October 2013 eu by OPI

Big Interview

The word in office.

magazine

Jeff Whiteway, CEO of OfficeTeam p18 October 2013

A turn of events

Quite a month for OP as EPIC lands, the UK debates a new industry-wide show and a new vision for United

p26 Union flak p12 Feeling Fed up Call for new UK event proves divisive

Amazon to target OP government dollars?

Epic stuff p36 Can MRO and Safety net profit for dealers? p43

Contents October 2013

www.opi.net

News

6 Round-up

United announces new show format while ‘Max chief Saligram pulls out of CEO race

36 EPIC OPI Editor Andy Braithwaite’s special report from the gamechanging event

Category Analysis

8 Facilities focus

Bunzl acquires again as Emerald shines for Paradigm

40 Mailroom

10 Analysis

The current status of the mailroom and why there’s plenty of life in it yet

Amazon and Walmart to target Federal business?; Superstat and Spicers in new initiative

43 MRO and Safety

Features

Is MRO and Safety the next great opportunity for dealers? And how do they capitalise on it?

18 Smiling through

OfficeTeam chief Jeff Whiteway dissects the UK market and explains why he remains bullish on the future

Regulars 5 Editor’s comment

26 Hot Topic

46 On the move

Calls for a new single UK event have put the industry in a spin. OPI takes a close look at why

47 5 minutes with... Andy Braithwaite

32 VOW Helen Beckett on how VOW+ helps resellers create their own bespoke roadmap

Shows

48 What’s on

Key dates for your calendar

34 Dealer Spotlight

50 Final word

PEG boss Claude Ackermann on a stubborn dealer community in Switzerland

Tom Rodda

“One prominent manufacturer accepted that some dealer groups would need

considerable persuasion to support (a potential single UK event) as they will see it as a threat to their independence”... For the full article turn to page 26 w w w.opi.net | OPI Magazine

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

Features Editor Heike Dieckmann +44 (0)20 7841 2949 heike.dieckmann@opi.net

Editor’s comment

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

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

VP – Asia Tony Yao +86 186 021 29588 tony.yao@opi.net

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

Sales Executive Fergus Cox +44 (0)20 7841 2952 fergus.cox@opi.net

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

Production and Finance Operations Manager Nicky Coulson +44 (0)20 7841 2943 nicky.coulson@opi.net

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

Accountant Charles Edwards +44 (0)20 7841 2956 charles.edwards@opi.net

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

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

Managing Editor Niall Hunt +44 (0)20 7841 2946 niall.hunt@opi.net OPI is printed in the UK by The carrier sheet is printed on Satimat Silk paper, which is produced on pulp manufactured wood obtained from recognised responsible forests and at an FSC® certified mill. It is polywrapped in recycleable plastic that will biodegrade within six months.

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

An EPIC month As I write this I’m still suffering from jet lag after my recent trip to the first ever EPIC Independent Stationers and TriMega joint convention. Apart from the aforementioned jet lag, I’ve also come back with a lot of positive energy from the event which underlined the dynamism and entrepreneurial spirit of the independent dealer community in the US. It was certainly two packed days that exceeded all expectations and the dates have already been set for EPIC 2014. Read my show review on pages 36-37 of this issue, but don’t forget to check the OPI website for some ‘bonus’ material, including a video and a closer look at some of the key seminars that took place. The timing of EPIC coincides nicely with our Hot Topic this month on the possibility of a single industry event in the UK. What EPIC certainly proved was that if there’s a will, there’s a way, and More reason for you to make now that the BOSS sure you are receiving our Federation has taken daily news e-mail updates! up the mantle, I’m confident that such an event will happen in the UK by 2015. Flicking through this issue of OPI, you may notice some tweaks in our content and design, most notably with fewer News Round-Up pages. Let’s be honest – a lot, if not all, of that content had already appeared on the opi. net website, and news that is sometimes over a month old just isn’t, well, news anymore. All the more reason for you to make sure you are receiving our daily news e-mail updates! Have a great month. Andy Braithwaite, Editor

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

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News from opi.net IP slashes production International Paper (IP) is to close its Courtland paper mill in Alabama, cutting its uncoated freesheet (UFS) production capacity by 765,000 US tons. IP’s CEO John Faraci said the decision was primarily because of the decline in demand for UFS products in the US. Following the closure of Courtland – which is expected in the first quarter of 2014 – IP’s Printing and Communications Papers division will consist of four paper mills, two focused on UFS and two on speciality papers. In another major development in the US paper industry, Boise is to be sold to US packaging group Packaging Corporation of America (PCA) for almost $2 billion Despite being focused on the packaging sector, PCA stated that it believed it could create shareholder value in Boise’s paper business.

United’s new show format United Stationers is to replace its Vision event with a new format from 2014. The wholesaler is dropping the Vision brand and is creating a new event called CORE, which stands for Center Of Reseller Excellence. The new format will see two regional events and a larger, national event alternate every year. Two CORE Summit regional events – one on the east coast and one on the west coast – will take place in June and July 2014, while the first CORE Experience national show will be held in February 2015, probably in Las Vegas.

Ravi out of CEO race

BIC completes Cello deal BIC has completed its acquisition of 40% of leading Indian manufacturer Cello Pens. Following a three-year legal battle, BIC finalised a €43 million ($57 million) transaction related to a Cello stationery entity in September. In addition, BIC confirmed that it will exercise an option to raise its stake in the whole of Cello Pens to 55% at a cost of almost €33 million. Quite what happens after that remains to be seen. BIC has been at loggerheads with Cello’s Rathod family owners since 2010 after they tried to renege on their original 2009 sale agreement. The Rathods still own 45% of Cello and relations with BIC are bound to be at a low ebb.

OPI Magazine | October 2013

OfficeMax CEO Ravi Saligram has said that he has withdrawn for the CEO search process for the combined Office Depot and OfficeMax entity should their merger go ahead as expected later this year. The official reason for Saligram’s withdrawal was that the CEO selection committee had indicated that it would favour an external candidate for the job. Saligram underlined his commitment to OfficeMax until such time as the merger had been finalised.

Staples CEO Ron Sargent underlined the reseller’s commitment to the online channel at an investor conference in New York in September. Sargent admitted that Staples still has a long way to go to catch up the number one online player (ie Amazon) in terms of the online customer experience, but that this was something that the office supplier is spending a lot of time and energy on. An e-commerce development centre in Seattle is set to open in the next few months following on from the Velocity Lab opened in Massachusetts in 2012. Staples is also revamping its European online assets and has just introduced a new website in Spain built on its Quill platform. Staples – which is already the world’s second-largest e-tailer – is clearly targeting Amazon and is looking to double the number of SKUs it offers online to 300,000 by the end of the year. Staples has also ended its Amazon locker pilot programme in the US and UK and is set to introduce an Amazon price-matching programme.

News ■ Round-up

Staples makes online push

ADVEO seals big envelope contract European distributor ADVEO has won a major public envelope contract in Spain. The two-year contract with the Spanish tax authorities is worth almost €700,000 ($940,000) and involves the supply of 34 million envelopes for the 2013 and 2014 tax campaigns in Spain. Envelopes is still one of the main product groups made by ADVEO at its Unipapel manufacturing division in Spain and it has historically sold products – mainly envelopes – direct to large end-user customers following tenders. ADVEO CEO Millán Álvarez-Miranda told OPI that these types of tenders involving manufacturers were commonplace in Spain and did not lead to any channel conflict with ADVEO’s reseller customers.

Smiggle to hit Europe Australian fashion stationery chain Smiggle is preparing for an entry into the European market, beginning with the UK in early 2014. Highly successful in Australia – where it is seen as a ‘must-have’ brand for school products – Smiggle is planning to open about eight stores in the UK in 2014 and has said that it could open as many as 200. If successful in the UK, Smiggle’s owner Premier Investment has said that it will look to expand the brand into continental Europe. Smiggle has about 120 stores in Australia, New Zealand and Singapore and is also looking at entering Malaysia and Japan.

News in brief ■ Portugal-based merchant INAPA has agreed to acquire Korda, one of Turkey's leading paper merchants. Korda serves more than 2,500 customers in Turkey through its distribution centres in Istanbul, Ankara, Izmir and Adana. Korda achieved sales of about €30 million ($40 million) in 2012. ■ MRO reseller Grainger has modified its reporting structure following the departure of experienced exec Mike Pulick. An Americas division has been established that will include Canada, the US, Mexico, Panama, Puerto Rico, the Dominican Republic, Costa Rica, Colombia and Peru. The International reporting division has been reduced in scope and now includes Grainger's emerging markets of Brazil, Europe and Asia. Pulick resigned after 14 years

at Grainger and has been linked with the CEO role at the combined Office Depot/OfficeMax. ■ US dealer Impact Office has acquired EZ Print Supplies, a leading supplier to the federal government in the US. EZ Print is one of just 15 suppliers that were awarded a blanket purchase agreement on the Federal Strategic Sourcing Initiative contract. Impact has a strong background in federal sales through its strategic partnership with fellow dealer George W Allen. ■ German dealer group Büroring is helping its members with the addition of virtual stock. The group has introduced 3,000 school-related products which its members can now order via the existing online procurement platform. Büroring is not stocking the items in its own central warehouse, but will rely on partner suppliers for order fulfilment.

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News ■ Facilities focus

SCA makes Bunzl back on acquisition trail China move SCA is aiming to take a majority stake in Chinese tissue company Vinda. The Sweden-based firm already holds a 21.7% stake in Vinda and has now made a public cash offer of HK$11 for the remaining shares, conditional upon SCA achieving an ownership share in Vinda in excess of 50%. SCA’s offer values Vinda at around $1.4 billion and it is hoped the transaction will be finalised in the fourth quarter.

Distribution firm Bunzl has taken its number of acquisitions this year to seven, after buying two firms in the UK and Mexico. The latest additions are Mexican safety products redistribution business Espomega and UK-based promotional products and marketing point of sale materials firm The Fulfilment Store (TFS). Espomega, which is based in Monterrey, has annual sales of around £28 million ($43 million), while TFS’s 2012 sales were £8 million. The TFS deal has already closed while the Espomega transaction should be finalised this month. The news of the two latest deals came as Bunzl reported its earnings for the first half of 2013. Sales climbed 11% to £2.96 billion, mostly thanks to acquisitions, although there was low single-digit organic growth. North America – Bunzl’s largest market – grew 17% in local currency to £1.65 billion due to sales growth with existing customers, new business wins and acquisitions.

Paradigm’s Emerald Campbell’s Soup shines as sales rocket launches Keurig single-cup kits US vendor Paradigm has reported strong double-digit growth of its Emerald brand of environmentally friendly products. Emerald sales soared more than 32% in the first half of 2013 compared with the same period last year, which Paradigm attributed to organic growth and the introduction of new products. The Emerald brand, which now consists of 170 SKUs, includes USDA-certified sugarcane-based towel and tissue products, cutlery made from plant starch and DfE-certified cleaning chemicals.

Design award for Ecover European cleaning products manufacturer Ecover has been awarded a Red Dot award for its new label design. The revamped Ecover Professional range has picked up a Red Dot 2013 award in the Communication Design category. The manufacturer teamed up with VanBerlo Communications whose brief was to design new product labels that gave a direct and clear visibility of each product’s application. “In B2B product development, label design is often of less importance,” noted Johan Tops, Ecover’s International B2B Manager. “However, during our 360° brand makeover we really aimed to become the most appealing B2B cleaning brand. The Red Dot award gives a real boost to the re-launch of the Ecover Professional brand and proves that B2B products can be sexy too.”

OPI Magazine | October 2013

Keurig coffee machine owners in the US can now brew their own single-cup hot soup after an agreement between Keurig brand owner Green Mountain and the US’s leading soup brand Campbell’s. The partnership aims to tap into the growing behaviour of snacking in the US. According to research, more than half of US consumers snack multiple times a day and it looks like demand will increase for convenient ‘mini-meals’ that satisfy hunger. The Campbell’s Fresh-Brewed soup kits include a K-Cup pack and a packet of dried pasta and flavouring garnish. Consumers brew the K-Cup over the garnish to create the hot snack. The new product is sure to be of interest to office resellers that offer Keuring brewing solutions.

