk about your distributors. I understand some of your tier one distributors have seen substantial declines in revenue for HP supplies. What’s your take on that?

SS: At the same time we went from the open to authorized program in November 2013 we also eliminated a second tier of distribution. When

You can’t fully shut all of those things off just like that, but we have dedicated resources both within the US – so that our channels are properly aligned with our program and our policies – and external of the US to try and manage incoming gray market products. It’s an ongoing process; we’re constantly getting leads and tracking them down, sending out notifications to cease and desist and following up with legal action.

“All of our channel changes are centered on the customer and we believe that, together, HP and its Qualified Partners will deliver a superior customer experience” Qualified Partner Program explained Steve Sakumoto summarizes the criteria for resellers to achieve qualified status in order to be able to sell ink and toner in the US: “There are five basic criteria that a reseller needs to achieve to be qualified and to continue – post 1 November – to have access to and be Qualified Partner medallions will be issued to those able to sell HP ink and toner in the US. resellers that have met the program criteria The first one is a basic one: you have to be an authorized dealer and have a US partner agreement with HP. As of November 2013, all of the US supplies partners were required to gain a US partner agreement to continue selling in calendar 2014. So now in November 2014, we are requiring all resellers in the future to maintain this partner agreement as the first step.

The second thing we’re asking our resellers is to have a physical presence in the form of a fully functional company website, a physical address where they conduct business operations and a phone number where somebody can actually be reached. We do not want customers to have to deal with PO or UPS boxes, mysterious forwarding email addresses or phone numbers that are disconnected. We want people to know that the reseller they’re doing their business with has a solid physical presence and background.

The third thing we want them to do is to represent the brand in a way that is fully aligned with HP. So that means properly presenting our products, using our brand trademark and marketing materials correctly, and following our supplies messaging across the whole portfolio.

Fourthly, qualified resellers are required to have a six-month minimum revenue history with HP – in ink and toner – of $15,000, so $30,000 on an annual basis. There’s a rationale for this: $30,000 of ink and toner is not a lot when you add it all up and we want to have dealers that do three basic things: one, have a physical solid presence for us in front of the customer; two, properly present our brand and product portfolio to the customer; and three, have the financial resources and support so that they can do numbers one and two adequately.

Our point of view is that if you’re not doing at least $30,000 worth of ink and toner business with us, you probably are not going to have the financial resources to properly do the first two – so all three of them go together.

Then the last criterion is basically to be in continued good standing with all of HP’s standard marketing policies and procedures.

All of our channel changes are centered on the customer and we believe that, together, HP and its Qualified Partners will deliver a superior customer experience.”

w w w.opi.net | OPI Magazine

35

Research | Amazon Report

Amazon bites!

EARLIER

this year, Martin Wilde Associates (MWA) and OPI published The State Of The OP Industry 2013-14, a report based on a survey of the views and expectations of 51 key office products industry CEOs. The report found that: • The distribution channel that was most widely reported to have won market share in 2013 was Amazon/eBay (84% of all respondents).

• The distribution channel that was most widely expected to take share in 2014 was Amazon/ eBay (72% of respondents).

However, despite these predictions, little was known about the current and potential B2B customer base for Amazon in terms of OP. As a result, during the summer of 2014, MWA carried out Source: MWA

Fig 1: US-based OP purchasing from Amazon by respondents 1%

42%

40%

The power of Amazon in the B2C world is well documented. But how about B2B – should OP resellers be worried? A new research report from Martin Wilde Associates and OPI finds out... a research programme among 400 end-user OP buyers in the US – and another 400 OP buyers in the UK – in order to investigate a number of key questions, including the following: • What kinds of businesses have used Amazon to buy OP in the last 12 months?

• What types of office products – and what share of end users’

A very significant number of OP buyers from all types of companies had bought core OP from Amazon total OP purchases – are currently being made from Amazon?

• What are the perceived benefits and disadvantages of buying OP from Amazon?

• Which OP supply channels have lost out to Amazon?

• How will OP sourcing from Amazon change in the future?

Two reports based on this research – one for the US, the other one for the UK – have now been published, entitled Swimming With Piranha and their contents make for some surprising as well as challenging reading.

Measuring the bite radius 16% 1% ■ ■ ■ ■ ■

36

Yes - both Amazon & Amazon Marketplace Yes - Amazon only Yes - Amazon Marketplace only No Don’t know/refused

OPI Magazine | November 2014

penetration is generally more widespread than that found in the UK study.

What was evident from both reports was that a very significant number of OP buyers from all types of companies had bought core OP from Amazon: it was not – as perhaps would have been expected – only those in the very

Figure 1 shows that in the US as many as 57% of OP buyers interviewed had purchased core OP (traditional stationery, office paper, EOS and office furniture) from Amazon in the past 12 months, with the majority (40%) buying both from Amazon and Amazon Marketplace traders and 16% buying from Amazon only. This

smallest companies who had done so. Additionally, the survey found that the age of the respondent was a significant factor in driving the use of Amazon to purchase OP. Respondents were also invited to estimate the current share of their organisation’s OP purchases from Amazon. Again, the results of these enquiries were enlightening and are detailed in both of the reports.

It was evident from the research that – in addition to these core OP items – Amazon was also being used by OP buyers’ organisations to purchase allied products, such as jan/san supplies, breakroom/ catering products and business machines. As a result, it is clear that Amazon has already achieved significant penetration at multiple points within these organisations – far beyond that achieved by most conventional OP resellers.

The OP channels that were most likely to have lost out to Amazon’s advancement tended to vary according to the size and type of organisation. There were also

Amazon Report | Research

Amazon fans Another interesting finding of the research was that Amazon customers tend to be very enthusiastic about the company: when asked to indicate the disadvantages of buying OP from Amazon, few could find anything negative to report about their experiences of the company.

Similarly, when asked to talk about the advantages of buying OP from Amazon, respondents were full of praise, particularly concerning the e-tailer’s low prices and wide product range.

Importantly, both were key factors in respondents’ choice of OP supplier.

There is no doubt of course that Amazon has benefited from an industry-wide trend towards online purchasing (indeed, it is no surprise that the survey found the majority of respondents in both countries now place orders for OP electronically), but it is also clear that the company is regarded by OP buyers as the leading exponent of this model.

“Simply the best online shopping experience. Fast response,” said one UK buyer of office products.

In addition, Amazon is perceived to be ‘hungrier’ than conventional OP resellers, according to another UK buyer who commented: “Other companies that we have used for years take us for granted; Amazon wants our business.”

Interestingly, even many of those respondents whose organisations did not currently buy OP from Amazon still used the company for price comparison exercises and found it to be competitive.

Many of the questions covered in the research investigated respondents’ vision of the future of their OP purchasing. Clearly, in both

Fig 2: US-based interest in countries surveyed buying all OP items many expected from Amazon their OP purchasing not only to switch 1% further towards online sourcing, but also to a greater 8% 5% use of Amazon (although the extent 15% of this varied by company size and respondent age).

