The word in office.
Channel changes at HP 1-1 with HPâ€™s Steve Sakumoto p28 November 2013
group revamps national p14 Exclusive: TriMega sees the Point Dealer accounts programme Big Interview: Cody Phipps, HOT Are UK dealers TOPIC being served? p32 CEO of United Stationers p18
Contents November 2013
SP Richards sales fall in Q3, while UFIPA project gets EU backing and City of Hope breaks records
Shows 46 Transform 2013 There is still a lot to learn about MPS, as delegates at Transform 2013 found out
8 Facilities focus
GSA issues $600 million jan/ san RFQ, as Bunzl steps out for Mexican catering distributor
The BTS season is a crucial time of year for OP balance sheets and 2013 was no different
Exclusive update on TriMega’s Point Nationwide programme
52 Imaging supplies
Despite depressed consumer spend, there are still opportunities to grow office printing sales
18 United we stand
United Stationers’ Cody Phipps on how the wholesaler is adapting in this digital age
Regulars 5 Editor’s comment
32 Service please! Cost-to-serve models seem inviting to improve the bottom line. But which one should you choose?
54 On the move
40 Office partners
55 5 minutes with...
Becoming a real partner to its customers is what it’s all about for Austrian operator Tekaef
56 What’s on Key dates for your calendar
44 Mountain or molehill?
58 Final word
Martin Wilde unveils new market research reports that offer a bright future for the OP industry
49 “What HP wants – even though we don’t have dedicated HP resellers, but office products resellers that sell a multitude of different products – is that when a customer walks into a store, calls or faxes a reseller, or goes online looking for HP products, they receive a consistent branded HP experience”... For the full article turn to page 28
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Office to the ’Max
As this issue of OPI goes to press, the share prices of Office Depot and OfficeMax are heading north in anticipation of imminent competition authority approval of their merger (or of the Office Depot acquisition of OfficeMax depending how you look at it). Reports suggest that approval won’t require Depot or ’Max to dispose of any of their stores, which would be somewhat surprising, but not something that will make a great deal of difference in the long run: store numbers will have to be cut anyway, and does Staples really want to take on existing stores in their current locations? Once approval is given, then it will surely be just be a matter of time before the identity of the new CEO Once approval is given, it will is revealed and we discover where the be just be a matter of time combined entity will before the identity of the new be headquartered and CEO is revealed what it will be called. Office Depot maybe? You never know. The other big news this month is HP’s highly anticipated new channel strategy in the US, which will see a move to an authorised-only reseller model. Make sure you read our exclusive interview with HP’s Steve Sakumoto (which starts on page 28) to find out what that’s all about. Talking of interviews, don’t miss United Stationers’ Cody Phipps as he tells us how the wholesaler is dealing with the secular challenges that everyone in our industry is facing. Happy reading!
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News from opi.net Record year for City of Hope The US office products industry gathered in Chicago at the end of September as ACCO Chairman Bob Keller collected the City of Hope’s 2013 Spirit of Life award. Keller has been leading the office products industry’s 2013 fundraising efforts for City of Hope, helping to raise an amazing $11.7 million – a record – for the California-based clinic and medical research institute, a figure that included almost $500,000 from an ACCO Brands-sponsored golf outing held in August. 2013 is a special year as it marks the 100th anniversary of City of Hope and this year’s Spirit of Life fundraising campaign has been called ‘A Century of Hope’. During this year’s Gala, City of Hope recognised the contributions and dedication of Nancy Doyle, who is retiring this year. Doyle has been with City of Hope for more than 20 years and was instrumental in expanding the institute’s collaboration with the office products industry in the 1990s. Next year’s honouree will be the President of Office Depot’s International division, Steve Schmidt, and City of Hope has confirmed that the 2015 honouree will be Steve Sakumoto, VP/General Manager of US Supplies Sales at HP. The 2014 Spirit of Life Gala dinner will take place at Chicago’s Navy Pier on 9 October.
News In Brief ■ New York’s Hummel’s Office Plus has acquired fellow dealer Hayes Office Products for an undisclosed sum. Hayes – which is based in the New York state town of Norwich – will rebrand to Hummel’s Office Plus and continue to operate out of its current location. Hummel’s will retain all Hayes employees and continue to service both retail customers and commercial delivery accounts. The transaction brings Hummel’s Central New York employee base to nearly 100.
OPI Magazine | November 2013
SPR sales and profits fall in Q3 Third-quarter sales at US wholesaler SP Richards (SPR) fell 3.1% to $430.5 million. Q3 sales to national account customers were up in the low single digits, while sales to independents fell by the same amount. In terms of product categories, both cleaning and breakroom, and furniture categories reported growth in the quarter, but these increases were more than offset by decreases in the technology and office supplies categories. Operating profit slipped 6.2% to $28.1 million, while operating margin fell 20 basis points to 6.5%. Genuine Parts CEO Tom Gallagher said he didn’t expect to see any material changes to the external environment in the near term. The focus will be on continued product and customer diversification.
UFIPA project gets EU backing The product labelling initiative from French trade association UFIPA has been selected as one of 14 pilot projects by the European Commission. UFIPA has been working on an environmental labelling system for office products for more than a year and extended the project to a pan-European level after an industry meeting in Frankfurt in September. At the Frankfurt meeting, UFIPA Project Manager Christophe Girardier revealed that UFIPA had applied to take part the European Commission’s Product Environmental Footprint (PEF) initiative to calculate the environmental performance of products.
■ Pukka Pads has diversified its product portfolio with the acquisition of UK manufacturer Yorkshire Envelope. Bingley-based Yorkshire Envelope, which produces a wide variety of envelopes for the greetings card sector, will retain its Yorkshire manufacturing facility and full complement of staff headed by General Manager Peter Rae. ■ Staples has strengthened its e-commerce capabilities by acquiring Silicon Valley-based software firm Runa. Runa develops e-commerce solutions that help online retailers personalise the shopping experience
Now the Commission has revealed the names of 14 organisations – from more than 90 applicants – that it has chosen for the PEF pilot phase, with UFIPA being the sole representative from the European office products industry.
for consumers. Runa’s PerfectOffer delivers automated, data-driven and personalised offers in real-time, while PerfectShipping provides real-time, personalised delivery estimates and free-shipping offers. ■ Office furniture manufacturer Steelcase will close a manufacturing plant in Germany as it shifts production to the Czech Republic. Steelcase said it had initiated talks with works councils in Germany regarding the closure Durlangen facility. At the same time, the manufacturer announced it would be investing $25 million in a new production site in the Czech Republic.
News ■ Round-up
Pelikan rethinks Herlitz integration Pelikan wants to acquire certain assets of its Herlitz subsidiary in order to speed up the integration of the two stationery brands in Germany and Austria. Earlier this year, Pelikan International – which owns about 71% of Herlitz – said the Pelikan and Herlitz businesses in Germany would create closer ties through a series of joint ventures. However, Malaysia-based Pelikan International has now said that it wants to speed up the integration process between the Herlitz PBS subsidiary in Germany and Pelikan’s sales and administrative functions in Germany and Austria. To achieve this, Pelikan is scrapping the joint-venture idea and is instead proposing that Pelikan acquires “selected assets and liabilities” of the German and Austrian stationery business of Herlitz PBS, as well as its logistics services company. Reports have suggested that Pelikan International has been “frustrated” by attempts to create synergies between the two brands as it attempts to reduce losses at Herlitz.
Corwell reports strong Q3 Hungarian wholesaler Corwell has said a strong third quarter has helped it to achieve year-to-date sales growth of 18%. Corwell said that its back-to-school sales this year were “outstanding” and that its subsidiaries in Slovakia and the Czech Republic have been major contributors to the sales growth. Start-up operation Corwell Czech implemented its new ERP system in the second quarter and a B2B e-commerce shop is set to launch in the coming weeks. Sales are on track to hit €1.5 million ($2 million) by the end of the year. Turning to Corwell’s domestic sales, the wholesaler said that year-to-date growth is 12%. The main reason for this impressive performance continues to be the popularity of the Victoria brand, while Corwell said that furniture sales had been boosted by the new Mayah private label. In terms of product categories, Corwell picked out copy paper and general filing products as the two best performing areas.
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News n Facilities focus
GSA issues $600m jan/san RFQ AOPD adds RDA to jan/san list Office supplies resellers in the US have until 12 November to submit their bids for a new $600 million federal government jan/san contract. The US General Services Administration (GSA) issued its request for quotation document for the new Federal Strategic Sourcing Initiative (FSSI) jan/san contract on 8 October. Only resellers that hold one of three federal government Multiple Award
Schedules (MAS) can bid on the new jan/san contract, but that does include those that hold a MAS 75 office supplies schedule. This means that office products resellers – some of whom already have FSSI experience, unlike their jan/san counterparts – have a chance of winning one of 16 blanket purchase agreements (BPAs) that have been earmarked for jan/san commodities and supplies. 14 of these BPAs have been set aside for small businesses. The GSA is estimating that the annual spend on the FSSI jan/san contract will be about $600 million, although this includes a motorised product category – items such as carpet cleaners and floor buffers – that office suppliers are unlikely to bid on.
Dealer network AOPD has added redistributor RDA Advantage to its Business Partner programme in the US. RDA Advantage is a $500 million pure redistributor of foodservice disposables and jan/san products. It was formed in 2007 when Redistributors of America and Advantage Marketing Associates merged and today consists of 16 independent redistributors with 35 warehouses across North America. “We must find other avenues of growth potential for our dealers as the office products share continues to decline in non-contract and also contract areas of our business,” stated AOPD Executive Director Bud Mundt. AOPD aims to tap into RDA Advantage’s buying power and national network of 150 sales reps to develop additional breakroom and jan/san sales for its members.
Bunzl buys Mexico Grainger adds 100 sales reps catering distributor Facilities supplier Bunzl has acquired Mexican catering equipment distributor Pro Epta as it continues to focus on international expansion. Based in Mexico City, Pro Epta is a leading distributor of catering equipment throughout Mexico – mainly to luxury hotels and restaurants. Its full-year sales in 2013 are expected to be approximately $30 million. News of the acquisition came as Bunzl reported third-quarter sales growth of 12%, with organic growth of about 2%.
MRO reseller Grainger hired 100 sales reps in the third quarter as it invests in sales growth. This brings the number of new reps so far in 2013 to 200, the company said as it reported its third-quarter results. Another key area of investment is e-commerce and Grainger confirmed that this is the fastest growing part of the business, now accounting for a third of total sales. Grainger admitted that the recent federal government shutdown in the US had hit sales. Federal sales – which represent 25% of its government sales in the US – fell in the high single digits in the third quarter and the reseller confirmed that the shutdown had been a “significant headwind”. For the third quarter, Grainger saw solid mid-single digit growth in the US as comparable Q3 sales rose to $2.4 billion. The company revised its full-year expectations downwards, but is still forecasting a record year, with total sales set to increase between 5-6%.
Manutan buys Ikaros Cleantech European supplies reseller Manutan has acquired Sweden-based specialist distributor Ikaros Cleantech. Headquartered in Malmö, Ikaros is a distributor of environmental protection products in Sweden and Finland. Its 2012 sales were about €16 million ($21 million) with an operating margin of 5%.
OPI Magazine | November 2013
Manutan said that the deal was financed entirely by its group equity, but did not reveal the value of the transaction. The France-based reseller operates in the Scandinavian market already through the Witre brand, one of its first international acquisitions in 1989.
News n Analysis
Full steam ahead for IS Independent Stationers’ national accounts programme continues to gather momentum
September award of the US Communities educational and classroom supplies contract is the latest feather in the cap of Independent Stationers’ national accounts programme. The contract – which could be worth up to $50 million a year in sales according to the US Communities proposal document – came into effect on 22 October. The initial term is for three years, with the possibility of three 12-month extensions, meaning that IS dealers could feasibly be vying
collaboration between dealer groups in the US: it’s an IS contract, Pinnacle member Guernsey played a key role in the bidding process with lead public agency Prince William County Schools in Virginia, and dealers are able to use TriMega’s BMI-powered Point Nationwide platform as their e-commerce system. At EPIC, IS’s VP of National Accounts said the new school supplies contract would have “a material impact” on the dealer group’s US Communities business as it allowed agencies to purchase both
original MBS Dev Enterprise model. However, Enterprise sales are holding steady and accounts are still being added, confirmed France. Other enhancements to the US Communities offering include a programme called Improved Bulk Buy, which offers discounts to new customers and a truckload paper initiative run in partnership with distributor Gould Paper. IS’s Scott Zintz told dealers at EPIC that they needed
The new schools supplies contract nicely demonstrates the growing collaboration between dealer groups in the US for up to $300 million in incremental sales. I say ‘IS’ dealers, but given the new relationship with fellow dealer group TriMega, who’s to say that TriMega members won’t also have access to this contract at some stage, helping to attain even greater market coverage? After all, there is a pilot taking place for TriMega participation in IS’s US Communities office supplies contract via TriMega’s California-based dealer Office Solutions. In fact, the new schools supplies contract nicely demonstrates the growing
office and school products from one website. There was also an opportunity, he noted, due to the recent financial difficulties of competitor School Specialty. Not that the dealers already selling through the US Communities office supplies contract have been dragging their heels. IS’s sales though US Communities are set to exceed $100 million in less time than it took Office Depot to achieve the same milestone; about 200 dealers are involved and more than 500 accounts are active.
Flexibility One driver of sales has been the Conventional Service Model Enhanced (CSME) that IS introduced last year. This gives dealers the opportunity for more flexibility and to deal directly with participating agencies, something that was not possible with the
OPI Magazine | November 2013
to show perseverance when dealing with local government agencies and that contract wins didn’t happen overnight. He also urged dealers to make sure that agencies were aware of changes and improvements to the programme as there still appeared to be misconceptions about the US Communities contract and IS’s capabilities. IS has also been participating in US Communities supplier summits and regional trade shows, and is promising a marketing “blitz” early in 2014 aimed at non-participating agencies that may have concerns over the Office Depot/ OfficeMax merger.
