OPI Winter Issue Europe by OPI

Big Interview

magazine

The word in office.

p32 Europe on its head The eurozone is in crisis â&#x20AC;&#x201C; thereâ&#x20AC;&#x2122;s less money, no political stability and very little growth. Where does this leave OP?

Ravi Saligram, CEO of OfficeMax p24 December 2011 / January 2012

Special feature

p44

Are catalogues soon to go paperless? Perhaps not

Contents

December 2011 / January 2012

News

8 Round-up

www.opi.net

50 Norse Warriors

Nordic dealer Markedshuset battles the cold for success

Best Buy withdraws from the UK, a new US national rep group and Adimpo boosts Unipapel

54 A whole new world

12 Analysis

58 On the right track

22 Green Matters

Category Analysis

The outlook for Paperworld 2012

More on the ACCO/Mead merger, the news from the Italian market and charity success in the UK

The success of Big Buyer 2012

Green isn’t dampened by the looming year end, with eco awards and new targets

62 Facilities Management

Features

66 Office Machines

What’s behind the growth? Success throughout 2011

24 With the ball in his court

Regulars

OPI questions Ravi Saligram

7 Editor’s Comment

32 Europe on its head

Its effect is felt globally, so how is OP coping? Felicity Francis on the eurozone debt crisis

Kasie Morley

OPI reports back on the highly successful BSA annual forum

Printing catalogues is costly and time consuming, so is OP going digital? Not yet, it seems

71 Inbox 72 5 Minutes With...

38 Partners for progress 44 Going paperless?

70 On the Move

73 What’s On

Key dates for your calendar

74 Final Word Martin Eames

“One thing that is clear is that the growth of the financial services in both New York and London, and in many financial capitals of the world, has been very beneficial for the

office products industry...We need to be realistic about the notion that the growth

it has provided is no longer the case.” For the full article on the impact of the eurozone debt crisis turn to page 32

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

Because your office is wherever you are At 3M, we understand your workspace extends beyond the boundaries of your cube or office building, so we develop useful, innovative products that go where you go. From Post-it® Super Sticky Full Adhesive Notes and Laptop Note Dispensers to Notebook Pockets and Flag+ Highlighter & Pens, we provide the tools you need to stay productive and organized — no matter where you work. Learn more at Post-it.com 3M, Post-it and the color Canary Yellow are trademarks of 3M. © 3M 2011

Editorial Editor Felicity Francis

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

Features Editor Heike Dieckmann

Editor’s comment

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

News Editor Andy Braithwaite

+33 4 32 62 71 07 andy.braithwaite@opi.net

Editorial Assistant Saqib Shah

Over hill and dale

Sales and Marketing

It was quite a European-focused November for me. I’ve been to the beautiful country of Austria to visit some of our friends, and to Amsterdam (despite the fog that tried to ground me) for the judging meeting of the European Office Products Awards (EOPA) – read the shortlist on page 13. The EOPA judges’ meeting is fascinating to attend. As a humble note taker, I was able to observe the proceedings and gain an insight into what some of Europe’s most important vendors and resellers look for in a product, a company or a person. Several of the debates went on for some time – the lunch break was very short – as there is rarely one clear winner for a category. The product categories contained a number of ground-breaking products and after a sedate start the passionate judges leapt out of their shells to defend and expand upon the credentials of what each saw as a ‘product of the year’. When writing this month’s Hot Topic about the eurozone debt crisis, which was no mean feat, I spoke to a number of people who maintain their passion for the industry despite the impact of the economic chaos (turn to page 32). It was interesting to hear a number of them talk about opportunities, and the different ways they’re coping. Judging by this month’s Big Interview with Ravi Saligram (turn to page 24) it seems that there is optimism over the pond too. Saligram is confident that OfficeMax now has the tools to grow and speaks extremely highly of his team. I went on another important trip in November – the Climb of Life (turn to page 18). It was a wonderful, though tough, event and climbing England’s highest mountain felt worth it when our fundraising total was announced. But as one of my team members said: “It’s lucky the cloud was there – if I’d seen how far we were going I wouldn’t have gone!” And I won’t forget the Monty Python quotes that kept us laughing up the mountain: “That piece of halibut was good enough for Jehovah!” Felicity Francis, Editor

+44 (0)20 7841 2950 saqib.shah@opi.net

VP – Continental Europe, Middle East and Africa Ewan Dickson

+44 (0)20 7841 2954 ewan.dickson@opi.net

VP – North America and UK Chris Turness

+44 (0)20 7841 2953 chris.turness@opi.net

VP – Asia Tony Yao

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

Marketing and Database Executive India Pride

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

Business Development Executive Stephen Dias

+44 (0)20 7841 2952 stephen.dias@opi.net

Events Events Manager Lisa Haywood

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

Production and Finance Studio Manager Adam Morris

+44 (0)20 7841 2943 adam.morris@opi.net

Operations Manager Nicky Coulson

+44 (0)20 7841 2944 nicky.coulson@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

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OPI magazine (ISSN: 1360-8460) is published monthly by Office Products International Limited and distributed in the USA by SPDSW, 95 Aberdeen Road, Emigsville, PA 17318. Periodicals postage paid at Emigsville PA. POSTMASTER: send address changes to OPI PO Box 437, Emigsville PA 17318-0437. No part of this magazine may be reproduced, copied, stored in an electronic retrieval system or transmitted save with written permission or in accordance with provision of the copyright designs and patents act of 1988. Stringent efforts have been made by Office Products International to ensure accuracy. However, due principally to the fact that data cannot always be verified, it is possible that some errors or omissions may occur. Office Products International cannot accept responsibility for such errors or omissions. Office Products International accepts no responsibility for comments made by contributing authors or interviewees that may offend.

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News | Round-up OK, so I was a bit premature last month with my predictions about the Spicers sale to Unipapel. I was just writing that things look all set to be finalised in the next few days when news broke that the EU competition authorities have put back their provisional deadline for approval by a couple of weeks to 20 December. Apparently, they need more time to study ‘commitments’ that Unipapel has made. What these commitments are hasn’t been specified and Unipapel is saying that this is nothing unusual. It would be a surprise if they revolve around competition issues; Unipapel does have a 52% share of the EOS market in Spain, but that came about due to the acquisition of Adimpo so nothing changes by acquiring Spicers. It seems more likely there could be issues regarding works councils negotiations and job guarantees following the acquisition. Any further delay, of course, has a knock-on effect on the spin-off of the UK & Ireland operations which is dependent on the original sale of the whole of Spicers. Hopefully, in my next News Editor’s comment I’ll be able to speak about “Unipapel’s recent acquisition of Spicers”! Wishing you all a happy end of year holiday season and a prosperous 2012. Andy Braithwaite, News Editor

Best Buy to close UK stores Minneapolis (MN), USA

Best Buy has confirmed that it will close down its big box stores in the UK. The consumer electronics retailer said the 11 stores would close by the end of the year as it focuses its Best Buy Europe operations on 2,500 smaller format stores with joint-venture partner Carphone Warehouse (CPW). Best Buy opened its first UK retail store in April 2010 to take on established groups such as Dixons and Kesa, but the experiment

failed to live up to expectations. The decision to close the stores does not come as a major surprise – earlier this year Best Buy said it was evaluating its position in the UK. As well as the UK announcement, Best Buy announced several key changes in its relationship with CPW. Best Buy is to pay $1.3 billion to buy out CPW’s share of the profit sharing agreement in the North American Best Buy Mobile operations. The two firms have also announced a

venture called Global Connect, which plans to recreate their mobile model in other international markets. As a direct result of the purchase of CPW’s contractual interest in Best Buy Mobile – which is currently held within Best Buy Europe – and the closure of the big box UK stores, Best Buy said it expects to record a non-cash write-down of substantially all of the $1.2 billion of goodwill attributable to Best Buy Europe in the fourth quarter of fiscal 2012.

Spicers rewards top synergy dealers

Veterans to head national rep group entity

Cambridge, UK

Chicago (IL), USA

Spicers UK & Ireland held its 2011 conference for its Synergy dealers in November. The one-day event included an update on a number of Synergy-exclusive initiatives such as free online product training, access to all Spicers’ marketing assets and a new prospects database partnership. In the evening the delegates gathered for the Synergy awards dinner as Spicers recognised dealers for their achievements in 2011. “We had a great turnout of dealers and a really positive response to our introduction of business sessions,” said Jeanette Bresitz, Spicers’ Director of Marketing Services.

A national rep group organisation has been established in the US, led by two experienced OP execs. Harbinger National combines the national account management capabilities of current groups NAM and Repforce, affiliates of leading groups Frey Gaede and John Motley Associates respectively. Harbinger is being headed by CEO and Managing Director Mike Rowsey – formerly in charge of OfficeMax’s contract division and a 30-year industry veteran – and former Fellowes sales chief Bob Compagno who takes on the role of President and Managing Partner. It brings together several well-known US rep groups – Frey

OPI Magazine | December 2011 / January 2012

Gaede/Blazer Brusa, John Motley Associates/Myers Brazell and The Godfrey Group – under a single umbrella organisation. The ten principals of the rep groups involved, as well as management, have invested in the business and there is also some stock “on the shelf” in the event of expansion, with the Canadian market an opportunity. The group is looking to develop the representation of jan/san manufacturers as they become increasingly relevant in OP. “We are extremely excited to bring together the best field representation in the industry with a new leadership team that brings years of distribution and manufacturing experience,” said Rowsey.

Round-up | News

Office Choice HP cautious goes for power about 2012 Melbourne, Australia

Australian dealer group Office Choice held its annual conference recently with this year’s theme of ‘Power On’. One of the major announcements was the launch of a new private label brand called Stufft. Stufft is being pitched as a colourful, fun and unique brand and is targeting a number of specific customer segments including business professionals, school and university students and female buyers. The product range includes popular items such as iPhone and iPad accessories, USB sticks and drinks bottles. Office Choice has promised an innovative marketing push to

back the launch, including social media campaigns and flash mobs. The conference included a golf day, trade show and an awards dinner. BPGI’s Jim Preston was the guest speaker, providing an insight into the global state of play, including the progress of independents around the world. During the group’s AGM, Office Choice elected a new Chairman following the retirement of the highly-respected Neil Blucher, Chairman for six years and a board member for 14 years.

Palo Alto (CA), USA

“Many will remember that Neil had the courage and tenacity to take the helm when the group was facing major challenges and desperately needed someone to stand up and take a leadership role,” commented General Manager Max Ritchie. Taking over the role from Blucher is Ian Jones of CJ Office Choice in Victoria.

HP CEO Meg Whitman said the company needed to get back to business fundamentals as it posted a cautious outlook for 2012. HP’s Q4 results came in ahead of Wall Street expectations but its share price took a hit after its 2012 earnings outlook was well below consensus estimates. Q4 sales of $32.1 billion were down 6% in local currencies. Sales in the Americas declined 5% to $14.5 billion, EMEA sales fell 10% to $11.7 billion and Asia-Pacific sales of $6 billion represented a decrease of 4%. Sales to consumers fell by 9%, while commercial sales declined by 2%. Whitman admitted that 2011 hadn’t been HP’s best year and that the company had created confusion with its strategic announcements in August. “We need to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution,” she said. Recent results from competitors such as Dell and Lexmark suggest that HP lost share in the quarter. While HP said that the August announcement had hit sales, especially in China, the company said it believed it held share in commercial PCs, printing, laserjet and ink.