Certainly, on 41% average, the expected share of ■ Yes, definitely 31% their OP purchasing ■ Yes, probably from Amazon is ■ Probably ■ Definitely not forecast by these ■ Other respondents to ■ Don’t know/refused increase steadily over the next three specialist FM channels. The research years. strongly argues that the successful Indeed, as Figure 2 shows, when B2B reselling of OP can no longer be asked whether – in principle – they regarded as the preserve of the OP believed that it was possible for specialists, and the report warns that Amazon to be used for all of their whichever new product categories OP purchases, a very significant OP resellers may wish to diversify share (46%) of respondents in into, may well have already been the US stated that they could, in successfully penetrated by Amazon. theory, envision this scenario, with Research results also show the 15% stating that it was ‘definitely’ power of the general e-environment possible. Again, the reports show for product selection and ordering, some variations here by size of which clearly has significant company and age of respondent, implications for all participants in with the overall picture being the supply chain, especially those similar in the UK. that primarily think in terms of Biting back? presenting products only in hard In summary, the research MWA copy media. carried out shows that, to date, Overall, the findings of this Amazon has achieved a stronger important research study have a real overall penetration of the OP user relevance and urgency for all types of base in the UK and US than perhaps OP distributors and manufacturers. many would have expected, and that Both reports focus on the its current and expected future share opportunities for – and possible of the market far exceeds that ever barriers to – the future development achieved by a single supplying entity of Amazon’s involvement in the OP in this marketplace. industry, and provide key advice to Source: MWA

marked differences between the results in the US and the UK. In the US, for example, the national OP retailers were more likely than in the UK to have lost business to Amazon.

“Other companies that we have used for years take us for granted; Amazon wants our business” Furthermore, the company has already secured a width of market penetration that is enjoyed by no other single channel of supply.

Amazon is not only successfully taking on the dedicated OP resellers, but also the mass market and

both OP resellers and vendors on how to best respond to the e-tailer’s extraordinary progress.

Each of these authoritative reports is available for only $3,750 (£2,200) per country. To order your copy, visit www.opi.net/piranha w w w.opi.net | OPI Magazine

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OPI European Forum 2014 | Review

The metamorphosis of the industry OPI’s fourth European Forum reaffirmed the urgency for transformation in the OP industry

ARound

80 leading executives from the European OP industry gathered in the seaside town of Noordwijk, near Amsterdam, for OPI’s 2014 European Forum.

After a relaxed welcome reception and dinner on the first evening, it was straight down to business the next morning with delegates attending the first series of presentations and roundtables moderated by journalist and author Roy Sheppard.

Chatham House rules preclude OPI from reporting on specifics from the Forum, but the overriding theme was one of transformation, how to achieve it and a look at what the future of the industry might look like.

simultaneously – all with different work ethics and productivity styles.

The mood was generally upbeat over the slowly recovering European economy, with many senior OP executives stating that business was indeed picking up again, although a few expressed mild concerns over the potential economic impact the Ukraine/Russia conflict may have in the future.

Recent consolidation activities in the UK – referring to the Spicers/ OfficeTeam and Vasanta/o2o

debate, featuring Vasanta’s Robert Baldrey, XPD’s David Langdown and PBS Holding’s Dr Richard Scharmann, covered the importance of dealer groups and the part they play within the supply chain; and the implementation of new reseller programmes in order to move dealers forward.

Industry transformation A series of roundtables provided delegates with the opportunity for in-depth discussions with several speakers and also specially-invited hosts about the key challenges and opportunities facing vendors and resellers.

Topics included mobile marketing, category growth and development in facilities management, building innovation and the convergence of B2C and B2B. In another entertaining and revealing session, former Staples VP of Merchandising Ronny Van Rossem sat down with OPI’s Steve Hilleard for a Big Interview about the metamorphosis of the OP industry.

Delegates walked away with a raft of new ideas and innovative practices on how to deal with the current transformation and entice the next generation into the business supplies industry.

Incidentally, throughout the Forum, the term ‘business supplies’ was the preferred terminology used to reflect the rapidly diversifying nature of the OP industry.

Delegates walked away with a raft of new ideas and innovative practices on how to deal with the current transformation and entice the next generation into the business supplies industry

A look at the future Applied futurist Tom Cheesewright gave attendees an insight into some of the trends that are impacting – and will continue to do so – the way people work and collaborate and what opportunities these could present for the business products industry. BridgeWorks’ Kim Lear, meanwhile, provided an entertaining and thought-provoking look into the mindset of the millennial generation.

In fact, the entry of this tech-savvy, non-office compliant bunch of youngsters streaming into the workforce was the source of much debate and discussion, with many executives also pondering how to deal with four generations working

deals – formed the basis of many conversations over dinner and coffee breaks for UK delegates, with several executives saying they wouldn’t be surprised if there were more mergers and acquisitions in the not-too-distant future.

Two panel discussions threw up lively debates, both between the panelists themselves and the panelists and the audience. The first discussion tackled the theme of developing a multichannel strategy, and while there were differing opinions on how to achieve this, the clear message was that dealers must engage or face being left behind.

OPI’s Global Forum takes place in Chicago The from 17-19 May 2015. For more details, second please visit www.opi.net/GF2015 panel w w w.opi.net | OPI Magazine

39

Event Review | EPIC 2014

Another

EPIC event

OPI Editor Andy Braithwaite reports back from this year's EPIC joint dealer group event

MORE

than 1,200 industry professionals attended the second Independent Stationers (IS) and TriMega joint dealer group event in Hollywood, Florida, in September. There was no talk of a dealer group merger this year, but that did not stop the groups from collaborating for the benefit of their members and wholesaler and vendor partners to put on a show that included an enlightening opening session, interactive educational and networking seminars and a lively tradeshow floor which included the latest products and services from nearly 140 exhibitors.

In a break with OP event tradition, the opening general session ended with a panel discussion with representatives from various industry sectors: SP Richards CEO Wayne Beacham and United Stationers CEO Cody Phipps from the wholesalers; Smead's Casey Avent, Ghent's Janet Collins and Avery's Barry Lane from the manufacturers; ISSA's Anthony Trombetta providing insight from the jan/san market; and Mono Machines' Isaac de la Fuente from the online reseller side.

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OPI Magazine | November 2014

A reality check The mix of participants provided for an interesting and thought-provoking discussion. It was not the uplifting, 'go out and get them' message that dealers are used to hearing at opening sessions, but more of a reality check: we are in the midst of a period of fundamental change; there are challenges at many levels; technology isn't being used to its full potential; more costs have to be stripped out; there is redundant funding money that is just 'sitting' there; products have been or are being commoditised.

But it also highlighted the opportunities that are out there for progressive dealers and those willing to embrace change. Jan/san was described as a 'no brainer' for dealers to develop further; safety products and healthcare represent other growth opportunities and technology can be harnessed for use at a local level where the big boxes can't compete.

The opening session also saw the awarding of the EPIC 2014 Partner of the Year, which this year went to Fellowes. Based on nominations received from IS and TriMega members prior to the event, voting

from a shortlist of five candidates was done live by text or through the event app. The EPIC 2014 app, which was downloaded by more than half of all attendees, was highly successful, with delegates sharing photos and messages as well as using it for their personalised agendas and to navigate the tradeshow floor.