Double sales US Communities is just one aspect of IS’s growing national accounts programme. The CHAMPS
Kevin France healthcare purchasing consortium contract has seen sales double in the past year and has been boosted by CHAMPS’ move into non-healthcare areas such as hospitality. IS also has another foothold in the healthcare vertical through a contract held by member Friends Business Source on the Premier Purchasing Partners group purchasing contract. This award – which received strong backing in the bidding process from the IS national accounts team – was made in May and was launched on 1 August. Friends’ Betsy Hughes told delegates at EPIC that being in the Premier fold opened lots of doors and was “a huge opportunity”. For example, Friends saw a six-figure impact on sales in just the first month of the programme. The three-year price protection guarantee was a useful argument against “big box price creep”, she added and there has been “a positive reaction” to the CXI reporting tool. Add to the above the new ChambersSolutions contract – which will see IS dealers go head to head with Office Depot and OfficeMax – then there is plenty for IS and its members to be positive about in the national accounts arena.
News n Analysis
Office Brands enters government channel Queensland contract win marks dealer group breakthrough in national accounts
their US cousins continue to enjoy success in selling to local government agencies, dealer groups in Australia have not historically made inroads into this customer base in a market dominated by national resellers such as OfficeMax, Corporate Express (now Staples) and Lyreco. However, that could be about to change after Australian dealer group Office Brands was recently awarded a place on the Queensland and Northern Territory local government
level playing field for the local government business in their areas.” This is the first large public sector win for Office Brands – and any Australian dealer group, for that matter. Brown told OPI that his team had been working hard over the past year or so to ensure that Office Brands and its members had the right technology capabilities to handle the e-commerce and reporting requirements for this type of contract. “Local governments want to work with local businesses,” he explained.
“The appointment will allow local members to compete on a level playing field”
Chris Brown, Operations Manager, Office Brands contract. The contract was won on behalf of 35 Office Brands’ members in the Northern Territory and Queensland and covers the following categories: office and stationery supplies, workwear, personal protective equipment and personal protective clothing. The contract is estimated to be worth around A$10 million (US$9.4 million) a year and runs for two years initially. The contract expires on 4 September 2015, with the possibility of two 12-month extensions. Office Brands Operations Manager Chris Brown, who led the bid, said: “The appointment will allow local members to compete on a
“But they haven’t really been able to do that until now.” After losing out on the Queensland all-of-government contract earlier this year, Brown said that Office Brands had emphasised its national strength as a A$400 million group for the Queensland and Northern Territory local government contract. “We did suffer from the perception that small businesses wouldn’t be able to handle this type of contract and we realised that we needed to act like a ‘big player’,” he stated. Office Brands CEO Gavin Ward said: “This appointment is a great first step in our bid to expand
OPI Magazine | November 2013
into government business. We are always looking for new business opportunities for our members and this Chris Brown, Office Brands’ Operations should prove to be a Manager, was behind the successful bid very rewarding contract for them.” Lyreco and Australia’s The other office suppliers largest independent dealer, on the contract are Staples, Complete Office Solutions.
BPGI dealer GrouPs awaIt comPetItIon decIsIon BPGI’s three dealer groups in Australia and New Zealand must wait until March 2014 to see if their joint purchasing arrangement can continue in the longer term. Australia’s competition authority (the ACCC) has granted dealer group Office Choice interim authorisation to maintain the collective purchasing arrangement between itself, fellow Australian group Office Brands and New Zealand’s Office Products Depot. This provisional approval has been given while the ACCC carries out an authorisation process for a new application filed by Office Choice on 10 October. Office Choice was granted authorisation by the ACCC in September 2007 for a collective bargaining agreement that enabled the three dealer groups to participate in joint BPGI supplier contracts and to negotiate directly with suppliers together. This last point has been particularly successful in the paper category, with the three groups collaborating to source paper directly from manufacturers. This authorisation expired on 22 October and the ACCC agreed that it was in the best interests of Office Choice and its members to grant interim authorisation while it conducts its public consultation process ahead of determining if it will grant a new authorisation. Authorisation provides protection from legal action for conduct that may otherwise breach the competition provisions of Australia’s Competition and Consumer Act. Broadly speaking, the ACCC may grant authorisation if it is satisfied that the benefit to the public from the conduct outweighs any public detriment, which was its opinion in 2007. As part of the new authorisation process, the ACCC has written to a number of potentially interested parties – including Staples, Officeworks and a host of local vendors – who now have until 8 November should they wish to respond. According to the ACCC’s schedule, the final determination will be announced in March 2014. Office Choice and Office Brands told OPI that it would be inappropriate of them to comment or speculate on the outcome of the ACCC’s assessment while the process was ongoing.
European alliance opts for go-it-alone purchasing strategy
reseller alliance EOSA will leave the BPGI purchasing consortium at the end of next year. EOSA has just restructured and, as part of its new direction, members have decided to take on responsibility for purchasing agreements. The €500 million ($660 million) alliance joined BPGI in 2008 and its BPGI membership will continue to the end of 2014, with both organisations promising that their cooperation will continue until then. EOSA CEO Philip Becker confirmed to OPI that the decision to leave BPGI was an EOSA decision and that its strategy would give it
more flexibility to develop partnerships with European vendors, both with OP specialists and suppliers in adjacent categories. EOSA has been keeping a low profile since Becker took over as CEO last year. He has been leading the restructure to give the alliance a more adapted cost structure. Now that process has been completed, EOSA announced its first new member for some time in the form of Austrian reseller Takaef (see Dealer Profile page 40), although Finnish member Paperipalvelu is due to leave at the end of this year. Heading EOSA’s purchasing efforts is Jan Buck, who is sharing his time between the alliance
and his role as Purchasing Director at Plate. Industry veteran Heinz Kneubuehl has also returned to EOSA as part-time Administrator. “The final results [of the restructuring] are a sustainable improvement in joint purchasing activities, an efficient organisation and an attractive, real alternative for independent office supply companies,” said Kneubuehl, adding that initiatives introduced by Buck had led to “significant”
EOSA CEO Philip Becker
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News n Analysis
EOSA leaving BPGI
cash savings for all members. EOSA also plans to expand its membership, and is eying France, the UK and Northern Europe. For BPGI, CEO Barrie Hayes told OPI that EOSA’s decision had not come as a big surprise, but that there was no animosity at all between the organisations. He said that there would be an opportunity for BPGI to focus its support on its independent dealer group members on a country-by-country basis. Hayes agreed that Germany – where BPGI will not have a member after EOSA leaves – was a key focal point and that he was hopeful of being able to add a new German member soon. Other changes are taking place in terms of the membership structure at BPGI, Hayes confirmed, although he said he was unable to provide specific details at the moment.
News n Analysis
TriMega reinvigorates Point Nationwide OPI Editor Andy Braithwaite reports exclusively on TriMega’s Point Nationwide town hall meeting that took place at the inaugural EPIC in San Antonio, Texas in September
cannot be denied that TriMega’s national accounts programme Point Nationwide (PN) has struggled in the three years since it was set up. While Independent Stationers (IS) (see page 10) and AOPD raced ahead with their own programmes, PN seemed to get stuck in the starting blocks and fell some way short of its three-year target of $100 million in annual sales. With major investments in PN by both wholesaler partner SP Richards (SPR) and around 90 founding dealer members, as well as its relatively high ongoing cost structure, questions had been raised about the very existence of the programme. Therefore, one of the most eagerly anticipated sessions at EPIC 2013 was a TriMega member-only town hall meeting on PN and its future, to which OPI was allowed exclusive access. The town hall was hosted
by TriMega’s EVP of Member Development Grady Taylor. When he came into the meeting, he draped ‘Police line do not cross’ tape across the lectern to try
to servicing new accounts. As it turned out, the meeting focused mainly on the road ahead and OPI understands that the refund issue was
“It’s been a rough road, but let’s turn it around” to break the ice ahead of what he was obviously anticipating as a potentially ‘robust’ session.
No refunds One of the key issues was what would happen to the founder members’ initial investment in the programme. PN is to be opened to the entire TriMega membership and it was confirmed that the founding dealers won’t be refunded their initial outlay, although they will be offered a degree of preference when it comes
largely covered in an earlier TriMega closed doors meeting. The other main investor in PN was SPR. Taylor explained that PN was still contractually obliged to use SPR as its first-call wholesaler and that it would continue to adhere to this agreement. However, this relationship is likely to evolve as TriMega develops new partnerships with IS and – potentially – AOPD.
Taylor himself assumed the leadership of PN a few months ago and has been busy revamping the programme. His first priority was to reduce costs, as the previous staffing levels – including now-departed Nita Turpin (l) with Grady Taylor. Turpin has significantly brought down the collection time on PN Tom for receivables VanHootegem, two field sales reps and an in-house bid unit – were a significant financial burden that could no longer be supported. The team has now been slimmed down to four Grady Taylor tried to break the ice with ‘Police line do not cross’ tape (excluding Taylor himself).
Other members of the PN team in attendance were Implementation Manager Nita Turpin and Manager Customer Support & Quality Andy Sullenberger. Both were singled out for their hard work in what has been a difficult few months. Turpin has
OPI Magazine | November 2013
significantly brought down the collection time for receivables, while a technology tweak introduced by Sullenberger was the key to winning an $800,000 contract previously held by Staples. Taylor showed a slide highlighting recent contract wins and revealed that PN has seen double-digit growth over the past 12 months, although he conceded that this was “still not enough”. A $12 million state contract was recently renewed with one of the big boxes, but Taylor said he was “hopeful” that this account could be won by PN in the next year. There was support from the floor for PN’s new outsourced bidding team which includes former Corporate Express VP of Strategic Accounts Mike Netter, and Taylor confirmed that he was looking for more “savvy” bids that increased the so-far disappointing bid-to-win ratio.
‘Love fest’ One of the major themes of the whole EPIC convention was the new ‘love fest’
members do business through its contract rather than look to what IS has to offer and Pam Gonzalez contended that the TCPN contract is superior in terms of the technology platform available and price flexibility.
Drive volume Taylor empathised with Gonzalez and agreed with her that TCPN is more flexible, but his priority is to drive volume through the PN platform. If that takes offering the platform to IS-run contracts, so be it. Another development has been to lower the minimum value of a contract that PN will consider bidding for. This is part of an outreach effort by Taylor and his team to find more leads from dealers. Fees have also been reduced, but won’t disappear altogether. Taylor rounded off the session by pointing to the strong incoming stream of
potential contracts and expressed optimism that more of these would now be converted into actual wins than had been the case in the past. “We are going after the right kinds of customers Pam Gonzalez: Questioning the new and the right kinds relationship with IS of contracts,” he stated. “It’s been a technology platform rough road, but let’s turn it running under BMI that around.” even IS wants to use for Success isn’t guaranteed, some of its customers, and but there are certainly there is a sense that past positive signs from PN performance was more and a greater sense of a question of execution optimism. Presumably, it rather than any inherent would have been easy for weaknesses in the model. Taylor and the PN board As IS and AOPD have so to close the programme ably shown over the past altogether if they hadn’t three years, independents seen any future in it. can compete in the national After all, TriMega shut accounts arena, so let’s see down the SmartXpress if there is more encouraging online initiative when that news emanating from the failed to make enough PN camp following its headway. PN has a great recent revamp.
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News n Analysis
between TriMega and IS, and nowhere is this more prominent than in the national accounts channel. One example is the use of the PN technology platform for the new IS US Communities school supplies contract. While this is largely seen as a positive step, Pam Gonzalez of Texas-based TriMega dealer Gonzalez Office Products questioned whether the dealer group was giving up its competitive advantage in terms of technology to basically help IS pay for PN. Gonzalez OP is the holder of the TCPN co-operative contract that TriMega members can already use to sell into the local government space. And it was revealed that it has just been approved as a school supplies vendor by TCPN as well. The Texas dealer obviously has a vested interest in seeing TriMega
With the US Federal government shutdown finally resolved (at least until January), OPI estimates that the loss of business to office suppliers was $4.4 million per day, not including the knock-on effect the shutdown had on government contractors. Here’s how some of our readers reacted to the crisis during the shutdown itself. David Guernsey, Guernsey Office Products Sequestration and now the government shutdown have been tough on our Washington DC market. It’s not just our Federal customers, but also the civilian and military government contractors that form part of our commercial business. We remain optimistic, but the market trauma is out of our hands and so we wait with everyone else for the politicians to come to their senses. Al Lynden, Chuckals Anytime over 800,000 of your potential clients and users of your products are not working, your business will be affected. But that is just on the government side of the business. We will also begin to see a slowdown from those private sector companies that support those 800,000 workers. Every small business in our community will be hurt, from grocery stores to movie theatres; restaurants and hotels will lose business as people cancel their vacation plans around our national parks. It just goes on and on.
Percentage of UK tradespeople who use their van as a mobile office, according to research by Direct Line
News ■ And finally...
TWEET CHAT follow us on Twitter @OPInews, @andy_opi, @mukeshmanik #fact: After only being in existence for 5 years, the iPhone is the second best selling product of all time the 1st is the Rubik’s Cube. @SpicersCEO Beats reffing, I could get used to this.
Number of UK workdays lost in a year searching for missing paperwork among the piles of clutter, according to a Brother survey
70,000 Number of full-team seasonal jobs Amazon is creating in the US for the end-of-year Holiday period
@StationeryBytes Just been to very informative Paperworld press briefing. ‘Newstalgia’ a trend to watch. @officedepot Spook up your office this #Halloween with frightful invitations by Copy & Print Depot.
Tom Bersch, Veteran Toner Services Our business has taken a hit which means our suppliers have been hit and their suppliers have been hit, and so on right down the supply chain. Regardless of what side of the political fence you are on, to cause close to one million people to be out of work is reprehensible. And should this continue for any length of time, how many non-government workers will be affected? I assure you it will be a big number. A very sad time for our country and all the politicians should be ashamed of themselves.
opi.net poll results How severely has your business been hit by the US Federal shutdown?
43% Mildly 21%
Not at all – we don’t have a Federal contract
It’s another challenge
A Chicago teacher shows her delight at being one of the recipients of $1,000 in school supplies from OfficeMax as part of this year’s A Day Made Better programme. ’Max, which is based near Chicago, recognised 100 Chicagoland teachers at a special presentation hosted by CEO Ravi Saligram (left) and supported by American football star Brandon Marshall (centre).