News n Analysis

Green light for European environment initiative New association set to meet for first time during Paperworld Frankfurt in January

Key

leaders from the office products industry met in Frankfurt in September to discuss a major initiative to develop a unified system for evaluating the environmental performance of products sold in Europe. The event, organised by French trade association UFIPA, attracted over 80 key executives from 45 of the region’s leading vendors and resellers, including nearly all of the top multinational manufacturers and distributors. There were, however, several notable paper producers absent, but this may reflect the fact that there is already a confusing plethora of labels in this category and it’s likely most will watch from the side-lines for now. The event was kicked off by Marcel Ringeard, CEO of Pilot Pen Europe and current Chairman of UFIPA, who explained that the raison d’être behind the move was the multitude of incomprehensible labels currently in existence. This, he pointed out, has led to a situation where there is no consistency or compatibility between the various evaluation systems, something which is undoubtedly costly and inefficient, and confusing for consumers. The major challenge, he said, is to ensure the provision of transparent and objective information

OPI Magazine | October 2013

for customers on product environmental performance and helping to alter the perception that consumers have of the office supplies industry. The goal is to produce a scale system of ratings – akin to the scoring widely used to assess energy

discussion, participant companies were asked to vote privately on three proposals suggested by the organisers: the creation of an evaluation and rating system to measure the environmental footprint of office products in Europe; the establishment of a non-profit pan-European association to drive the initiative; and the establishment

The goal is to produce a scale system or ratings performance of electrical appliances – and not to merely assess whether a product is green or not green. The project to date has been managed for UFIPA by consultant Christophe Girardier and he took the microphone to explain that for this initiative to succeed, there are two key prerequisites: an adapted methodological approach to guarantee irrefutable technical credibility, and a governance system which must be accepted by all stakeholders.

Vote Following several hours of presentations and

Marcel Ringeard: Legacy

of a transitional steering committee to, among other things, set up this new association. The nine distributors present were unanimous in their support of all three but there was some reticence amongst the vendors, although a majority still supported the proposals. Several organisations volunteered their services to serve on the transitional steering committee and its final composition will be announced shortly. Whatever the final make-up, a key principle is that vendors and resellers have equal voting rights. The goal is to have all the

preparations for the new association ready in time for an inaugural general assembly to take place at Paperworld at the end of January. This will mark the end of UFIPA’s control over the project. So to the $64,000 question: How will all this be funded? The UFIPA working party proposes “a balanced business model which involves the pooling of costs and a fair contribution of all stakeholders”. The system design and update costs, as well as the operating costs of the European association, will be funded by manufacturers and resellers alike through a “fair contribution”, while product evaluation costs will be met by manufacturers based on a number of criteria. Delegates OPI spoke to appeared very willing to embrace the initiative, especially Office Depot, Staples and Lyreco. If they continue to take a lead it is highly likely to get full buy-in from the European supplier community. A fuller account of the meeting and the aims of this project will appear in OPI’s Green Thinking supplement to be published this month.

Christophe Girardier: Managing the project for UFIPA

News n Analysis

GSA eyeing Amazon? News that Amazon and Walmart may be able to bid on the new federal government office supplies contract is ringing alarm bells

OPI

readers may remember the introduction of the second phase of the US General Services Administration’s (GSA) Federal Strategic Sourcing Initiative (FSSI) office supplies contract – known as OS2 – in 2010. The contract sparked controversy at the time because the GSA awarded blanket purchase agreements (BPAs) to just 15 vendors and then took the decision to freeze new applications for its MAS-75 (Schedule 75) programme for small businesses. There were concerns that hundreds of small businesses qualified to sell office supplies into the federal government via their Schedule 75s could be locked out as the GSA received commitment from government departments to procure from OS2 BPA holders. (See OPI #204 November 2010 News In Depth: ‘The big freeze’). Schedule 75 holders weren’t prevented from doing business with federal government altogether, but

Colt, President of Schedule 75 holder Mono Machines, told OPI. However, storm clouds are gathering on the horizon that could have an even more dramatic effect on what is about $1.3 billion of business. OS2 is due to expire on 31 May 2014 and the GSA is preparing to issue requests for quotation (RFQs) for its new FSSI contract, known as OS3. At an industry day on 6 August the GSA dropped several bombshells, one of which could have serious consequences, not only for small business suppliers to the government, but also for Staples and Office Depot, the two big boxes that were awarded an OS2 BPA.

Open bid concerns At the August meeting – which attracted around 80 attendees and a host of online participants – GSA’s Bob Woodward said his organisation was intending to make OS3 RFQs open to any applicants, whether they hold a Schedule 75

be making the bidding process more competitive if it was open to all. That argument has been met with a degree of scepticism by a number of OP industry insiders and there are suggestions that GSA is looking to attract the likes of Amazon and Walmart to submit a bid. That’s a thought that certainly scares both independent dealers and the big boxes, even though Amazon and Walmart have no experience of selling to the federal government. Should one or both of those

53% – or about $650 million – of GSA’s annual MAS-75 office supplies spend now goes through the 15 OS2 BPA holders the percentage of office supplies bought from OS2 BPA holders has grown dramatically over the past three years (see chart) and is only likely to increase further. “We’ve noticed declines in our GSA business, but it has really started to hit in the last 12 months,” Kris

OPI Magazine | October 2013

or not. Traditionally, to qualify for a BPA, suppliers already had to hold a Schedule 75. His argument was that since new applications for a Schedule 75 had been frozen for the past three years, legitimate businesses would be prevented from bidding on OS3 and that GSA would

behemoths get a foot in the federal door, where could that lead? There may be an escape route, however, at least for the independents, as GSA regulations stipulate that in the event of an open-market bid and if at least two small businesses are able to fulfil the

contract, then the whole contract must be set aside for small businesses. Federal government specialist and NOPA representative Paul Miller told OPI that the trade association would “push very hard indeed” to enforce this small business set-aside rule should GSA decide to open up OS3 to non-Schedule 75 holders.

NOPA and big boxes side by side? As NOPA and other independents would prefer for GSA to keep OS3 reserved for Schedule 75 holders, it’s in the interests of Depot and Staples – ironically – to stand alongside their traditional foes on this issue: 1) to try and block someone like Amazon getting a BPA and 2) to prevent OS3 from being set aside for small businesses, which would lock out the big boxes (Depot and Staples are achieving combined sales of around $160 million

Schedule 75 under threat? It is notoriously difficult to predict what decisions GSA will take next, but there are concerns that it will make OS3 a mandatory contract for federal agencies and then simply cancel Schedule 75. That would potentially lock about 450 dealers out of selling to the federal government unless they belonged to a small business consortium. Independent Stationers (IS) is the only consortium to hold a BPA on OS2, but even the dealer group opposes this mandatory requirement. “Making FSSI mandatory under OS3 could result in the federal government trading a strong future small business vendor community for short-term savings,” says IS’s Charles Forman. “If there are only a few vendors awarded [a BPA] and OS3 is mandatory, the remaining small businesses may not be around five years from now to bid on a new solicitation.”

up OS3 to non-Schedule 75 holders, but that it is not planning to set it aside for small businesses, something that appears to contradict the GSA’s own rules. However, the fall-out from small business groups if it went down that route – and not just from office suppliers; GSA is also feeling the heat from jan/san and IT vendors over new FSSI contracts in those

The consortium route could well be expanded if NOPA has its way. The trade association is proposing that a new pool of vendors consisting solely of consortia is established for OS3. That would include the likes of IS and other groups such as AOPD and TriMega’s Point Nationwide if they submitted a bid. Longstanding Schedule 75 holders might not necessarily like the idea of joining a consortium, but they might eventually have to if noises coming out of Washington Charles Forman prove to be true.

categories – might be more than GSA is prepared to handle.

contract’s lifetime, but it said that last time around and it didn’t happen Follow the – unless you See OPI’s video money count two channel for some In any event, additions expert insight into whether OS3 shortly is open to after the OS3 contract. all-comers or the first limited to current awardees were Schedule 75 holders, named. an RFQ is likely to While one might be issued within think that OS2 incumbents the next couple stand a better chance of of months and being awarded a BPA on respondents OS3, apparently that is will have just not how GSA necessarily a short time in works, and all bidders which to submit are going to have to be their bids. extremely savvy when The (relatively) it comes to pricing on good news is that their RFQs. A number of GSA has indicated highly experienced and that it will expand successful federal resellers the number of failed to get an OS2 BPA vendors this after they lost out to lower time around, bidders – although this has although no apparently come back to specific number bite both GSA and some of has been set. the awardees. NOPA is calling GSA will probably for 50 awards tighten its tiered discount to be made, but structure for OS3 to the smart money prevent what has been is on about 30. described by some as GSA has also “crazy pricing” on OS2, but suggested that bidders will still need all it will add new their wits about them if 2013 (to date) vendors over the they are to get one of those precious OS3 BPAs. Source: GSA

The rise of FSSI 60 The percentage of GSA Schedule 75 office supplies spend purchased through the 15 OS2 BPA holders

News n Analysis

on OS2, and much more if you count non-OS2 sales to federal customers). In addition, Schedule 75 holders went through a time-consuming and expensive vetting process to achieve their status. They know what it takes to sell to the federal government and to comply with the myriad of rules and regulations. Notwithstanding the sense of injustice felt by Schedule 75 holders that some OS3 applicants might not have had to jump through all these hoops, there are strong fears that non-Schedule 75 holders will be caught out by all the red tape required, and that GSA would just be digging itself into a hole. One solution suggested on 6 August was simply to re-open Schedule 75 to new applicants and then let new schedule holders apply for an OS3 BPA in a second round of bidding at a later stage. That way, all OS3 vendors would be GSA-approved. According to Miller, noises coming out of GSA since August suggest that it does still want to open

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News n Analysis

Abracadabra! UK dealer group Superstat has launched a ‘magical’ new dealer services initiative

dealer group Superstat has launched an initiative aimed at promoting the growth of independent dealers. Called Cadabra, the concept involves Superstat handling dealers’ back-office functions, including order processing, invoicing, sales and purchase ledgers, marketing, lead generation, online ordering, customer service and (optionally) delivery, leaving the dealer to focus on customer relationships and sales. Reading the above, does the word ‘nectere’ spring to mind? It is certainly easy to see the similarities between Supertstat’s aims and those of the nectere group set up by Paul Musgrove in 2010. OPI spoke to Superstat’s Managing Director Chris Collinson shortly after the news of Cadabra broke and he admitted that he was finding the comparisons to nectere “annoying”. “I have the greatest respect for Paul and what he has done – in fact, it’s so good that we are going to do something similar,” he told OPI. “But while I can’t

Chris Collinson didn’t want to get into a war of words over this, he clearly rejected that this is what underpins the nectere model. “The early adopters were struggling,” he admitted to OPI, “but this was because nobody else believed in our concept at the time and nobody thought it would work. Since then, we have evolved and grown, proved that the model does work, and now everyone is all over the idea.”

“Both Superstat and Spicers have a shared vision on where the dealer community needs to grow” Chris Collinson, Superstat hide the fact that the basic principles are the same, the concept is completely different.” Collinson’s argument is that nectere has taken on “failing dealers” and has given them a “rescue package”. While Musgrove

OPI Magazine | October 2013

Musgrove also pointed to new partners that had joined nectere mainly as a vehicle to drive acquisitions. Superstat wants to attract “vibrant” businesses to Cadabra, according to Collinson; those

entrepreneurs that have reached a certain level, but are struggling to make a breakthrough because of all the extra systems and investments required. “With our IT expertise and logistical set-up we can take away the traditional headaches an OP dealer has and leave them to grow sales,” Collinson stated.