The tradeshow itself was busy and buzzing; dealers were really interested in seeing what innovations the vendors had on offer and there was a nice range of new product categories such as outdoor furniture, LED lighting and business gifts.

The final day of EPIC was devoted to the meetings and seminar programme, some dealer group-specific, others open to members of both groups.

There was a strong focus on areas such as jan/san, e-commerce, digital marketing and the sharing of best practices and ideas.

See pages 41 and 42 for some further highlights from EPIC and check out the video page on opi.net (opi.net/video) for reaction to the event from IS CEO Mike Gentile and TriMega President Mike Maggio.

Date for your diary EPIC is back in 2015 – from 7-9 October at The Cosmopolitan in Las Vegas

EPIC 2014 | Event Review

Next steps TriMega's Next Committee was launched in 2013 as a way of allowing younger executives in the business supplies industry to connect, develop and add value, and it has certainly done that.

Next now has more than 80 associate members and has just launched a supplier chapter, transcending it from a dealer young leaders group to something that encompasses the entire industry. "Supplier involvement was the next logical extension and was also in response to feedback we had from suppliers that were eager to participate," TriMega VP of Marketing Michael Morris told OPI at EPIC, where Next held an informal gathering sponsored by Fellowes.

The focus for Next in 2014 has been on technology. It has created a programme called Elevate Your Game, a set of training tools developed

by Next members that helps improve the general technology know-how of dealers in areas such as social media, blogging and search engine optimisation (SEO). Next year, the focus will be on attracting and retaining talent in the business supplies industry, and the group is working towards a new programme called ATR – attract, train, retain.

The Next Committee has also linked up with K-Coaching to launch the Next Think Tank. This involves setting up a number of online networking groups that will 'meet' on a regular basis to share ideas and discuss industry issues. This project is being facilitated by K-Coaching's Brittany DiCello, herself a member of Next.

Last but not least, the Next Committee has developed Next Give Back, its own charitable initiative.

This will see Next members involved in a number of hands-on charitable projects around the US, the first of which took place just after EPIC in Fort Lauderdale (see And Finally, page 17).

Next now has more than 80 associate members

IS sweeping up with FM

Mike Foster

“It's all about giving our dealers more choice”

OPI caught up with IS's Director of Merchandising Mike Foster at EPIC to find out more about its Operation Clean Sweep initiative in the facilities management (FM) category and new programmes involving Bunzl's R3 distribution business.

Operation Clean Sweep is the umbrella name for IS's FM programme. This includes an area on the IS dealer website which groups together IS's FM vendor partners so dealers can easily identify FM, jan/san and breakroom manufacturers that are either distributor partners, direct-buy manufacturing partners or, in a couple of cases, marketing partners.

A relatively new distribution partner is Bunzl-owned R3 Distribution which began a programme with IS in May as part of its own renewed focus on the independent dealer channel.

R3 is dedicating a lot of resources to this programme and has assigned a sales rep to each participating IS dealer to take them through the set-up process and help them grow sales.

Working with R3 is different to what dealers may be used to with SP Richards or United Stationers, explained Foster. In the majority of cases, dealers have to place an order on a specified day of the week and will receive their delivery from R3 two days later. Dealers also have to have the facilities to be able to receive and unload deliveries from a 53-ft trailer truck.

It's very much a stocking programme with no wrap-and-label capabilities built in. It may be less flexible, but Foster pointed to the 40,000 FM products available, extremely competitive pricing and the human support from R3.

IS has also recently begun working with R3 Safety, part of the same group but with its own separate distribution facilities. This programme – dubbed Operation Health and Safety – gives IS dealers access to a full range of safety products. It is still in a pilot phase with about 80 dealers and works differently from the R3 Distribution programme in that no sales reps have been assigned.

IS has been holding webinars with these dealers to introduce them to the programme. "It's a different type of product and there are some things you just don't do," said Foster. "For example, you don't recommend hearing and eye protection products to customers or that could potentially lead to a liability issue."

Other areas that IS is looking at developing include coffee and snacks – possibly with some of the vending wholesalers – and medical disposables for doctors and dentists. "It's all about giving our dealers more choice," concluded Foster. w w w.opi.net | OPI Magazine

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Event Review | EPIC 2014

IS focusing on sustainability With its own in-house expertise in sustainability, IS is set to revamp its Green Matters sustainability programme in the new year. Scott Zintz, a member of IS's National Accounts team, has an MBA in sustainable business practices and has already been working on green initiatives at IS for a number of years.

Speaking to OPI at EPIC, Zintz explained that he was putting the finishing touches to a turnkey sustainability programme for IS members that will be introduced in January under IS's existing Green Matters branding.

This will include white papers and case studies, marketing collateral that can be rebranded as the dealer's, newsletters aimed

at end users and assisting dealers in being able work with their customers on things such as carbon neutral programmes.

"There is the potential and the thirst in the market for sustainability programmes that dealers don't currently

Scott Zintz

exploit," said Zintz. "If you look at the studies, everybody wants to go green and buy green; they think it's more expensive, but if you can put a programme in place that actually helps save money by going green,

"Everybody wants to go green and buy green" then you really have customers that are interested."

Zintz has been talking to a number of vendors and they have agreed to support the programme, while some of IS's 'greener' dealers have also been providing input.

For details of how IS has been helping to develop the LED lighting category, for example, please see the OPI 2014 Green Thinking supplement which has just been published.

Meg goes from strength to strength One notable success for TriMega over the past year or so has been its Torque marketing programme, a multimedia initiative that helps dealers and vendor partners sell more products. Underpinning the programme is a retro look and feel involving a character called Meg. Meg herself was at EPIC having her picture taken with attendees and there was a real buzz around the photo booth all day.

So far, about 7.5 million Meg emails have been sent out to TriMega dealer customers and the results are pretty impressive: email open rates are about 18% and the upswing in sales for products that are promoted on

About 7.5 million Meg emails have been sent out to TriMega dealer customers Torque is over 40%. Sales of the promoted products also stay higher during the months after the Meg promotion, tracking data has revealed.

About 20 vendors are actively involved in the Torque programme and the range of products promoted includes furniture, breakroom, jan/san and traditional office products.

"Vendors see the value in it and dealers are seeing a sales lift," TriMega VP of Marketing Michael Morris confirmed to OPI. "The campaign with Meg also goes beyond the products we are promoting; dealers are engaging with customers, and the customers are really

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OPI Magazine | November 2014

connecting with the campaign."

Having made that connection now means that there are other ways in which the Meg 'brand' can be exploited: custom videos have been made for dealers; some dealers are using the Meg character for their on-hold phone messages; others are featuring Meg on their websites and Facebook pages.

TriMega has also been exploring other ways to develop the brand.

"We are very close to introducing a landing page for a dealer's website that takes the products being promoted in the Torque programme and creates a promotional page, allowing the campaign to live on," Morris revealed.

"This will have click-to-cart functionality which turns the website into a sales vehicle."

Morris added that other initiatives in the pipeline include solutions-oriented emails (as opposed to the 'one email, one product' approach currently used) and Meg blogs that dealers can use for their own sites.