Don’t forget to take part in the discussions on the OPI LinkedIn page w w w.opi.net | OPI Magazine
Big Interview | Cody Phipps
Focusing on the essentials
United Stationers CEO Cody Phipps tells OPI why a healthy sense of paranoia has been a good thing for the wholesaler Interview by Steve Hilleard Editing by Andy Braithwaite
the uncertainties surrounding the office supplies industry, United Stationers’ share price is bucking the trend and is trading at an all-time high. That market confidence is testament to a diversification strategy that began in the cleaning and breakroom categories and has now extended into industrial supplies. Not that United is neglecting its traditional office supplies resellers. Far from it, says CEO Cody Phipps, who took over from Dick Gochnauer two and half years ago and has just celebrated being with the wholesaler for a decade. OPI travelled to Chicago to get Phipps’ take on the challenges facing the office supplies community and why he feels United is well placed to help its customers grow. OPI: You took over from Dick [Gochnauer, former United Stationers President & CEO] in May 2011 after a well-planned succession period. What did you take away from his leadership in terms of lessons and experience? CP: Well, first of all Dick was a great mentor to me. It was really an honour and a privilege and I’m fortunate that I was able to work with him for nine years and watch him in action. I think Dick shaped the culture of United, the culture of what we call ‘servant leadership’. He’s recognised as really the person that brought that to United and that lives on today. I think Dick and I were good complements in some ways because he was a very detailed bottom-up thinker
OPI Magazine | November 2013
and I was a little more of a big picture, top-down thinker. OPI: You took over during a difficult period for the economy. What were your plans, goals or aspirations for the business when you succeeded Dick? CP: We are certainly still challenged with the economy. We don’t see a lot of tailwinds out there and so as we think about our future we believe a lot of it is going to have to be driven by our own initiatives. The luxury I had coming in and following Dick is I was one of the architects of our strategic plan, and therefore when the transition took place it wasn’t like I had to come in and reinvent a new plan; it was really a question of ‘sharpen our pencil’ and go execute the plan we have. And our plan really has two main components: one is to strengthen the core businesses in light of the economic times and the digitisation of the office, and the second is to diversify our company into higher growth channels and categories. Early on I was accused of turning away from office products, but I don’t see it that way at all. I think it’s understanding the situation in office products and the digitisation of those products and then recognising that the company needs to diversify into other products that fit our business model. The good news is it’s the same advice we’re giving our customers. We’re not asking them to do something that we don’t think is important for ourselves. OPI: Just how great a threat is this process of digitisation and decline in traditional office products? I get various sentiments from people – some border on complacency, some border on paranoia and panic. Where do you sit on that scale?
“The smart players are shifting their business model and becoming something different”
United Stationers | Big Interview CP: I’m probably a little to the right on the paranoid side because I think it’s good to have a healthy sense of paranoia. And let me tell you why I say that. We studied this phenomenon three or four years ago – I think we were one of the first to really get our arms around it. And I was at IBM when they claimed we were going to have a paperless office and I don’t think this ever really came into fruition the way people thought; in some ways maybe it was over hyped. So when we first started thinking about digitisation of the office, I thought it was the ‘iPad effect’ and all this stuff going digital. But as we really got in and understood it, it was the effect of that compounded with cloud storage Compound that now with the new millennials entering the workforce – I have four of them in my family and they just don’t use traditional office products the same way we do. And we’ve confirmed through other studies that as these folks come into the workplace they consume fewer office products. So am I paranoid? No, I’m not paranoid but I believe in this digitisation of the office. I feel it’s having a profound effect on our industry and I think the smart players are recognising that and they’re really shifting their business model and becoming something different – leveraging their strengths, but also heading in a new direction to remain successful. OPI: Do you get the sense that the vendors share that same degree or margin of paranoia and are doing something about it? CP: I would venture to say they all have that same sense that digitisation is real, that consumption is likely to decline further and that companies have to take action: redirect their business models, redirect their product portfolios and come up with more product innovation if you’re a manufacturer. OPI: Are the vendors in our field willing or able to adapt quickly enough? CP: I know all of our good partners w w w.opi.net | OPI Magazine
Big Interview | Cody Phipps are trying. Time will tell how successful everybody is, but I think everybody understands this change and is attempting to shift their business models to address it. OPI: With that in mind, what organisational or structural changes have you had to make to the organisation? CP: Well, a key area is strengthening our core, and we have two fundamental tenets to that. One is win the shift to online, because we think these products are going online and so we’ve taken some action to strengthen our organisation that way. A second fundamental tenet of strength in our core is to become easier to do business with. As we’ve gone out and talked to customers and suppliers and even looked at consumer research, we believe that consumers want to buy more of these products from a single source. They want easy digital access through e-commerce sites and want to get more products in a single box. So we made a move several years ago to move the operations of our three platforms to one shared service model and that included facilities and logistics. And now we’re contemplating more ways to become easier to do business with and provide more seamless product offerings and services – it’s an ongoing thing. OPI: That gives me a nice link into your trUchoice programme, which did throw up some issues between yourselves and the dealer groups a few months back. Where are we now with that? CP: TrUchoice is one element of a larger programme, which is 1) the ability to truly choose how you want to do business with United and 2) us recognising that we have to lower costs in the supply chain and offer more flexibility so our resellers can be competitive. One component of that is expanding capability to buy a wider variety of products in a variety of different methods, from drop-ship all the way up to direct truckloads. That’s the capability we want to bring to our resellers because they’re asking for it. It was portrayed as some kind of assault on the buying groups, but that’s not it at all. It is our effort to broaden our service offering to the larger players who are saying, “I need this or I’m going to get it somewhere else”. So, we’re trying to work hard to reposition trUchoice because it got off on the wrong foot. OPI: The groups seem to think it will damage the collaborative balance of the industry. Do you understand their point of view?
OPI Magazine | November 2013
CP: I do to a point, but I believe the industry has to change and, at the forefront of that change, is providing the services that our dealers need to compete. And at the forefront of that is lowering our total supply chain costs. Beyond that we’re quite willing to partner with anybody in the value chain who can help do that on behalf of our dealers. And so ‘Winning From the Middle’ isn’t always without its own little bumps in the road and we tend to work through those. But where I gain confidence in all this is, at the end of the day, all of the 3PVs, the buying groups and the wholesalers, they all have a vested interest in helping the independents being more successful, more competitive and more adaptive to the changing environment. So, despite all the discussions around these things, I feel we’ll find common ground because that’s in all of our best interests to do so. OPI: How would you describe your relationship with the dealer groups? CP: We’ve always had a collaborative relationship with the two main groups and we support them. I think they are coming together now – there’s certainly talk about that – which is probably a good move. I do think their model will morph and change, just like our model’s changing. I don’t have all the answers to what that will look like, but I think we’re all facing a future that has us with different business models and different approaches.
“At the forefront of change is providing the services that our dealers need to compete and that is about lowering our total supply chain costs”
United Stationers | Big Interview OPI: When you talk about dealers you’re talking about customers; when the groups talk about dealers, they’re talking about members. There’s a pretty significant difference between the two. CP: I think there are some things they can do as co-operatives that we can’t do and there are things we can do as a $5 billion company that they can’t do. So I believe that the relationships are going to remain strong, but probably we’re going to emphasise new areas of opportunity. For instance, I believe it’s in all of our dealers’ best interests to go online as it is with the groups to go online, so I think there will be collaboration on that front. As we think about broadening the portfolio of products we sell, the groups may need to take on a role in other categories, or work with the wholesaler to find a way to bring lower cost of goods to the customers. If you think about our ‘7 Moves to Win’, there’s a real question about what role the groups will play in those 7 Moves and how can we collaborate. And that’s some of the dialogue we’re having with them. OPI: You referred to your ‘7 Moves to Win’ and that was a key element of your last Vision event. Fast forward almost a year and how’s that panned out? CP: I think we’re having a great deal of success. Basically, underlying the ‘7 Moves to Win’ was a subtle message from us to our customers that we view the need to change as your partner. As I’ve said to many of our customers, the only thing I’m certain of is that the status quo is a bad strategy. This is not a time when we can sit and wait out the economy and hope things go back to the way they were. That won’t happen. And so the subtle message we had in the ‘7 Moves to Win’ was, “This is what we’re seeing; this is the insight we’re gleaning from it; this is where
we’re going as a company and as your partner, and we think we should go there together”. And that’s really what drove the ‘7 Moves to Win’ and I think we’ve had a really great reception from our customers on that. We’re seeing our leading customers adopt those principles, think more about online, target their campaigns, sell their sales force and sell their brand. OPI: Have you’ve seen any impact on their revenues and therefore your business with them? CP: We’re running pilots on various aspects of it and we’re encouraged by those. I can say that when we see customers successfully go online and successfully market themselves, we’re seeing an uptick in sales and they’re seeing it as well. If we didn’t we would stop. Our customers are kind of black and white in that respect, so they see the need and we’re seeing progress. I think one of the things we learned is it takes time. The strength of these entrepreneurs is their adaptability and you’ve got to convince them and they need to convince themselves, but once they get going then they’re a real force. So we’re probably still in the formative stages, but I would say the reception of those ‘7 Moves to Win’ has all been very encouraging, despite the overall economic environment and despite the clouds hanging over office products due to digitisation. So we’re bullish on that. OPI: The term ‘business essentials’ has cropped up in some of your recent conference calls and press releases, and we’ve even suggested that ‘United
w w w.opi.net | OPI Magazine
Big Interview | Cody Phipps
Business Essentials’ might be the new name for the organisation. What can you share with us on your repositioning and rebranding? CP: I’ve said publicly that we need to reposition the company. People ask me about renaming and rebranding the company, but for me it’s more about repositioning our company to the business that we are today and where we’re going. When I joined the company ten years ago we were 87% office products; today we’re 62%. What we like about the term ‘business essentials’ is that it recognises where the business is going and how it’s broadening, and that’s the positioning we’re going after. I don’t feel a great need to rush out with a new name. I do feel the need for our company to build the requisite capabilities to deliver against that promise and, in the process of doing that, reposition and eventually rename the company. OPI: Cleaning and breakroom is now your second largest category. You have just revamped your breakroom offer and rolled out your jan/san Fresh programme. You obviously still see a lot of upside in this category. CP: Yes, janitorial and breakroom are still the fastest growing categories within the office products channel and I think it’s fairly well known that the channels between the office suppliers and jan/san distributors are blurring. What’s playing out, is that leading office product players offer a superior value proposition. They’re e-commerce enabled, deliver every day, are capital light and showing up in the office. So they naturally view that as a very attractive adjacency. Quite frankly, we didn’t think we put our best foot forwards in enabling that, so we’re
OPI Magazine | November 2013
taking moves to make our platform easier to do business with. We’re lowering the cost of those transactions, providing new marketing programmes like Fresh to broaden what we sell and are providing new capabilities. Again, as part of the effort to become a broader market player, that’s one of the nearest opportunities. Everybody knows it and is chasing it, and we’re trying to provide more services and capabilities to help our independent dealers successfully go after that opportunity. OPI: But what about cost of goods? I’m hearing that dealers just can’t be price competitive at the moment. CP: You’ve got two channels that are merging and there’s different pricing between the two. You’ve got to navigate that carefully, but we believe we can bring our scale to bear to help independents be more successful in the category. The capabilities, the breadth of the product line that we’re offering and the cost of goods we’re bringing are being very well received. I think we’ve got more work to do there, but I think it’s an attractive and exciting opportunity for the independents. OPI: And can a traditional independent reseller sales rep sell cleaning fluids and toilet paper? CP: According to figures we have from last year, our average penetration of these products into the OP channel was around 7%. But as with all things we have very successful resellers who have penetrated to the tune of 20%-plus. OPI: And what have they done that’s different? CP: They’ve made investments and increased capabilities. They’ve hired experts at selling the product and they’ve understood some of the equipment needs in the industry, whether it’s dispensers or cleaning equipment. So there’s a casual reseller in the marketplace that gets to that 7% and then there’s the ‘power-user’ who’s really going after that category and they invest at a different level and we’re trying to tailor our programmes to help both.