Adimpo boosts Unipapel results Madrid, Spain

European wholesaler and distributor Unipapel has posted strong nine-month results after reporting share gains from its Adimpo EOS business. Overall group turnover for the nine months to the end of October increased 4.6% to d649.5 million ($880 million).

Top-line sales from the Adimpo subsidiary were over d550 million and increased by 6.5% for the period. Adimpo reported double-digit sales growth in Portugal (28.6%), Italy (24%) and France (19%) while sales in Germany were up 9.7%. 57% of Adimpo’s sales now come from outside the domestic Spanish market, and Unipapel has said that

it continues to win market share, notably in the countries of Germany, France and Italy. Unipapel’s Spicers acquisition may have hit a stumbling block, however. As OPI was going to press the EU Commission competition authorities extended the deadline from 6 to 20 December after Unipapel submitted commitments in late November. w w w.opi.net | OPI Magazine

News | Round-up

Vienola buoyed by Wulff progress Vantaa, Finland

Wulff CEO Heikki Vienola says he is very satisfied with the group’s sales performance over the first nine months of the year. The Finland-based reseller reported an 8.4% increase in sales to f71.6 million ($97 million) for the nine months to 30 September. EBITDA during the same period surged from f0.3 million a year ago to f1.6 million, while last year’s operating loss of f0.86 million

was transformed into an operating profit of f0.81 million. The group’s Sweden-based Wulff Supplies business was the chief growth driver, although sales grew in the Finnish market, notably in the contract channel. “Our satisfied customers, sales growth and profit improvement tell us that we are moving in the right direction,” said Vienola. “Our aim is to grow profitably and to be our industry’s top company in all Nordic countries by

2015, although we understand that this still requires a lot of work.”

Bong continues with cost savings Kesa offloads Comet Kristianstad, Sweden

European envelope manufacturer Bong has announced more cost-cutting measures as it continues to see weak demand. After closing most of its Belgian production capacity in the summer, Bong has now said that it has initiated cost-reduction actions in Scandinavia that

will result in the loss of 50 jobs. A further 30 jobs are to go in the UK town of Milton Keynes as part of the integration process with Hamelin’s envelope business, which Bong acquired last year. Bong said that demand for its core products remained weak in Western Europe where the overall envelope

market was estimated to be down by 6% in the third quarter. On the upside, Bong reported positive market trends in Russia and Eastern Europe. However, the manufacturer said that the volume trend for envelopes fell short of expectations for the first nine months of the year, constraining earnings.

Proffice acquired by investment fund Bucharest, Romania

Leading Romanian reseller RTC Proffice Experience has been taken over by a Swedish investment fund. The fund – Oresa Ventures – has acquired the business from the RTC group owned by Romanian entrepreneur Octavian Radu. Proffice Experience – the 2010 European Emerging Reseller of the Year – had annual sales of around d28 million ($38 million)

last year and posted a loss of d1.2 million according to data from the Romanian finance ministry. Financial details of the transaction were not disclosed, but Oresa is understood to have refinanced Proffice’s debt and the sale has enabled the RTC Group to reduce its own by 25%. RTC ran into cash flow problems in 2010 and was forced to restructure a number of its companies, including its Diverta chain of bookstores.

OPI Magazine | December 2011 / January 2012

London, UK

European consumer electronics group Kesa has agreed to sell its Comet chain for £2 ($3.20). Comet – which has almost 250 stores in the UK – is to be acquired by private investment firm OpCapita. Kesa has agreed to invest £50 million into the Comet business and has taken on liability for its pension scheme, while OpCapita will provide £30 million for working capital funding. OpCapita has said it intends to keep Comet operating as a going concern for at least 18 months after the deal closes, most likely in February. Kesa said in June that it was exploring alternatives for the struggling Comet chain as it focuses on its European Darty brand. Comet’s like-for-like sales were down almost 19% in the six months to 31 October as UK consumers rein in spending on big ticket items such as TVs.

Round-up | News

Double acquisition Newell gives GBU details for Pukka Pads Atlanta (GA), USA

Poole, UK

UK-based vendor Pukka Pads has made two acquisitions in the last few months. The first move was for Cardinal Brands, which manufactures a wide assortment of paper products including the Adams duplicate and triplicate book range. Cardinal’s UK subsidiary was bought out by Michael Deane in 2009 after the global operations were acquired by US giant RR Donnelley. Pukka Pads has said that Cardinal Brands will continue to trade under its present name and Deane will be staying on. “We view this as a natural progression to the Pukka range and believe that acquisitions such as this help us to offer more to our customer base,” said Pukka Pads’ Managing Director Chris Stott. The company has also acquired business forms solutions provider Inspired Forms as it looks to capitalise on the business form market in the UK. Although Inspired Forms’ management structure will remain the same, the company’s name will be changed to Pukka Pads Business Forms. “This has secured the jobs of many UK workers, which is great news in today’s climate,” said Stott.

Newell Rubbermaid has provided further details of the global business unit (GBU) changes it announced at the end of October. The company announced a restructuring of its operating groups on 28 October when it released its third quarter results, saying it will consolidate its current three operating groups into two – Newell Consumer and Newell Professional – and its 13 global business units into nine. Now Newell has given further details of the changes. Newell Consumer will also comprise four GBUs: Home Organisation & Style, Writing & Creative Expression, Fine Writing and Culinary Lifestyles. These four consumer-facing global business units will report to Penny McIntyre, Group President, Newell Consumer. Newell Professional

will comprise four GBUs: Commercial Products, Construction Tools & Accessories, Labelling Technology & Integrated Solutions, and Industrial Products & Services. These four professional-facing global business units will report to Bill Burke, Group President, Newell Professional. The Labelling Technology & Integrated Solutions GBU is simply a name change from the Office Technology GBU, and its realignment to the Newell Professional operating group. Key brands in this new GBU are Dymo, Mimio and Endicia. The Writing & Creative Expression GBU will comprise the current Everyday Writing GBU and the Markers, Highlighters, Art & Office Organisation GBU. Key brands in this new GBU are Paper Mate, Sharpie, Expo and Prismacolor.

News in Brief Banner Business Services has announced that sales of its Closed Loop paper have now exceeded 750 million sheets. The office2office subsidiary developed its Closed Loop document destruction and paper recycling service in 2009 in response to a request from UK government department HMRC to provide an audit of its document destruction facilities. This resulted in the creation of Banner Document Services which today provides a Closed Loop national document destruction service to HMRC and other government departments.

OfficeMax in New Zealand has been working with the country’s Retail Institute in the development of a new distribution certification. When developing distribution qualifications, the Retail Institute sought the advice of the OfficeMax HR team and distribution centre staff at its Auckland distribution centre. Austria-based wholesaler and reseller PBS Holding has acquired F1.7 million Slovakian reseller Kanex. PBS has been present in Slovakia since 2004 with its Büroprofi B2B operations. The two businesses will now be

merged and Anezka Boriova, the former owner of Kanex, is staying on in the role of Key Account Manager. The new name for the entity is Büroprofi Kanex, but the intention is to brand the business as simply Büroprofi over the next two years. An online stationery retailer called Stationery4u has been launched by Indian consulting firm Xynisis. At the launch ceremony of the website in Delhi, Xynsys said its aim is to obtain 20% of the country’s online stationery supplies market share within two years.

Stationery4u is currently available in five Indian states, with plans to extend its marketing and services throughout the country. Lexmark International has been ordered to pay $5.7 million in attorney fees in a class-action lawsuit over its vacation time policy in California. Los Angeles Superior Court Judge Gregory Alarcon ruled last week that the claimants were entitled to these fees in addition to a previous judgment of nearly $8 million over Lexmark’s ‘use it or lose it’ vacation policy that was found to violate California law.

w w w.opi.net | OPI Magazine

News | Analysis

Groundhog day? OfficeMax unveils another strategic plan at its November investor day in New York

During

the question and answer session at OfficeMax’s Investor Day on 16 November, financial analyst Gary Balter said it felt like ‘groundhog day’ with the office supplier presenting its second strategic plan in the space of 20 months. ‘Max announced a five-year growth plan in April 2010 when Sam Duncan was still in charge and it seemed that the global economy was moving in the right direction. Times have changed; Duncan and a good part of his former management team have now left and, as Ron Sargent has put it, we are still in a period of “economic purgatory” with no visible signs of a sustainable recovery. Ravi Saligram has had his feet under the CEO’s desk

‘Down under’ commitment It has been suggested on several occasions by OPI that OfficeMax could offload its Australian and New Zealand operations, with Lyreco and Staples possible candidates to acquire all or part of them. However, CEO Ravi Saligram confirmed that Australia and New Zealand remain core assets of ‘Max’s international contract business. Former Managing Director David Kelly has come out of retirement to return to the business which has been led by acting Managing Director Simon Finch since David Armstrong’s departure. for just over a year now. He has already made a number of changes, especially in terms of the executive team around him, with only CFO Bruce Besanko and supply chain specialist Reuben Slone surviving from the Duncan days. In truth, many of the strategies outlined in the latest investor presentation have been mooted by ‘Max before. For example: • Optimising the retail store portfolio • Expanding the product ranges to adjacent categories such as jan/san and technology

However, ‘Max has said that it plans to divest the Croxley business in New Zealand. Croxley – with estimated annual sales of around $100 million – is the country’s leading distributor and its ‘Max ownership has traditionally been viewed with suspicion by the dealer community. An obvious purchaser does not spring to mind, but local group Paper Plus and Australia’s Pelikan Artline are two names thrown into the ring. Another option could be a private-equity-backed MBO led by Croxley CEO Joe Naus.

• Focusing on higher-margin services such as technology services and copy/print • Developing new channels such as store-in-store and category management with other retailers • Gaining a greater share of wallet with existing customers • Winning more business in the small and mid-market segment • Improving the online experience for customers • Controlling costs and improving productivity. What Saligram argued was that the previous plan

The ‘Max plan • A pilot mobile initiative with Radio Shack which will see mobile phone kiosks in around 20 OfficeMax stores in the San Francisco area, stocked and staffed by Radio Shack • Plans to divest the Croxley manufacturing and distribution business in New Zealand • The renewal of the international contracts agreement with Lyreco for a further three years • The continued pruning of the retail footprint in the US, with an average of 15-20 stores to close annually for the next five years • Regional acquisitions to be made in the US to quicken growth in the SMB and jan/san segments

OPI Magazine | December 2011 / January 2012

• 70 new positions created for the SMB sales team, to be in place by January 2012 • Further expansion in Mexico, including growing the small contract business there • The trialling of smaller store formats in business districts where ‘Max has a strong presence • No short-term geographical expansion • A doubling of the ratio of direct import penetration for private brand products • An increase in private label sales to 32% (currently at 28%) and a focus on the main brands – OfficeMax, [IN]PLACE, TÜL and Divoga.

had been more of a financial plan with over-optimistic assumptions about the economy and was not based on a realistic view of the “state of the nation” of the company. Execution would be the differentiating factor this time around, he stated. 2012 is being seen as a transitional year and sustainable, profitable growth is not being predicted before 2015. With about 100 stores likely to be closed by then, top-line improvement – a key component of the plan – is dependent on meaningful growth in new categories. Read this month’s Big Interview with CEO Ravi Saligram (page 24) for more insight into the company’s strategic plan.