Sponsored Article | Fellowes

Solid Legacy,

Expanding Vision How does a generational business weather the test of time in a changing and fluid marketplace? As Fellowes® approaches its centennial anniversary it looks back at what has created continued progression of the business, and applies those principles to its future.

Three times over the past 97 years, Fellowes has transitioned its leadership to the next generation and embarked on an enhanced vision for its brands, people, and purpose. In the 1950’s, the first transition occurred between founder Harry Fellowes and his sons Folger and John. At that time, it was the Bankers Box® business. Both Folger and John worked to build the Bankers Box brand into a market leadership position successfully through a network of top-grade regional manufacturing and sales offices. In the 1980’s, the reins were handed off to James

solutions which enable productivity, security, and well-being through Brands its Fellowes and Bankers Box consumer I N N O VA T I O N I N M O T I O N brands. Fellowes also hosts mobile accessory and air purification businesses under the Body Glove® and AeraMax® brands respectively.

What directions do you envision Fellowes pursuing?

John: We will continue to embrace, pursue, and reinvent our brands in market spaces which have been a part of the legacy of Fellowes. Our Fellowes and Bankers Box brands contain our strongest equity and market positions globally. While these businesses are challenged with the migration from paper to digital means of communication, we envision a runway in front of each of these brands. In these businesses, we see growth through market share gains, we also envision growth through a broader positioning and offering beyond current traditional categories. Symbolic of this strategy, we have begun implementing a new consumer tagline in our Fellowes brand, “Work Better”, which can support a broader range of progressive solutions. Starting in 2015, we will be launching new product lines, which deliver on this positioning.

In Bankers Box, we are continuing to progress in our legacy business, but are also pursuing expansive categories which leverage our brand equity and core competencies. Moving boxes and supplies and mail and ship are clear categories where we can expand John Fellowes and James Fellowes our 97 year-old

Three times over the past 97 years, Fellowes has transitioned its leadership to the next generation and embarked on an enhanced vision for its brands, people, and purpose.

Fellowes. At this time, technology, customer consolidation, and the connectedness of the global economy were factors presenting new threats and opportunities for the Bankers Box Company. James changed the name of the business from Bankers Box to Fellowes which represented the new frontier of opportunities and new categories including shredders and computer accessories. The infrastructure of the business was also reshaped. Five national subsidiaries were scaled back to one central headquarters and 17 international locations were forged, providing new international scale and synergy.

James transitioned the leadership of Fellowes to John within the past year.

Under John, Fellowes currently maintains a global leadership position in product

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OPI Magazine | November 2014

Fellowes | Sponsored Article

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Bankers Box business.

We are also committed to diversifying our product strategy beyond categories that are mature within our company. Mobile Accessories have been a part of Fellowes for 13 years, primarily under the Body Glove brand in the United States. We are currently in the process of expanding this category in its product offering, brand partnerships, and global reach. In this process, we are building on an established capability which has been running effectively in the background of our business for many years.

We intend to scale our capability through investment and smart risk-taking. A few months ago we acquired Optrix, Inc, the innovator of mountable, water-proof smartphone cases. This will be one of numerous developments we will launch to shape this business going forward.

Another key emerging category is our air purification business. We launched this category 3 years ago, and are encouraged by the progress and long-term potential of this business. Over the past year, we have launched a line of proprietary personal air purifiers under the AeraMax brand. Next month, Fellowes is launching a new-to-world line of commercial air quality control systems, AeraMax® Pro. These new solutions provide the ability for end users to resolve odor and indoor air quality issues in a seamless and effective way, at the source of the problem. Fellowes will continue to invest in both personal and commercial air purification solutions, and envisions its AeraMax brand leading the way in the next wave of the growing janitorial/sanitation segment.

corporate identity, we are embracing our numerous consumer brands in place today as well as our commitment to multiple brands being a part of the future strategy.

In addition, we have launched a corporate and primarily internal tagline, “Innovation in Motion™”. This promise embraces the principles of distinctive innovation in both our products and capabilities, while reinforcing our commitment to outpacing the competition with our ability to change and evolve.

While these two adjustments above are symbolic in nature, they are deeply significant to our strategy and mindset. They shape our corporate focus, approach and investments.

What do you feel will be the most important ingredient for success over the next 20-30 years?

John: A lot of things must come together for us to be successful, but the most important means of achieving our long-term goals will be our people. Today, Fellowes has an excellent global team, which embraces our core values of integrity, teamwork, initiative, and passion. In addition, our people bring a mind-set to their roles in which they are constantly looking for ways to improve, challenging today’s assumptions in an effort to uncover tomorrow’s possibilities. It is only through our people that we will achieve innovation, performance, and quality as a business. We are both proud and grateful for our very capable global team.

These are significant adjustments to Fellowes business. How do you ensure they are set up for success?

John: The effort must start with a clear vision, reshaping our capabilities behind the desired strategy, and communicating to our people and marketplace in a way that represents where we are going. As part of our expansion, we have recently changed our corporate name to “Fellowes Brands”. Under this slightly modified

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45

Category Analysis | Imaging Supplies

Prints of thieves

Is the imaging supplies sector really in terminal decline or are rumours of its demise grossly exaggerated? It depends on who you talk to…

by David Holes

IT’S

common knowledge that the imaging supplies industry is facing tough times, or at least that’s what we’ve been told for many years. Many pundits point ominously towards a decline in printing volumes with fewer supplies being sold and the rise of new-built and remanufactured cartridges further squeezing the OEM sector. Throw in counterfeit and cloned products and it looks like the perfect storm has hit the category.

However, it seems that some dissenters disagree and still see opportunities and areas of growth among the oft-reported carnage.

A rosier picture Scott Mackenzie, VP of Sales Operations at aftermarket supplier Clover Technologies in Canada, thinks reports of the segment’s demise are largely nonsense: “Commentators have been postulating about the decline of this sector for years and while there has been a shift away from continuous double-digit growth, many of the statements about a precipitous decline in printing are overblown. If there is indeed any decline, it’s very gradual and not across all categories – colour laser printing, for example, continues to show very strong growth, in terms of sales.”

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OPI Magazine | November 2014

Indeed, for the colour production environment, research group InfoTrends expects the market to be dominated by rapidly increasing volumes in North America. In 2014, it estimates that we will print out around 175 billion individual items, but predicts that by 2016 this will rise to around 275 billion – a huge 57% increase (see chart on page 48). Ink and toner volumes will inevitably have to increase too to keep pace.

Somebody else seeing light amid the supposed gloom is Monte White, VP of Product Marketing at Supplies Network, a US-based imaging supplies wholesale

However, despite this he’s relatively bullish about future prospects: “We’ve seen significant M&A activity within the remanufactured market which will be interesting to watch. But there are remaining opportunities for those that continue to invest in the imaging market – MPS, colour printing and business ink are some of the areas where we’ve seen encouraging gains.

We remain cautiously optimistic on the outlook for 2015 as we have many initiatives in our pipeline that we expect to fuel growth further.”