“I’ve said publicly that we need to reposition the company”
United Stationers | Big Interview
“We tend to win bigger, more sophisticated customers”
OPI: I have to ask you about the Office Depot/OfficeMax merger. I know you’ve referred to that before as a potentially positive event for United. Is that still your take? CP: Yes, and the reason we view it as an opportunity is that it’s less and less about shaving a point off your supplier relationship. It’s increasingly becoming important that the partner you choose can help you go to where this industry needs to go, and our whole strategy is designed around broadening what we sell, making it easier to get those products and making them digitally sourced. We tend to win bigger, more sophisticated customers because of that and, as those two companies come together, we think we have a good shot of winning that business. We’re first call today with OfficeMax and second call with Office Depot, so they’re both our customers; and we think they’re going to look for a partner that can help them with all the important parts of their strategy: broadening what they sell, getting more SKUs online, being capital smart. Again, we think we’re very well positioned to help them do that because of our physical assets and the size of our distribution network, as well as the new e-business capabilities that we’re building. OPI: Is there a danger that the combined entity will look at your relationship with Staples and lean towards giving their business to SP Richards? CP: There’s always that risk. There’s that risk in any one of our customer relationships. Again, I think what we stand on is the value that we can bring to those customers and I think it’s very compelling. We like our odds in that, but nothing’s guaranteed. OPI: I guess no interview with the United CEO would be complete without mentioning WB Mason, which is your largest privately owned customer. What should the industry and your other independent resellers learn from the success of WB Mason and its operating model? CP: First of all, I think WB Mason has been a phenomenal success. They’ve shown growth that is enviable in our industry and I think what they’ve done is to really understand what they bring as an independent dealer and what we bring as a
wholesaler. So they bring that high-touch customer intimacy and a very strong sales culture, and we bring scale and logistics expertise to bring that to life. What I’m really pleased about is that together, and not just with them but all of our successful resellers, we’re now starting to understand that we can take that relationship and do the other things that are important, such as broaden what we sell, become more e-commerce enabled, be more capital smart. And I think they’re one of the players that are doing very well and are going to be one of the successful leaders. OPI: This is where I ambush you with a couple of things that you may not want to answer. CP: And I evade skilfully. OPI: I wanted to ask you about the lawsuit that’s come out of the SAP debacle, involving the Sage Group. It’s a substantial amount of money being claimed and they’re naming dealers as well. What can you say about this? CP: First, I would never refer to it as ‘the SAP debacle’. I think we made investments and raised a whole industry up as a result of that. And second, I can’t discuss ongoing legal matters in this interview. OPI: OK, I had to ask the question. Secondly, it was suggested to me recently that Genuine Parts may look to divest SP Richards at some stage. If that were to happen, do you envisage a situation where the industry would allow you to acquire your primary office products competitor? CP: I can’t predict what the industry would or wouldn’t allow. What I can tell you is that the industry is evolving and it is consolidating. I don’t think many people ten years ago when I joined United would have said that Corporate Express would be merged with Staples and that OfficeMax and Office Depot would be coming together, although there was talk of it. So, as the industry evolves is there going to be more consolidation and could that consolidation happen at the wholesale level? I believe it could. Will it be well received by everybody? Probably not. But the one thing I can say is the industry is changing and it’s dynamic and the winners are going to be those that recognise those changes and adapt. So I would not rule out the possibility of something like that happening. w w w.opi.net | OPI Magazine
Sponsored Article | HP
Going for the HP experience HP’s Steve Sakumoto reveals the details behind the manufacturer’s new ‘authorized partner’ channel program in the US for HP original supplies
Sakumoto is a familiar face to many in the US OP industry. He is VP and General Manager of HP’s US Supplies Sales Organization, Printing and Personal Systems, and is responsible for all field sales operations for HP’s supplies sales in the US. This includes office product superstores, general retail accounts, commercial distribution, independent resellers/VARs and corporate account sales, and revenues for his department exceed $5 billion in annual shipments. During his 33-year career at HP, Sakumoto has also held various sales, marketing and product management positions, including responsibility for all field sales operations for the office product superstores channel. Earlier this year, HP announced a major change to its channel strategy for supplies in the US, as it looks to establish a more formal relationship with its channel partners. This arrangement involves HP Inkjet, LaserJet and large-format ink cartridges and affects the entire reseller community. This new channel relationship formally came into being on 1 November and OPI caught up with Sakumoto shortly prior to this date for an exclusive interview in which he gives his reasons for this new strategy and what it means for HP’s distributors, resellers and customers. OPI: You’re introducing this new channel program on 1 November. Talk me through what you’re doing and why. Steve Sakumoto: What we’re really doing is we’re moving from what HP terms an ‘open’ distribution system to an ‘authorized’ distribution system. Therefore, we’re basically asking all of our reseller partners just to register with HP so we can know who
OPI Magazine | November 2013
they are. That means we can have and develop a direct relationship with them and we’ll be able to support them directly. Not from a sales, logistics and distribution standpoint – we will still rely on our distribution partners to manage all that business for us and we have no intent of taking these customers direct – but we want to have a direct sales touch with the resellers so they can better serve the end-consumers. OPI: So, just to clarify, the previous situation was that you had your major distributors – United Stationers, SP Richards and Supplies Network, for example – selling to resellers, and it’s now those resellers that you are requiring to be authorized? SS: Correct. OPI: What does the authorization process entail? SS: The authorization process involves going to an HP website, downloading a series of forms and filling out pretty standard business information. Then it goes through our authorization
HP | Sponsored Article review process and we register the reseller with HP. To go back to your question on why we’re doing this, our belief is that when we touch resellers directly and we’re able to communicate directly with them and provide them support. They, in turn, will be able to provide a superior level of service and customer experience to our joint end-user customers. So the idea is not to interfere with the supply chain, but to provide a direct touch to the resellers that will enable us to better support them and in turn they will be able to better support our mutual customers with a superior HP-branded experience. So that’s the overall strategy. OPI: So why are you doing this now? SS: Let’s take the example of outlets such as Starbucks, the Apple Store, or a McDonald’s. Whenever you walk into one of these, there is a certain branded experience that you have come to appreciate and you have come to expect. And, wherever you are in the US or elsewhere in the world, you will be treated to a very similar, consistent and familiar brand experience. What HP wants – even though we don’t have dedicated HP resellers, but office products resellers that sell a multitude of different products – is that when a customer walks into a store, calls or faxes a reseller, or goes online looking for HP products they receive a consistent branded HP experience. That encompasses a number of areas such as making sure that the reseller has the appropriate selection and the products are properly presented; that if there are any questions the reseller can address them promptly; the customer’s confident that when they buy an HP original that it is an HP original and not a remanufactured or a clone product; and the customer is getting a
of delivering great products and quality and reliable devices – is that the experience they get when they buy HP is what they expect. OPI: Presumably you’ve run some numbers and you estimate that not everybody that is selling HP products will sign up to get the authorisation. Do you forecast that? SS: Right now we have approximate numbers well in excess of 15,000 various types of resellers in the US. We anticipate that a large portion of them will sign up and become authorized partners and we also anticipate a portion of them will, for whatever reason, choose not to. So there will be some change, but we don’t expect it to be significant. OPI: From what I’ve heard, you could be walking away from a significant amount of business. Is that correct? SS: Well, from HP’s perspective we don’t believe so. At the end of the day, we believe
Where to source original HP supplies in the US From 1 November 2013, HP-authorized partners in the US must purchase their original HP supplies from one of the following distributors: • D&H • Digitek Computer Products • Ingram Micro • New Age Electronics • SP Richards/ Horizon USA • Supplies Network • SYNNEX • Tech Data • United Stationers/ AZERTY • WYNIT
“The idea is not to interfere with the supply chain, but to provide a direct touch to the resellers that will enable us to better support them” fair price and if something goes wrong then they’re supported by HP. When we don’t have direct touch to the broad dealer base we can’t do that as effectively. When we touch and support the resellers directly we can more effectively drive that experience through the entire dealer base. So that’s the ultimate desire. And, as the market gets more and more competitive, customers are looking for reasons why they should buy HP and we want to make sure that part of that – on top
that the customers are the folks that choose to buy HP. Whether they can buy it from more than 15,000 resellers today versus x thousand resellers tomorrow, we believe the business will still continue to flow through the whole reseller base and we don’t believe there’s going to be any change. If a customer wants HP they’ll find it. OPI: I take your point, but it does seem that you’re actually limiting or reducing choice. w w w.opi.net | OPI Magazine
Please sponsor us 8 November 2013
‘Ain’t no mountain high enough’ challenge This year OPI is again raising money for the Institute of Cancer Research (ICR) by climbing some of the UK’s highest peaks in freezing winter conditions. Organised by former Office Friendly Director Graeme Chapman for the 26th year (and the 7th year for this excellent international cause), the money we raise will help the ICR’s world-leading scientists work tirelessly to make progress in the ongoing fight against cancer. The ICR is one of the world’s most influential cancer research institutes, with more than 800 scientists in Europe and the US. It leads the way in isolating cancer-related genes and discovering new targeted cancer drugs, and has taken more drugs into clinical trials in the last decade than any other organisation in the world.
Tragically, one in three of us will develop cancer in our lifetime.
Please sponsor us. www.opi.net/COL2013 For US donations visit: www.firstgiving/fundraiser/OPIClimbofLife/2013 For all other donations visit: www.justgiving.com/OPIClimbofLife2013 Or contact:email@example.com, +44 (0)20 7841 2959
HP | Sponsored Article SS: I wouldn’t say ‘limiting’. If you look at our distribution status today, any customer has a multitude of choices – and I would say in some cases an overwhelming number of choices – where to buy HP supplies from. In future, they’ll still have a wide number of options, but our intent is to make sure that they buy from an authorized HP outlet, where we feel they will then receive better service, a better purchase experience and just an overall better and superior branded experience from HP. OPI: To what extent is this decision impacted or influenced by fakes, counterfeit products and imported clones? Is that an issue for you that you think this will help to eliminate? SS: Well, whether it’s fake or counterfeit or clones, that problem has existed for a long while. This move is not intended to change that or impact that at all. We have different avenues for addressing that class of product. This is really focused around how we work with a very broad and diverse dealer base and the creation of a process where HP can know who our resellers are, provides an authorization and some level of qualification to them and provides a level of superior support. Then, when the customers buy from this vast distribution base, they know they’re buying from an authorized HP reseller and they can feel confident that they’re going to get a quality HP product, supported by HP. OPI: Will you be providing independent resellers with a badge that says they’re HP authorized? SS: We will be creating a new program in the spring of next year called the Preferred Partner Program and for that we will be developing a set of standards – service and delivery standards, for example – that if a reseller chooses to participate in they can become recognized as a Preferred Partner. There will be some kind of logo or badge for that, but that’s still to be finalized.
OPI: As we speak, I’ve been told anecdotally that there’s a bit of a backlog with getting authorizations. Are you confident that you’ll have this all in place by beginning of November? SS: Yes, we’re confident we’ll have most of the backlog worked through and, as you know, there are thousands of resellers that are already authorized so we’re really looking at the tail edge of the channel. OPI: What’s been the response from your big distribution partners and other channel partners like the dealer groups? SS: I think there’s some degree of uncertainty – obviously any type of change creates uncertainty. We’ve been working directly with each of the big major distributors to explain the program and understand their concerns and, thus far, we’ve been able to address practically all of the concerns. There are a few ‘what ifs’ that we may have to address at some stage, but we’re confident that we have 99.9% of the t’s crossed and the i’s dotted. OPI: My understanding is that this is a US only program at the moment. SS: That’s correct. OPI: Why is it not being rolled out elsewhere? SS: The other regions are looking at it and, depending on their market conditions or their business, they may or may not do it. HP manages marketing and our go-to-market structures on a country-by-country basis, and each country manager will figure that out on their own. We do share what we learn in the US across the globe, but that’s really going to be a local decision.
See what Steve Sakumoto has to say about HP’s ‘authorized partner’ program on opi.net.
“The partner agreement that the reseller will be signing with HP requires that they buy only from HP-authorized distributors and then sell direct to the end-user”
OPI: If an authorized partner purchases product from a distributor and then decides, for whatever reason, to resell it to a non-authorized reseller, would that technically invalidate their status with you? SS: Yes. The partner agreement that the reseller will be signing with HP requires that they buy only from HP-authorized distributors and then sell direct to the end-user. We will not allow subsequent resale to other resellers. w w w.opi.net | OPI Magazine
Hot Topic | Cost-to-serve models
Service please! Two thirds of small independents in the UK are making a loss, research suggests. Several entities, mostly dealer groups, have stepped up to do something about it. It’s easy to get confused, however, as OPI explores the tricky cost-to-serve issue by Heike Dieckmann firstname.lastname@example.org
said it before – the UK OP space is a very interesting place to be at the moment. And with everything around new wholesale entrant Gem having gone quiet for the moment (see ‘Sparkling and new: Gem OP’, OPI September, page 40), over the past few weeks all eyes have been on the dealer community or, more specifically, on its groups. The topic is always the same: what can we offer independent dealers that helps them lower their fixed costs and overall go-to-market approach? Handing over part of the responsibility and day-to-day running of the business, on- or offline, and dealing with the hugely costly logistics side, has been the favoured plan of attack. Several years ago, nectere paved the way with the conception of its new dealer services model (more details on page 42). It is now firmly established in the UK with about
OPI Magazine | November 2013
35 dealers working with the group, has launched in the Republic of Ireland and set its sights on several other markets, with imminent announcements expected. NetStationers, later known as the Office Canopy Group and since this autumn rebranded as ‘buro business supplies’ goes even further back, to 2000, but as a concept works very differently as it’s a pure franchising model. About 18 months ago, Advantia signed a deal with office2office, giving dealers Truline, while in July
The only thing we know for sure now is that, unlike all the other initiatives, it will not be a programme aligned specifically to one of the two UK OP wholesalers.
Game changers? In among all these announcements, the terms ‘game changers’ and ‘unprecedented’ have come up more than just once. But are they? Broadly speaking, all parties bring something different to the table. The extent to which they do that is debatable but, quite frankly, it
“Dealers have spent many years building their reputations – we intend to enhance this reputation, not take it away” euroffice surprised the market with its Office Power initiative. Most recently, Superstat announced Cadabra and XPD launched Pi. Integra is expected to take the limelight next with its very own programme, details of which are still firmly under wraps.
would be unusual if there weren’t any misgivings and a certain amount of snipe given the intensely competitive nature of the UK dealer community – and for now realistically just two viable wholesalers to support it. “But”, says Advantia CEO Bob Geens, “any new initiative which
Cost-to-serve models | Hot Topic helps the dealer community to be more competitive and profitable is to be welcomed, providing it does not add in any unnecessary cost to the supply chain.” The notion of some initiatives only attracting failing dealers – and nectere in particular has faced much criticism here – is a repetitive, if slightly irritating, one. To blatantly generalise: why would anyone doing so very well on their own, with their own warehouse and delivery fleet – most models at least ‘strongly recommend’ a stockless model – want to ‘sign over’ any part of their business to somebody else, no matter how good they are, in some cases giving up their own identity (buro, partly nectere) and most certainly losing a certain amount of control over it? As such, dealers will be looking very carefully at what’s on offer to establish whether a programme suits them and which they should choose. Going stockless, for example, may not be compulsory, but the benefit of joining a programme might be lost entirely if dealers choose not to go down that route. Yet, the stockless model is usually a core part of virtually all initiatives, enforced or not and presented in varies guises, as it’s typically an area where a large percentage of dealers’ fixed costs are tied up in. The option of working with sophisticated ordering and web platforms are other advantages that are high on the agenda. They are also areas where small dealers in particular often lack expertise and resources and where the likes of Cadabra, XPD’s Pi (see also ‘The new life of Pi’, right) and, of course Office, Power score highly, often with solid wholesaler backing and support.
Small dealer focus With the exception of Cadabra which, says Superstat Managing Director Chris Collinson, is open to and suitable for dealers of all sizes, all initiatives regard the small independent dealer (or even the individual in buro’s case), with revenues of between £0.5 million ($0.8 million) and up to a maximum of £2 million as their core audience.