Supermarket trip The IT expertise he is referring to is the group’s SupermarketOnline platform that was developed to help dealers compete in the online space. That technology has been adapted for Cadabra, although Collinson was quick to point out that this didn’t mean an end to Supermarket. “Cadabra is not intended to replace SupermarketOnline,” he stated. “They are completely separate businesses, although there is a relationship as SupermarketOnline is

a member of Cadabra.” What this means is that Cadabra partners in a vacant SupermarketOnline zone will take on the SupermarketOnline business for that area. The Cadabra initiative has been set up in partnership with Spicers as part of a five-year supply agreement in what Superstat called “an unprecedented collaboration” between a wholesaler and a dealer group. Quite what the word “unprecedented” refers to is not clear. When nectere was set up, it had a supply relationship with Spicers but has since signed a five-year agreement with rival wholesaler VOW. Collinson declined to reveal the commercial details of the deal with Spicers, although he did confirm that the wholesaler does not have a shareholding in Cadabra. “The agreement is the fruit of a 20-year relationship with Spicers and both parties are extremely comfortable with what’s on the table,” he said. “Both Superstat and Spicers have a shared vision of where the dealer community needs to grow.” Having said that, Musgrove himself had a relationship with Spicers exceeding 20 years before moving to VOW in April, and it is questionable whether this Cadabra/ Spicers agreement would have come about had nectere not changed wholesalers. Unfortunately, OPI wasn’t able to speak with Spicers’ CEO Alan Ball on this topic before this issue of OPI went to press.

Package deal Turning back to the functions that Cadabra will undertake for dealers, Collinson said that while lead generation was a

“unprecedented” part of the deal with Spicers. While smaller dealers under £1 million ($1.6 million) will obviously be an important target group for Cadabra, Collinson believes there is something in it for dealers of all sizes. “We will provide additional resources to a small dealer and additional sales to a big dealer,” he said.

Although whether larger dealers would be willing to hand over the running of their back-office functions is another matter. Reaction from the UK dealer group community invariably included a comparison with nectere and queries as to the exact

nature of the relationship with Spicers. “The industry is undergoing massive change at the moment and the removal of costs from dealers’ businesses is a key focus with a number of similar developments coming to market,” XPD’s Managing Director David Langdown told OPI. “In my view there will be better solutions available and my advice to dealers would be to hold fire until they have had a look at them.” Steve Harrop, Managing Director, Office Friendly, said: “There are a number of the smaller players who will be looking at this as a potential exit route or business-saving opportunity. Whilst Superstat state it’s a ‘model for all sizes’, I wonder who will be the ultimate takers.”

One must also question just how many “vibrant” dealers there are in the UK market at the moment, certainly at the smaller end of the spectrum. Might Cadabra find itself in the same boat as nectere when it started out? Collinson says that there are already a number of leads in the pipeline and that he would be “pleased” with ten dealers on board by the end of the year. With an estimated 3,000 dealers in the UK, there would appear to be plenty of fish in the sea. OPI understands that at least two other UK dealer groups are planning to introduce similar initiatives in the near future and it is certainly an interesting time in the UK and possibly in other markets too. In fact, so interesting that we’ll be covering this topic in more depth in November OPI.

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News n Analysis

component, no actual selling would be done on behalf of the dealer. The rest of the Cadabra offer is basically a take-it-or-leave-it all-in-one package, with one notable exception: delivery. Collinson recognises that this is a highly emotive issue for a lot of dealers and, although he believes that Cadabra will provide a more efficient system, partners can choose their own delivery solution if they want to. Part of Collinson’s sales pitch for Cadabra is that it is essentially free to move across to the platform. Again, he wouldn’t discuss commercially sensitive information, but he said that pricing was not based on a fixed monthly fee. Perhaps this is all wrapped up in the

Staples raised a few eyebrows with its recent acquisition of US independent dealer Lonesource. Here’s some feedback OPI received from its LinkedIn members (also see the poll results at the bottom of this page). Steve Danziger, Owner, AAA Business Supplies & Interiors It’s too premature to tell if this will be a new Staples growth strategy to address Wall Street pressure for faster top-line growth. I think the most prudent bet is that this represented a unique situation related to Lonesource’s position, given all their lawsuits and the disruption and financial issues these may have caused. As we have seen with recent IDC acquisitions by impersonal big boxes, most IDC employees flee to other independent dealers when this happens. Independent dealer customers have also expressed their preference to be served by an independent dealer. For these reasons, I am guessing it is very challenging for a big box to get an acceptable ROI on this style investment. Given the relative size of these problematic acquisitions, is it really worth the big box’s effort? Time will tell. Everything does tend to go in cycles so maybe it is time for them to relive this again. Bill Salm Jr, Vice President at Etactics Staples is not necessarily the best provider to serve the client. They might have enjoyed success in the Fortune 500 marketplace, but the SMB space is foreign to them and clients will have demands that they will not be able to satisfy. By staying lean and efficient with a focus on being customer-centric, I believe the independent business owner has a real opportunity to thrive. Again it will be about establishing well founded alliances with partners that provide them with the ‘mass’ advantages that Staples enjoys and the ability to adjust quickly as customer requirements evolve along with innovation and technology.

$2 billion

TWEET CHAT follow us on Twitter @OPInews, @andy_opi,

The amount that US paper and packaging manufacturer Boise is to be acquired for by Packaging Corporation of America (PCA)

@usscospeaks We’re bugging out over this stapler design. Might want to keep an eye on your employees though because it might just hop away to their desks!

200

@JeffreyHayzlett Out and about in NYC with @fame shooting on the street interviews for @OPInews upcoming conference I’m speaking at :)

The number of stores Australia-based children’s stationer Smiggle plans to expand into the UK with

30,000 The number of trade visitors that attended the Office Brasil Escolar show in Sao Paulo

News ■ And finally...

Comment

@PilotPenUSA We scored a #touchdown with the @Eagles cheerleaders! ! @magicwhiteboard 7.8 million people tuned in to see Magic Whiteboard on BBC News @PhilJones40 Move your ideas into invoices by acting on them. Creativity without action is not innovation.

SNAP SHOT

Lia Michael, Director at Office Power Australia Why is Staples doing things like this worldwide and trying to close down small business dealers? What is it that we need to do to keep our businesses going? Or is it too late, as many of the larger dealers seem to be taking over? Rusti Riggs, Sales Professional at Advantage Office Solutions It sounds like the independent dealer is Staples’ target for new customers. I will be curious to watch what Staples does with the facilities and employees gained by this acquisition.

opi.net poll results Following Staples’ acquisition of Lonesource, do you think we will see more dealers bought by the big boxes in the near future?

Yes 62% No 38%

UK distributor Westcoast marked the launch of its Accessorise autumn/ winter 2013 catalogue by commissioning a one-off dress that included a number of EOS products. The dress – designed by English fashion designer Lyndsey Clark – was auctioned off on eBay with the proceeds going to the Great Ormond Street Hospital. The dress was co-funded by vendors and includes the following items: 3M privacy filter; Fellowes mouse mats; Microsoft hardware; Sweex MP3 bracelet; Targus Clutch; Transcend USB necklace and earrings.

w w w.opi.net | OPI Magazine

Big Interview | Jeff Whiteway

It’s Whiteway or the highway If there is one thing that Jeff Whiteway isn’t lacking, it’s optimism. The CEO of the UK’s fourth-largest OP reseller tells OPI why his company is poised for growth. Interview by Steve Hilleard Editing and photos by Andy Braithwaite

WHEN

Jeff Whiteway was last featured as the OPI Big Interview, the year was 2005, OfficeTeam – or OyezStraker as it was known at the time – had recently been acquired by a private equity firm with deep pockets and all economic signals were pointing to a rosy future for the business supplies market. That all seems like a different world now, but Whiteway is still alive and kicking and, after steering OfficeTeam through two subsequent financial transactions, the jovial 52-year-old is still as optimistic as ever. OPI caught up with the OfficeTeam CEO at the firm’s headquarters just outside London. OPI: We’ll dive straight in and talk about the financials before we do anything else. You’ve sold the business twice in the past eight years and been through a recession. I recall from the interview in 2005 that the company sales were about £160 million and your most recently published results show revenues of £148 million. So talk us through what’s led you from £160 million down to £148 million. Jeff Whiteway: The turnover at the time Hermes Private Equity acquired us in 2004 for £80 million was actually £130 million, with an EBITDA of £13 million. Fast forward to 2007 when Hermes exited and AAC Capital bought in, we were showing good success in terms of the top and bottom lines. In fact, in that period we were forecasting £166 million in sales and a bottom line of £17 million. This helped the multiple, but realistically what helped us most was the market. We sold the business for £163 million. As you can imagine, Hermes were delighted with that result – from £80 million to £163 million in three years. That was great for the exiting shareholders, but just six weeks after completing the deal, Northern Rock declared they had problems and the market just fell away.

OPI Magazine | October 2013

Once Lehman’s had failed it was very clear that our bullish forecasts in terms of sales were not going to be possible. OPI: Was that because your revenues were heavily dependent on the financial and legal sectors? JW: More to do with the general economy. Since 2007, we’ve had to manage the bottom line, often to the detriment of the top line. In 2007, P/E investors were buying businesses and gearing them up very heavily, so we took on £110 million worth of debt. We – with hindsight – foolishly hedged the interest rate at 6.1% because at the time rates were at 5.5%, and with £110 million we couldn’t afford for a significant increase in interest rates. I do remember a conversation with the board to the effect that interest rates could possibly go up by 5%, but they couldn’t possibly come down by 5%. Although the interest is not payable and is akin to equity, it builds up year on year to make the balance sheet look horrible. OPI: Sounds like a similar situation to the one that VOW faced. JW: Similar, because it was a typical private equity structure. Most financial directors, suppliers and credit insurers understood the ‘debt’ was closer to equity, but it still meant that we had a very

OfficeTeam | Big Interview

w w w.opi.net | OPI Magazine

Big Interview | Jeff Whiteway sick balance sheet and that caused some challenges in the business. The big difference from the VOW situation was there was no requirement for additional cash and the

not like banks. Are they asking me to sell the business now? No, they’re not. They realise the value in this business is worth more tomorrow than it is today. So we have some

The biggest issue we have is that traditional office products cannot be seen to be the future of this business in terms of growth banks never considered writing any debt off. So come 2012, we looked at the situation and said: “Look, this is getting crazy. We’re not doing the right thing for the long-term viability of the business. Yes, we’re making £16-£17 million profit, but is that sustainable?” So as a team we went to our investors and our banks and told them we needed to change something. The balance sheet was showing £220 million of debt – albeit bank debt was reducing nicely – and there was too much ‘funny money’ as we call it, and we wanted to invest in the future and not just manage the bottom line. OPI: Which led to AAC taking a severe haircut on its investment? JW: AAC were very grown up about the situation. They realised they had bought in at the peak of the market and worked with us to equitably exit the business. We now have a balance sheet of £40 million in debt and investors who are acting as shareholders

long-term growth plans and not short-term sale plans. OPI: Let’s fast forward to the end of 2014. When you crack open the bubbly on New Year’s Eve, what kind of number will you be pleased or proud to have hit in terms of top line and EBITDA? JW: What I want to see is year-on-year growth, because for the past five years we’ve seen declines, despite successfully managing the bottom line. We are investing very heavily this year, with additional costs of investment in new people alone being in excess of £100,000 per month. We are now materially back to historic sales force numbers, having kept our best people and replaced others with those with more relevant skills for the future.

Whiteway on Spicers and VOW In 2012, OfficeTeam made a much publicised switch from Spicers to VOW as its main wholesale partner. Almost a year on from that, has the rift healed between Whiteway and Spicers’ CEO Alan Ball? JW: There was some nonsense talked about [the split from Spicers] in terms of who left who and the like. The fact is that Spicers was not making money out of our contract. I respect what Alan Ball’s doing in terms of not chasing unprofitable business because we’ve done the same thing. The reason I believe we weren’t profitable for them is that they over serviced the account. What every company needs to do – and what Spicers should have done rather than seeking increases – is to

look at better ways of reducing costs. We still have dialogue with Alan but from a different angle, having not spent a penny with Spicers in the last five months. I do want to make sure I haven’t got a sole wholesale partner and therefore, having a Spicers, a Gem, a Beta or whoever, could be very useful for the future.

it was my decision to move the business away from Spicers. I am delighted to say VOW didn’t miss a beat in terms of service. We spend £80,000-£90,000 a day through the wholesale channel and because of what happened with Spicers, VOW took that business almost overnight. It was full service from day one and they have been amazing.