Ben Appleby, Technology Product Manager at UK wholesaler VOW, sees sales trends as somewhat

“Many of the statements about a precipitous decline in printing are overblown” distributor. He admits it’s been an “interesting” year for the company, with Hewlett-Packard’s (HP) changes limiting the number of authorised resellers having been particularly disruptive to dealers and adversely impacting top-line revenue for many in the market.

paradoxical: “The data suggests that the imaging supplies market is in decline. However, as a business we are seeing very good growth in this declining market and that’s not something we’ve experienced before.

Although we’re told that with the rise of the virtual office fewer people are

Imaging Supplies | Category Analysis using computers, it seems that there aren’t fewer people using printers.”

Laura Fan, Senior Marketing Manager of the Brand Strategy Department at China-based printer manufacturer Pantum, remains similarly positive. She has not seen any drop in demand for printer hardware or supplies in the first half of the year and sees mobile printing as a significant new growth area.

Another upbeat report from China comes from Amy Lu, Marketing Manager at cartridge manufacturer Ninestar Image Tech: “The whole market is growing and presents huge opportunities. Despite the reports of the paperless office that we’ve heard for years, printing is actually increasing and we predict that won’t change for the best part of the next decade. The market, especially in developing countries such as China, is still very strong.”

Recent forecasts from market intelligence group Photizo back this up, suggesting that toner cartridge sales will show steady growth rates through to 2018. InfoTrends, meanwhile, sees a shifting sector with an increasing emphasis on mobile printing but, interestingly, little opportunity for growth in the MPS area.

Disruptive technologies Another potential upset for the traditional supplies market could be caused by the so-called ‘disruptive technologies’ that are now available.

HP has been taking the initiative with innovations such as ‘PageWide’ printing on its OfficeJet Pro X series, claiming it will deliver prints at twice the speed for half the cost. It’s also recently introduced its Instant Ink subscription service into the professional market in the US and is now expanding it into the consumer market in the UK. What effect could this have on the reseller channel?

A positive one, says White from Supplies Network: “It’s good to see innovation and the development of advanced features in this market – we see a lot of creative programmes being developed and typically view these as opportunities. Having said that, we’ve also seen a lot of things come and go without ever realising

Attack of the clones The rise of the clone or counterfeit cartridge is a huge issue for legitimate cartridge manufacturers and it’s estimated that globally it costs the industry $3.5 billion each year. The European Toner and Inkjet Remanufacturers Association (ETIRA) classifies a counterfeit cartridge as a blatant fake – looking and feeling just like an original OEM product, with the same branding and packaging.

Clones are a subtler attempt to deceive – they look, at first sight, like an OEM cartridge, but may not overtly attempt to pass themselves off as an original product by using the same name and branding. Having said that, they may still infringe patents or contain inferior technological components that Allen Westerfield could cause problems for the end user.

The manufacture and marketing of counterfeit cartridges clearly constitutes criminal activity. This is also often the case with cloned products – even if no patents have been infringed, the deliberate attempt to confuse, by appearing similar to an OEM product, can leave the manufacturer open to civil litigation. Resellers and distributors of these fake products are liable too – they are required by law to be aware of any patents on the products they sell and ignorance is no defence.

The Imaging Supplies Coalition (ISC) is a trade organisation of OEMs with a mission "dedicated to educating, empowering and protecting consumers to combat counterfeiting and fraud in the imaging supplies industry". It has just held its 15th annual conference on this topic in Las Vegas, with attendees including around 90 brand protection professionals from across the globe together with a number of exhibitors displaying their anti-counterfeiting technology.

OPI spoke to Allen Westerfield, President of the ISC, to see what measures it is promoting to counter this nefarious trade.

He says: “The internet enables counterfeiters and other disreputable actors to present their illegal products in ways that are misleading and confusing to unwary consumers. Brand owners must implement internet monitoring programmes which allow them to take action against illegal activity involving their brands and products.

"Counterfeiters can now import products into a country via express mail and air freight where they are more difficult to detect by customs officials. In addition to working closely with customs, the brand owners must engage with the major e-commerce sites to mitigate this activity and educate the consumer.”

Westerfield is also keen to point out that the rise of the clones and the explosive growth of non-OEM new-built cartridges has seen many OEMs enforcing their patent rights. Canon, Epson, HP and Lexmark have all been granted General Exclusion Orders (GEOs) by the US International Trade Commission. He explains: “These exclusion orders prohibit the importation of cloned cartridges that have been found to infringe patents and, in some instances, also exclude remanufactured cartridges and empty cartridges that violate patent or trademark laws. Companies, including resellers, that import products prohibited by a GEO can be subject to penalties, including inventory seizures and fines. The ISC believes these exclusion orders should be rigorously enforced.”

He adds that there are now numerous tools in place to protect both brand owners and consumers from intellectual property violations and illegal products which can contain harmful technology.

“Ultimately, protection methods which involve the consumer and the channel in ways that are straightforward and easy to use will prove to be the most effective. A great example is the rise of simple mobile phone apps which can scan a barcode and quickly validate the authenticity of the product,” Westerfield concludes.

www.opi.net | OPI Magazine

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Category Analysis | Imaging Supplies their perceived potential and ultimately it’s the customer that will decide what is relevant.”

Pantum’s Fan, however, is not such a fan of HP’s new developments: “There is nothing disruptive about HP’s announcements, it’s just marketing blurb. Frankly, I found the Instant Ink programme very complex and there is no real cost reduction.

I’m not impressed.” She’s equally dismissive about MPS initiatives: “These favour the OEMs exclusively, definitely not the end user.”

Clover’s Mackenzie also has his doubts about any detrimental effect: “New technologies are only disruptive when they have a significant, negative effect on existing technologies and, to date, we just haven’t seen that happen. Any innovations have, so far, just supported the existing demand for the laser and inkjet market and we consider both categories as having strong potential for growth.”

Fakes and imposters A subject that all key players universally agree on is the threat posed by counterfeit or cloned cartridges (see ‘Attack of the clones’) and the need to combat their insidious impact.

Ann Priede, VP Consulting, Services and Publications at Photizo Group, sets the scene: “The aftermarket is stuck between a rock and a hard place, with concerns about intellectual property (IP) litigation, the downward spiral of pricing by its peers, ‘dumping’ by foreign firms and the effect of clones.”

Ninestar’s Lu puts it bluntly: “The manufacture of these products is just not allowed and, left unchecked, will destroy the whole market.”

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OPI Magazine | November 2014

Usage of colour printers by print application (in North America)

Source: InfoTrends

Clover’s Mackenzie agrees that it’s a problem affecting the entire imaging industry and an issue that needs to be taken very seriously. He welcomes the willingness of OEMs to take action: “In recent years, they have shown that they will collectively go to great lengths to eradicate clones and counterfeit products from the marketplace and protect their intellectual property rights through legal action. We expect this type of response to continue to be a defining characteristic of the imaging industry for years to come.”

White from Supplies Network echoes these thoughts, noting that many OEMs have stepped up their efforts to combat counterfeit product, investing heavily in ID and packaging technologies to help customers quickly and easily validate that they’ve received an OEM product.