The new life of Pi XPD’s Pi programme is so new that it hasn’t commanded quite the column inches other cost-to-serve initiatives have had. As such, OPI spoke to Managing Director David Langdown to find out a bit more. OPI: You are the latest in a succession of dealer service models – what is Pi bringing to the market? David Langdown: The easiest way to understand is to hear what Pi is not. It is not an all-or-nothing solution that requires dealers to radically re-engineer their businesses. It doesn’t require dealers to join or change alliance within dealer groups; it does not require the change of their business name, independence or ownership and it doesn’t turn them into sales agents for another entity. OPI: That’s some of the competition covered then. So what is your sweet spot dealer and what do you offer? DL: Pi is about three distinct opportunities. Firstly, it offers a significant improvement to the Oscarnet e-commerce system. Based upon the Netalogue technology platform and utilising the Open Range data, it will provide a function and content-rich solution for processing SME and corporate business. For some dealers, this is as far as they may wish to go. However, should they want to take it further, the system includes fully integrated ERP that extends it from being customer facing to also operating as a procurement and back-office system. This will streamline processes and improve the dealers’ efficiency. Beyond that, there is the option to outsource all of the business processes, bar the selling and customer relationships. Here, dealers would be able to choose how far to take the model. They can decide whether to outsource, for example, sales order processing and telephone support, accounts and so on. They could maintain their own stock and warehousing, continue to run their own vans and manage their own deliveries, or they could adopt a stockless model, get rid of all of the overhead associated with it and outsource a direct distribution model. OPI: It’s a case of pick and mix then? DL: Very much so. We are not being prescriptive and it’s a case of marrying the systems we have with dealers’ individual objectives and aspirations. OPI: What has been the feedback so far? DL: We have started discussions with a number of interested dealers, including those at our recent conference. Feedback so far has been overwhelmingly positive from the type of dealers we expected to be interested and for which reducing the cost to serve is very high on the agenda. We are now fine tuning the systems and refining the outsource model. Our intention is to be live with transacting dealers by the new year. OPI: How will dealers pay for the services they use? DL: There will be a monthly licence fee for the e-commerce solution that will include the full Open Range data and will offer both a B2C (web store) and B2B (e-procurement) solution. This will be priced at £250. For dealers that wish to integrate the system with their accounts package and create an end-to-end solution, there will be an additional fee. For dealers that choose to outsource service elements such as telesales and handling of end-user enquiries, invoicing, sales and purchase ledger and so on, there will be variable charges based on the value of transactions. In the case of services such as list cleansing, telemarketing, catalogue mailing, campaign follow-up and so on, these would also be charged on a variable basis depending on the volume of work. OPI: You are very closely linked to Spicers with Pi. How did that come about? DL: XPD has been involved in the development of e-commerce solutions for more than 12 years and it’s a natural extension to our offering to go down this route. The big question for us was whether to go it alone or in partnership. We ultimately decided that it would better to develop a solution in conjunction with Spicers, and we view them as a partner that can add tremendous value to the whole proposition. And as it’s a joint programme, only Spicers ‘loyal’ dealers are eligible to participate in it.
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Hot Topic | Cost-to-serve models They are the ones that have the most to gain from them and, as a general rule, also the ones that are struggling the most. Most dealers above that bracket, certainly more than £5 million, arguably already have an infrastructure in place that would make it difficult to take full advantage of the various offers. Office Power Managing Director Tim Beech says: “We top it off at about £1.5 million because anything above that often means that the dealer is already web-savvy and marketing-led. “We’re looking for small dealers that have built their model with their own identity and with their own warehousing and logistics. Alan Bonner These dealers
colouring, font style and so on on the web platform. Buro, meanwhile, is not modular in any way and the franchisee also has no identity of its own. But the franchising model also caters for a very specific audience (the individual) and is very much a lifestyle choice, as CEO Alan Bonner points out. He says: “Operating someone else’s business model is a half way house to outright business ownership and this does not suit everyone, so finding good franchisees who understand the sector and are able to sell and share the values of buro is an ongoing challenge. We are not a dealer service organisation supporting dealers with their own working practices, personality and portfolio of customers. “All customers are buro customers and receive a common experience and our most successful franchisees are those that understand that the job is about selling.”
“Operating someone else’s business model is a half way house to outright business ownership and this does not suit everyone” are our sweet spot because they are the ones that can gain the most from using the Office Power model and make the most savings. “So it’s not necessarily web-based businesses, but those whose time is being diverted with all these other things rather than selling. With the pricing visibility and competitive landscape as it is, a lot of dealers are having their margins squeezed at the top and trying to cut costs at the bottom while at the same time maintaining service levels.” Modularity and identity are two points that also frequently come up in conversation and it’s here where opinions – and models – are divided. Office Power is not modular – it’s an end-to-end solution – but dealers are, as Beech points out, “often more than happy to go with what we’ve got because it looks better; the way it works, the route to market, website design, etc”. But, he adds, they always keep their own name,
OPI Magazine | November 2013
And, while the dealer group initiatives concur with the view that selling is at the top of the agenda as far as dealer priorities are concerned, both modularity and identity are hugely important, both in the case of Cadabra and also Pi. Says Collinson: “Dealers have spent many years building their reputations in their chosen field and geographical areas. We intend to enhance this reputation, not take it away. So, while we require the dealer to acknowledge that they are part of the Cadabra family in their marketing, their own name will remain prominent throughout.”
Dealer group lifeline Arguably, all these initiatives provide as much of a new lifeline and raison d’être to the dealer groups themselves – and a financial and possibly even acquisition target for the likes of Office Power – as they provide a service to dealers.
buro business supplies
Franchisee sweet spot: Individuals – from B2B, corporate or independent dealer background. Last mile: Various logistics partners including OP wholesalers. Modularity: No. There is a standard franchise contract to work within. Payment: One-off franchise management service fee (one-year sponsorship scheme for selected franchisees). Percentage of sales, payable monthly. Branding/identity: All dealers operate under one brand – buro – no exceptions. Stock: Stockless model.
Dealer sweet spot: Dealers with annual sales of £0.5-£2 million; also start-ups. Last mile: Varies – dealers’ own vans, delivery hubs or direct from supplier to the end-user. VOW wholesale support. Modularity: Essentially ‘no’ – generally speaking, you take the package. Payment: All fees are a percentage of dealer sales – no upfront fees. Branding/identity: Dealers keep their name, but change the brand style to match that of nectere to have a unified brand marketing. Stock: Stock needed is supplied by VOW, but funded by nectere, not the dealer. Dealers can use their warehouse as a hub if they wish.
Dealer sweet spot: Dealers that have their own logistics and salesforces, internal and external, and that want to operate on a regional and national basis. Last mile: Truline, supported by VOW. Modularity: Yes, as regards group services. Required to use Truline logistics and the Advantia group catalogue. Payment: Open book, cost-to-serve charge payable to Truline; marketing and other support services payable to Advantia. Branding/identity: Dealers keep their own identity, but all logistics fall under Truline banner. Stock: Not compulsory, but stockless model recommended. As Alan Ball, CEO of Spicers which is at the heart of many of them, says: “The buying groups are coming up with these models, because unless they do something to add further significant value, they would come under pressure themselves because they haven’t got any long-term viability. The initiatives may vary, but the underlying principle is the
Cost-to-serve models | Hot Topic same and that’s helping dealers take cost out of their business and focus on selling rather than all the other administrative things that they are used to doing.” There’s no doubt among any of the people OPI spoke to for the purpose of this article that the sheer number of dealer groups in the UK is unsustainable going forward. But that’s not necessarily implying that those that have not jumped on this particular ‘cost-to-serve bandwagon’ will be the ones in most danger.
Too good to be true? As Mike Gentile, CEO of US dealer group Independent Stationers, says with more than a hint of scepticism: “The many new initiatives and programmes being introduced in our industry are most intriguing. But we need to do a deep dive into these specific programmes to fully vet their respective benefits to the independent dealer. Some programmes claim to reduce fixed operating costs and streamline the supply chain which should result in freeing up existing resources for market share growth. “Who would not be in favour of that? Well, sometimes when it is too good to be true, it isn’t true. We have found that some initiatives are mere “share shift” programmes that can be a Trojan horse for the independent dealer and the manufacturer.” Fellow US dealer group TriMega is equally sceptical. Says EVP of Member Development Grady Taylor: “We’ve heard of one of these programmes coming to the US and we’re wondering if, at the end of the day, it’s nothing more than a roll-up. There are at least three dealerships in TriMega that are already doing this to a certain extent. If this concept was going to be wildly successful then I would have thought that these [US] initiatives would have made larger inroads already than they have to date.” Taylor is referring to America’s Office Source, a network of independent OP dealers located in several cities across the
Dealer sweet spot: Any UK dealer; size irrelevant. Last mile: Flexible. Spicers, dealers’ own logistics or a combination of both. Modularity: Yes, generally speaking. Exception: dealers have to use Cadabra front- and back-end computer platform at no cost. Payment: Flat rate of £3,000 per annum. Branding/identity: Dealers keep their own identity/name, but acknowledge Cadabra in their marketing. Stock: Predominantly stockless model recommended.
Dealer sweet spot: Dealers with sales of £0.5-£1.5 million with existing warehousing and logistics facilities. Last mile: Spicers or on occasions the manufacturer. Modularity: Essentially ‘no’ – fully managed end-to-end platform with some flexibility. Payment: Margin calculated based on dealers’ product mix and cost-to-serve built into dealers selling price. No upfront fees. Branding/identity: They keep their own identity. Stock: Essentially a stockless model, with limited flexibility.
US. Created during the heyday of the OP superstores in 2000 when many small independents were rolled up or simply went out of business, like the UK initiatives, the concept revolves around dealers focusing on selling while the host – America’s Office Source – provides the tools to make the rest happen (for more info, www. americasofficesource.com). The issue with any model like
“If this concept was going to be wildly successful... then these [US] initiatives would have made larger inroads than they have to date already” that, and Taylor also refers to Indoff (see www.indoff.com), is that he questions both its appeal, as well as its success rate. “The premise with a concept like Indoff is that the dealer goes out to sell, while the Indoff people handle everything else; the dealer-cum-salesman gets half of the growth margin. But the allure of half the gross profit starts going away when Indoff starts charging back for delivery costs etc and the next thing you know is that the salesperson is making what he was making before, maybe even less…” And is there room for another layer in the chain that wants a share of the profit too? According to Paul Musgrove, Managing Director of nectere, there is. “Shared resources are cheaper –
end of story. If you save £10,000 and use £5,000, that still leaves you with £5,000. It’s not physically possible to remove all the overheads, but by aggregating things become cheaper. In the past 18 months, for example, our dealer margins have gone up by five points.” Musgrove has been vindicated to a great extent, of course. Having come under heavy criticism when nectere first launched in 2010, he says: “Everybody is now trying to copy us – and a poor copy from what I’ve seen so far – and that’s quite nice.” The good bit, he adds, is “that dealers are really looking up now and hopefully they’re going to see what works best for them”. As Spicers’ Ball concludes: “Some of these initiatives will fail and some will succeed, but overriding any specific platform developed by whoever in whichever format, I have no doubt that it will change the way that dealers operate.” w w w.opi.net | OPI Magazine
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OPI Magazine | November 2013
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Dealer Spotlight | Tekaef
partners Becoming a real partner to its customers is what it’s all about for Austrian operator Tekaef and contractual services like MPS are very much part of the plan
by Heike Dieckmann email@example.com
been a busy year for Tekaef. New warehouse, new company name and, to top it all off, the Austrian operator most recently joined EOSA, fuelling hope there’s life left in the reseller alliance that’s been worryingly quiet over the past 18 months or so. At €80 million ($108 million) in revenues, Tekaef Holding is a very sizeable organisation, but it’s also one with several strings to its bow and not all of them are related to OP. With a consultancy business focused on asset management based in Switzerland (Office Asset Consulting), a non OP-related wholesale business (Mape Distribution) and promotional products firm Media Group just making up €10 million of this total, however, it’s firmly rooted in OP or, perhaps more accurately, in the resale and distribution of printer and printer supplies. And that’s Gerhard Panwinkler indeed
OPI Magazine | November 2013
how the company started out, says Gerhard Panwinkler, Distribution Manager of Printberry, the distribution business of Tekaef Holding. “We began as a reseller of printer and printer supplies – on a telesales basis – in 1994. About ten years ago, we added office supplies to our B2B offering. “Part of our initial portfolio included having supplies distribution contracts with companies like Lexmark, OKI and Brother, for example. Then, about seven years ago, OKI approached us and asked if we wanted to also do the distribution of hardware, ie printers, for them. At the same time, however, OKI felt that we had to split
Angel assumed the name of Tekaef Büroleben (translated as ‘office life’). As mentioned before, Panwinkler heads the distribution business, but he has, in fact, been with the company since its inception. He works closely with company owner Christian Maass and Managing Director Daniel Rossgatterer and is a key part of the firm’s strategy team.
Bigger capacity In addition to the name change, Tekaef also added a second large warehouse at the beginning of the year, in preference over a number of several smaller facilities that proved to be ineffective. Now everything to do with Tekaef Büroleben, now
“We are moving from shifting boxes and selling products to contract management. This is the business of the future” the company so as not to confuse B2B customers with end-users and their distribution contracts. It was a sensible thing to do, so we divided the company into Tekaef Distribution and Logistics and – the B2B reselling part – Tekaef Data Hero and Office Angel.” These two names are now redundant since the firm completely rebranded earlier this year. Since April, Tekaef Distribution and Logistics is known as Printberry, while Tekaef Data Hero and Office
a pure B2B online shop, is stocked at its HQ-based warehouse in Ried (see picture above), while the new Printberry warehouse is located 5km down the road in Hohenzell. This holds all the bulkier items and hardware like monitors, printers, but no office supplies. Partly as a result of that but also due to a different stock rotation, it’s the bigger of the two facilities at 5,000 sq m (the Ried facility has a capacity of 3,000 sq m). That said, Tekaef Büroleben is, weighted in revenues, the larger part
Tekaef | Dealer Spotlight of the two businesses, with €40 million now coming from the B2B channel – that’s 50% of overall company sales – as opposed to €30 million for Printberry. However, and at the risk of adding confusion, Printberry holds all the purchasing functions within the organisation and as such Tekaef Büroleben is its biggest customer. Within Printberry, office supplies account for a negligible 2-3% of sales. The vast majority of customers – about 600 to 700 – are wholesalers of printer and printer supplies. Most of these players are very small, admits Panwinkler, with typically just one to five employees, while 10-15 are more sizeable firms. One of these customers is PBS Holding, in its wholesale capacity and for printing supplies only. The fact that a company like PBS Holding does not go straight to the manufacturer for these supplies is
supplies and if they do, they can purchase everything from Tekaef Büroleben.”