Analysis | News

OPI announces European awards shortlist OPI is pleased to announce the shortlist for the 2012 European Office Products Awards (EOPA).

Despite

or perhaps because of, the economic climate, a diverse range of strong entries was put forward for judging.

With many of the categories fiercely contested, the 15-member panel had a tough time in whittling down the entries into a final shortlist. The winners will be announced on 30 January 2012 at a presentation dinner held during Paperworld (turn to page 51 for details or visit www.opi.net/ awards2012).

SHORTLIST Best Product of the Year: Core

Corporate Social Responsibility

Best Product of the Year: Facilities Management

Dealer Group of the Year

Accentra COLOP Hamelin Pilot Corporation CPD Durable Dyson Metsä Procter & Gamble SCA

PaperPro EvoLX Desktop Stapler Stamps with Microban® antibacterial protection Oxford Range FriXion Veltia Hand Dryer Durabin Trolley Dyson Airblade™ Hand Dryer Katrin Classic One Stop Swiffer® WetJet® Tork Premium Liquid Soap System

Best Product of the Year: Technology

ACCO Brands Europe Dyson Newell Rubbermaid Plantronics tesa

Rexel Auto+ range of Automatic Shredders Dyson Hot™ Dymo Label Manager™ PnP Savi W740 Multi Device Wireless Headset System tesa Clean Air®

Best Product of the Year: Environmental

Banner Business Services COLOP helit innovative Büroprodukte tesa Trodat

New Product Innovation

CCM International Esselte Leitz Hewlett Packard Plantronics

Marketing Initiative

Brother Fellowes Newell Rubbermaid Staples Europe

Online Initiative

Avery Dennison Durable UK Esselte Leitz Esselte Leitz Pilot Corporation of Europe

100% Recycled Closed Loop Copier Paper Printer Liquid Wood Greenlogic Letter Tray tesapack® ECO & STRONG Original Printy 4.0 Bacoban Leitz iLam Laminators TopShot Laserjet M275nw Voyager Pro UC (v2) 141% Campaign Professor Ergo Campaign Sharpie 2011 UK Campaign EasyTree, a Staples Advantage Campaign Avery® Brand&Print™ Durable UK Brands Leitz Create! SociaLEITZ Leitz – A Job Worth Doing FriXion Ball

BIC Esselte Lyreco OfficeTeam Staples Europe

Advantia Business Solutions Integra Office Solutions Quantore Soennecken Superstat Group

Wholesaler/Distributor of the Year Corwell PBS Holding soft-carrier Unipapel VOW

Regional Reseller of the Year Akoffice Codex Office Products Dacris Impex Just Office

Reseller of the Year Amazon Bureau Vallée Kaut-Bullinger OTTO Office Staples

Vendor of the Year Brother Esselte Leitz Hamelin SCA Stabilo

Global Expansion Bi-silque Durable HSM

Professional of the Year

No shortlist – winner announced on the night

Industry Achievement

No shortlist – winner announced on the night

w w w.opi.net | OPI Magazine

News | Analysis

ACCO’s big move $860 million MWV deal creates the largest global OP vendor

ACCO

took the office products community by surprise in November when it announced a merger with MeadWestvaco’s (MWV)’s Consumer & Office Products (C&OP) division in a deal worth $860 million. The deal sees MWV focus on transforming itself into a packaging company, while ACCO will increase its annual revenues by 50%, gain strong brands such as Mead, Cambridge and Day Runner, and have

the chance to develop a strong presence in the growing Brazilian market. With annual sales of over $2 billion, the combined ACCO/C&OP will become the largest global office products vendor, ahead of Newell Rubbermaid, 3M and Esselte. The transaction is expected to be completed sometime in the first half of 2012, subject to the usual shareholder and regulatory approvals.

ACCO CEO Bob Keller: “A transforming event for ACCO”

An acquisition In essence, MWV will spin off its C&OP division and then merge the new entity with ACCO, in what is commonly known as

History repeating? A Reverse Morris Trust transaction was in fact used for the ACCO World spin off from Fortune Brands and the subsequent merger with GBC at the beginning of 2006, in the deal that created the ACCO we know today. That deal loaded the ACCO balance sheet with debt, something that almost brought the company to its knees during the 2008/2009 global financial crisis. A closer look at this latest transaction also reveals a sharp increase in ACCO’s debt level post the C&OP merger. According to ACCO’s most recent quarterly filing, its long-term debt by the end of 2011 will be around $644 million. Actually, the company has done a good job of reducing debt since Bob Keller took over, but its debt/adjusted EBITDA ratio of about x3.9 still means that it remains restricted by certain covenants from its lenders. As part of the C&OP deal, ACCO will pay MWV a dividend of $460 million, which it says it will finance by debt. ACCO will also be refinancing its debt due to the C&OP transaction, an arrangement that comes with a hefty $120 million refinancing premium, so the new company is going to be carrying something in the region of $1.2 billion in debt on its balance sheet. CFO Neal Fenwick admitted that the refinancing deal was expensive, but pointed to the “enormous deleveraging” of the new business and a much healthier balance sheet overall.

OPI Magazine | December 2011 / January 2012

In fact, the net debt/adjusted EBITDA ratio of the new business is expected to be about x3.6 at closing and is projected to be under x3 by 2013. A key to that is the cash flow generation of the combined ACCO/C&OP. Estimated at $291 million (before synergies), that is currently around double that of ACCO’s $148 million today. So while the headline debt number is much higher, as long as the business can remain cash generative as projected then it should be able to pay down debt going forward – while benefitting from better lending terms at the same time. Apart from the debt issue, the GBC/ACCO merger also presented a number of integration headaches, leading to restructurings (and restructurings of restructurings) in many markets around the globe that took years to be fully completed. That shouldn’t be the case here. C&OP is only present in the US, Canada and Brazil and Bob Keller called it “the simplest acquisition we could have made” in terms of integration. Obviously there will be back-office, systems and operational synergies – estimated at $30 million per year, with $20 million of that achievable in the first two years – but Keller said that the whole of the C&OP management team led by Neil McLachlan would be moving over. The ACCO CEO also reconfirmed his own commitment to staying on to lead the new business.

Analysis | News

a ‘Reverse Morris Trust’ (RMT) transaction. To all intents and purposes, ACCO is acquiring C&OP even though MWV shareholders will own more than 50% of the new entity. This majority shareholding is simply to enable MWV to benefit from significant RMT tax breaks and was the reason that MWV approached ACCO about six months ago to see if a deal could be reached. The ‘new ACCO’ will retain the ACCO name, be run by the existing ACCO management team and continue to be headquartered in Lincolnshire, Illinois. MWV will have two representatives on the new board, but ACCO has told OPI that there are no other provisos or requirements regarding the management make-up or control of the new entity.

The arrangement The management teams of ACCO and C&OP met the day after the merger was announced for their first integration meeting. They looked at, among

other topics, how to organise the business units of the newly created business and how to handle product overlap, which is most noticeable in the dated products category. C&OP could feasibly just be integrated into the ACCO Americas business unit, but there may have to be a new focus along channel lines and a separate ACCO Brazil reporting unit. ACCO CEO Bob Keller had hinted during October’s third quarter conference call that the company could be in the market for acquisitions. Back then he said that expansion could be geographic, such as into

WHAT’S IN IT FOR ACCO? On paper, the MWV acquisition looks a good one for ACCO. It: • Creates the global number one branded OP reseller with proforma 2010 sales of over $2 billion • Gives ACCO a $200 million foothold in Brazil, doubles sales in Canada to $200 million and adds around $450 million to top-line sales in the US • Quadruples ACCO’s presence in the mass/drug-store channel and lessens dependence on the office supplies superstore channel • Gives ACCO a $300 million entry into the school products category • Leads to a portfolio where 80% of the brands hold number one or two positions in their categories • Is immediately accretive to net profit and significantly improves cash flow generation • Reduces ACCO’s debt/EBITDA ratio

said was a “transforming event” for ACCO.

OPI reported back in May that Avery’s Office Products division could be up for sale, and the current word on the street is there could be a tie-up with Esselte emerging markets, or could be into adjacent and existing product categories. Any acquisition, he added, would have to be conditional that it was accretive to earnings extremely quickly, and that it did not add to the company’s leverage. It was widely expected that this would translate into some tuck-in or smaller regional acquisitions, not a move for the $750 million C&OP business, which Keller

The financial markets certainly reacted favourably to the news, sending ACCO’s share price soaring by over 25% in the two days following the announcement. One interesting comment from Keller during the webcast that was held to present the deal was his belief that, going forward, there will be just one national brand in each category in the office products space. That was perhaps a shot over the bows of rival Esselte, which is estimated to have top-line sales of around $1

billion, about half of those of the new ACCO. Esselte has made a couple of high-profile acquisitions in the last couple of years with Rapid and Ampad. It may now need to do so again if it is to compete with the scale and breadth that ACCO now has, especially in the US. An obvious candidate for this is Avery Dennison, which has been struggling with declining sales in its office products division for several quarters now. Avery is also facing increasing competitive pressures from the likes of 3M. OPI reported back in May that Avery’s $800 million Office Products division could be up for sale, and the current word on the street from the US is that there could be a tie-up with Esselte. Given the ACCO/C&OP news, it could be supposed that this tie-up may now happen sooner rather than later.

w w w.opi.net | OPI Magazine

News | Analysis

Staples eyes International Headcount reductions in European retail after doubledigit same-store declines

headcount reductions in European retail was one of the key takeaways from Staples’ third quarter conference call in November as concerns over its International division prompted many questions from analysts. While Staples’ overall International sales declined by 7% in local currency terms during the third quarter, European retail saw a 12% like-for-like drop and only the 21 stores in Norway – a country bolstered by its oil economy – showed positive comps. The company didn’t provide specific plans about how it would affect a turnaround in European retail sales, but International President Mike Miles said that a 7% G&A headcount reduction had already taken place and that more reductions would be made in the fourth quarter. Staples began the year with 381 international stores, 332 of those in Europe. The current store count is 377, so there has not been a major closure programme. That could now be a possibility, with the Portuguese market – where there are around 30 stores – an obvious candidate given the economic conditions in that country, as well as the six stores in Belgium which are currently not profitable.

However, Miles reiterated Staples’ long-term commitment to the European retail channel which he described as profitable (except for Belgium), although he admitted that near-term growth was likely to be restricted to the mid-market and online channels. One issue that Miles said he had to contend with is European redundancy regulations and severance requirements, which could offset salary savings in the short-term. Taking retail out of the equation, the European results were solid enough. CEO Ron Sargent said that Contract channel results in Europe were in line with those being seen in the US, up by about 2% in local currencies.

Australia and China changes Turning to Staples’ other International division markets, former European supply chain VP Jo Verbeek was named President of Staples China during the third quarter. Verbeek’s appointment demonstrates the areas that Staples is focusing on as it looks to move its Chinese business into profitability, although losses are still narrowing. Achieving satisfactory gross margins is an issue for

OPI Magazine | December 2011 / January 2012

the Indian and Chinese markets. Staples is taking a long, hard look at the business model in those countries and is unlikely to ramp up investments until it finds the right ‘recipe’. Australia had a “weak” quarter with the double-digit sales declines sequentially worse than in the second quarter. Things were not helped by an SAP switchover which cost the business two days in lost sales. The experienced Jay Mutschler has been appointed to run the Australian/New Zealand operations, and will officially take over this month, replacing Paul Hitchcock.