OPI: I’m not sure that is what Robert Baldrey [Vasanta Group CEO] wants to hear! JW: Robert would probably be very hurt if he thought after over 18 months of negotiating with me to get the business, he didn’t actually win it but it was given to him by Spicers. But they did win the business and

OPI: Alan Ball is certainly not afraid to shake a few trees and try new things, some with success and some without. JW: Yes, and he’s been very good for the industry. I have to say the way he goes about things can sometimes be difficult to accept, but he is trying different things and the industry does need shaking up.

It was my decision to move the business away from Spicers

OPI Magazine | October 2013

OPI: What did you make of Spicers’ MemoEtc initiative? JW: Their market was obviously under pressure from VOW, which had a lower

OfficeTeam | Big Interview OPI: We know all about the challenges facing the office products industry in terms of secular declines in traditional categories and the impact of digitisation. How much of the decline that you have seen in the past few years was down to those challenges? JW: The biggest issue we have is that traditional office products cannot be seen to be the future of this business in terms of growth. A declining market with too many players is not a great place to be to try to grab market share. In terms of margins, they are going to decline – supply and demand will see to that. OPI: Let’s look at profitable growth and new categories. I probably won’t spend too much time talking about jan/san because I think if you’re not in that game now then you really are behind the curve. JW: Everybody talks about jan/san and everybody says they do it, but how well do they do it? I think OP resellers are generally

cost base. I think many of the things that Spicers is doing make sense for a business that historically has been unprofitable; it’s where they stop and that’s the big question I haven’t got the answer to. If they’re undertaking the selling, marketing, operational and logistics functions, it just comes down to the dealer invoicing. Now there isn’t 5%-6% net profit for a dealer just invoicing!

Supplies Team and now they have just bought a dealer, they do separate those businesses quite nicely under the Vasanta umbrella. I don’t have any concerns about that at all because if they can get economies of scale in their business, I can leverage a better deal from them. So it’s all about taking cost out of the supply chain and sometimes to do that there have to be little parts of it that you don’t really like.

OPI: What are your thoughts on Vasanta’s acquisition of Yes2? Does that concern you? Do you think it was inevitable? JW: It was inevitable. At the end of the day it was going to be a huge bad debt for VOW and so therefore it made complete logic. In business if something makes sense commercially you just have to accept it. Whilst they do have

OPI: So if your biggest customer shifted to Supplies Team tomorrow, would you still be looking so cheerful? JW: They wouldn’t [move to Supplies Team]. OPI: Sound convinced. JW: I am convinced. Absolutely convinced.

amateurs at it. The majority of the industry has not recruited the expertise they need to actually drive that market forward. We made a mistake to start with where we were retraining our paperclip salesmen to do that job. These salesmen walk through a different door, they see a different person and they need to show they know what they’re talking about – and a retrained stationery person normally doesn’t. So we’ve had to go out and employ people who don’t sell paperclips, who don’t know office products, but they do know jan/san and they do know health and safety. We were too long in doing that, but we now have an excellent specialist team. We’ve now got a good percentage of our turnover from jan/ san – about £17 million depending on how you define the category – and it’s our fastest growing area. OPI: I think the $64,000 question is can resellers grow and add new product categories and services quickly enough to counterbalance the decline in traditional product areas? JW: I have to say, the way the industry is structured at the moment it has to change. I think there are too many dealers chasing an ever-reducing market. Yes, we can move to other markets, but actually they’re quite well populated already. There has to be consolidation and there has to be cost taken out of the supply chain. I can’t think of any other industry in the world where the wholesaler makes above 20% gross profit, but is only marginally profitable. OPI: So does it surprise you that it’s taken so long for the EOS/technology wholesalers, who are used to working on much thinner margins, to show an interest in office supplies? JW: Yes, it does. These wholesalers are seeing their markets toughen up and they’ve had to react. I think the likes of Gem have got the financial clout to come in and stir things up a little bit, and I welcome that. OPI: Will you be a customer? JW: Possibly. I wouldn’t discount it. We are a very big customer of wholesale, because the wholesale channel adds value to our supply chain. If they didn’t we wouldn’t be using them. So yes, we will certainly talk to Gem and, being frank about it, competition is good if you’re a buyer. What I want is to look in the whites of the eyes of the traditional wholesalers to say: “There is another option; we just want you to be that little bit smarter w w w.opi.net | OPI Magazine

Big Interview | Jeff Whiteway in terms of your cost base because if you’re smart in terms of your cost base you can offer me a better deal.” OPI: Let’s talk about your competitors, because some of them are facing well-publicised difficulties. What’s your take on your four primary competitors: Staples, Office Depot, o2o and Lyreco? JW: Lyreco is missing Eric [Bigeard]. Obviously everybody had a huge regard for Eric and I’m just quite surprised how much one man can have had such an impact on that business. Lyreco’s still a great company and I’m sure Steve [Law] will sort out the UK, but it’s not the company it was a few years back. Office Depot: they’re not focused on

OPI: We’ve talked about resellers, but how do you think vendors should react to the predicted decline in traditional office product categories? JW: We are all vendors at the end of the day. Manufacturers need to consolidate, add much more brand value and reduce the costs of their supply chains. A shrinking market requires fewer suppliers and ever-increased efficiency. We have some world class manufacturers in the traditional office products market. These have reacted to the market conditions and have consolidated, evolved, moved manufacturing and widened their product offering. Those who haven’t or won’t, will not be with us in the future. Many ‘manufacturers’ are now merely

Manufacturers need to consolidate, add much more brand value and reduce the costs of their supply chains the UK, they’re focused on the States and I understand the reasons why. What they need – and can I put my tongue in my cheek now? They need to reverse themselves in the UK into OfficeTeam because we would show them how to put 8%-10% onto the bottom line. Staples: Europe is very difficult for them. They want to be number one in every market where they trade. They’re a long way from that in the UK, but I don’t think they’re going to achieve that if they treat the UK the same as Europe. If they were to focus on the UK and on individual businesses within Europe, then they might succeed and that would worry me more. Tongue back in cheek – or they should be buying OfficeTeam because my team could do that for them. OPI: Do you think that’s likely? JW: No, I don’t. And I suspect it would never happen because when Staples, barely profitable in the UK, looks to buy a business making 10%, is the question they ask themselves about how they get their profit nearer the 10% or is it more likely the 10% is diluted. The day somebody realises: “Actually, hang on a second, maybe our model isn’t right, and maybe these guys have got it right because they’re making industry-leading profit”, then we have a very interesting conversation. OPI: Did you ever have an interesting conversation with Simon Moate when you were considering your options at the end of last year? JW: Given o2o’s share price, Simon had enough problems of his own.

OPI Magazine | October 2013

middlemen for an Asian factory, adding little brand value, but potentially cost to the supply chain. They are in great danger as dealer consolidation allows access to the ultimate manufacturer on a more frequent basis. The dealer community as vendors to the end user needs to project forward two to three years and understand how their businesses will look then, with their traditional market shrinking and key areas such as EOS nose-diving in terms of volumes. This won’t look pretty unless they diversify. And that means a great deal more than waking up and realising they need to be selling coffee.

OfficeTeam at a glance Business model: Hybrid contract stationer/independent dealer Stocking & own delivery fleet 2013 sales (estimated): c. £140 million ($226 million) Employees: approx. 950 Headquarters: Croydon (near London)

OfficeTeam | Big Interview

do. It makes my job that bit easier. Now we have the right financial structure and excellent support from our investors and non-executives, it is a great place to be. You can only worry about what you can’t control. We’re in control.

Now we have the right financial structure and excellent support from our investors and non-executives

OPI: What is your view on managed print services? OPI: Given that we have, somewhat JW: MPS will certainly have a major impact unfairly, a reputation for conducting on EOS consumable sales. The OEMs are these Big Interviews and the interviewee becoming more effective in this space and finding themselves out of a job inside a will battle it out for market share at the top couple of months, is this interview likely end. The likes of HP have a great deal to lose to keep you awake? so can’t afford to let this market get JW: This interview is most away from them. Where that will enjoyable and is keeping me leave the traditional dealer is very much awake! But am Read the complete questionable, but selling a I concerned to be out of interview with Jeff third-party service is likely a job inside a couple Whiteway on opi.net for to prove a challenge in of months? No. If I’m what will be an ever more the wrong person to what he thinks about o2o’s competitive market. Strong drive the business then Truline initiative, the latest alliances will be essential I shouldn’t remain in on OfficeTeam’s PALS to maximise opportunities charge, but I’m confident at the mid and lower end of in my ability, very programme and a new the market, but even then the proud of our business direct website. wise dealer should be viewing and enthusiastic about the the future of EOS supplies in the future. I’m well backed and well same vein as fax rolls and carbon supported, so it’s great place to be. paper of the past, as MPS takes an ever larger slice of this market. OPI: So we’ll see you in another eight Such a view can only help bring years? focus in driving other product JW: I’ll be an even ‘older boy’ by that time so sectors. However, the EOS market with a very maybe not. Saying that, I love what I’m doing low cost of serve should not be ignored as, and I have no intention of retiring. Anyway, even under MPS, there is still good business my wife wouldn’t let me retire – she’d find it to be had. abhorrent me being at home every day. OPI: Let’s finish up with a couple of personal things. What keeps you awake at night? JW: Not very much I have to say, because I feel in control. I’ve surrounded myself with people who are darn good at what they

OPI: It’s taken us an hour and fifteen minutes, but we’ve finally figured out what drives you: it’s what your wife says! JW: (laughs) And I suspect that goes for most sensible men and why I still remain very happily married. w w w.opi.net | OPI Magazine

Hot Topic | New UK Event

An eventful idea Calls for a new single event for the UK OP industry have been met with an equal amount of welcome and suspicion. So why is it so divisive and will it happen?

by Bruce Ackland bruce.ackland@opi.net

WHEN

Spicers chief Alan Ball floated the idea of the return of a single OP industry event to the UK you might have thought this was a fairly benign idea. Released through the medium of twitter, Ball challenged the industry to put its heads together and come up with an event in the belief that the timing and level of demand was right for a grandstanding two day show. He said: “In these challenging times it is incumbent on the industry to join in unity to present the most cost-effective and efficient exhibition. I recognise that many wholesalers and buying groups rely on conferences and shows to stimulate interest and also funding, but in these difficult times all could be accommodated. Manufacturers are finding the market tough at the moment and the multiple payments are just not there anymore.” Ball went on to say that he believed a single exhibition could work for all concerned with buying groups and wholesalers holding specific seminars for their members and partners alongside an exhibition at a single venue. Following Ball’s tweet, OPI CEO Steve Hilleard contacted Ball and all key UK parties with the idea of convening a meeting to discuss the feasibility and issues of a single UK event for the benefit of all in the UK industry. This had the desired effect of creating momentum behind the idea and put it firmly on the agenda. Subsequently, UK trade association BOSS Federation came to the table and it was discussed at the BOSS board meeting (including chair Alan Ball) on September 19. Following the board meeting, BOSS told OPI that a number of options were discussed, including a national conference linked to the annual BOSS Awards evening; a national conference linked to one of the current stationery events held in the UK (see Q&A with