Focus on solutions But the growth lies elsewhere, he adds, notably in the solutions around its products. “C-article management, printer asset management – that’s what we’re focusing on right now. We’re moving from shifting boxes and selling products to contract management. This is the business of
“The traditional OP market is never going to recover – you have to find other solutions to create margins” easily explained, says Panwinkler – it simply has to go through the official distribution channel as part of contractual OEM agreements with the likes of Lexmark or Samsung. Tekaef Büroleben’s customers are a completely different mix altogether, though just as wide-spanning, from small businesses with ten employees to multi-million dollar companies won through public tenders. As such, its competitors are equally diverse, with everything from small dealerships to the likes of PBS Austria and Lyreco in the picture. Interestingly, OEMs like Canon or Ricoh are also on the competitor list, as they frequently deal directly with large business clients for printer and printer supplies. Office supplies account for a small 15% of overall sales in Tekaef Büroleben, while is the rest is largely made up of printer and printer supplies, plus a small amount of notebooks, monitors etc. Says Panwinkler: “We check with our customers if they need office
the future, both in our B2B as well as our distribution business.” There are plenty of challenges on that quest and one of them is to speak to the right person: “You really have to sell asset management, MPS or whatever you want to call it to customers. You have to explain to them the costs they can save by signing up to our printer asset management system, for example. Or take our C-article management system – customers can use the software and either buy their C-articles from us or from other companies – we just give them the platform to handle all these
C-articles and manage them in an easy and cost-efficient way. If you tell the story, people will be mostly be happy to contractually commit, that’s what we’re seeing.” And it appears to be working. This solutions-based business now represents 25% of Tekaef Büroleben’s overall revenues, that’s a very healthy €10 million. So what of EOSA, how does that fit into the picture for a progressive organisation like Tekaef? Panwinkler remains guarded when it comes to the benefit that the alliance can bring to the Tekaef table. He says: “We are new to EOSA so we are still figuring out how it’s doing business, etc. What I can say is that it will be a change for us to do business all over Europe. We are in Germany already, but not on a big scale. Where we see value is that we’ll be able to buy OP cheaper than we do now because of the greater purchasing power. “What we bring to the table,” he adds, “is our expertise in the area of MPS and everything to do with document/print management. Most EOSA members still focus primarily on reselling office supplies. But the traditional OP market is never going to recover and you have to find other solutions to create margins. “The most important job for the next 12 to 24 months is to move away from just moving boxes for customers; you have to give them ideas on how to save money in their business, offer them contracts to optimise their print and overall asset management, fix where something goes wrong. In other words, become a real partner rather than a provider of products. If you don’t do this, you will lose out to others that do.”
Tekaef fact box: Founded: 1994 HQ: Ried, Austria Owner: Christian Maass Revenues: €80 million ($108 million) Employees: 105 Business model: B2B online shop, distribution
Logistics: Two warehouses, total capacity 8,000 sq m SKUs: 60,000 in online shop Customer base: 9,000 Geographical coverage: Austria, Switzerland (consultancy only), Germany (€3-€5 million)
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OPI Magazine | November 2013
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Special Feature | FM Report
FM: mountain or molehill? Specialist OP market researcher Martin Wilde unveils two important new market research reports that offer a bright future for the OP industry Why are FM supplies important? In the late summer of 2012, Martin Wilde Associates (MWA) and OPI produced a research report entitled “Boiling The Frog: A Guide To The Behaviour Of Young Office Workers”. This ground-breaking study of office working habits came to the sobering conclusion that demand for many conventional office products would be in structural decline henceforward. Fortunately, in recent years, many OP distributors have increasingly turned to other product areas, one of which has been facilities management (FM) supplies. Certainly, OP distributors have seen significant growth in their sales of FM recently, and these now account for 11-12% of total OP wholesaler sales in the UK and US, while for OP dealers the share of FM can be between 7-15%. All report that this share is growing, at a time when growth has been hard to find elsewhere. This is good news for the OP industry, but the question is, how much more growth can there be in this sector? Have the OP channels already taken as much share as they are ever likely to obtain? In short – is the opportunity presented to the OP industry by the FM category a mountain or a molehill? MWA and OPI are proud to announce the publication of two new market research reports entitled “FM Supplies: Mountain or Molehill?” One report is focused exclusively on the US market, the other on the UK. So, what’s the conclusion? Firstly, there is no doubt that these are large and growing markets:
OPI Magazine | November 2013
What do the reports cover? Each of the two reports is based on 300 interviews carried out with end-user buyers of FM supplies in each country, supplemented by in-depth interviews with OP wholesalers and OP dealer groups to provide clear answers to 18 key questions: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.
What is the identity of the purchasers of FM supplies? How many FM product categories do these buyers purchase? How much do they spend on these products annually? How many staff do they buy these products for, and what is the average annual spend per worker? To what extent do FM supplies buyers also buy OP items? From which supply channels do these buyers currently buy these products? What share of purchases does each channel account for, currently? To what extent are these buyers interested in buying FM supplies from OP suppliers? What barriers are preventing these buyers from sourcing FM supplies from OP suppliers? What would encourage buyers to purchase FM supplies from OP suppliers in future? What other products do these purchasers buy that they might be interested in purchasing from an OP supplier? On what criteria are FM suppliers selected? What service levels are required by these buyers? Which FM brands are most important to these buyers? How acceptable are private label products in these categories to these buyers? What price differential is required from equivalent branded products? How frequently are orders placed for these products? What is the average order value for these products? How and where do buyers search for products? How will the purchasing of these products change in future? Product categories covered by the surveys Category
Food; beverages; catering utensils, appliances & supplies.
Cleaning chemicals, materials and appliances; washroom/restroom cleaners; hand & skin care; towels, dispensers & accessories; refuse products.
Health, Safety & Security Products
First aid & health supplies; PPE; fire & safety products; cash, key & security products.
Mailroom, Shipping & Packaging Products
Mailing, packing & shipping supplies & equipment.
FM Report | Special Feature overall, UK businesses spend about £165 (and US businesses $280) per worker each year on these four product categories. The research also indicates that many buyers expect their purchases of these products to increase in future as the economy recovers further. Secondly, the research has found that the OP channels are competing with a large number of other channels in each of these categories: while the common perception may be that it is the local janitorial resellers who represent the greatest competitor – and ‘lowest hanging fruit’ – for local OP dealers, these have only a limited overall share of end-users’ spend on jan/san products and, of course, only specialise in one of these four sectors. Indeed, the research shows that the OP industry is faced with some large and well-resourced competitors: the warehouse clubs/cash & carries, grocery multiples, industrial supplies specialists, food service distributors and others, all of which have significant average shares of end-user spend in these four product sectors. However, the research also shows that OP channels – particularly the national OP suppliers – now have a good foothold in all of these product sectors. Overall, comparing the two reports, it appears that the OP channel in the UK is slightly ahead of the US in terms of market penetration. As figures 2 & 3 show, while most (53%) UK respondents are already buying at least one of these four FM product sectors from an OP supplier, the equivalent figure in the US is 34%. Nevertheless, it is clear that, whichever the country, there Figure 2: Interest In Buying FM Supplier: US is still much for the OP channels to go 18% for: as these figures show, 2% very few respondents 5% are not interested in buying FM supplies from an OP supplier. 34% Furthermore, the research also shows
clearly that, while many respondents are buying some types of FM supplies from an OP supplier, they are by no means always purchasing all their FM requirements from this channel. In other words, there are not only many other interested potential customers for the OP channels to serve, there is also plenty of scope to sell more FM products to existing customers. From this perspective, the molehill does indeed begin to look like a mountain. What do OP channels need to do? For each of the four FM product sectors, each report also investigates the key issues required by buyers of these products from their suppliers and shows what requirements have to be met to gain this additional business. The research throws up some surprises here: while low price is important – especially for some product categories – it is nearly always secondary to considerations of product quality and customer service, particularly in the breakroom/catering and health & safety categories. And, while a rapid delivery service is regarded by many in the OP industry as a particular advantage, it is also clear that for many of these product categories a delivery lead time of 2-5 days is seen by many FM supplies buyers as being quite sufficient. The reports also look at the importance of brands and detail not only the key proprietary brands that any OP supplier should offer in these product categories, but also the acceptability of From An OP private label products. Source: MWA Here, the research found major differences between countries and product categories (and even sub-categories): 42% in hot beverages, for ■ Already do this ■ I do not do this but I am very interested ■ I do not do this but I am slightly interested ■ I do not do this but I am not interested ■ Don’t know/refused
Figure 1: Interest In Buying FM From An OP Supplier: UK Source: MWA
53% ■ ■ ■ ■ ■
Already do this I do not do this but I am very interested I do not do this but I am slightly interested I do not do this but I am not interested Don’t know/refused
example, only a small percentage of purchasers are prepared to take any brand in both the UK and the US; however, in first aid and health supplies, most UK buyers are happy to take any brand, although this is not the case in the US. What about the future? Having analysed the present, the reports also look to the future, gathering the views of both end-user purchasers and OP distributors on how the purchasing of these products will change. Inevitably, one of the predicted developments in both countries is a shift towards online purchasing. While this could be good news for the OP channels (which of course are comparatively well-equipped in this respect), it should not be forgotten that – as mentioned above – there are many other competitors already in the market that are very capable of taking full advantage of this trend. Each report also concludes with an action list of the considerations that any OP distributors must address before entering these markets.
How do I get a copy?
The two 150+ page reports are available now and can be ordered via the OPI website (www.opi.net/ mole) for US$3,100/£2,000 per report or for a special discounted price of US$5,100/£3,300 for the two publications.
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Show Review | Transform 2013
The long journey Despite lower numbers, Transform 2013 proved to be another informative and educational few days of learning all about MPS, its opportunities and challenges by Heike Dieckmann firstname.lastname@example.org
could be forgiven for thinking that after several years of hype, Managed Print Services (MPS) fatigue is beginning to set in. And it’s true, attendance levels at Photizo Group’s recent Transform 2013 event were well down this year, with a total of 182 visitors, compared with last year’s record-breaking 344 (partially due to one sponsor – Ricoh – last year bringing a large delegation of customers).
But there’s no doubt that the congregation of delegates from Europe’s imaging and print industry had much to learn in a wide selection of absorbing keynote speeches, panel discussions and breakout sessions, not to mention in the pre-conference workshop that delved a little deeper into MPS tactics (see box below). The event was kicked off by Jim Lawless, a well-known motivational speaker who has taken several leaves out of his own book The Ten Rules for Taming Tigers. He showed a hugely appreciative audience just what can be achieved if you truly put your mind (and body in his case!) to it. But while every single delegate appeared to stand a little taller after Lawless’ positive assault on everybody’s confidence and self belief, the subsequent panel discussion on MPS: The Good, the Bad and the Ugly showed that much remains to be done to bring all stakeholders in the overall MPS
MPS in a declining market – the coach’s view The OP space is rife with change right now. We all know that traditional office product sales are in decline and much of what we see right now makes for less than uplifting reading. Some of the giants like Staples are having to redefine their business models at break-neck speeds. And we know they are not alone. The ‘tablification’ of the office and the trend of BYOD (Bring Your Own Device) are other flashpoint conditions that will continue to change how people share documents within the office. Tablets and smartphones have become attractive and economical transport mechanisms for documents and the visual quality and ease of use are such that people don’t feel the need to buy as many notepads and pens as they used to. And this trend isn’t a fad; it’s the new reality. People aren’t taking a temporary break from the traditional office, they are transforming the very nature of what an office is. With pressure from Generation Y, corporate cost-cutting, remote workforces, the complete digitisation of traditionally paper-based workflows, as well as the wide adoption of cloud-based solutions, there is no doubt that revenue diversification is essential if we are to prosper.
OPI Magazine | November 2013
So how do we evolve to recapture those lost revenues? One simple way is to add MPS to your portfolio. This offering is, after all, directly related to some of the product sets being sold in the OP space – think printers, toner, paper. The key difference with managed print versus selling the items upon request is that you get a long-term contract and better margins for your efforts. Maybe you’ve entertained developing an MPS programme only to be put off by all the moving parts: auto-toner fulfilment, collecting page counts for billing, hiring/dispatching service technicians, sales rep training. Just five years ago you would have had to develop most of these MPS elements in-house, but that’s no longer the case. Many distributors and other reseller partners have MPS programmes that make it easy for OP companies to offer MPS without having to build the
Transform 2013 | Show Review debate successfully and coherently under one umbrella. From issues with contract lengths, unrealistic savings promises to lacklustre customer buy-in, there are many challenges that still need to be addressed. And how can you make money in the (ever more threatening) paperless office, asked José Luis Parga, Founder/CEO of Pulsar Technologies. His answer is simple in theory, if not necessarily in practice – document storage. “Documents – in whatever format and Ed Crowley medium they are stored – do have a cost and we have to recoup that cost,” he said. Parga made the very interesting leap from MPS to Managed Document Services (MDS), which are predominantly the domain of large corporate organisations, in a well-attended session that finished with a Jim Lawless’ first day keynote address lively debate.
infrastructure (author’s note: not to mention the cornucopia of software providers vying to enter into collaborative agreements). You would buy the ‘pages’ at a wholesale cost, and your customers get the toner, service and parts required. Simple. And of course organisations like FocusMPS are ready and willing to help you to train your salesforce on the art and science of MPS selling. So all in all you no longer have to worry about building out an MPS programme all by yourself, and this is good news if you’re considering adding value-based and margin-rich offerings to your bag of tricks. If you aren’t offering MPS you are in jeopardy of losing business to those that are. And once a contract is signed, you won’t have a chance to earn that business back for at least 12 months, likely longer. So evolving the toner and printer portion of your office supplies revenue streams into an MPS model is no longer a difficult prospect. And with workflow and BPO solutions becoming more economical and simple to deliver the opportunity is massive. The only question left to ask is ‘when do you get started’? West McDonald is Founder/Owner of focusMPS. He has been involved in the MPS space for over a decade and set up his own company about two years ago. To get in touch, contact West on +1 905 835 2520. Email: email@example.com; www.FocusMPS. com or www.Print2Glass.com
Further discussions of the day included the European MPS market and its opportunities, a look at cloud computing and printing, as well as a useful insight into delivering services to SME customers from a leasing perspective. The first day finished with Photizo’s Solutions Showcase that allowed delegates to listen to some very specific solutions or alternatively visit one of the many exhibiting booths and tables displaying their wares at the conference. On the second full day, Photizo’s Founder/ CEO Ed Crowley took to the stage with his keynote address. He spoke about services and the part they increasingly play in the MPS arena. Can they become commoditised too? What does the future hold for all involved? In among a hugely informative ‘Ask the Experts’ panel discussion and a host of more breakout sessions in the afternoon, visitors had plenty of time to network again, learn and be educated, not least during a very enjoyable Bourbon tasting that topped off the event with a glow. The transformation is far from complete; some might say has barely started yet, but it’s fair to say delegates at the very least came away with some ideas taking shape in the back of their minds.