Leader of the pack European retail and Australia aside, it was another solid quarter for Staples with profitability improving despite pressure on the top line. A number of initiatives in North America such as the expanded breakroom and facilities management category – now an $800 million business in the North American Delivery

Mike Miles

, TAX DEBATE Back in Europe, Staples revealed that it is in a contractual dispute with Lyreco over the v30 million ($40 million) that Lyreco received in relation to the Corporate Express acquisition in 2008. Lyreco received the v30 million, but is now claiming compensation for the income tax it incurred as a result of the payment. In its quarterly 10Q filing with the SEC, Staples said that there is a “reasonable possibility” that an arbitral tribunal could rule against the company, which would require it to pay Lyreco all or part of the claim. division – and the revamped Copy & Print centres are paying dividends. There are other programmes too, including mobile phone departments in around 450 stores, which put Staples ahead of its main rivals. However, given the continued economic headwinds and renewed uncertainty in Europe, the company lowered its full-year earnings outlook slightly, something which didn’t go down too well on Wall Street. Still, while Staples’ share price has fallen by around 11% between its release of its results on 14 November and this issue of OPI going to press, those of Office Depot and OfficeMax have dropped by 22% and 26% respectively, showing that, once again, the Framingham-based giant continues to be the most resilient of the power channel players in times of adversity.

Analysis | News

Italian resellers target private label Pricing and volume pressures accelerate own brand strategies

OPI

met with several of the leading resellers in the Italian market at last month’s Big Buyer show in Bologna. Given all the international concerns about Italy’s sovereign debt crisis, the recent change of Prime Minister and potential austerity measures, the mood in the reseller community was relatively upbeat. A general feeling was that it’s been a tough few years and it will be the same again in 2012, although there are growing concerns about worsening credit conditions and the risk of non-paying customers. There’s no doubt that the crisis has had an impact in both the B2B and consumer channels. Companies have been making staff reductions; unemployment in Italy is officially at 8.5% of the workforce, but some put the real figure several percentage points above that. Businesses are also making do with less, challenging the average office supplies spend of €300 ($400) a year per white collar worker, the benchmark market figure.

Lorenzo Rudella

One strategy that resellers have been using in order to offset declining sales and pricing pressures has been to develop their private brand offerings. Gifts and stationery retailer C’ART, for example, has doubled the ratio of its own brands to 30% of total sales in the last two years in its network of just over 100 stores. CEO Stefano di Veroli says that the market for luxury goods is relatively recession-proof and a new store format – STILE by C’ART – has been running successfully in the Italian capital Rome for the last couple of years. Currently, 50% of STILE’s turnover comes from the luxury writing instruments category, but the plan is to introduce more ranges of C’ART’s own high-end private ranges. Tests are taking place and a decision will be taken next summer whether to then roll out the new concept in other city and town centres. Expanding its private brand luxury lines is also a strategy of Italy’s number one office retailer Buffetti, which has 750 stores. The group has its own business bags Business Unit, Full Time, and so far about 100 stores have been fitted out with Full Time areas, stocking high-end leather goods aimed mainly at the female buyer. Furniture is another area where Buffetti sees

C’ART’s Stefano di Veroli says the market for luxury goods is relatively recession-proof

opportunities. An exclusive private label agreement with renowned German office chair manufacturer Wagner is already generating annual sales of over €1 million and special ‘furniture corners’ are being introduced in stores.

90% private label target While C’ART’s Stefano di Veroli says private brand sales of 30% is about the right figure for his chain, Villa’s target at Buffetti is a mind-blowing 90%. Today, 25% of Buffetti’s revenue comes from private label, but sales are up 28% so far in 2011. Villa says Buffetti achieved scores of over 90% in spontaneous brand recognition tests and that the name is associated with good quality. A pilot store in Turin to test this private label strategy was opened about 18 months ago. Villa says that performance has been benchmarked against five other stores opened at approximately the same time and the key metrics of sales, customer traffic, staff productivity and margins are all substantially better. In the non-retail dealer channel, private label has

“Our own private brands have traditionally been high-end and we needed a solution where we could be more price aggressive”

also been something of a buzzword. BPGI member In Ufficio – which has 21 members and end-user sales of over €110 million – has recently revamped the packaging of its In Linea brand and increased the range to over 400 products. This includes products in new categories such as jan/san, breakroom and safety and security as In Ufficio looks to lessen its dependence on traditional office categories. Like In Ufficio, contract stationer Karnak has been expanding its product offering, not only in adjacent categories such as safety and security and FM, but also in areas such as online training for SMBs. Karnak has teamed up with a local online provider to offer training in subjects as diverse as English language skills and health and safety. Karnak’s Purchasing Manager Lorenzo Rudella told OPI that membership of the Interaction alliance has had a favourable impact on purchasing terms with suppliers. It has also meant access to Interaction’s Q-Connect private brand and sales have grown to around €10 million in the first year. “Our own private brands have traditionally been high-end and we needed a solution where we could be more price aggressive,” said Rudella.

w w w.opi.net | OPI Magazine

News | Analysis

CoL raises record amount Left: Felicity Francis and her team at the top of England’s highest mountain, Scafell Pike

The annual Climb of Life took place in November, and fundraising beat expectations

Below: The OPI team with Climb of Life organiser Graeme Chapman

This

year’s total stands at £65,700 ($105,000), beating last year’s £65,300 despite what organiser Graeme Chapman, MBE, described as a difficult year. “I genuinely didn’t think it would be possible to have 16 growth years in a row while all world economies are struggling, but with a superbly loyal team and the generosity of customers and suppliers, it shows that nothing is impossible!” said Chapman. The event, named the Olympic Hi-Mountain Challenge, saw 12 teams walk the total distance of all the athletic events covered in the London 2012 Olympics in cold winter conditions. Many teams raised significant

sums and with pledges still to come in, the OPI team – comprising Steve and Kelly Hilleard, Janet Bell, Felicity Francis and India Pride – raised £18,000. OPI CEO Steve Hilleard said: “It is extremely rewarding to take part in raising money for such a great cause. We’d like to thank all our sponsors for their generosity in our second year taking part.” OPI Director Janet Bell said: “At the start of the day I couldn’t believe how far we were expected to walk. However, with plenty of encouragement from our fantastic team leaders we

Above: India Pride and Janet Bell (far right) with their team, photograph by team member Garry Mellor Right: This year’s efforts raised a record amount for the ICR

OPI Magazine | December 2011 / January 2012

made it over several peaks, through clouds of mist and several falls to complete the walk. “It was a tremendous sense of achievement to think that this effort on our part raised such a lot of money for a good cause.” Climb of Life’s partnership with global charity the ICR started five years ago. This year’s

fundraising efforts bring the total raised for the ICR to more than £300,000. With the ICR’s staff of 800 international scientists, the institute is the third largest of its kind in the world. Over the last ten years it has been the leading researcher exploring the causes of cancer and bringing new drugs to the market.

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News | And finally... tweet chat follow us on Twitter @opinews

@CalculatorGirl (CalculatorGirl) @OPInews thx for the great news! Loved ur article on Facebook in the October edition, very informative

750 million

@TheNextWeb (The Next Web) Apple to become largest PC vendor in 2012 when including iPad sales

The amount of sheets of Banner’s Closed Loop recycled paper sold so far.

@repforce (RepForce USA) @OPInews Nicely done rebranding! New logo looks good!

54%

@TerraCycle (TerraCycle) #EcoFact Of the 2.25 million tons of electronics (TVs, cell phones, computers, etc) retired in 2007, 82% were discarded, mostly to landfills @MBSDEVinc (MBS Dev, Inc) @OPInews like the new look! Happy 20th anniversary!

The percentage of market share that Android phones will have in Asia this year as the operating system’s dominance of the continent continues.

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£7bn

@Evo_Software (Evolution Software) @OPInews Love the new logo guys :) @nopanet (NOPA) Business Owner Survey Reveals Key Economic Recovery Trends in the US & Canada via @BusinessWire

The amount UK shoppers will spend online in December according to research group IMRG. Almost half of that figure will be spent during the first two weeks of the month.

Snap shot Faber-Castell gets creative A single line spiral drawing of Van Gogh’s Self-Portrait by Singapore-based illustrator Chan Hwee Chong, created using Faber-Castell’s PITT Artist pen. As part of an advertising campaign for the company, Chong recreated a number of iconic works of art using the spiral technique. Chong draws a continuous spiral line on a blank canvas. The same technique was used for a number of images including the Mona Lisa and Girl with a Pearl Earring.

OPI Magazine | December 2011 / January 2012

Comment Leading Italian retailer Buffetti confirmed to OPI its aim to achieve 90% of its sales from private brands. We asked some leading private label manufacturers for their views on this sector. We’ve continued to see growth in our private label business as consumers look for better value products. In the commercial channel, private label ranges are pretty well established, but we’re seeing more opportunities in retail. We’re seeing some significant growth with European retailers that like to have a nice display to enhance their own, already strong brands. In fact, even on the commercial side, there could be a bigger focus on retail-type packs. Stuart Seymour, European Sales Manager, Hopax The majority of resellers of any significant size have already turned to private label, and we’ve actually developed a low-cost-of-entry range of private label for smaller players, so it’s a phenomenon which is not going to go away. I think a trick that some of them miss is not having a premium brand alongside their own private labels, and then using the marketing and PR efforts of the brand owner to drive sales across a whole category. Ron Jakeman, Group Managing Director, HK Wentworth In response to the news: Michigan ignoring SMBs, says NOPA: Maybe NOPA should look in the mirror. Your organisation ignores smaller producers of goods the same way they are ignoring your members. Why are companies like Emerald Brand not accepted through your membership and supply channels, and you continue to support the largest producers like Georgia Pacific and K/Clark? Try supporting smaller national suppliers and maybe states will better recognise your commitments. Ralph, on opi.net

opi.net poll results Will office superstores have to downsize to survive?

Yes

89% 11%

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News | Green Matters

Do you have green news? Contact Saqib Shah saqib.shah@opi.net

Armor takes part in eco-label trial Nantes, France

Aftermarket imaging supplies vendor Armor has been chosen by the French government to take part in trials aimed at introducing new eco-labels on consumer products. A law passed in France in 2009 known as Grenelle II established the right of a consumer to have information on the environmental impact of a product so that he or she may make more sustainable choices when purchasing goods. A 2010 update to the law required a trial period to demonstrate the feasibility of environmental labelling based on a lifecycle assessment (LCA) approach. Armor was one of 168 companies selected for this trial and the only representative from the compatible printing consumables sector. The company has been working with specialist organisations on the relevant data to collect, the most appropriate assessment method and the calculations needed for LCA. Three models of cartridges were examined closely and a tool was created so that the same calculations could be applied to Armor’s full range of cartridges. Consumers now have two environmental indicators that appear on a printer cartridge in order to show the impact of printing 100 pages on both climate and natural resources. Armor shared its findings with the French Minister of Ecology and Sustainable Development last month, claiming that its products have a much lower impact on the environment than certain equivalent OEM cartridges.