OPI Magazine | October 2013

New UK Event | Hot Topic Statindex – trading memories While the whole UK industry is talking about a new single event it seems appropriate to share memories of the last event of that kind – Statindex. Statindex reigned supreme as THE event for the UK OP industry in the 90s both in London and at the Birmingham NEC. It was rebranded the Total Office Products Show (TOPS) from 1998 to 1999. “I have fond memories of Statindex but it was not cheap and budgets didn’t allow for it after time so major exhibitors left as they saw fewer clients. You need major suppliers and they dwindled.” Mark Austen, Office Club “TOPS was just an exhibition, which was the whole reason that it failed, it needs to be a true industry event with everyone vendors, dealers, groups, wholesalers, IT providers etc included. It needs to be training- and development-based with seminars and workshops not just products.” Chris Collinson, Superstat “I recall Statindex as an event that did not really work for anyone. My outstanding memory is of skateboarding down the empty aisles with a manufacturer who had nothing else to do!” David Langdown, XPD “Statindex was a good event but the market was very different then. There were many more potential customers to support the high levels of expenditure by so many companies on large stands, and still give a reasonable ROI” Chris Leonard-Morgan, The London Stationery Show “In the heyday of Statindex I worked for Rexel and 20% of our sales went through the event. Dealers arrived with paper and pens to take orders but those days are over because we only really buy stuff when we’ve sold it now.” Paul Musgrove, nectere

Chris Leonard-Morgan for a potential partner there) and a number of other additional ideas, such as widening the remit from B2B to B2C, retail and education in a national venue with breakout zones for market sectors and/ or dealer groups. An all-inclusive event would bring the big box players and retailers such as Rymans to the event and would certainly be something of a game-changer. BOSS Chief Executive Michael Gardner told OPI: “At BOSS we are conscious that there are a number of parties and interests involved in this debate and that any national event would

need the support of as many market sectors from the industry as possible.” Over the next few months BOSS will hold a series of meetings with the dealer group heads, the BOSS manufacturers forum and current organisers of industry events. Input will also be sought from wholeslaers, contract stationers and retailers with a view to gaining support for a possible event from 2015 onwards. The project will be discussed further at the December BOSS board meeting. Reacting to the news of BOSS’s interest in the event, OPI CEO Steve Hilleard said: “We’re delighted to see BOSS step up to the challenge of taking on this new event and have naturally assured them of our support and assistance where possible. As the UK trade association, BOSS is the natural home for an event of this kind and we hope and believe it has the potential, if executed correctly, to reenergise the UK market.” Time will tell if the latest from BOSS will quell fears that many do have over the proposed new event. Perhaps seeking to circumvent any concerns over it being merely a Spicers-controlled event, Ball stressed from the outset that the event is not a Spicers initiative, but one to unite and showcase the industry as a whole.

Concerns Nevertheless, it was easy to see what a potentially hot potato this idea could be when you started to get industry responses such as ‘I don’t think I’ll get involved in this debate’ and ‘I’d rather see how it pans out for now’. Consequently, there were a few negative off-the-record comments while others were more positive about the reasoning behind the call for a new UK event. One concerned dealer group member said: “I just think it’s Alan playing politics. It absolutely cannot be organised by one wholesaler alone but by an organisation like BOSS with support from the press and on totally neutral territory with dealer group meetings and the BOSS Awards put around it.” Another dealer group representative echoed this saying: “Why have Spicers called for a new event when they host their own? I don’t know. And why do I want members talking to suppliers who don’t talk to us? I think suppliers would just like to circumvent dealer groups and it could be a vested interest exercise with wholesalers looking to set the agenda on an event.” XPD’s David Langdown is another who is unsure about why Spicers called for the event. w w w.opi.net | OPI Magazine

Hot Topic | New UK Event “I think Alan (Ball) enjoys ruffling feathers and challenging the status quo. I’m not convinced he believes this is in everyone’s interest. I don’t think he has an anti-group agenda but maybe weakening them helps Spicers,” he said. “As to whether we need another industry exhibition, if that was the case there could be the option to broaden EFTOS (Everything for the Office Show) or the Stationery Show, but EFTOS is very much a Spicers event and the Stationery Show has already moved away from broader office products in order to focus on more consumer stationery products.”

there are still concerns certainly among dealer groups although not all as Chris Collinson from Superstat demonstrates. The Superstat chief says: “I’m not sure what people’s concerns are. We have our own concerns that we will need to overcome, the fact that we have a contract with our venue for next year being one of many. We spend months planning our conference and do it to build great relationships with vendors and dealers and make a significant loss on the whole event – the majority of this loss is down to subsidising dealer attendances at a four-day event. Putting selfish reasons

Our search for differentation and innovation for our members is a key reason that the independent dealer channel has been as resilient as it has. Conferences are a big part of this and I would not want to see a homogenised, one-size-fits-all approach that suggests we are all the same Clearly there’s quite a split in dealer group opinion and it’s a view that some manufacturers are not surprised about either. One prominent manufacturer accepted that some dealer groups would need considerable persuasion to support the event as they will see it as a threat to their independence. Langdown adds: “Group conferences are about getting closer together, in an exclusive environment, with an extended period of time that allows members to really engage with the culture, understand the strategy, absorb the messages and engage with new initiatives. Will they effectively do that in an industry-wide event? “The UK office products market benefits from the fact that there are many diverse dealer groups. Our search for differentiation and innovation for our members is a key reason that the independent dealer channel has been as resilient as it has. Conferences are a big part of this and I would not want to see a homogenised, one-size-fits-all approach that suggests that we are all the same.” As said previously, it’s clear that Ball foresaw this response thus deciding to stress it would not be a Spicers initiative but clearly

OPI Magazine | October 2013

to one side, our main concern is that the organisation of such an industry event should be done by the BOSS Federation and all proceeds should be given to the BOSS Federation for the benefit of all.” For others in the industry a new event would be the perfect way to energise the participants in an embattled market and draw fresh impetus. But, as Luke Chapman from The Business Performance Group points out, it will need buy-in from manufacturers and dealer groups for the initiative to succeed. Chapman says: “The risk is if the manufacturers and dealer groups don’t fully support it. This will reduce the impact and the footfall of dealers and kill the idea pretty quickly. That would be a shame because I think the event would hopefully be a way for suppliers to have a more focussed event, save many days and weekends away from the business and home and ultimately reduce their overheads. If it can be managed properly (like the Trimega/IS event in the US) then it would have the ability for the groups to have a unique flavour to it, ring fenced break-out sessions and also elements of unique content.”

The vendors’ view In a pool of vendor responses to a new single UK event there were a number of broad opinions that arose. They were:

• There should be a balance between dealer and end user focus • There must be an end goal to increase the average spend per transaction and educate consumers about solutions and new products • Anything that delivers the same or enhanced result for lower overall cost has got to be good • The current set up of multiple events is too timely and costly

New UK Event | Hot Topic Chris Leonard-Morgan, organiser, London Stationery Show OPI: What do you think are the pros and cons of having a new UK event? CLM: A single all-singing, all-dancing OP event would be good news for both dealers and suppliers as it would save them time and money IF there were no longer wholesaler and dealer group exhibitions. But based on our experience, that is the only way it would work. OPI: Why do you think Spicers in particular called for this? CLM: Running exhibitions is incredibly time consuming and not as easy as some people like to think. It also carries risk. I would completely understand if Spicers wanted to allocate that time to their core business. The initiative for an inclusive event is a bold one, and would be good for today’s OP community. OPI: What’s your view on the idea your own Stationery Show at the Business Design Centre could be effectively converted as a single UK OP event?

CLM: The London Stationery Show is not an OP show and makes no pretence to be, although many of its products are sold by the dealers and dealer groups who visit and could be sold by many more. It is a largely retail event. OPI: Can you tell me a bit more about your show and its success and if maybe you would you see a new UK event as in anyway competitive? CLM: The Stationery Show is successful because of its focus on stationery, writing instruments and cost effectiveness. The buyers love it. Almost all the leading independent and multiple retailers visit it, from every walk of life, and even more so now that there is National Stationery Week. However, it does a completely different job to any other exhibition, and

At this stage, manufacturer buy-in for the event looks pretty good with a quick poll of views from manufacturers showing broad support with clear ideas on what it should achieve (see box “The vendors’ view”).

the new event being proposed wouldn’t change any of that. OPI: Do you understand the concerns that have been raised about a new UK event? CLM: I don’t see why anyone should have any concerns if all the dealer groups and two major wholesalers come in, and discontinue their own exhibitions. It’s a big ask but if it happened…..result.

intimate and relevant offerings, but I personally think that we can work around this to make a single event work. Timing is critical as our next event is already booked (July 2014) with a huge cancellation fee so

Manufacturer buy-in for the event looks pretty good with a quick poll of views showing broad support Certainly for many in the UK industry the positives for vendors are pretty clear not least because of the time and cost savings they would make. Collinson explains: “The biggest complaint I have heard is more about time than money. Many vendor executives have to give up seven, eight or nine weekends a year to cover the various exhibitions on the circuit. The down side for Superstat would be the less

next year’s event will happen regardless of an industry wide event.” Several major manufacturers have already concurred that justifying the investment in many of the smaller events they are invited to throughout the year is becoming tougher and as a result both exhibitor impact and the visitor experience has become watered down. Clearing there’s a way to go in terms of sealing a deal for a single new UK event but at this stage it seems the spirit is certainly willing. So it’s a case of watch this space and keep your eyes on opi. net and OPI’s social media presence for updates on this major ongoing story in the UK market.

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Sponsored Article | VOW

OPI Magazine | October 2013

VOW | Sponsored Article

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Dealer Spotlight | PEG

G N I G G E P out

Independent dealers the world over are changing, adapting and evolving. But, in Switzerland, many are doing so with some reticence as PEG’s Claude Ackermann explains by Heike Dieckmann heike.dieckmann@opi.net

FIRST

off, PEG is not a dealer – it’s a buying group, a wholesaler, a contract stationer, a retailer, even a manufacturer (of binding and laminating products). But its core focus – and 50% of its combined overall sales volume of SFr150 million ($162 million) – remains on and comes from the independent dealer. But, says Claude M Ackermann, Chairman of the Board of Managers of the buying group-cum-wholesaler organisation, the face of dealers is changing. “We have the same number of dealer members – about 500 out of a total of 600 independent dealers in the whole of Switzerland – that we’ve had for years, but the make-up of these dealers has changed somewhat.”

Challenging market He adds: “With the evolution of the market, we have been losing members. We’re also gaining new ones so the overall number has basically remained the same, but those new ones are often very small businesses, mostly individual small shop units, or really tiny stationery shops. As such, members’ combined sales have dropped about 5%.” Indeed, it is this plight of dealers that has led PEG to buy several stationers itself. The organisation now owns four stationery shops in the French speaking and northern

OPI Magazine | October 2013

The majority of PEG dealers are retail-based stationers with very little, if any, B2B business. But its 15 or so biggest dealers are operating very much in both camps and it is here where the overlap is the greatest, because PEG also acts as a contract stationer and logistics provider to mainly small- and medium-sized companies.

part of the country. All former members of PEG, it has owned one of these shops for about 18 years, but the other three were added in the past couple of years because, says Ackermann, “the owners couldn’t pay Conflict of interest the bills anymore, didn’t want to go Ackermann explains: “In the contract out of business and we felt we had to business, we mainly focus on ‘white’ buy them as otherwise we wouldn’t areas, ie geographic locations where have had a presence in this part of we don’t compete with one of our the country anymore”. dealer members. Alternatively and The potential conflict of interest in the more ‘grey’ areas, we try to of such a set-up is largely irrelevant create a partnership arrangement as most of these stationery dealers whereby we do the business on serve a small and mostly local the dealers’ behalf, using their clientele. They also all continue to name, logo, etc, and paying them be run by their previous owners. commission on that business. And, Furthermore, adds Ackermann, none in Zurich for example, where one of its dealer members are obliged to of our biggest dealers that is really buy solely through PEG. In fact, many strong in the contract business is are also affiliated with fellow buying located, we don’t compete.” group/wholesaler and, importantly, PEG also has an agreement with chief competitor Waser (author’s note: Swiss Post, whereby it supplies not the same Waser BPGI comment as B2B operator Waser Büro bought As Chairman of BPGI, Ackermann is frequently asked about by Lyreco in 2010). the future raison d’être of the global dealer group consortium. As such, they can Here’s his short statement on where he believes BPGI is headed: pick the services “The question we’re asking ourselves at the moment is this: are they require from we a purchasing and a marketing support organisation for our either group. independent dealers? Having its “I think we have to focus on selling, on helping our dealer groups hands in so many provide better services to their independent dealers. If we can pies, however, manage this, better purchasing conditions Ackermann admits will follow. We should also be the long arm of that the conflict our vendors. If a vendor has a new product, of interest issue for example, and we can help in offering does come up that product quickly to 4,000 dealers that occasionally, but can then start selling it, I think that’s what it’s in a different manufacturers are looking for today. And arena and mostly again, good pricing conditions will be the so in the B2B result of this en masse effort.” space.