Beyond basic MPS In a pre-conference workshop organised as part of this year’s Transform event, West McDonald explored some of the other lucrative and recurring MPS revenue streams that exist within the managed services and IT services sectors. Nearly 30 dealers, mostly from a copier and printing background and not new to the concept of MPS, attended an engaging afternoon geared towards teaching them how to sell and integrate horizontal workflow solutions into their MPS practice. One of these is ‘Secure Release/Follow-me’ printing. The benefits here, says McDonald, are manyfold and successful implementation can deliver cost savings and document security benefits that are “impossible to ignore”. He adds: “Customers are driving the need for this change and this workshop was a good primer. By the end dealers were able to confidently work with their customers to deliver far more than ‘MPS 101’.
w w w.opi.net | OPI Magazine
Back-to-school | Category Analysis
Under examination The back-to-school season is a busy period for the OP industry, but striking the right balance of offers and marketing is crucial to ensuring success
by Niall Hunt firstname.lastname@example.org
total back-to-school (BTS) and back-to-college market is worth $72.53 billion in the US alone. Of this, traditional school supplies, such as notebooks, folders and pens, account for $7.24 billion while electronics, including PCs and tablets, are worth $19.5 billion. Last year, US BTS retail sales hit $30.3 billion and while the National Retail Federation (NRF) reports this year’s sales to be down sharply to $26.7 billion, each US household still spent an average of $634 on BTS this season. And the 2013 BTS market in the UK was at least as buoyant. Figures from GfK for July-August show the UK stationery market up 3.5% by value. GfK says this growth continued into September, producing overall value growth in the BTS 2013 period of 4.5%,
Where will you purchase back-to-school items this year?
■ ■ ■ ■ ■ ■ ■ ■ ■
Catalogue Thrift stores/resale shops Drugstore Electronics store Online Office supplies store Clothing store Department store Discount store
8% 14% 20% 26% 37% 41% 51% 62% 67%
Source: NRF Monthly Consumer Survey
driven by sales at grocery chains which saw a value uplift of 4.6%. By volume, however, the market declined 7.9%. In the US, figures from the NPD Weekly Retail Tracking Service show total BTS spending down 1.9% on last year at $3.39 billion for the 13 weeks to 5 October. The biggest fall, according to research firm NPD, was at office
were strong in both retail and the business channels, with value growth of 3.9% and 5.7% respectively. Branded products were instrumental, according to GfK, showing a value uplift of 11%, while own labels fell 11%. Pentel Marketing Manager Wendy Vickery confirms this, saying demand for Pentel’s EnerGel range of markers has been “record-breaking” this year.
“Some of the biggest consumers of stationery and trendsetters are teenage girls” superstores, with a 3.9% sales decline. Other retail stores’ sales slid 1.6%. NPD Office Supplies President Lora Morsovillo says: “One bright spot was e-commerce [up 6.2% by value], but it’s such a small piece of the overall pie.” The OP superstores’ market share also declined, according to NPD, with their slice standing at 30.2% this year on 30.8% last year. But it is a piece of pie that is still worth $1.02 billion. “We saw a lot of activity in the office superstores to differentiate their offerings,” says Morsovillo, “particularly celebrity endorsements”. However, she adds that choosing the right celebrity was a tricky balancing act. “There have been mixed successes on sell-through and it’s really striking when a product’s hot.” In the UK, GfK figures show that writing instruments
And the US was no different. “Brands do well because of quality perceptions. We also saw growth in areas that focus on fashion with patterns and colours playing an important role,” adds Morsovillo. Vickery comments: “Some of the biggest consumers of stationery and trendsetters are teenage girls and violet is extremely popular with this audience. We’re seeing sales of violet ink pens becoming as popular as blue now. “ “Consumers are still looking to get value for money,” adds Vickery. “This has always been the case at back-to-school time, regardless of current strains on the household budget. Value, however, doesn’t necessarily mean always choosing the cheapest product.”
University challenged Back-to-college spending in the US is also down. “The good news is that consumers are spending, but they are w w w.opi.net | OPI Magazine
Category Analysis | Back-to-school doing so with cost and practicality in mind. Having splurged on their growing children’s needs last year, parents will ask their kids to reuse what they can for the upcoming school season,” NRF President/CEO Matthew Shay said in response to this year’s figures. Last year’s US BTS and BTC sales were driven, in part, by growing demand for tablet devices and PCs, according to the NRF. The organisation estimates that $8.38 billion was spent on BTC electronics this July, down 12.6% from $9.59 billion in July 2012. IDC and Gartner also both reported a decline in PC sales during the BTS season this year. And, while Apple sold 14.6 million iPads in Q3 2013, unit sales were down 14.1% this year. Despite this, NPD’s Morsovillo says: “What consumers have told us is that, while overall there was no growth in those products this year, if you break it down by age group, middle school and also junior high school did see a little bit of growth.”
Marketing class Experian Marketing Services Head of Global Research Bill Tancer says that BTS marketing started much earlier this year, with some campaigns kicking off as early as May. But, he says, this doesn’t mean shoppers started buying earlier. “Shoppers are delaying their purchases till later in the season, even beyond the Labor Day weekend. Students, for example, want to wait to see what the other kids are wearing before buying,” he says. Morsovillo says that retailers in the US started marketing BTS earlier two or
Key areas for UK grocery growth
She adds that while convenience is an important factor in where consumers shop, it also “varies enormously according to demographic factors”. “Students requiring specific products for university courses will be more likely to visit a specialist stationer or out-of-town retailer to find what they’re looking for, whereas parents of young children may be more inclined to incorporate their back-to-school purchasing within their weekly shop in the supermarket or high street,” she says. “What all of them have in common,” she adds, “is increasing use of the internet to make their back-to-school purchasing selections.” In the UK, online saw value growth of 18%, according to GfK, whereas traditional in-store sales only grew 3%. “Online is the area experiencing the most growth for our customers, due to the convenience and choice offered by this channel,” GfK Account Manager – Office/Stationery Panel Sarah Wheeler explains. “With online sales flourishing for stationery products in BTS 2013, this is an important area to target customers driven by the digitisation in consumer purchasing habits,” says Wheeler. But online is not growing as strongly in the US. “I think with e-commerce, we have seen steady growth in the US,” comments Morsovillo. “But that’s not
Writing felt pens +11%
“What all of them have in common is increasing use of the internet to make their BTS purchasing selections” three years ago. However, she adds: “A good proportion of the US had a very late start to summer climate-wise. And people just weren’t shopping for these products until the end of July. So stores weren’t seeing as much traffic as usual.” Vickery meanwhile points out that marketing is crucial to shoppers’ decision-making process. “Pentel has had a successful back-to-school promotion with a particularly attractive selection of offers on key products, with a strong range of consumer offers.”
OPI Magazine | November 2013
isolated to the BTS season. There is definitely room for growth.” Despite this, the NRF’s 2013 BTS survey shows that more US consumers are turning to the internet to save money, with 36.6% saying they will do more price comparison online. All channels remain important to Pentel, comments Vickery: “The high street contains many of the traditional destination stores for BTS purchases, while the independents offer the range of choice that consumers requiring
Colouring pencils +11%
Fountain pens +15% specialist products are seeking. We ensure that we have a credible BTS solution for each channel.” Wheeler says: “BTS has seen good growth over 2013, where brands have been the key contributor. Looking forward to 2014, if this growth is to continue manufacturers and retailers need to look at gaps to expand.” “I think it’s having the right selection of products, the right quality of products and having them at a good deal and offer value,” adds Morsovillo. “The opportunities for Pentel are to bring innovative products to the market and explore opportunities with non-traditional routes to market, such as the internet and value retailers,” says Vickers. As the OP industry in the northern hemisphere focuses on next year, it must be ready to embrace a more bargain-savvy set of customers. And, while the internet was an important channel this year, its growth looks likely to dominate next year’s BTS season, in the UK at least. Manufacturers and resellers will also need to get their marketing right in the battle for brand dominance in the minds of consumers. At the more globally focused brands and resellers meanwhile, thoughts will be turning to the start of the back-to-school season in the southern hemisphere, where marketing efforts will have already begun.
Category Analysis | Imaging supplies
Getting down to business While the consumer market remains depressed there still appear to be opportunities to grow office printing sales
by Andy Braithwaite email@example.com
purely coincidental that imaging supplies is one of OPI’s featured product categories in the month that HP has launched its new authorised partner programme in the US (see pages 28-31), a move that Monte White, VP of Product Marketing at distributor Supplies Network, has called “the single biggest manufacturer change in a long time” in the print consumables channel. While we’ll have to wait to see how the new HP strategy pans out, the fact that the number one global print brand is taking this step is probably an indication of the economic and secular pressures facing the print hardware and supplies vendors. “When the market is booming you can overlook a lot of things,” White told OPI. “When it’s not, you have to take a more aggressive approach and we’re seeing that across the board, not just with HP.” That said, there is still a degree of optimism within the print industry, especially in terms of the opportunities for inkjet with business customers. Inkjet has been regarded as an inferior product by corporate users for many years now, but perceptions are changing as new technology such as wide-array printing helps drive down the cost per page.
OPI Magazine | November 2013
HP Officejet Pro X series: Page-wide inkjet technology is targeting the office laser market
Latest figures from HP put the overall hardware and supplies market as remaining flat for the next three years at $180 billion. However, within that, the OEM is forecasting that the business ink market will grow by 9% to $10 billion. HP is banking on part of that growth to come from its Officejet Pro X series of devices, which are aimed at taking share from office laser machines. Brother is also raising eyebrows with its new 100-page-per-minute stationary print-head device.
Reseller resistance Whether inkjet products such as these prove popular with resellers remains to be seen. There is certainly an undercurrent of doubt – even resistance – from the reseller community over the profitability to be gained from lower-cost inkjet products that require less servicing. Obviously, demand will also be consumer-driven – and research shows that corporate users are impressed with new inkjet products – but the rise of office inkjet could have consequences for OEM/VAR relationships. Another interesting move from HP has been the development of closer ties with the aftermarket community to ensure compliant chips for HP-compatible cartridges. While this does not suggest that HP or the other OEMs are going to be any less aggressive in pursuing patent infringements – in fact, the opposite appears to be true at the moment – it could herald the start of a more positive relationship between OEMs and aftermarket vendors.
“When the market is booming you can overlook a lot of things. When it’s not, you have to take a more aggressive approach and we’re seeing that across the board”
Imaging supplies | Category Analysis
While figures suggest slight market share gains for compatible products in the past 12 months, Sophie Lansac, Marketing Director at leading European vendor Armor, believes that laser clones have had a damaging effect on non-OEM sales. Lansac pointed to pricing differences and quality issues that have caused confusion in the market, probably to the benefit of the OEMs. “The situation is similar to 2007 when the inkjet market was flooded with low-cost Asian products,” she told OPI, adding that suppliers such as Armor were moving towards more value-added solutions. Lansac also highlighted the continuing growth of managed print service (MPS),
Going mobile OEMs join forces to develop mobile printing standard One issue that the print industry is trying to put its arms around is how to simplify the printing experience from mobile devices, such as tablets and smartphones. This is important because the phenomenon of bring your own device (BYOD), where employees use their own smartphones or tablets at work, is growing fast – IDC research has indicated that BYOD will jump to 56% of the workforce over the next three years, up from 40% today. Until now, trying to print from a smartphone has been a bit of a frustrating experience, but four OEMs – Canon, HP, Samsung and Xerox – have joined forces to create an alliance aimed at standardising and simplifying printing from mobile devices. The Mobile Print Alliance (Mopria) aims to bring together the mobile, software and print industries with the goal of aligning to standards that make printing universally compatible from any mobile device to any printer, anywhere. Writing on a company blog, Karl Dueland, VP of Xerox’s Solutions Delivery Unit, gave a straightforward explanation of how the alliance will help end-users. “If a printer has a Mopria sticker on it, anyone with a smartphone and an internet connection can walk up and print to it – without downloading an app or driver. It’s really that easy.”