OP dealer awarded top German eco prize Osnabrück, Germany

Jurgen Schmidt, Founder and CEO of German OP dealer memo AG, has been awarded the German Environmental Award, worth €500,000 ($683,000). Memo AG produces environmentally friendly items, including paper and office

Green News in Brief Waitrose to stock Remarkable stationery UK-based recycled stationery manufacturer Remarkable has won a contract with supermarket chain Waitrose. As part of the contract Waitrose will stock Remarkable’s full range of products across its 240 stores in the UK.

Clover subsidiary wins award Clover Technology’s subsidiary, The Wireless Source, has won Automation Alley’s Global Trader of the Year award. The Wireless Source

OPI Magazine | December 2011 / January 2012

furniture, from ecologically sustainable materials. Schmidt shared the prize with Joachim Alfred Wünning and his son Joachim Georg Wünning from WS ärmeprozesstechnik. Together they created a new industrial combustion technology called FLOX (flameless oxidation), which can use 20-50% less energy compared to the traditional furnaces used in high-temperature processes. The German Environmental Award has been handed out to individuals who “demonstrate the necessity of finding new ways to be energy efficient” since 1993.

is headquartered in Bloomfield Hills, Michigan, and offers private label solutions for in-store and online trade-in and recycling programmes. Its services include the recycling of electronic items such as cell phones, laptops, GPS devices, e-readers, digital cameras and MP3 players.

HP and Depot partner in Thailand HP has joined forces with Office Depot in Thailand to launch the ‘Office Go Green’ environmental programme.

As part of the initiative, a number of activities are being held at Depot stores throughout the country to educate customers on how to reduce energy consumption and cut down on consumables use. A recycling programme is also currently taking place at Depot stores nationwide. This intiative involves HP toner supplies, which customers can return to the stores free of charge. These products are then processed and recycled by HP.

Green Matters | News

Depot ranks highly in competition Boca Raton (FL), USA

Two Office Depot outlets made the top ten on the Energy Star National Buildings competition. The Office Depot branches in Plano (TX) and Raleigh (NC) were among the buildings that reduced their energy consumption the most during the 12-month competition period. The two stores cut their energy use by 34.1% and 33.1% respectively. The overall winner was the University of Central

Florida parking garage, with a total saving of 63.2%. A total of 245 teams representing different buildings participated in the competition. “We applaud the Energy Star programme for hosting these types of positive competitions that bring fun into environmental initiatives,” said Yalmaz Siddiqui, Senior Director for Environmental Strategy at Office Depot. In other Depot news, the retailer has been ranked

among the best green companies in the US by Newsweek. As part of its annual Greenest Companies list, Newsweek chose the office supplies retailer as the eighth best company in the US segment with a green rating of 73.6%. Depot was the lone US retailer on a list crowded with technology companies. According to Newsweek, Depot’s notable initiatives

The low carbon office of the future London, UK

As part of Workplace Week in the UK, the ‘Life, Work and Place in 2020: ACTION NOW’ convention saw a number of speakers discuss the changing nature of the workplace in regard to sustainability, technology and working practices. Katharine Deas of the Low Carbon Workplace was one of the keynote speakers at the event. Her seminar entitled ‘Low carbon workplaces in 2020: Important or irrelevant?’ explored the environmental agendas that will shape businesses in the future. Deas also presented findings from a survey conducted by her company with the support of the British Institute of Facilities Management (BIFM) The survey asked a number of facilities managers how they believed workplaces would change in regards to sustainability. The most popular reply (39%) was

that respondents envisaged more carbon-related roles developing, if not already in place, by 2020. These will include such positions as energy and carbon managers. Additionally, a widespread belief (55%) among facilities managers is that by 2020 employers will operate a ‘per person carbon’ measure. As a result, the carbon footprint of individual employees will be taken into account. Deas concluded the seminar by stating: “In the future, occupier behaviour and technology will need to be balanced in order to maximise energy efficiency. This requires ongoing commitment.” The ‘Life, Work and Place in 2020: ACTION NOW’ convention was chaired by Ian Ryder of the BCS The Chartered Institute for IT and Ian Fielder, CEO of BIFM. Workplace Week took place in the UK during 7-11 November with 100% of the proceeds from its associated events going to the Children in Need charity.

include a $20 million investment in energy efficiency, creating an emissions reduction of more than 10% in a year. IBM was ranked in first place on the US companies list, with insurance firm Munich RE being crowned the global number one.

International Paper sets sustainability targets Brussels, Belgium

Paper and packaging manufacturer International Paper has announced that it plans to use 15% less energy by 2020. As a result, the company claims it will be able to reduce its greenhouse gas emissions by 20%. International Paper says that these reductions will be achieved through manufacturing efficiencies and the research and implementation of new technologies. “The goals of improving energy efficiency and reducing greenhouse gas emissions go hand-in-hand,” said Greg Gibson, VP Sustainability EMEA. “In the last five years we have been able to reduce our global energy usage by 12% and we feel confident that we can improve upon this performance.” International Paper added that further environmental targets would be announced over the coming months. w w w.opi.net | OPI Magazine

Big Interview | Ravi Saligram

With the ball in his court

Amazingly, OPI has never before conducted a Big Interview with a serving OfficeMax CEO. So when the opportunity arose to speak with current incumbent Ravi Saligram we jumped at the chance

Interview by Andy Braithwaite andy.braithwaite@opi.net

few eyebrows were raised in October 2010 when Ravi Saligram was named to succeed retiring OfficeMax CEO Sam Duncan. The market had been expecting a seasoned CEO with a strong B2B background, but the ‘Max board turned to the 54-year-old International President of food services giant Aramark. India-born Saligram has certainly had his hands full for the last 12 months, making a number of key organisational and senior management changes. Almost a year after taking over, he presented a new five-year strategic plan to analysts in New York as the company looks to offset secular declines in its traditional markets. OPI spoke to Saligram just a few days after the New York conference. OPI: You’ve been in the hot seat a year now. What are your overall impressions of your 12 months in charge at OfficeMax? Ravi Saligram: The year has gone by very quickly. It’s been an exciting ride and I can promise you I’ve not been bored. It’s had its challenges, but I’m feeling very good as I believe we’ve got a very clear strategic direction. There is a sense of excitement and

OPI Magazine | December 2011 / January 2012

we’re happy to turn now to execution because ultimately that’s the name of the game. OPI: How did you assess the company? RS: I’d done some due diligence before I joined, but when I started things were slightly different. We’d had a relatively decent year and the economy had started picking up, but when I joined we began seeing the first signs of some issues in Q4. Coming in, I thought the journey would be about transforming the company, but as I sunk my teeth in it became clear we had to continue to turn it around. I reviewed our previous five-year plan and a lot of assumptions had to be revisited. I decided to put in place a journey to develop and evolve the strategic direction, and brought in a consulting firm because there were a lot of insights and facts that we needed to pin down. That proved to be a very good idea because, ultimately, what you get out of consultants is only as good as the direction, input and engagement of the team, which was certainly highly engaged. We got a terrific diagnostic about our strengths, capability gaps and how we chart out a direction. OPI: Hadn’t the consultants been in ten months before for the previous plan? RS: I think that they’d been used in a different way. I was really looking for a complete and overall diagnostic and a 360°, objective view of the company and customer base.

Ravi Saligram | Big Interview

OPI: Any sense of disappointment on your part when you realised you had to go back to turnaround mode? RS: No, because I didn’t have preconceived notions on what the strategy ought to be. I was delighted that my team was quite candid and we started looking at it. The big issue really was the economy. One of the fundamental assumptions that we had worked on was that the economy would rebound, but conditions have been tough. So it was more about pragmatism and readjusting the lens, looking for opportunities. We started looking at our subsidiaries and customer service centres and took a series of cost actions. Probably the most specific change was that there was the perception within the company – true or false – of a retail bias in terms of resources. I’m not a retail guy, I’m just a customer guy, and I looked at various customer segments to see which represented our opportunities. We decided we needed to put a bit more emphasis on contract, and I think that this has borne fruit. Our retention today is at an all-time high at 92.5% and our net new business has been positive for two quarters in a row.

w w w.opi.net | OPI Magazine

Photographs by Colin Lyons Photography

OPI: Looking at the new strategic plan, it does appear to be very similar to the previous one. RS: Well, parts of it are because we’re building on what was done before. That’s a good thing because you don’t want pride of authorship to come in the way of good ideas and doing the right thing for the business. Having said that, I would say that the previous plan was probably more of a financial nature. This is more of a strategic plan that has the underpinning of a very solid diagnostic. We’re taking into account that we will probably not get a lot of tailwind from the economy so will have to more vigorously prioritise growth initiatives. I believe that our plan is also well informed on how we will use each channel to go after different customer segments. For example, our whole store-in-a-store retail effort is aimed squarely at the individual consumer who’s buying on impulse in the drug and mass channels, while in our retail stores most customers are micro-businesses and some home offices. I believe the integration of the channels and driving multi-channel further

Big Interview | Ravi Saligram across the enterprise will also be a positive thing. Finally, we have created a different organisational model based on individual business championship in each channel. OPI: What does that mean exactly? RS: Well, if you take retail as an example we’ve brought in Michael Lewis as President with full P&L responsibility for that channel. We made a similar appointment in contract but Mike MacDonald unfortunately had to leave for family reasons. SMB, which we’ve said is a standalone unit, has Steve Mongeau as its champion. Reuben Slone is heading print solutions and we’ve appointed Jim Barr to drive our digital strategy. When you have people with expertise focused on specific areas, you achieve success. I’ve used the model in the past to drive growth efforts. OPI: So have you got the team now that you need to take the business forward? RS: More or less, yes. Clearly, filling the Contract President role is important and we’ll get there soon. We are going to recruit a new Chief Merchandising Officer and I think with that we will be in pretty good shape. I’m proud that our company has welcomed in a number of really sharp, top-notch people who are having an impact. OPI: Looking at the US industry generally, there are three main players in the OP space and you’re number three. Analysts say there should be two or even just one and they’re asking for consolidation. To what extent do you agree and what does that mean for OfficeMax? RS: Overall, clearly there are concerns about store saturation; industry store productivity has gone down. At the investor meeting I said that in real dollars retail store productivity has declined 31% from 2002 to 2010. So that creates a lot of speculation and commentary. OPI: Is the issue purely on the retail side? RS: Everything that we’ve heard is that the focus seems to be more on that space and we’ve taken a number of steps to address this. Since 2005 we’ve closed 195 stores and we’ve reduced our square footage by a net 1.3 million. I think the industry suffers from some of the superstores being too big. This is one of the reasons we looked at various strategic options. On the store spacing front we announced a mobile device pilot offering with Radio Shack. I would also say that while we’re number three, I’m

OPI Magazine | December 2011 / January 2012

very proud of our team and that we’ve been profitable in the last five years under very difficult circumstances. We remain profitable, which is a great testimony to our teams and ultimately this is all about whether we can create shareholder value long term. OPI: Is there any pressure from the main shareholders, at least in the short term, to get the stock value up? RS: We conducted a survey, and our findings indicate that most investors believe we have a clear direction. The message for them is we cannot influence the stock price, nor can anyone; we can influence our performance and that’s what we’re laser-focused on. It will take some time; we admit we have some capability gaps and we have to improve on execution, but I believe we have the right team and strategy in place. OPI: What would you say are the main capability gaps that you need to focus on? RS: There’re a few. We are now proactively tackling the issue of space in our stores. A second gap has been on the contract side – the website that we use to connect with our contract customers needed improvement so we’re taking the necessary steps.