He says: “On the issue of clone products, there has been much work

experience on behalf of the reseller community.”

VOW’s Appleby explains that the technological arsenal that can now be employed against counterfeiters is growing ever more sophisticated.

“There are many up and coming methods such as barcode and QR code scanning that enable us to track a product’s origin as it makes its way to the end user. Some printers operate by chip recognition too which is something counterfeit manufacturers haven’t yet managed to overcome.”

Pantum’s Fan adds: “This topic is high priority. The only way to progress is through technology, copyright and patent protection.

Eventually the cheaters will disappear as the cost of remaining in their illegal business will become too high.”

The imaging supplies industry has already fired some successful salvos in the battle against those that peddle these fake and fraudulent

“New technologies are only disruptive when they have a significant, negative effect on existing technologies” done by the Business Solutions Association to standardise product classification and provide working definitions to help customers better understand what they are actually buying. We applaud and support these efforts in the interest of helping customers make informed decisions based on their needs and ultimately improving the customer

products and believes that, in the long run, the rise of technology will help it to ultimately triumph.

Add in the fact that the world is showing no decline in its appetite for printing things out, with predictions suggesting that volumes will actually be accelerating, that has to be good news for those supplying the printing industry.

Category Analysis | Marking & Stamping

On your

marks...

The marking and stamping sector has had a difficult time over recent years. The industry is now showing some positive signs, but it’s by no means a universal story

by David Holes

THE

marking and stamping sector is best described as the curate’s egg of the OP industry – good in parts. Reports from all the big players suggest rather a mixed bag of sentiment, with some firms reporting strong sales and enthusiastic projections, while others seem less optimistic about the future.

Jimmy Chen, Deputy Executive Manager at Taiwan-based Shiny Stamp, falls into the more bullish

meanwhile, is more cautious in its positivity. Franz Ratzenberger, Head of International Sales & Marketing, says: “The stamp market as a whole seems quite stable, but it’s not a homogenous story, with some markets more difficult than others.

However, overall we are winning market share; 2014 has started well and looks like it’ll be a prosperous one for us.”

Across the border in Germany, Reiner, a manufacturer of numbering machines and metal stamps, tells a more downbeat tale. Marketing Manager Annette Zandomeni explains: “The general stamp markets matured a long time ago and are now

“Growth in the stamp business is mainly underpinned by the large demand seen in emerging markets” camp: “Despite recessionary pressures Shiny continues to enjoy steady growth year after year, with a surge of 14% in 2014 to date.”

Roland Rier, Managing Director at Trodat in Austria, is equally positive: “We remain on course for success and plan to double sales to around H300 million ($377 million) by 2020.” Austrian arch-rival COLOP,

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OPI Magazine | November 2014

saturated, especially in Europe. The product offering is huge and the technical solutions numerous. The metal stamp segment has survived, but it’s now shrinking.”

Navitor in the US also talks of a contracting industry, although General Manager Chad Fitterer is keen to point out that it is turning this to its advantage: “The market for

marking devices has been in decline for the past ten years or more. This trend is evidenced by stamp provider consolidation and divestment from smaller stamp manufacturers to larger providers like us. The main difference between us and other global providers is that Navitor continues to invest in the industry.”

Geographical split This geographically patchy performance and general tale of traditional markets in retreat has emphasised the need to seek new opportunities in those parts of the world that offer stronger growth prospects.

Trodat’s Rier spells this out: “Approximately 75% of the main markets for the stamp business currently lie in Europe and North America, but in many countries here we are faced with stagnating or declining demand as a result of weak economic development and a strong trend towards digitisation.

Global growth in the stamp business is mainly underpinned by the large demand seen in emerging markets.

Asia – in particular China – is at the forefront here with the need for stamps mushrooming due to the tens of thousands of start-up companies that are founded daily.”

Shiny’s Chen is also optimistic about prospects in new markets: “We market products in more than 100 countries in all corners of the globe. Demand

Marking & Stamping | Category Analysis is steady in developed countries, but truly great in emerging ones.”

COLOP mentions Asia as a key expanding market, but additionally cites that Africa and South America offer huge possibilities. “This is partly based on the fundamentally strong economic development in these regions,” says Ratzenberger, “but also on good collaboration with COLOP’s global partners.” He also mentions expanding production facilities in Austria and the Czech Republic to keep up with this demand and the establishment of new, rapidly growing satellite companies in Spain and Hungary, showing that there’s life in the European markets yet.

Making a mark The need to innovate, improve and modernise stamping and marking products is a key theme for all those companies that OPI spoke to.

As Reiner’s Zandomeni explains: “Today’s customers are looking for solutions. They expect answers to their requirements on identification, traceability and security when they process goods or documents and want stamps that are ergonomic, efficient and safe.”

She puts forward Reiner’s new range of handheld inkjet printers as versatile products that encapsulate these trends: “Our jetStamps can print on paper, cardboard, metal or plastic and provide automatic numbering, date, time, text, graphics or even print a barcode.

These imprints can all be created by the user on a PC using our supplied software.”

Trodat sees huge potential in converting users of traditional wooden hand stamps to new self-inking models. That said, its latest product to launch is the Ideal Seal. Led by market research that identified a strong desire for a better-performing seal press, the company has produced a device it says is both easier to manufacture and easier to use.

Shiny has also gone down this route and released the new Shiny Embossing Seal, saying that its pressure reduction system is a good example of using breakthroughs in technology to create something that would not have been possible a decade ago.

COLOP regards itself as an innovation leader in the category.

“We always want to create something new, something unprecedented,” says Ratzenberger.

“This is plain to see in our new Pocket Stamp Plus, with its unique contemporary design and eight different colour variations. It’s the ideal address stamp that’s always with you, carried in your pocket or handbag or even hung on a lanyard around your neck where it becomes a trendy accessory.”

He points out that, technologically, it’s the automatic slide mechanism that singles it out: “With no cap to remove (or lose), you just slide and get stamping – it’s a one-handed neat solution.”

Green credentials are also important to COLOP. “Our new printer generation is optimised in line with environmental principles.

Unavoidable CO2 emissions released during production are offset through investments in climate-protection projects. Based on the cradle-to-grave principle, our new printers are CO2 neutral,” Ratzenberger explains.

Keeping it personal Like in many areas of the OP industry, the desire from end users to personalise their workspace and the products they use is strong, and the marking and stamping sector is no exception.

Navitor’s Fitterer sees this as a key trend, noting that marking devices continue to be required to authenticate documents, print codes or messages in difficult

places such as boxes and pallets, for general business use or artistic and craft purposes. He explains: “The industry’s ebbs and flows are partly related to documentation regulation, but there’s also an increasing desire from people to personalise and create unique ways of addressing invitations, mark gifts and design their own stationery.

We’re excited by our new 2000 Plus Printer Line stamps – in addition to improved features and performance, they also allow for expanded personalisation options that make the stamps as unique as the users themselves.”

Shiny’s Chen also mentions this theme: “Personalisation is a key area that’s welcomed by customers.

Stamp units are no longer plain and dull, and users can transfer their own desired artwork onto the stamp unit to freshen up their desktop.”