PEG | Dealer Spotlight

office supplies and related items to more than 2,400 post office outlets around the country. In addition, the organisation fulfils a lot of the country’s government-related OP demands while also acting as a wholesale and logistics provider to department stores and retail outlets including Migros (of which both Office World and iba are a part), Coop, Manor, etc. But these strands of the business are typically not those targeted by its dealer members so the conflict remains negligible.

Lack of innovation And of course, these strands are well worth having as, apart from the contract business, they are where the current growth comes

meaningful way so far, Ackermann freely admits. The organisation has an impressive SKU count of about 35,000 in its sophisticated warehouse located in Aarburg, the logistical heart of Switzerland, but it hasn’t been particularly successful in its efforts to becoming that sought-after ‘one-stop shop’. The majority of products are traditional office products including various lines of own brands (they account for 18% of total revenues), with only about 5% accounting for the aforementioned seasonal items, gifts, etc. As for adjacent categories like facilities management, Ackermann says: “We’ve been offering coffee, water, snacks and various other breakroom products to our dealers for the last year or so, but it hasn’t been overly successful and dealers are just not fanatic about selling those products. From a contract point of view, PEG itself is not typically asked to supply those type of products, although we are making slow progress in the jan/ san segment. Coffee in particular is difficult as Lyreco has this unique

“The stationery sector in Switzerland is flat and the mentality of stationery dealers is equally uninspiring” from, according to Ackermann. “The stationery sector in general in Switzerland is flat and the mentality of stationery dealers is often equally uninspiring – many are not looking ahead and moving forward, and they’re simply not innovative enough to bring the business to a top level.” That said, he adds that over the past four to five years – essentially in a particularly challenging economic environment and at a time when much has happened in the Swiss OP market – retail stationers have been re-evaluating and adjusting their product portfolio, away from traditional OP to more gift items and seasonal goods. What they haven’t done is to go down the route so well trodden in other parts of the global OP community – the route of EOS, of breakroom products, of jan/san, etc. And neither has PEG in any

contract with Nespresso. The whole category is definitely something we need to address. “I’m personally convinced that our members have to offer the whole FM range to their customers, but we at PEG need to carefully redefine our strategy, for the stationery shops as well as for the contract market, and decide the way we want to pursue it. But either we have to do it properly or not at all.” The whole product category of EOS also remains absent from PEG’s

– and many of PEG fact its dealers’ – box: portfolio. The reason for this is Founded: 1941 HQ: Aarburg, the dominance Switzerland of Swiss player Chairman of the Ecomedia, a Board of Managers: SFr250 million privately-owned Claude M Ackermann Owner: Dealer distributor members of printing Revenues: SFr150 supplies. But, million ($162 million) as so many Employees: 150 supplies Business model: distributors Dealer group, have done (see wholesaler, B2B also the Big contract, retail Interview with Logistics: 30,000 soft-carrier’s sq m warehouse Thomas Veit, SKUs: 35,000 September OPI, page 28), Ecomedia is now also increasingly going down the OP path, potentially adding another competitive aspect to PEG’s fast-moving products.

Increased competition PEG is a true multi-channel operator, in a country that has always been fiercely independent. But times are tough and certainly over the past two years or so, it hasn’t been able to escape from the impact of the euro currency crisis when dealers have for example been buying their products from Germany because of the 20% currency advantage they’ve been enjoying. During that same time period, the market – in OP retail terms – has become even more saturated through a host of new competitors coming in, in the form of drugstores, Rail City shops, etc. And they all want to sell office products.

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Show Review | EPIC

EPIC lives up to its name First joint dealer group show is hailed a resounding success

by Andy Braithwaite andy.braithwaite@opi.net

THERE

may not have been an appearance from a live bison, but there was very little else missing from the inaugural combined Independent Stationers and TriMega EPIC 2013 convention that took place in San Antonio, Texas in September. Over 1,000 delegates attended the event, including the principals and senior executives of around 450 IS and TriMega dealers. Following a welcome reception sponsored by Smead, the conference kicked off proper with a general session. And right from the opening speeches, the message was clear: that the independent dealer community should be united in its battle against the big box chains and work together to develop solutions that tackle the fast-changing market conditions. When IS CEO Mike Gentile was joined on stage by TriMega’s interim President Ian Wist, they didn’t hide the fact that the industry has been talking about a possible merger between the two See the OPI TV dealer groups, but channel on our Gentile said that website for reaction there would be no from IS’s Mike big announcement Gentile and TriMega’s during EPIC. “Maybe Michael Morris. one day,” he said, comparing IS and TriMega to a courting couple who might one day get married,

OPI Magazine | October 2013

adding: “We make a real difference by working together.” Apart from the actual event itself, evidence of collaboration between the two dealer groups is starting to show in other ways, not least in the national accounts arena. Wist revealed that, following the recent

What they said about EPIC Here’s what some of the participating suppliers had to say about EPIC 2013

“The spirit of this event is buoyant. We are all aware that there are plenty of challenges in our industry today, but many of the independent dealers here seem to be prospering.” Jamie Fellowes, Fellowes “From our perspective it’s been an absolute success. Everybody is sharing great ideas and I’ve only heard positive remarks. It would normally be impossible for us to get in front of this many customers in a two-to-three-day period.” Casey Avent, Smead “The turnout has been good and the dealers are fully engaged. I think EPIC was an all-round great idea and it has been a positive development for the industry. It has allowed folks to synergistically talk about a lot of things as opposed to just being an expense cut.” Andrew Morgan, ECi I’m very pleased with the energy here. We’re at the end of the show and we still have activity – it’s very refreshing. There’s no doubt that it’s a cost saving, but it has been positive on a number of levels.” Bob Dahlgren, Midwest Resource Group

Photo courtesy of Venice Paparazzi

EPIC | Show Review

EPIC snapshots Photo courtesy of Venice Paparazzi

Office Smart acquisition by his Wist Office Products dealership (Office Smart was an IS member), Wist OP is now working on the IS FSSI Federal government contract, an industry first in terms of collaboration. Going in the other direction, a new educational supplies contract won by IS will be handled by the TriMega Point Nationwide platform, as it presents certain advantages over IS’s current national accounts solution. Following the general session was the supplier expo, where around 140 vendors were exhibiting. The suppliers that OPI spoke to were unanimous in their support for the joint event. Cost savings from having to attend just one event instead of two were, of course, an important factor, but not the only one and there was a definite impression that there was a more dynamic and positive energy by having the two sets of dealers in attendance at the same time (see What they said about EPIC). For the dealers, too, it was a case for many of catching up with old friends after the compartmentalisation of IS and TriMega members over the years. They also showed a keen interest in the products and services on display at the expo. How many times in the past have expo aisles been virtually deserted after lunch? Not so at EPIC, and the show was busy right up until the very end. In fact, there were suggestions that the expo could have gone on even longer, or that it could have been spread over two days. Of the new products on display, OPI noted strong interest in Fellowes’ new automatic-feed shredder – which is being launched for 2014 – and in Brother’s 100-page-per-minute printer which is set to debut in the US. The first day ended on a high note with an outdoor party sponsored by HON that took place right in front of the historic Alamo monument in central San Antonio. On the second and final day of EPIC was a full programme of meetings and seminars, some dealer group specific and some open to members of both groups. A wide range of topics and issues were covered, including national accounts, Point Nationwide, managed print and how to take advantage of the merger between Office Depot and OfficeMax (see OPI’s website for more details on some of these seminars). IS and TriMega have already confirmed the location and dates for the EPIC 2014 event, which will take place in Hollywood, Florida from 17-19 September 2014, with hopes that other dealer groups such as Office Partners will join the party.

During the opening session, the first ever EPIC Partner of the Year award, as voted for by EPIC 2013 attendees, was presented. From a final shortlist of five, the winner was Domtar-owned supplier Enterprise Group.

TriMega’s Next initiative is aimed at bringing together future leaders from the dealer group community. Fellowes sponsored a reception for Next members at EPIC which saw a strong turnout, and there are hopes that this programme will now be extended to include young talent from the vendor channel.

Office Products Women In Leadership (OPWIL) had a booth at EPIC and also organised a well-attended cocktail ‘mingle’. OPI Editor Andy Braithwaite was briefly allowed to enter the ‘lioness’s den’ for a photo opportunity and reportedly escaped unscathed!

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3-5 Nov 2013 The Langham Chicago, USA

3 An invitation-only forum for CEOs and senior executives from the business supplies and associated sectors. The Global Forum offers a unique opportunity to hear from expert speakers, explore future trends, engage in frank discussion, share ideas and network with fellow industry leaders in a confidential environment. If you would like to be considered for an invitation please email steve.hilleard@opi.net or visit www.opi.net/gf2013 for more information.

Organised by Office Products International

tesa | Sponsored Article

The

strongest link Patrik Baboumian, Germany’s strongest man 2011

Facilities management as a new OP category is in many resellers’ minds. German adhesive tape manufacturer tesa is capitalising on that trend with its innovative Powerbond range

WHAT

does Germany’s strongest man have in common with office products you may ask? The one-word response is marketing. The slightly longer answer has to do with innovation and how that innovation can penetrate different sectors and different product categories. Patrik Baboumian – said strongest man – is the face of tesa’s Powerbond campaign and a range of mounting tapes that was first launched in 2012 and has since seen great success in various European markets, but also as far flung as South America. Historically perhaps primarily suited to the DIY sector, the new Powerbond range offers numerous options of double-sided applications and is as much at home in the OP sector as it is in the DIY category. From washroom suitability (Powerbond Mirror) over outdoor applications (Powerbond Outdoor) to office and home use, it’s become an all-encompassing range with a host of different products.

Powerful bond Powerbond is all about strength and about ease of use and especially the former was the key focus of the Patrik Baboumian Powerbond ULTRA STRONG tape campaign. Matthias Schumacher, Director of International Sales & Key Account Management at tesa Consumer, says: “Patrik Baboumian belongs to the international elite of power athletes and tried to fight against the tesa Powerbond ULTRA STRONG in our 2012 international TV campaign. The 125kg man had no chance against the holding force of this product. In several challenges ‘Germany’s strongest man of 2011’ competed against the new, double-sided

adhesive tesa mounting tape for end-consumers but, in spite of his powerful arms, could not loosen the adhesive bonds.”