Ravi Saligram | Big Interview In terms of stores, I think we’ve done a very good job of running clean, efficient store operations. We need to get better at selling in stores; we have very good associates who are very helpful to customers, but we want a higher level of expertise that converts those interactions into sales. We’re putting in more sales consultants who are more tech-savvy because we haven’t focused much on this area. OPI: It sounds as though some of these initiatives are going to take time. RS: When we articulated the whole strategy I talked about three phases: 2012 being a foundation year where we improve on what we’ve talked about; beginning to gain momentum from 2013 to 2015; by 2016 we aspire to be an enterprise that is beginning to deliver sustainable, profitable growth. We believe that this is a realistic outlook. OPI: How dependent is your growth plan on some form of economic recovery? RS: We’ve used the best forecasts that are available and we’re not expecting a huge robust recovery, nor are we assuming a double-dip recession. The key is that we’ll continue to focus more and more on what we can control as opposed to being totally at the mercy of the vagaries of the economy. OPI: Would you agree that OfficeMax seems a bit behind its main competitors in terms of some initiatives? Take jan/ san, technology, website capabilities or the SMB focus; Staples and, to an extent, Depot would appear to have a headstart on you. RS: It depends on the initiative. The key fact is that we’ve been profitable. Having said that, would it have been better if we had been further along on some growth segments such as jan/san? Yes, but I am confident that we now have the right teams, tools, directions and tactics in place. The important thing is where we go forward from here. In terms of being behind, I can cite examples on the whole

RÉSUMÉ Full name: Ravichandra K Saligram Age: 55 Born: India, naturalised US citizen Education: BSc in Electrical Engineering from Bangalore University and MBA from University of Michigan Experience: 2003-2010: President International at Aramark 1994-2002: InterContinental Hotels Group, including a spell as Chief Marketing Officer & Managing Director, Global Strategy Began career in advertising with Leo Burnett agency in Chicago

gross margin side where the team has done a terrific job on private brands – our private brand sales penetration is up to 28% which has been one of the big engines helping us despite the fact that we lost a considerable amount of revenues during the recession. We’ve actually been openly self-critical. I don’t think any of our competitors has ever put out as comprehensive a strategic plan as we have. But we’ve committed resources to where we feel we have gaps and we’re gaining traction in a number of areas. At the end of the day we shouldn’t forget that OfficeMax in its present form is a very new company. It is the result of a major merger between two companies and then the recession hit, so I would say the team has done the best it could under the circumstances. OPI: Looking at an individual segment, what is your strategy in the SMB space? RS: In the past there was a tendency to try to restructure the independent businesses we acquired along the lines of our large contract operations. I think this may have caused them to lose the essence and spirit of what they were all about. So now we’re really building a group that thinks small. The compensation systems are different and the type of individuals we’re hiring as salespeople, especially with the greater focus on hunters, is quite different. We’re taking a very methodical rolled-out, as opposed to a national, approach because ultimately SMB is a high-touch local game, so you’ve got to do it market by market. OPI: Which markets have you focused on? RS: At this point we’ve not publicly disclosed those. OPI: Are they traditionally areas where you have a stronger retail presence, meaning you can develop a true multi-channel approach? RS: We looked at a number of criteria – the strength of retail was one, but we also studied things like where our delivery routes could be maximised. We were very scientific about it. We’ll get up to about 70 salespeople fully dedicated just to SMB and we’re going to move the telesales group under Steve Mongeau so that they’ll work in tandem. Then we’re looking at which product assortments are right for the SMB audience. That’s how we’re going about things. OPI: You have alluded to some possible tuck-in acquisitions; would this be w w w.opi.net | OPI Magazine

Big Interview | Ravi Saligram targeting successful local dealers to use as a springboard into certain markets? RS: Yes, I think that describes it well. It’s a way of jump-starting growth and providing some platforms. We’re currently doing the work to get a sense of where the right opportunities are.

OPI: Some of my sources in the US have said that you’re being very aggressive at the moment in some of your pricing… RS: People draw out the price card and routinely allege that the other guy’s more aggressive. To me the key is that we are very focused on customer margins. I brought in one of the top pricing guys in the country Rajeeve Kaul and we’re very focused on making sure we’re not only winning good business, but that there is opportunity to build up and migrate margins and that it’s a win-win for both the customer and ourselves. You can’t run a business on just opportunistic pricing, that’s never ever sustainable.

OPI: How do you see the larger contract business developing? RS: The key is to continue to win new business, not only in the US but in Canada, New Zealand, Australia and Mexico. We’re encouraged by the success we’ve had in the last two quarters. OPI: Sequentially there does seem to have been an improvement. How important are the healthcare and the education verticals in all this? RS: They’re very important. There are a whole range of issues about hospital productivity in the US at the moment. We don’t want to think of ourselves anymore as in the office products business, but more in the productivity business. We’re all about workplace services, products and solutions that help our

Ultimately SMB is a high-touch local game, so you’ve got to do it market by market customers work better. That’s something that has resonated in the healthcare sector and we’ve had a number of important wins. The same with education; that’s a really vibrant business model with a lot of opportunity. OPI: What is your view of the state and local government space at the moment? RS: We will continue to work on this. On the federal side, in particular, we’ve not been particularly big and we had some issues with a major account, the US Postal Service, which has gone through its own set of challenges. So I think we see opportunities for us and the state and local government as we go forward. OPI: You mentioned hunters and winning new business. How do you manage the price versus the margin issue? RS: We incentivise our sales teams both on margins and revenues as they are equally important. Sales without margins is not a viable way to run a business. Having said that, we run our account as a portfolio at different stages and levels of competitive pricing. One has to be very sophisticated about go-to-market pricing. It’s not about winning accounts at any cost.

OPI Magazine | December 2011 / January 2012

OfficeMax • Founded: 1988 • Went public: 1995 • Current business: Founded when Boise Cascade acquired OfficeMax in 2003 • 2010 sales: $7.5 billion • Employees: c. 30,000 • No. stores in the US and Mexico: c. 1,000 • Also operates in: Canada, Australia, New Zealand

OPI: You’ve mentioned on several quarterly calls that the East has been a problematic region for you. What was the problem and how has that panned out? RS: That is less and less of an issue as time goes by. When I first started out at ‘Max we had certain management issues; we probably didn’t have the right leadership and the right team. In 2010 we’d lost some major accounts there, so we had a few executional issues too. Every month we’re continuing to make progress and I think the worst is behind us. OPI: Turning to international, you’ve said you’re looking to divest the Croxley business in New Zealand. What does that represent for your international sales? RS: We’ve not disclosed that in terms of specific numbers. It’s an extremely well-managed company: a great team, profitable, a good track record of performance and a very fine reputation. It’s a wholesale business, not directly what we do and one part of our strategy process was to look at non-core assets. Croxley came to the top of the list so we have started to evaluate the divestiture. OPI: You’ve committed to your Australian and New Zealand contract businesses, but they do seem out on a limb when you look at a global map of OfficeMax’s operations. Why don’t you just look to sell them? RS: Well, it’s a fair comment that it is geographically quite far. But in 2010 our Australia, New Zealand and Canada businesses together represented $1.15 billion; that is slightly more than 15% of our company revenues and they’re good, profitable businesses. There’s a lot of synergy between what we do here and what they do there, they have very much the OfficeMax DNA; they learn from us, we learn from them and today the geographic dispersion is less

Big Interview | Ravi Saligram of an issue. We have a strong leadership position in New Zealand; we’re number one in that marketplace and there’s opportunity in Australia. We believe that we can continue to optimise their performance to the extent that they can drive shareholder value. If, at a later date, they don’t meet expectations then we’ll revisit that. OPI: You could return some money immediately to shareholders through a sale or invest the proceeds into speeding up some of the initiatives in the US. RS: Fair enough, but it’s a good business, has some good trajectories and is very much part of the plan. If that changes down the road… OPI: Let’s look at partnerships. The Radio Shack agreement on the mobile side is in pilot phase at the moment in the San Francisco area. How does this model work in terms of profitability for OfficeMax? RS: Obviously, the arrangement between Radio Shack and ourselves is confidential, but suffice to say that both sides looked at the economics and we hope that it will be a win-win for both us. And to me the strategic idea here is that of two strong brands coming together and helping our store become more of a destination. They bring expertise in mobile devices, which we really don’t have. Putting in Radio Shack allows us to complete the whole concept of a technology section. But another aspect is to leverage strategic relationships and alliances so that there’s not this view of ‘not invented here’. I think one of the keys for us is how we capitalise on our size. How do we create compelling partnerships where one plus one equals three? The other alliance, which is on the contract side, is with Lyreco and that’s a very good relationship. OPI: What does that Lyreco agreement generate in terms of aggregate revenue or the number of contracts involved? RS: I can’t give specifics on the revenue, but I can say that given we both renewed it and renewed it with gusto, both sides are very happy with the arrangement. We have a lot of admiration for Lyreco and our geographies and DNAs complement each other. They’ve brought us a lot of customers and we’ve brought them a lot, so it works well. OPI: You made the point at the Investor Day that there’s no geographical expansion on the horizon. Why did you refer to that specifically? Was it anything to do with your relationship with Lyreco?

OPI Magazine | December 2011 / January 2012

The most specific change was that there was the perception within the company – true or false – of a retail bias in terms of resources RS: We don’t normally comment on those sorts of issues, but I’ll say what I meant by the geography issue. Because of my global background, I had questions from analysts and investors as to whether I was going to take the company on a massive expansion geographically. I wanted to just be clear that, at least in the near term, we are not planning to enter new countries. I think there are plenty of opportunities in the geographies we’re in. OPI: Any closing remarks? RS: People always refer to our status as the number three player, but this industry is far bigger than the office superstore channel. It’s a $230 billion sector and there are a lot of opportunities. There’s a lot of fragmentation, plenty of customer segments and lots of channels. We’re intent on becoming an integrated brand that synthesises a channel view and a customer segment view and really redefines itself as a company in the productivity business. We are very focused on are our execution and innovation. We have got to clearly articulated the strategy, we have a good team and I’m confident of success and that we’ll create shareholder value. We’re not cocky, but people tend to underestimate us. Ultimately, though, I hope that actions will indeed speak louder than words.

Additional content The extended version of this article can be found at www.opi. net/BigInterview

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Hot Topic | Eurozone

Europe

Public debt as a percentage of GDP in 2010 in 2000

on its head

100% 10%

As European markets falter, crumble and raise their hands in desperation, the OP industry ploughs on; the crisis’ impact, however, will be long term, creating new

79.9%

business models and routes to market

41%

by Felicity Francis felicity.francis@opi.net

The

sovereign debt crisis in Europe is a mutating beast, and a hard subject to pin down. Governments and prime ministers were falling all around Europe while this article was being written, and markets were going further into turmoil as a result of European, and US, instability. The most recent news was that German Chancellor Angela Merkel had ruled out a bailout from the European Central Bank. By the time you read this, Greece might have pulled out of the euro, Italy might be calling for a bailout and the UK might have been further ousted from discussions – at the extreme, talks about relinquishing the euro might have begun. The indirect impact all this is having on the office products industry can already be felt by the heightening of the pressure that has been present for some years. Staples’ third quarter results highlighted the big box’s struggle in Europe and the effect of government austerity measures and the tightened belts of banks are taking their toll. As an industry totally reliant on end-users having money to spend, and enough money to function, it will surely experience the ongoing effects of the uncertainty keenly going forward. Some predictions include an entirely new way of doing business. But it might not all be bad.