Ratzenberger is a keen advocate of COLOP’s approach here: “The move away from mass-produced, identical products towards individualised items is a huge trend. COLOP introduced the idea of a personalised stamp product years ago, but our new Printer and its extra-large image window takes this to a new level and offers boundless possibilities – use it for photos, QR codes, company logos or cartoons. Individual, personal creations are what end users want and they can create these with our software tools. Alternatively, we can respond to specific design requests if required.”

So curate’s egg it may be, but the marking and stamping industry shows plenty of life yet. By embracing emerging markets and keeping the product line fresh, innovative and exciting, many key players still see a bright future where they can truly stamp their authority. w w w.opi.net | OPI Magazine

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Your OPI

On the move

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

North America

Mobile device accessories manufacturer ZAGG has named Steve Tarr as its new COO. In his new role, Tarr will oversee the company’s operating goals and plans including inventory management, logistics, purchasing and factory qualification and selection.

Tarr brings with him Fortune 500 best operating practices after serving most recently as Infrastructure Solutions Director for Europe and North America at Stanley Black & Decker. Previously, he served as Division President of Prestolite Electric.

Global information company NPD has announced a number of leadership changes within its Home and Office Supplies Practices.

Lora Morsovillo, formerly President of the Office Supplies Practice, takes the role of President of Lora the Home Practice.

Morsovillo Morsovillo has been with NPD since 2010.

She will continue to report to Perry James, who takes over direct management of Office Supplies from Perry James Morsovillo while continuing to lead the company’s Hardlines sector.

Shawn Ahearn has been named as ECi’s VP of Support for the Office Products Division.

With almost 20 years of experience in IT, support and operations, Ahearn was VP of Operations for US independent dealer New England

52

Office Supply (NEOS) before joining ECi. Prior to this, he was Manager of Hosting Operations for internet commerce application software and service provider fourthchannel.

Europe

Jürgen Krüger has left his role as Director of Managed Services at the managed print services (MPS) division of European IT distributor ALSO after just six months in the job. Krüger – who was previously Director of Samsung’s Printer Division in Germany – left ALSO due to a “difference in opinion about the direction of MPS” at the company, according to media reports.

ALSO’s subsidiary Alpha International has named Oliver Kuhlen as Sales Director for Oliver Kuhlen Germany, Austria and Switzerland. Kuhlen takes to Alpha a great deal of printing industry knowledge and experience after working in similar positions at Xerox, Lexmark, OKI and, most recently, LG Electronics.

Bjarne Mindested has joined the executive board of German visual communications vendor Franken.

Mindested’s position on the board comes after his company, Synergy Holdings, acquired a shareholding in the manufacturer. Manuel and Werner Franken will continue to lead the company on a day-to-day basis.

UK-based print and document management services provider Danwood has appointed Douglas Greenwell to the new role of Group Strategy and Marketing Director.

Greenwell will work closely with the sales force and lead the

OPI Magazine | November 2014

Europe Lyreco’s COO Samuel Avenel left the reseller suddenly at the end of September. French national Avenel was only appointed to the newly created role in May 2013 and his sudden departure certainly suggests that things have not worked out, although CEO Steve Law said he was unable to make any comment about Samuel Avenel this – except that the decision was by “mutual agreement” – due to a confidentiality agreement.

The process of finding a new Group COO will begin shortly and Law said that both internal and external candidates would be considered. The role will not fundamentally change, and the new COO will be expected to drive growth, innovation and change at a commercial level. professional services business division. Before joining Danwood, he was Sales and Strategy Director at security solutions group G4S. Wilkhahn Head of Global Sales Peter Röhrig is to leave following a restructuring process at the Peter Röhrig German office furniture manufacturer.

The company said that the 39-year-old was instrumental in the expansion of the vendor’s international business, establishing Wilkhahn Asia-Pacific in Australia and setting up Wilkhahn Inc in New York.

Staedtler UK has appointed Rebecca Stirling as Marketing Executive responsible for the trade sector.

Rebecca She joins Stirling the vendor from recruitment company Linea Resourcing where she was responsible for online and offline marketing activities as Marketing and PR Executive.

At Staedtler, Stirling will report to Marketing Manager Rachel Woolley.

Mark Lineham has joined UK dealer group Advantia as IT Manager. The company said Mark Lineham the newly created role was necessary as it believes that data, IT and systems will be the key driver in the next phase of development for its members.

Lineham has both industry background and dealer knowledge, having worked in the IT departments at Europa Office and, most recently, Antalis.

Moleskine has announced changes to its senior organisation structure, including the creation of a COO position. The Direct Retail and Digital Innovations functions will now fall directly under the responsibility of CEO Arrigo Berni, together with finance, brand equity and human resources.

Current Director of Operations and Product Development Lorenzo Viglione has been appointed COO, a new position within the company.

Viglione will coordinate the wholesale, B2B and e-commerce channels, in addition to marketing, product development and operations functions. He reports directly to Berni.

Save the Date

5 The fifth Global Forum 17 – 19 May 2015 Sofitel Chicago Water Tower Chicago

Mark your diary!

Email janet.bell@opi.net or visit www.opi.net/gf2015 for more information

Organised by Office Products International

Your OPI

5 minutes with...

Rob Abrahams, European Purchasing Director, ADVEO

Describe what you do in less than 20 words.

Lead ADVEO’s supplier and category strategy, setting the global guidelines and managing global relationships and agreements.

Your first full-time job.

Glass collector in a ski resort... a very tough job!

If you weren’t doing your present job, what job would you like to be doing?

Playing football for Spurs, although I think I may have more chance becoming their next manager.

Your most embarrassing industry-related experience.

I am not sure if you can call this industry related, but scraping the CFO’s car (actually his wife’s) on the first day in my job in this industry when I joined Spicers, while he was watching through his office window.

What would you like to be doing in five years’ time?

Continuing to be involved in the development of ADVEO, seeing it reach its full potential as an industry behemoth, and bringing together manufacturers, resellers and end users in the most effective, supportive and beneficial way possible.

Your greatest strength.

My passion and drive whilst still remaining personable and approachable.

“I was in a film with Ingrid Bergman”

Your first vehicle/car.

VW Beetle – looked amazing, broke down everywhere.

What sports team do you support and why?

Tottenham Hotspur Football Club (Spurs). I grew up equidistant between Spurs and Arsenal and chose Spurs because they played the beautiful game. The right decision?

Your ideal night out.

A nice meal and a good theatre production, maybe after watching Spurs beat Arsenal 5-0.

If you could invite two famous people for dinner, who would they be and why would you invite them?

Rory Mcllroy and Raquel Welch in her prime. Rory because his focus and strength of mind are a real inspiration from someone so young, plus he seems a good laugh. And I am sure Raquel has a few interesting stories to tell!

Have you got a claim to fame?

Not to show off, but I have two: I was in a film with Ingrid Bergman, and Kylie Minogue came to my home for a day and even gave us a private sing-song…after a few Pimms!

How would you like to be remembered?

He delivered on his promises and remained positive and passionate until the end.