Smart solution Schumacher also points to the fact that Powerbond mounting tapes adhere to their chosen surfaces instantly, as opposed to liquid glues which have a longer application time. That, combined with the fact that there are no tools needed for fixing mirrors, pictures or interactive whiteboards, for example – and who typically has a power drill in the workplace – contribute to the set of USPs that differentiate Powerbond products from other tapes and mounting applications in the marketplace. Adds Schumacher: “The tesa Powerbond range offers a sophisticated, smart solution that enables users to complete a task easily and quickly, with no disrupting noise or surface damage. The mounting tapes offer an instantly strong hold without tools. The variety of tapes can also be used in different surroundings, including outdoors, in wet environments, on glass, etc.” Just under a year ago, in November 2012, work got under way for the construction of the new tesa headquarters in Hamburg. Part of the new HQ will be an integrated research and technology centre. Expected to be finished in 2015, the new facility will no doubt play an important role in further developing its wide range of products and in ensuring that the company continues to meet the changing requirements of its various markets. And OP is definitely one of those markets. For more information, visit www.tesa.com/ consumer/powerbond

Matthias Schumacher

“The tesa Powerbond ...enables users to complete a task easily and quickly”

w w w.opi.net | OPI Magazine

Category Analysis | Mailroom and Packaging

You’ve got mail The mailroom may not be the most exciting room on a company’s premises, but it can often offer more innovation than the boardroom itself by Heike Dieckmann heike.dieckmann@opi.net

TRENDS

in the mailroom and packaging segment are not so very different from many others in the OP industry. Declining sales in some categories, growing take-up in others, the impact of digital, increasing globalisation – it’s all there. Avery UK recently commissioned a study that showed letters are a more effective way of communicating important business messages than emails. Carried out by Chartered Psychologists at London Metropolitan University, the study looked at how different groups responded to an identical message communicated by email or traditional letter. 60% found letters more engaging and 40% more trustworthy than emails. 80% of respondents also thought letters were more persuasive than emails, while 40% were more likely to take action and respond to a business proposition that was communicated to them by letter rather than by email. Totalpost Managing Director David Hymers concurs with the view that

OPI Magazine | October 2013

postal communication remains an essential part of office culture. He adds: “Yes, the overall trend is that snail mail is declining because of emails and other electronic messaging, but the growth in the parcels business has become a phenomenal replacement market. Also, according to Direct Marketing Association statistics, a major increase in conventional advertising mail, which is shown to have a much better response rate than email ‘blasts’, is another reason for value being regained.”

Snail mail decline No doubt though, the traditional mailing of letters is down. According to Jim Bettinger, VP of Marketing and Strategic Business Development at US-based Quality Park Products, his company has seen a 3% to 4% decline in the envelope category. “This trend,” he says, “is consistent with the United States Postal Service (USPS) Q3 fiscal report, which documented a decline of 4% in the nine months to

30 June 2013. Additionally, the NPD group reported a 3.2% annualised decline (ending July 2013) in the commercial envelope sub-category, which represented the majority share within the US envelope market.” In the UK too, there’s been a reduction in postal volumes, but by no means does this apply across the board. Hymers says: “The largest factor in fuelling the existing demand for franking, for example, in the UK is the Royal Mail’s discount for franked mail over stamped mail, which in most cases can pay for a small top medium franker for a new user in less than a year based on postal usage. “Internationally,” he adds, “our sales, particularly in franking machine supplies, have increased year on year. In 2011, exports as a percentage of company sales were 33%; in 2012 this figure was a staggering 44%.” And it is the whole variety of supplies – everything that is part and parcel (pardon the pun) of a typical mailroom – that presents opportunities. Gregg Corbett, Marketing Director at Avery UK, which produces a comprehensive range of labelling solutions – many for the mailroom – points to the fact that all manner of postal communications can often reflect a company’s image – to its benefit or detriment.

Mailroom and Packaging | Category Analysis He says: “The importance of a in a considerable growth in the parcels company’s reputation and image business and, as such, in the demand is vital when it comes to driving for packaging material. This may not demand for mailroom supplies. An have hit a growth mark yet that is unprofessional mailing can reflect capable of offsetting the declines in incredibly negatively on an traditional mailings, but it’s very organisation. Badly significant nonetheless. packaged parcels, Says Bettinger: “We see growth letters and labels in the packaging sector as well that are poorly as in international mailings. printed, misspelled, The global marketplace, off-centre or smudged online commerce and small can communicate that an businesses all fuel the organisation doesn’t care need for packaging. The enough about its clients. challenge for existing This is where it becomes traditional envelope essential for the OP industry companies lies within Memory cards to emphasise the importance the capabilities of their of using high-quality mailroom machinery that tend to run lighter products where customers can weight substrates. As such, a transition be assured peace of mind with towards packaging requires capital more efficient, consistent and reliable investment or partnerships.” mailing solutions.” On that same note, Hymers adds: “We are a major vendor and re-manufacturer of franking machine cartridges. This has allowed us to achieve growth in cartridge sales where we can usually show, through our dealers, that franking machine users can save some 30% or more by using Sustainability our products. Additionally our quality, Packaging is also one readability and yield match or better of several areas that the OEM product. After testing all the faces closer scrutiny cartridges Royal Mail have approved from a sustainability our red and blue ink, with us being the point of view first company other than the OEMs to although it’s perhaps be awarded this accolade.” not a key priority yet. Says Corbett: Embracing digital “In the long-term, Much is said about the impact of sustainable solutions electronic communication on the for the mailroom traditional mailroom. Quality Park will be another has come up with an ingenious idea key trend driving to marry the two. One new product demand and OP is a line of greeting cards tagged resellers that aren’t Memory Cards. Bettinger explains: offering customers “These Memory Cards leverage QR sustainable supplies technology via our Memory Tag to for the mailroom provide unique codes for 30-second will face being online video messages. Consumers left behind. One leverage their mobile app technology recent report from to instantaneously unlock the video environmental message that accompanies their body Forum for the physical greeting. It is a great blend Future states that for the millions of Americans that sustainable products continue to embrace both physical and services will be and digital communications.” mainstream by the As mentioned above, the continuous year 2020, meaning growth in e-commerce has also resulted that by the end of the

decade green living and working will be normal practice, It’s something that the industry and the mailroom segment as part of it should seriously look to prioritise.” Many have done so already, Avery included. Quality Park, for example, is in the process of introducing the Againvelope to the US market, providing value through its longevity of use while also – from a sustainable point of view – preventing waste by eliminating the use of multiple envelopes. The mailroom and packaging sector might be changing, but there’s plenty of mail to be had David Hymers just yet.

“Yes, snail mail is declining because of emails and other electronic messaging, but the growth in the parcels business has become a phenomenal replacement market”

MRO and Safety | Category Analysis

MRO and We all know that traditional office products are not exactly a robust category anymore and that resellers are having to turn their attention to diversifying into a host of adjacent categories – one of the latest being MRO and Safety.

by Bruce Ackland bruce.ackland@opi.net

WHILE

jan/san has been a focus for some time now, the search has still been on for that next big opportunity – even before many are really taking advantage of the jan/san possibilities. Which is where MRO and Safety products come in like the proverbial knight in shining armour as the new heir apparent to jan/ san, although while this has caught the imagination of many, already there have been some teething problems. “What is MRO?” answered one reseller interviewed in a not exactly encouraging manner. Well, for anyone keeping quiet at the back, MRO is maintenance, repair and operations. Which alongside safety products is another potential saviour category that flirts around the edges of the matured category of traditional office products. So how big an opportunity is MRO and Safety? It’s fair to say that it’s significant and certainly has similarities with jan/ san and with it related issues in terms of capitalising on it. More than anything, the opportunity to take on more products in and around the office environment feeds into the one-stop shopping experience so beloved by purchasers and the so-called ‘endless-aisle experience’. Speaking to dealers, the overall feeling at the moment is of an opportunity that is truly in its infancy, but it’s an opportunity nonetheless. Dennis McCarthy, VP at New England Office Supplies, says: “We’re not sure how big an

opportunity this is yet and if all products can be supported. “But if we can warehouse them and deliver them on our trucks, we should be able to fare well. Added together, MRO and Safety could be as big an opportunity as jan/san maybe, but we’re not completely sure yet. We are still doing our due diligence. That said, it is a big enough opportunity to get on our agenda certainly.” Tim Flynn, President at Impact Office, differentiates between MRO and Safety despite them being handed the role of bedfellows in the category. He explains: “Certainly safety products seem to be a growing opportunity. MRO is a little different in that downtown offices will have little need for MRO as the landlord will bear that responsibility. It’s somewhat similar to industrial jan/san as opposed to ‘kitchen’ jan/san.”

Opportunity As ever with new adjacent categories, the first step to capitalise on the opportunity is recognising it in the first place. To this end, wholesalers are seeking to educate dealers on the new possibilities. United Stationers, for example, has focused on helping its dealers win with key consumables for the office end-user, such

Speaking to dealers, the overall feeling at the moment is of an opportunity that is truly in its infancy but it’s an opportunity nonetheless as first-aid kits, disposable gloves, eye protection and similar products which, the wholesaler says, may be thought of as “safety light”. United’s plan here is to use such basic items to help OP resellers build their confidence and success in selling these entry products and then encourage them to expand into other, more sophisticated w w w.opi.net | OPI Magazine

Category Analysis | MRO and Safety Vendor view Kristen Kindle, Regional Manager of the OP Channel at Rayovac, discusses the opportunity in the office products channel for MRO and Safety. OPI: MRO and Safety products have been called the next big opportunity for traditional OP resellers. Do you agree? KK: I would agree that the MRO and Safety product channel presents a large opportunity for traditional OP dealers. We believe that the larger players within the market will begin to bring a greater focus and more product options into their portfolio; many already are doing it today. There is still room for dealers to become more experienced within the jan/san category and continue to post gains within that specific channel. As these dealers obtain a stronger foothold within jan/san, MRO and Safety will be a natural progression for them. OPI: Is MRO and Safety as big an opportunity as jan/san has been and continues to be as an adjacent product category? KK: The hope is that MRO and Safety will be as large as jan/san which, for many companies, is their second largest category. The MRO and Safety category definitely has the potential to grow as large as jan/san, but the competition will be fierce. There are many distributors within the commercial channel that are experts within this market and have been so for years. The opportunity is there, it just depends on who can outlast the competition. OPI: How has business been for you over the last 12 months? How is the market in general? KK: Rayovac continues to post growth within the OP channel year over year. We are focused on the market and committed to providing our customers with high quality products at a value price. Rayovac continues to bring new items to the market, such as our Portable Power line and Virtually Indestructible Flashlights, and we have a strong history and position within the jan/san and MRO and Safety market today which OP dealers recognise. They see the benefit in partnering with a company like Rayovac to help grow their category profitably. product categories. It’s a tactic that seems to be working so far. Sales of industrial supplies at United increased 17.6%, workday adjusted, accounting for 8.1% of the company’s net sales in 2012. Excluding OKI sales, this category increased nearly 12% and was driven by strong execution of strategic growth initiatives despite a moderation in the underlying demand for industrial products. Growth in this category remains above market growth rates. Manny Chan, Senior Category Product Manager of jan/san at United, says: “We are absolutely focused and committed on building awareness and motivation among our resellers to take action in this important direction. We have been helping our dealers capitalise on these market growth opportunities with a basic core safety product offering. Our goal is to continually expand product breadth to enable our resellers to achieve continued growth and build on early successes. ”

OPI Magazine | October 2013

The key component in selling a new adjacent category is understanding that new category

For Mark Nolan, VP at Nolan’s Office Products, the category is another double whammy area where the company can target new business from existing accounts as well as open doors to businesses that may actually do more in this category than in traditional OP. He says: “We aggressively market to our customers with various facilities flyers and catalogues, employing sales analytics tools to measure growth and potential opportunities.” Of course, as with jan/san, the key component in selling a new adjacent category is understanding that new category, the differences in selling and marketing it and appreciating the different user you are now dealing with. Naturally, this comes down to education and training, and the wholesalers should ideally be ensuring that their dealers as well as their own staff are getting help in this direction. Hungarian wholesaler Corwell is already doing regular training sessions for its sales staff in this new area, while for dealers it’s explaining the potential through promotional magazines, e-newsletters, trade shows, etc. Flynn believes the MRO and Safety category requires even more expertise to sell. He explains: “Our customers look to the sales rep of this product range to be both a problem solver and an expert in the field. We are not there yet.”

Training As OP resellers have not grown up with these products, education on the nuances surrounding them and empowering resellers to add them to their product mix has become a key part of United’s assault on the category. Chan adds: “Training is always critical for sales and customer service to increase their knowledge and comfort level selling the category, and this is something we are constantly reviewing and developing.” So it’s early days for sure, but a cross-section of dealers certainly feel that they and their wholesale partners are on the ball with MRO and Safety. It may seem a little confusing to introduce a new category for dealers to get their heads around, especially at a time when many are still wrestling with the move into jan/san. However, good business is where you find it and you have to take advantage. It would be nice to think that 12 months from now we can be concentrating on and reporting back on some success stories in the category – and that the reseller community has been quicker to capitalise on it than it has done in jan/san.