The current landscape “I don’t think many of us realised, prior to about two years ago, just what a stable environment we were in,” says Andrea Davis, President of Fellowes Europe. The OP industry had seen relative stability and growth for years; there was money to spend and it was a lucrative business

OPI Magazine | December 2011 / January 2012

94.9% 37.8%

107.9%

82.3% 93.3%

57.3%

48.5% 61% 59.3%

96.2%

Eurozone | Hot Topic

48.3% 43.8%

53.9% 39.7% 52.4% 43.7%

62.9%

83.2% 54.9% 36.8%

53.8% 59.7%

37.6% 18.5%

50.3% 41%

82.3%

71.8% 59.7%

54.9%

144.9%

103.4%

109.2%

118.4%

to be in. That’s not to say it’s not the case now – many people are still making money – but the world of offices is changing rapidly in the current environment. Growth is going to have to come from a new area. Tom Schinkel of Thomas Schinkel and Associates says: “One thing that is clear is that the growth of the financial services industry both in New York and London, and in many financial capitals of the world, has been very beneficial to the office products industry. And I think we need to be realistic about the notion that the growth it has provided is no longer the case. That’s a long-term condition that we have to live with.” However, Harald Strom, Director of Swedish firm Nordea Corporate Finance, points out that the effect of the changing financial services sector will have a more profound effect on the UK than the rest of Europe. “The financial services industry is an important part of the UK economy, but in continental Europe, while still important, it doesn’t have the same weight,” he says. “If you look at Germany, corporates such as Siemens or Bayer are big office products consumers. I think that we have a general concern about the debt crisis; is this going to prolong the economic crisis?” Different countries are experiencing the economic chaos differently. According to Peter Killian, Sales and Business Development Manager at Irish dealer Codex Office Products, the recent commotion only continues what has been years of turmoil. “The office products trade is down 30-40% on what it was two years ago; its carnage. It’s taken an awful long time to reach the bottom, and although we’re bumping along the bottom ok now, it’s a difficult place to survive. Banks are withdrawing credit and seven businesses a week are going under in Ireland – with an economy our size that’s quite a lot.” Codex, however, has been doing pretty well. The dealer was fortunate to secure a government contract just before business started to plummet. Killian does believe that government austerity is taking its toll on OP, however. w w w.opi.net | OPI Magazine

Hot Topic | Eurozone He says: “Austerity measures are in place and pressure is coming in from every government body to buy from one central point. They’ve taken a leaf out of the commercial sector and are renegotiating contracts left, right and centre, telling suppliers to reduce costs by 7-8% or they’ll lose business.” In Italy the story is much the same. “We are selling office products to a business world that’s changed,” says Francesco Villa, General Manager of Italian chain Gruppo Buffetti. “White collar employment has been left at home, companies are reducing in size; this is all having a direct impact on us.” While no OP executive in Greece wanted to speak about the crisis – which is understandable given the question marks that surround the country – others in the industry told OPI that companies such as Plaisio are having to ask employees to work 12-hour days at a minimum if they are to stay afloat. It’s working, but it’s not easy. A common problem in many countries has been the difficulty of getting credit. The Doing Business Project scores 187 economies in a number of areas with 1 indicating easy credit availability. According to the ranking, getting credit in Greece scored 75 in 2011 but will score 78 in 2012. The UK scored 1 (which many will disagree with), Germany scored 21 moving to 24 in 2012, while Spain scored 45 moving to 48. However, all this could be thrown in the air if no agreement is reached regarding a European bailout. “The difficulty of getting loans has had an indirect effect on customers, but has also made it hard for the OP industry itself to grow,” says Schinkel. “Even manufacturers with a strong export record have had real difficulty over the last couple of years getting funding for their growth.”

A model that can cope Across the world, a significant challenge of the last few months, if not longer, has been fluctuating currencies. Stephane Hamelin, President of France-based manufacturer Hamelin, says:

French President Nicolas Sarkozy and German Chancellor Angela Merkel are determined to defend the euro

“The currency crisis is creating quick changes in exchange rates, so it has become very difficult to make price adjustments. This affects margins significantly.” This, on top of other challenges such as fluctuating customer demand, means that office products businesses of all channels need to be looking internally. Fellowes’ Davis says: “It’s all about managing through instability. This is quite a learning process and I don’t think it’s materially different for manufacturers or resellers. More risk management needs to be built into the system, whether that’s when you’re pitching to resellers or when managing the whole supply chain back. The crisis is going to hit you whether it’s on exchange rates, commodity costs or demand; it’s just a lot more volatile.” Schinkel has a similar view, emphasising that businesses need to focus on creating a business model that can function with less demand or money. They need to manage working capital more

OPI Magazine | December 2011 / January 2012

efficiently, evaluate pricing more closely and ensure that internal business systems are up to scratch. “As a result of the crisis, leaders of businesses are forced to take a very hard look at how they function, what activities they engage in, how they measure these activities and how they make sure they’re profitable,” says Schinkel. “They need to set benchmarks and limits to what they can do, and do a much better job of what they are good at.” Some OP businesses might find it necessary to change their model completely. For example, the rush to offer end-users next-day, or same-day, delivery might be over; this is costly for all involved and is it really necessary? On the other hand, it could become even more necessary if a business is to remain competitive. And does a dealer really need to offer absolutely every stapler that’s on the market? Surely stocking just one brand is more cost-effective. It boils down to what the target market is, and one company that

Eurozone | Hot Topic “It’s all about managing through instability. This is quite a learning process and I don’t think it’s materially different for manufacturers or resellers”

Andrea Davis

has analysed its market very specifically is Gruppo Buffetti. “Buffetti has decided to specialise itself,” says Buffetti’s Villa. “In the future we won’t be able to afford to offer everything to everybody. Take the big giants – they are active in all channels and aim to have all company profiles in their pockets. This won’t be the case in the future. We are defining, very precisely, our target: the SOHO market.”

Villa believes the SOHO market is growing, and not just in Italy, as increased unemployment means that more entrepreneurs are setting up small businesses. He has decided to target this market through shops and the internet only, as he believes delivery is less important and less cost-effective for these customers. Buffetti has also taken the perhaps risky decision of not stocking the lowest-priced goods. “There is a danger of people wanting low-priced goods in this economy,” says Villa. “But if you take a small company, the expenditure on office supplies is less important compared to a medium-sized company where a buyer has to negotiate with a manager and the focus is on saving money. The SOHO market buys fewer products so is willing to spend a little more.” This strategy might just pay off if Villa’s predictions of a growing SOHO market come to fruition. Small businesses have long been the real powerhouse in Italy and this could increase if the tax reforms and political overhaul that are currently being planned come into effect. And we could see a step-change in the way OP dealers target their customers if this pans out across Europe. Staples’ President of Europe Rob Vale sees customers already changing the way they buy products. He sees larger companies pushing buyers to do four things: reduce consumption, be more careful, buy lower-cost products – or “beat up the supplier to lower the costs” – and buy off call lists. He says: “They are pushed not

A possible future Harald Strom says: “The crisis is going to be deeper in certain countries than others. The austerity packages like those being imposed on Greece will probably also happen in Italy, Spain and Ireland and many Mediterranean countries. If so, this could cause higher white collar unemployment, and I think we’re going to see the polorisation in growth levels between northern and southern Europe become even more pronounced. “If you look across the globe at which countries have AAA ratings today, there are only about 11 or 13 countries left, such as Australia, a number of tax havens and the Nordic countries. The countries that have stronger public finances are in the best position to pursue a sort of Keynesian economic policy to stimulate the economy when overall demand is going down. “So there may be a less pronounced dip in white collar employment in the north, and the office products market will gain importance modestly. But of course northern Europe is a very small market compared to Germany, France and the UK, for example.”

to buy other items in catalogues. A company that has negotiated prices on 300 or 600 items will know that’s where they’ve got the best prices.” However, while Villa believes stocking fewer products might be the answer, Vale disagrees. “I’m not sure [stocking fewer products] is compatible with what’s happening in this day and age,” he says. “We’re all aware we have access to more and more products. There’s far greater choice and spending is spread over a far greater range of products. But you do have the finance manager pushing office workers to concentrate which products are used, so there are contrarian activities going on.”

Onshoring Speaking to OP manufacturers and resellers across Europe, the topic of ‘onshoring’ is circulating – bringing manufacturing back to a European base. Many factories have moved overseas in the last few years to cheaper labour costs in countries such as China and India, but this, like everything, is no longer a clear-cut benefit. Wages in China are rising and with the cost of fuel escalating, transporting goods back to a European end-user is becoming costly. Hamelin says: “We have not moved any production to Asia and two years ago we wondered if this was right. Now we are sure we made the right decision. Production and material costs in China are rising rapidly and this situation will be worse in a few years. Of course the squeeze is mainly due to currency, but we believe it is better to keep manufacturing in Europe.” Schinkel is aware of many manufacturers looking to move production back to Eastern Europe, to countries such as Romania, for example. There are also suggestions that product quality will be easier to maintain closer to home. “Bringing back production to Europe has been a topic for the last couple of years,” says HSM’s Head of Marketing Angelika Lange. “Many manufacturers decided to transfer production to Europe due to quality problems.” Vendors can respond more effectively to now-variable w w w.opi.net | OPI Magazine

Hot Topic | Eurozone demand if delivery can be fulfilled more quickly. Says Schinkel: “There are tremendous opportunities for what I call network manufacturing – bringing manufacturing much closer to the point of consumption in cooperation with distribution channels. “Manufacturers can therefore produce in smaller quantities with local and regional, rather than global, supply chains.” Vale believes this trend will be more of an “evolution rather than a revolution” while Davis is less sure altogether that the trend for onshoring is quite upon us. As she says, there is probably not a manufacturer out there that hasn’t considered a move back to Europe and more of a just-in-time delivery model, but the problem lies in the ability to make the necessary investments in Europe. She says: “It’s too early to see the impact of the crisis on a macro-level, but we are seeing containers reducing coming out of China. I think we’re all thinking in those terms but putting down a large-scale investment in Europe is probably too high risk; the needle probably hasn’t tipped far enough yet.” A build-up of stock is becoming an increasing problem. If a public company has a quarterly target it may just turn off the tap during the last month of the quarter; where does this leave the supplier? A warehouse full of stock and a customer base with no money is not a good combination, and prices drop as businesses try to destock more actively to reach cash-generation targets. At the end of this, it’s margins that suffer.