Your favourite event on the OP circuit and why.

The ADVEO World events. The buzz, excitement and enthusiasm shown by the suppliers, dealers and our own people have amazed me from the first time I participated and they still do now.

Your childhood ambitions?

To be a vet or anything to do with animals, especially pandas. I had a real thing for them… I still do!

What keeps you awake at night?

Often my youngest son’s foot after he has sneakily climbed into our bed.

Any annoying habits?

I like to wear slippers at night. My wife hates it and thinks I am becoming an old man. I’ll buy a smoking jacket next! www.opi.net | OPI Magazine

55

Your OPI

Calendar Key dates in your industry If we are missing an event, please let us know.

Contact editorial@opi.net Do you have an event that you would like to promote in the OPI Calendar?

Please contact Chris Turness for further information about having an extended entry and pricing.

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2015 JAN 12-15 Hong Kong International Stationery Fair Hong Kong, China JAN 21-24 Bett 2015 London, UK

NOV 04-07 ISSA/Interclean Orlando (FL), USA

JAN 23 VOW Green Light Birmingham, UK

NOV 10-12 ECi Connect Conference Las Vegas (NV), USA

JAN 25-26 Paper Show 2015 Leuven, Belgium

NOV 10-12 Marketplace 2014 Miami (FL), USA NOV 11-15 Office Partners’ Grand Ole Gathering 2014 Nashville (TN), USA NOV 20 Integra Conference Nottingham, UK NOV 26-28 Big Buyer 2014 Bologna, Italy DEC 03-05 ADVEO World Munich, Germany

JAN 31-FEB 03 Paperworld 2015 Frankfurt, Germany FEB 16-19 United Stationers & Lagasse: CORE Live Nashville (TN), USA FEB 22-24 EDexpo Atlanta (GA), USA FEB 25-27 ISSA/Interclean Latin America Mexico City, Mexico MAR 02-04 Paperworld Middle East 2015 Dubai, UAE

MAR 03-05 OPI Partnership 2015

Hotel Okura, Amsterdam, the Netherlands Email: steve.hilleard@opi.net Web: www.opi.net/ partnership2015 Assisting European vendor and reseller companies in building long-term strategic relationships.

MAR 04 European Office Products Awards 2015

MAY 08 The Office Friendly Sales Conference 2015 Nottingham, UK

Hotel Okura, Amsterdam, the Netherlands

For Presentation Dinner tickets, email awards@ opi.net or visit www.opi. net/EOPA2015 for further information.

MAR 08-13 AOPD & DPCG 2015 Annual Meeting Huntington Beach (CA), USA MAR 16-20 CeBIT 2015 Hanover, Germany MAR 19-21 Education Show 2015 Birmingham, UK APR 22-24 ISSA/Interclean Central & Eastern Europe Warsaw, Poland

APR 28-29 London Stationery Show 2015

Business Design Centre, London, UK

Contact: Chris LeonardMorgan Email: clm@ firstevents.com Tel: +44 20 8462 0721; Web: www. stationeryshow.co.uk The only UK exhibition dedicated to stationery products, writing instruments and accessories for the home, school and office.

Organiser of National Stationery Week.

MAY 17-19 OPI Global Forum 2015

Sofitel Chicago Water Tower, Chicago (IL), USA Web: www.opi.net/GF2015 An invitation-only forum for CEOs and senior executives from the business supplies and associated sectors.

JUN 15 BOSS BenGolf 2015 Wyboston (Bedford), UK JUN 15-17 NeoCon 2015 Chicago (IL), USA JUN 16-18 Facilities Show 2015 London, UK JUN 21-25 SP Richards Advantage Business Conference 2015 Las Vegas (NV), USA JUL 08-10 ISOT 2015 Tokyo, Japan SEPT 17 Spirit of Life Gala Dinner Chicago (IL), USA OCT 07-09 EPIC 2015 Las Vegas (NV), USA OCT 20-23 ISSA/Interclean Las Vegas 2015 Las Vegas (NV), USA w w w.opi.net | OPI Magazine

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Your OPI

Final word Your industry, your opinions Ronny Van Rossem

The stress of choice – the stress of change

DURING

the recent OPI European Forum, I was asked to describe how I see the OP industry these days. And my answer was that I saw a lot of stress – stress of choice and stress of change.

Following the event, I took the opportunity to talk to several peers from around the industry and from all channels.

Almost everybody mentioned the opportunities and challenges they encounter, and how quickly these have evolved over the last couple of years, even the last couple of months.

Both the technological and economic evolution has been so momentous that it is substantially affecting business in a number of ways.

think and operate as well as the speed with which they have to do it. Except for some new online players, most businesses have seen their sales and margins decrease at a high speed. At the same time, the options to address those dilemmas require substantial investments in new tools and skills. Even once they’ve made the decision that they ‘need to act’, there is still much to consider: • Do I invest in building/acquiring new categories? If yes, which one(s)?

• Do I hire people to build my own web solutions, do I buy/lease a solution or do I join a team that has the technology?

• Once I have the technology, I need substantial funds to invest in online marketing, SEO, search, etc.

• For those with a bricks-and-mortar presence: do I keep my store(s) going by investing in the ‘experience’ or do I divest and go for pure online?

Can I do both at the same time?

• Should I invest in services? If so, which ones: data protection, shredding services, presentation design support, flower service, catering?

• Should I merge, buy a competitor or even sell my own business and start anew?

All these options can lead to paralysis and a tendency to just continue as before. Some leaders might even hope that the issues will go away again, kidding themselves with the notion that once the economy gets better, they will regain volume and be back on track!

I can’t predict the future but I dare say that they – whoever ‘they’ are – will not go away. Change has started and will continue to come in at an even higher pace than it has so far. However, it should not lead to paralysis, but to more action and quicker and better decisions made. If business leaders don’t make the decisions, they will be made for them.

“Change [...] should not lead to paralysis, but to more action and quicker and better decisions”

Challenges Technology, to start with, is really impacting the type of office products customers buy and, perhaps even more importantly, the quantities they buy. The economy is only fuelling that fire: employment has decreased over the past couple of years and although it has stabilised a little, there’s no real growth expected anytime soon.

In addition to that, the economy has forced people to reduce spend and use fewer office products. The ultimate upshot of this is that customers have learned to work with less and have decided to keep it that way.

This heady combination of technological advances and an unstable economy has driven customers to buy – and demand – cheaper products. Many ‘status items’ people bought in the past from traditional categories have been replaced by gadgets like tablets and smartphones. Due to this shift, customers want to spend even less for those items they still need which is pushing down prices.

Technology is also having a big impact on how customers make a choice and where they ultimately buy.

It’s made access to ‘our’ space quite easy for newcomers, leading to more – and often cheaper – competition.

Lastly, the paperless office we have been talking about for over ten years isn’t here yet but the trend to use less paper in the office is clear and will continue.

All of these points have led business leaders across the globe to reflect on what to do to remain relevant and survive in the medium term. And, like I said, the number of options available is exactly what’s causing the stress.

But it’s more than just having those options. Stress is further caused by the need to change the way they

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OPI Magazine | November 2014

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