Your OPI

On the move

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

USA

United Stationers’ new CFO Todd Shelton is recovering after surgery. In a press release, United said that Shelton’s surgery was unexpected, but successful. He is now expected to spend the next several weeks recovering and transitioning back to his full-time duties. In the meantime, CEO Cody Phipps will be the primary point of contact for investors. “We wish Todd a speedy recovery,” said Phipps. “We have a seasoned finance team which will continue to effectively oversee the company’s financial matters until Todd’s return.” OPI joins Phipps in wishing Shelton a full and speedy recovery.

Well-known US OP exec Peter Stubberfield has been named President of Floortex USA. Stubberfield started in this new role on 9 September and reports to the Chairman and CEO Steve Bull. He was most recently President of Helix USA, leaving shortly after it was acquired by Maped. That was his second stint at Helix, having founded its US business in 1980 and leading it until 1993. After that he held senior positions at Rolodex,

OPI Magazine | October 2013

Esselte, US Luggage and Briggs & Riley, before returning to Helix in 2009. Floortex said it had made the appointment as a result of its continued growth and success in the US. “Peter brings a wealth of experience and has an outstanding record of achievement in a number of senior positions,” stated Bull. “He will play a key role in our future strategic initiatives and day-to-day operations in the US.” US independent dealer Impact Office has strengthened its expertise in the government sector with the appointment of former SP Richards executive David Harris. Harris – who was previously Director of Government Sales at the wholesaler – joined the independent dealer in August as VP of Sales for Impact’s Federal Business Solutions division, a move that tied in nicely with Impact’s acquisition of federal government supplier EZ Print. Harris’ experience will no doubt be of benefit to Impact as it prepares for the next round of bidding on the US government’s new federal office supplies contract. US vendor Block and Company has appointed John Lanman as President and CEO. Lanman brings more than 25 years of consumer products industry experience and was most recently General Manager for Fun Express, a division of Oriental Trading. Lanman was previously General Manager of Blyth Homescents International and worked for Thermos as VP of Marketing. Avery’s Barry Lane has joined AOPD’s Business Partner Advisory Council. Lane – who has been at Avery

USA

Former HP senior executive Tappan Guha has been named VP Distribution Channels & Supplies for Xerox’s North American Reseller Sales (NARS) programme. In his new role, Guha is responsible for NARS distribution relationships and the development and implementation of the NARS distribution strategy for both hardware and supplies with all authorised distribution partners. He is also in charge of the development and implementation of Xerox’s supplies strategy through its distribution partners, reseller partners and end users. Guha is well known in office products circles, having spent 20 years at HP before leaving the tech giant last year. He then spent a few months with SP Richards before joining Xerox at the beginning of April this year. for 31 years and is VP for Commercial Channel Sales – has been named to the board following the retirement of Smead’s Tom Sullivan. He is the fourth member of the advisory board, which works closely with the AOPD board of directors in developing and implementing programmes that support dealers and business partners.

Europe

Richard Ford began in his role as Sales Director for the Dealer Channel at Spicers in early September. The appointment of the former Lyreco and Newell Rubbermaid exec was announced in July following the departure of Sales and Marketing Director Tom Rodda. “I am appreciative of Newell Rubbermaid’s discretion to allow [Richard] to join us early,” said CEO Alan Ball. “I’m confident that he will bring a fresh approach to the Spicers business.” Ford described the wholesaler as a company “with great vision”. “It’s a business with owners who are

investing and a management team that is focused on driving success with its customers through new, differentiating initiatives and service offerings,” he said. In addition to its US appointment, Floortex has named Andy Bones to the new role of Design Manager. Another former Helix employee, Bones will report to Commercial Director Melvin McGregor. Euroffice has appointed Tim Beech as Managing Director of its customer management and service arm Office Power. Beech spent five years as Managing Director of IT distributor XMA and has held senior roles in the US and Europe with wholesale, manufacturer and reseller companies. Staples UK finance director Sarah Guest will leave the business after four years, it has been confirmed to OPI.

International

Struggling paper merchant PaperlinX has named Andrew Price as new MD and CEO. Dave Allen, named permanent CEO last December, will remain with the firm until end of year to assist the transition.

Your OPI

5 minutes with... Andy Braithwaite, Editor, OPI

Describe what you do in less than 20 words. Oversee – and sometimes contribute to – the editorial content of OPI. Your first full-time job? Working in the tax department of a local council when the government was trying to introduce the poll tax. The worst job you’ve ever had? See previous answer. If you weren’t doing your present job, what job would you like to be doing? Running a hotel in the south of France. Your most embarrassing industry-related experience? When I asked someone how her father was, when in fact it was her husband! The daily task that you like the least? Trying to turn blatant PR into some kind of news story.

“An espresso coffee – that’s an office product now, isn’t it?”

Your first car? A Fiat 600 inherited from my grandmother… why couldn’t she have had an E-Type Jag? Things you don’t like spending money on? New mobile phones for my kids what seems like every few months, when the one they have works perfectly well. What sports team do you support? I’m a big fan of Derby County Football Club, because I was born in Derby. If you had to sing at a karaoke next weekend, which song would you choose? Embarrassingly, I never usually end up singing just one song at karaoke.

The most annoying travel experience you’ve had while in the OP industry? I once left all my notes at a show and had to take a taxi from the airport back to the venue to get them. When I got back to the airport, I realised that I had left my coat at the show as well! Your favourite event on the OP circuit? I don’t have one particular favourite, but I’m always amazed by the sheer scale of US events. Your favourite office product? An espresso coffee – that’s an office product now, isn’t it? The biggest single issue affecting the OP industry over the next five years? The fact that people will continue to buy fewer traditional office products and how manufacturers and resellers cope with this phenomenon. The first record you bought? This Year’s Model by Elvis Costello. The second was Wheels of Steel by Saxon. I was a confused teenager.

Which character from a film or TV series do you think most resembles you? For some strange reason, some of my work colleagues think I look like Bill Murray when he was in Ghostbusters. www.opi.net | OPI Magazine

Your OPI

Calendar Key dates in your industry If we are missing an event please let us know. Contact editorial@opi.net Do you have an event that you would like to promote in the OPI Calendar? Please contact Fergus Cox for further information about having an extended entry and pricing. Email: fergus.cox@opi.net Web: www.opi.net/calendar

OCT 04-05 XPD Annual Conference

Orchard Hotel and East Midlands Conference Centre, Nottingham, UK Contact: Steve Robinson Email: steve.robinson@ xpd.co.uk Web: www.xpd.co.uk Drawing together dynamic independent dealers, big brands and supportive suppliers, this will be another XPD Conference with a difference – you’d be MAD to miss it!

OCT 08-09 office* National Hall Olympia, London, UK OCT 10-11 EMGE Office Papers & Printing Conference NH Grand Hotel Krasnapolsky, Amsterdam, the Netherlands OCT 14-18 WB Mason Annual Sales Convention & Trade Show MGM Grand at Foxwoods Resort Casino, Ledyard (CT), USA 48

OPI Magazine | October 2013

OCT 15 Advantia Conference & Exhibition The Chesford Grange Hotel, Kenilworth, UK OCT 24 BOSS Industry Awards ICC, Birmingham, UK OCT 29-31 BSA Forum 2013 Hyatt Regency Coconut Point, Bonita Springs (FL), USA

NOV 03-05 Global Forum 2013 The Langham, Chicago (IL), USA

Contact: Janet Bell Email: janet.bell@opi.net Tel: +44 20 7841 2950; Web: www.opi.net/gf2013 An invitation-only forum for CEOs and senior executives.

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

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 28 COPA Stars Gala Bellagio, Vaughan (ON), Canada DEC 04-06 EdSpaces 2013 Henry B Gonzalez Convention Center, San Antonio (TX), USA

2014 JAN 08-10 PSI – Promotional Products Fair Messe Düsseldorf, Düsseldorf, Germany JAN 25-28 Paperworld Frankfurt 2014 Frankfurt, Germany FEB 25-27 Skrepka Expo powered by Paperworld Crocus Expo, Moscow, Russia MAR 2-6 AOPD Annual Meeting Biltmore Hotel, Coral Gables (FL), USA

MAR 08-11 Ed Expo and CAMEX Dallas Convention Center, Dallas (TX), USA MAR 11-14 CeBIT 2014 Deutsche Messe, Hanover, Germany MAY 06-09 ISSA/INTERCLEAN Amsterdam RAI Convention Centre, Amsterdam, the Netherlands

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.

JUN 11-15 SP Richards’ Advantage Business Conference Gaylord Opryland Resort & Convention Centre, Nashville (TN), USA JUL 09-11 ISOT 2014 Tokyo Big Sight, Japan

MAR 04-06 OPI Partnership 2014

Okura Hotel, Amsterdam, the Netherlands Contact: Steve Hilleard Email: steve.hilleard@opi.net Assisting European vendor and reseller companies in building long-term strategic relationships.

Your OPI

Final word Your industry, your opinions Tom Rodda, Associate Director, P1 Training and Development

Give sales a sporting chance will have a need for all of the above. Do not try to sell them something they do not need; after all the relationship is key and that will be your USP above all else.

New products

Existing products

Existing markets

does a UK premier league footballer play on average 180 minutes per week and yet train for 720 minutes per week? Why does a pro golfer hit 1,000 balls per day yet only takes 70 odd shots in a round? I guess you are thinking the answer is absolutely obvious; after all, how many gold medals would Mo Farah have won if he ate burgers and just rocked up in his shorts for the Olympics? Well, it may sound obvious but ask yourself when was the last time any of your staff were trained (and I don’t mean in the gym)? Traditional office supplies are a declining market but many businesses expect their salesforce to go and sell into new areas without any help or guidance. Everyone is talking about the opportunities in new adjacent product categories like jan/san and MRO and safety but are you giving your people the best chance to capitalise on these? After all, it’s not the players in a football team that set the strategy for the match, it’s the coach. The players are working to instruction. If they don’t, then and only then do they get the legendary ‘hairdryer treatment’ famously employed by Manchester United’s former boss Sir Alex Ferguson. One comment I hear regularly is “my sales team struggles to sell new products”. The answer why that’s the case is simple – look above – they need a coach and they need to be taught. There was a time when they could not sell OP and they were taught or learnt to do that. One model commonly used is the Ansoff product/ market matrix (see diagram). At my company we use this simple yet proven model to guide and coach people into focusing on the areas most likely to deliver success. I feel that it’s always easier to sell to existing customers than to new ones, so for the purpose of this piece I will be focusing on product development and new products into existing customers. In my experience salespeople love guidance and fresh conversations to have with their customers. Do all of your customers buy your full range from paper, EOS and jan/san over furniture, data storage and archiving to shredders? Sit down with your salesperson and work through the above list. Train them to think about these areas as second nature but beware. Not all customers

New markets

WHY

Many of the questions that need to be asked should be done in a training environment which includes you (coach) and the salesperson. Will the new category undermine the business I currently enjoy? Which customers should I sell to? How do I sell it? If I don’t do it, might somebody else? Set the team small but realistic targets such as finding five new customers from their existing customer base for shredding and stay focused on them meeting these targets – salespeople will love to tell you what is just around the corner. There are multiple ways to grow your sales but the easiest is product development. Know where there is an opportunity, equip your salesperson to ask the right questions, set achievable short-term targets and review what they have done. And when it works for the first time, trust me the feeling is infectious!

In my experience salespeople love guidance and fresh conversations to have with their customers

OPI Magazine | October 2013

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

IN THE NEXT ISSUE • United Stationers CEO Cody Phipps is the subject of a must-read Big Interview • Unbeatable industry analysis on the crucial stories and developments shaping the market