Rising demand It’s not yet clear why other OEMs such as Brother or Epson are not part of Mopria. That could be due to strategic direction, competition issues or even oversight, but manufacturers are keen to tap into what is seen as a real demand for hassle-free mobile printing. IDC research suggests that today almost a quarter of smartphone users and a third of tablet users want to be able to print from their devices, and that figure is set to rise to 50% and 58% respectively by 2015. Commenting on the launch of Mopria, InfoTrends’ Zac Butcher wrote: “Whilst I am extremely positive about this development, I don’t believe the introduction of more intuitive print support on mobile devices
estimating that more than half of corporate accounts now had some form of MPS programme. Not that MPS is necessarily a negative driver for aftermarket resellers. In fact, it could be viewed as an opportunity. “Aftermarket quality has improved greatly over the past ten years and consumers are more accepting of those products,” said Supplies Network’s Monte White. “When a reseller sells an MPS solution, the customer is often less concerned about what brand of product is in the box as long as it works and it’s covered by a service contract. Resellers are making a choice about what products go in the box and end-users are following them in that direction.”
is going to arrest the declines we are seeing in pages printed. In many instances the technology that enables digital workflows ultimately results in a better workflow. Any pages lost to better ways of working will be at risk regardless of whether printing from a mobile device is straightforward or not.” However, he still sees mobile printing as an opportunity. “Where this initiative may benefit the document imaging industry is in securing the more resilient print opportunities – the pages that will not be so easily converted to a digital workflow,” he continued. “If people are able to continue current ways of working (printing) with tablets and smartphones, then logically there should be an increased probability that they will do so. If people can’t print, believe they can’t print or think it is too much effort to print, then they won’t print. They then seek out a new way to work with the new behaviour becoming reinforced over time. In this context, the launch of the Mopria Alliance is both timely and of critical importance.” Supplies Network’s Monte White believes the lack of mobile print solutions has been one of the dynamics that has caused softness in the demand for consumables. “We absolutely see a gap with those that are using mobile devices to be able to access print fleets and print on those devices,” he told OPI. While he recognises that areas such as cloud computing and mobile devices inherently reduce the need to print, White also points these forces being offset to some extent by the sheer increase in available content. “There’s not a decline in the amount of content being consumed by users – in fact, it’s growing,” he said. “Some of it is generational – younger people are used to consuming data on a screen – but some of it’s more about print access. Often print environments are not as accessible to mobile devices where people would prefer to print but they can’t. That’s why a lot of the manufacturers that we do business with, while they are not bullish, they are certainly not pessimistic.”
w w w.opi.net | OPI Magazine
On the move
OP personnel changes from around the globe We would love to hear from you. Email firstname.lastname@example.org, Tweet us @OPInews or you can write to us at OPI, Diamond House, 36-38 Hatton Garden, London, EC1N 8EB, UK
Rosa’s Office Plus has officially announced that Vicky Hauptstueck has been promoted to President. Hauptstueck has been fully involved in the day-to-day operations at the independent dealer since she and her husband John bought the business at the end of November 2006. She took over the President role in April when John Hauptstueck became CEO of the parent corporation Office Ventures to manage corporate strategic growth initiatives. The US dealer has also hired experienced OP executive Stacey Wolke as Sales Manager. John Motley Associates’ long-serving rep Mary Lou Callahan has retired. Callahan – described by the rep group’s President Rick Flounders as “one of our finest reps” – retired on 1 October after a 28-year career in the office products industry. Vendor Acme United has named John Ward as General Manager of its subsidiary in Canada. Ward was formerly Director of Sales and Channel Marketing at Newell Rubbermaid Canada and has extensive general management and sales experience in the office products and industrial markets in the US and Canada. He has succeeded Harry Wanless who has now retired. Steelcase has announced that Jim Keane will succeed Jim Hackett as the office furniture manufacturer’s
CEO. Keane will take over from long-serving CEO Hackett in March 2014 at the beginning of the company’s next fiscal year. Keane is currently COO of Steelcase and is responsible for product development,
Laurent Bertrand has been named Managing Director of French reseller Fiducial Office Solutions. Bertrand has been with the company for ten years and in that time has been in charge of marketing, logistics and the Graphic Art division. Fiducial said his in-depth knowledge of the business would enable him to be immediately operational in the highly competitive office products market. Bertrand takes over from Bart Rentmeesters, who had been Managing Director at Fiducial Office Solutions for almost two years. Avery’s new VP for Europe and Asia-Pacific Mark Cooper is now also leading the manufacturer’s UK subsidiary. Cooper re-joined Avery in August following the company’s takeover by CCL and is based at Avery’s UK headquarters in Maidenhead. In addition to his new VP role, Cooper has assumed General Manager responsibilities for the UK. This development means that General Manager Northern & Eastern Europe Mark Williams has left Avery. Olivier Langlois has been named Managing Director of France and Benelux at European paper merchant Papyrus. The ex-Esselte executive has been running Papyrus’s French
OPI Magazine | November 2013
Paperworld has a new face following the move of Ruth Lorenz to a different role at organiser Messe Frankfurt. Cordelia von Gymnich has taken over responsibility for the Consumer Goods II division at Messe Frankfurt – which includes the Paperworld, Creativeworld, Christmasworld and Hair and Beauty shows – after a restructuring process that has seen two divisions merge. Lorenz, who was previously in charge of Paperworld, will now head the New Events division, which includes the development of events such as Webchance, M-Days and other future-oriented event themes. operations for the past two years and the addition of the Benelux market comes after a structural change in the firm’s regional management. Langlois reports to Sören Gaardboe, Papyrus’s SVP for Northern and Western Europe. UK wholesaler VOW has appointed Martin Weedall to the new position of National Sales Director. Weedall joined the wholesaler in 1990 and was most recently North & Midlands Sales Director. His new role will encompass building partnerships with potential and existing customers and developing sales strategies to drive growth within the VOW reseller customer base. He also has responsibility for the national sales force via the regional director team. Mike Holme will join Spicers in December as Category Sales Director Paper Products, as the wholesaler ups its investments in the category. Holme has been National Account Manager at the PaperlinX-owned merchant Robert Horne since 2009 and before that spent almost nine years at Antalis. Spicers said the appointment comes after it has developed a “credible” paper offering over the past 18 months and recognised the need to make additional investments in the category
Stewart Superior has appointed Alun Thomas as Sales Development Manager. The former Durable and Esselte executive will be responsible for growing and enhancing Stewart Superior’s business with new and existing customers. Owen McGonagle left uni-ball brand manufacturer Mitsubishi Pencil Company (MPC) at the end of October. McGonagle had been with MPC for 14 years and took on the General Manager’s role at the beginning of 2012. The company’s European Director Olivier Brenot has assumed control of the UK subsidiary. German Office furniture manufacturer Wilkahn has promoted Michael Englisch to the role of Head of New Product Development. Formerly Head of Design Management, Englisch will oversee Wilkahn’s restructured product development department to focus on its core competencies. UK software systems provider OASIS has appointed Christine Geer as Sales and Implementation Consultant. Geer has worked in the OP industry since 1984, including 14 years at dealer JH Clarke and five years as an agent for BlueSky’s Horizon software.
5 minutes with... Tim Beech, Managing Director, Office Power
“I always love the buzz of the sale, but I am still striving for that ‘best moment’.”
Describe what you do in less than 20 words. Office Power is the leading-edge, fully managed sales and service solution for dealers – my job is to grow it.
What keeps you awake at night? Sweating the “small stuff”!
If you weren’t doing your present job, what job would you like to be doing? Running a bike café.
Your ideal night out. Beer and curry.
The best moment in your career. I always love the buzz of the sale, but I am still striving for that best moment. The worst moment in your career. There have been two low points – learn and move on. Your best piece of advice to someone who has just joined the OP industry. Don’t let a catalogue restrict your ambition. A management book you would recommend as essential reading. Don’t Sweat the Small Stuff by Richard Carlson. Your greatest strength. I have led some great teams; my contribution has been putting the right people in the right jobs. Your biggest achievement. Helping the right people in the right jobs achieve more than they ever thought possible. The best innovation in the OP industry in the past few years. The internet has made prices transparent and cost management is now critical for organisations to compete and survive.
Your first car. Ford Escort Mk1. Purple… inside and out! Favourite sports team. Grimsby Town Football Club – I went to school with the manager’s son. My life has never been the same… so much disappointment! Have you got a claim to fame? East Midlands road race champion 1981. The best concert you have ever been to. I really enjoyed The Stranglers at Rock City, Nottingham earlier this year – I had forgotten how good they were. Which character from a film or TV series do you think most resembles you? It used to be Ray Doyle from The Professionals, then Robson Green. Now I just look like my dad. How would you like to be remembered? Just to be remembered would be good.
Your favourite office product? Rolodex rotary business card holder – now redundant thanks to smartphones and LinkedIn. The biggest single issue affecting the OP industry over the next five years. Think work space, not office. The biggest change that has taken place in the industry since your career began. The paperless office (work space) will happen: how many 30-year-olds print e-mails?
Have you ever done anything dangerous or daring? I like going down hill on a road bike – very fast. www.opi.net | OPI Magazine
JAN 08-10 PSI – Promotional Products Fair Messe Düsseldorf, Düsseldorf, Germany
If we are missing an event please let us know. Contact email@example.com
JAN 20-22 ADVEO World France Disneyland Paris, France
Key dates in your industry
Do you have an event that you would like to promote in the OPI Calendar? Please contact Fergus Cox for further information about having an extended entry and pricing. Email: firstname.lastname@example.org Web: www.opi.net/calendar
NOV 18-21 ISSA/INTERCLEAN North America Las Vegas Convention Center, Las Vegas (NV), USA NOV 20-22 Big Buyer 2013 BolognaFiere, Bologna, Italy NOV 26-28 European Paper Week 2013 EU Thon Hotel, Brussels, Belgium
NOV 03-05 Global Forum 2013
The Langham, Chicago (IL), USA Contact: Janet Bell Email: email@example.com Tel: +44 20 7841 2950; Web: www.opi.net/gf2013 An invitation-only forum for CEOs and senior executives.
NOV 04 Nectere Ireland Supply Partner Day Dublin, Ireland NOV 11-14 Marketplace 2013 Hilton, Miami Airport, Miami (FL), USA NOV 14 Integra National Conference The Chesford Grange Hotel, Kenilworth, UK NOV 15-16 Office Friendly Main Conference Carden Park Hotel, Chester, UK 56
NOV 28 COPA Stars Gala Bellagio, Vaughan (ON), Canada NOV 28-29 ADVEO WORLD 2013 Berlin & Potsdam, Germany DEC 04-06 EdSpaces 2013 Henry B Gonzalez Convention Center, San Antonio (TX), USA
2014 JAN 06-09 Hong Kong International Stationery Fair Hong Kong Convention Centre, Hong Kong
OPI Magazine | November 2013
JAN 25-28 Paperworld Frankfurt 2014 Frankfurt, Germany FEB 25-27 Skrepka Expo powered by Paperworld Crocus Expo, Moscow, Russia MAR 02-06 AOPD Annual Meeting Biltmore Hotel, Coral Gables (FL), USA
MAR 04-06 OPI Partnership 2014
Okura Hotel, Amsterdam, the Netherlands Contact: Steve Hilleard Email: firstname.lastname@example.org Assisting European vendor and reseller companies in building long-term strategic relationships.
MAR 04-06 Paperworld Middle East Dubai International Convention and Exhibition Centre, Dubai, UAE
APR 01-02 London Stationery Show 2014
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 06-09 ISSA/INTERCLEAN Amsterdam RAI Convention Centre, Amsterdam, the Netherlands MAY 21-23 CORWELL EXPO Corwell HQ, Budapest, Hungary JUN 11-15 SP Richards’ Advantage Business Conference Gaylord Opryland Resort & Convention Centre, Nashville (TN), USA JUL 09-11 ISOT 2014 Tokyo Big Sight, Tokyo, Japan
MAR 08-11 Ed Expo and CAMEX Dallas Convention Center, Dallas (TX), USA
SEPT 17-19 EPIC 2014 Joint Independent Stationers TriMega convention Westin Diplomat, Hollywood (FL), USA
MAR 11-14 CeBIT 2014 Deutsche Messe, Hanover, Germany
OCT 09 Spirit of Life Gala Navy Pier, Chicago (Il), USA
so we are
Keep up to date with all the latest issues of OPI, available to download direct to your smartphone or tablet wherever in the world your business takes you. Search for ‘OPI magazine’ in your app store
Final word Your industry, your opinions Jim O’Brien SVP Marketing, SP Richards & President, BSA
An open invitation WITH
each passing day we encounter an equal number of challenges and opportunities – and we are constantly trying to determine where we might stand with each occurrence. Are we the hammer (strike) or the anvil (bear)? Or both? 20 years ago we were all navigating our way around the roll-up phenomenon. Fifteen years ago we applied resources to ensure we were not left out of the .com boom… and then tried to escape the mudslide that came with its subsequent bust. Between then and now there have been an increasing number of game-changing events. Now, each of us is mapping the various potential strategies that might be put into play allowing us to leverage our strengths and emerge as winners, or at worst mitigate the downside and live to play another day. So, how does your team evaluate each of the scenarios (disruptions) that have either already played out or are likely to happen? What plans do you have in place that will protect you from disaster or launch you to new heights? Here are some potential developments most likely to affect us in the near term, if not already: Amazon: Let’s face it, many in the industry are racing to join this juggernaut as it seeks world dominance. Staples has publicly stated they will compete on price at every level. What will be the domino effect? Who will be the next Amazon? Office Depot/OfficeMax: If the seemingly inevitable happens, what next? As the stream of RFPs are launched in the aftermath, there are sure to be big winners and those that are less fortunate. How will it affect suppliers that are on the outside looking in? Hewlett-Packard: As HP looks to control its brand and destiny by narrowing access to its offering, what happens next? Do others follow suit? TriMega/IS: Will they merge and, if so, could this be the start of serious cost reduction and a cohesive mission statement throughout the channel? Regardless of what may happen, we can certainly expect that consolidation will continue and may even accelerate. Long-time industry leader Jay Baitler offered some very appropriate commentary in the June edition of this column. His quote: “Change is the most wonderful attribute of life”, is very fitting. He followed that with “Smart, resourceful
people will try different things, some of which will work and some won’t”. In September’s OPI, ACCO Marketing SVP Liz Moseley offered some thoughts on how the independent dealer model must change in order to survive. She stated that dealers will need to focus on their core competence of in-depth product knowledge and personal service and begin to outsource parts of the model that create unnecessary cost. These comments parallel some of the discussion that took place at the Advantage Business Conference this past summer in Orlando. There are a growing number of individuals that believe the independent dealer community can eliminate tasks and reduce costs that do not directly contribute to differentiation or value-add in the minds of B2B consumers. So where am I going with all of this? Stuff is happening. It is a far less forgiving marketplace today and will become even less so as the future unfolds. As we look to make responsible decisions for our collective futures, we are fortunate that we have far more data points available to us and we use analytics and science in ways not thought possible just a few years ago. But we can do more to minimise the risk that comes with making changes. As Mr Baitler said: “Smart, resourceful people will try different things.” And our industry is blessed with many smart, resourceful people. I believe we would all be well served to expand our circles of advisors and devil’s advocates. The Business Solutions Association (BSA) is one of the few forums that offers that diverse opportunity. Please accept my open invitation to join BSA in the coming year. I encourage you to participate and lend your candour, experience and vision to make our channel stronger. We can do more than survive. We can and will thrive. We need you!
“What plans do you have in place that will protect you from disaster or launch you to new heights?”
OPI Magazine | November 2013
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IN THE NEXT ISSUE • We go ‘down under’ to find out how Officeworks’ CEO Mark Ward is achieving success in retail • One of the UK’s fastest-growing dealers shares the secrets of his success