Opportunities Let’s look on the bright side for a moment. While some suffer in a crisis, savvy organisations can prosper. As Schinkel says: “I think there are

Francesco Villa

“Take the big giants – they are active in all channels and aim to have all company profiles in their pockets. This won’t be the case in the future” tremendous opportunities for people who are flexible and capable of entrepreneurially thinking differently about making and reselling products.” Buffetti is one example of a company looking to work with the situation at hand, and there is talk that it could be the hour of the independents in Europe. Killian from dealer Codex says: “Running a big box is like driving Titanic when it comes to reacting to change. Independent dealers can change quickly and react, which is certainly a positive.” While it might take months or years for one of the big boxes to change internal processes, an independent dealer can do this relatively quickly. Hedera in The Netherlands is one such example. It has extremely strong internal processes that allow it to react to change, and has recently brought out a new web store to further boost its progress. Managing Director Philip Becker says: “Our new website allows us to cope with cross-selling better than in the past. We’ve increased turnover this way – we can monitor activity and make an offer to a customer based on what they don’t buy.” This type of tailored service and marketing isn’t as easy to do for a big box. This may already be taking its toll; Staples’ overall International sales for the third quarter declined by 7% in local currency terms while European retail saw a 12% like-for-like drop. International President Mike Miles announced more headcount reductions in Europe, and while store count hasn’t significantly

OPI Magazine | December 2011 / January 2012

reduced, this may change in the coming year. “There’re certainly some challenges around our International division and where we’re really struggling is retail,” says Vale. When asked if Staples is acting soon to close stores, he adds: “No, we’re not. As leases come to an end on an ongoing basis we’ll ask ourselves if it’s a store we want to continue with, but other than that we have no additional plans.” Staples also believes – contrary to Villa’s target of the SOHO customer who may spend a little more – that its ability to offer lower-priced products will continue to appeal to customers. Vale says: “We’re all in the same boat, and whether you are a Staples or a small dealer you have to present value to your customer. Price is obviously a critical element, so we have to help the customer to find ways to save money and still get a product that does the job. “Where we can help is that we have a very good range of Staples’ own brand products and it’s no surprise that that’s a growing area of our portfolio.”

All together now Thinking positively, Fellowes’ Davis believes there are still some possible growth areas. She cites the ‘green’ trend as one that hasn’t gone away, despite a renewed focus on price, and that customers are still willing to pay for real innovation in products. So there are glimmers of hope, certainly for those willing to adapt and innovate. Many executives are calling for the various channels to learn to better work together and reduce costs this way. As one pan-European distributor recently said to OPI, “we could talk all day about this crisis, but that’s not going to help us get out of it”. So pull up your socks troops, and start those discussions about how to move forward.

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Show Review | BSA

Partners for progress BSA’s recent annual forum provided plenty of food for thought for both independents and their channel partners. Collaboration was regarded as the key to the ultimate goal – pleasing the end-user

by Heike Dieckmann heike.dieckmann@opi.net

Around

100 US industry participants descended on the beautiful Hyatt Regency Hill Country Resort in San Antonio, Texas, over a few October days for BSA’s annual forum. The theme of the event – Partnering for Progress – squarely focused on how distribution channels should work together to strengthen the position of the independent channel, and provide the best possible buying experience for the end-user. Sandwiched between two days of networking and meetings between dealers and their manufacturing and wholesale partners was the highlight of the event – a day of panel discussions centred around the core subjects of buying local, e-commerce and end-user behaviour. Lively, engaging and at times refreshingly critical, the discussions provided a host of collaborative ideas that delegates felt could be developed into tangible initiatives. After a warm welcome to the audience on the second day, BSA President and United Stationers SVP Trade Development Joe Templet started proceedings with an update on what’s been happening at BSA over the past year. He Templet referred to the heightened roles of manufacturer rep groups, the importance of independents affiliating with dealer buying groups and the persistent need for member education.

Knowing the crowd Next up, Mike Wilbur, Program Chair and BSA VP, introduced the first panel discussion. As ‘buy local’ is becoming ever more popular, moderator and OPMA President Mike Metchikoff kicked off a lively debate by asking a panel of four dealers and one

OPI Magazine | December 2011 / January 2012

independent manufacturers’ rep how dealers are taking advantage of this new phenomenon, what buy local campaigns can mean for an independent’s business and how manufacturers can help dealers get the message out there. Diverse as the answers were, there was a consistent thread – to be as involved as possible in the local community. Wayne Gonzales, President of Gonzales Office Products in Austin, Texas, said: “We network like crazy. We take advantage of every customer invitation we get. Every networking event, every charitable undertaking, every voluntary event, my name is on the door. In the community, for the community, that’s our motto.” A hands-on community focus is especially important as the big boxes are increasingly jumping on the bandwagon, portraying anything from a Costco to an Office Depot as “your local store”. Whether the dollars spent ultimately benefit the local community is another matter altogether, of course. Buy local is clearly good for business, added Dick Dodge, Chairman of The Office City and TriMega, saying that half of his firm’s revenues come from the local community. “Dealers must get involved in their local community because it’s where they can meet the people who are making buying decisions. Statistics show that people who are involved in buy local have an increase in business of 5.6%, those who are not involved of 2.1%.” Dodge, together with his fellow panelists, pointed to the importance of manufacturer involvement in developing buy local campaigns. Aside from the obvious demand to make dealers price-competitive, he urged manufacturer delegates to work directly with dealers’ salespeople on specific campaigns as well as to flag up local buying options on their websites. The second panel discussion focused on e-commerce and its role in the well-being of independent dealers. Moderator Jim O’Brien, SVP of Marketing at SP Richards,

BSA | Show Review “Dealers must get involved in their local community because that is where they can meet the people who make buying decisions”

Above: Joe Templet accepting the BSA Leadership Award Left: Wayne Gonzales on the buy local panel Below left: Dick Dodge on the buy local panel

introduced four panelists who, regardless of their channel-specific interests, agreed on one basic point – end-user relevance and preference. Unsurprisingly, Amazon came up as a key contender in the best practice talks. Avery Dennison’s Online Category Business Manager, Robert Weinberg, specifically referred to the company’s permission email marketing and product reviews: “Amazon has become very relevant to its customers in terms of its very specific marketing – mostly through email – and also its reviews. We know that our customers look at the products they want on Amazon in terms of content and functionality and then go to their local dealerships.” Being able to help dealers create an end-user friendly online buying experience, however, can be a real uphill battle, said SP Richards’ Director of Marketing Information, Paul Gatens, as he pleaded for manufacturers’ help: “We need to start with some basic product content and information. We’ve set a standard for having SKU-specific images for every item we sell and we still have a very large group of manufacturers that don’t have those. It’s very difficult to sell a product on the web without a picture of it. Videos, assembly manuals, tutorials, buying guides – all these things also enrich a customer’s experience and help sell products.” Another interesting issue raised was the relevance of print. In what could be seen as something of a role reversal, it’s important to consider that consumers might ultimately order online, but they don’t necessarily browse online and that’s perhaps even more true in the B2B arena than it is in B2C.

The customer The third and final panel discussion kicked off early afternoon after a special luncheon honoured retired former CEO of Miller Business Systems, Jim ‘The Coach’ Miller, with the Legend of the Industry award. The theme – end-users – offered an apt culmination of all that was said in the morning discussions. Moderator Nick Aronis from The Godfrey Group made sure delegates had no chance to slip into post-lunch lethargy. Witty and engaging, Aronis addressed a panel that was, though purely end-user

centric, somewhat focused on the public sector, with only one panelist from a private enterprise. It was unsurprising that there was an overriding feeling of budget constraints and, for want of a better word, practicality. Questions as to the importance of green products, for example, were also interesting. Generally speaking, eco-friendliness only plays a role if the price is competitive which, according to the panel, it often isn’t. That said, outside the realms of traditional office supplies, there’s a definite move towards LEED-certified buildings as part of the overall government agenda. Having spent half the morning on the discussion of buying local, Aronis aptly threw the question at the panel as to whether buying local is important to them. Again, the answer was practical as much as it was honest. Beth Hughes, Procurement Specialist at the United States District Court, said: “To us what’s important is delivery time and that’s what my buying decision is based on. “I don’t want to have a lot of product on the shelf and I want to get it to my end-user just in time, so that my money is not tied up in inventory. Buy local – we’ll try. If it’s the same price, we’ll go local, but we’re price and delivery driven.” Product information was again stressed as highly important, be that via online reviews or tutorials, email marketing, or – and that’s the best scenario – seeing the product first hand from the manufacturer. Hughes added: “Generally speaking, the higher the ticket of a product, the more I want to feel and see it. You don’t have to leave it with me and you don’t have to gift it to me, but I want to see it and then I can figure out the value of it.” Rounding off a long day of discussions, in the evening BSA presented its Innovation of the Year awards. The winner in the General Business category was C-Line Products for its Plaid Fashion line while Pilot Pen Corporation of America scooped the Green Innovation award for its B2P writing instruments. Lastly, event host Joe Templet received the BSA Leadership Award for his role in the development of the US office products industry. Several standing ovations illustrated just how richly deserved this accolade is. Templet had earlier finished his opening address with a comment that would also serve as the perfect finish at the end of the day: “With the unsteady economy and changing marketplace, we have to work together… as partners…to get things done. Our goal should be to strengthen our existing partnerships while we seek to build and develop new ones.” w w w.opi.net | OPI Magazine

Vendor Focus | Pilot

The Pilot of green Pilot Corporation takes its environmental commitments seriously, and has the processes in place to make sure this is carried through to all staff

Why is it so important to Pilot to protect the environment? Reducing the environmental impact of our products has become one of Pilot’s key brand pillars, alongside the historical pillars of quality, innovation and respect for customers. In fact, Pilot applies the same rules to its environmental policy as to its quality policy, which is a permanent improvement process that is always challenged. As a global corporation, how does Pilot decide its environmental policy?

This kind of policy is, of course, decided at a worldwide level. Pilot’s environmental policy is first decided by the team at the worldwide headquarters in Japan, as a long-term and global company commitment. It is then cascaded to all the regions of the world, which are all totally involved in this key strategic policy. Pilot’s basic know-how to develop products with a limited impact on the environment first started in Japan, with the launch in 1992 of the Ecomate range. This complies with the Ecomark Japanese regulations on writing instruments manufactured

OPI Magazine | December 2011 / January 2012

from recycled plastic; one of the more demanding eco-labels in the world. These products were launched in Europe in 2006 under the name of

Pilot worldwide • HQ in Tokyo, • N° 2 brand worldwide in the writing instruments market • Operating in five continents • 2,400 employees worldwide • Present in more than 100 countries • Six plants in Japan • Total turnover: ¥69 billion ($873 million)

Pilot | Vendor Focus developed, the Bottle to Pen – or B2P – with a barrel made of post consumer recycled plastic derived from bottles of water, followed by the development of a ball point pen also made from post-consumer recycled plastic from bottles of water. So now there is a worldwide exchange of know-how between headquarters in Japan, North America and Europe, which is very fruitful and allows Pilot to continue to move forward quickly in the design of products that are more respectful of the environment. Moreover, all Pilot’s factories in Japan, Europe and the US are certified to environmental standard ISO 14001, which is the proof of a firm commitment to use strict environmental rules in all the manufacturing processes.

the Begreen range, all created with a minimum percentage of recycled plastic of 70%, excluding inks and refills. So, as well as others areas, Pilot has been a pioneer in terms of environmentally friendly products. But quickly this global technical know-how surrounding Begreen products has been shared with other regions. Pilot Corporation of Europe (PCE), as well as Pilot Corporation of America (PCA), has launched, in cooperation with the research and development centres in Japan, some very innovative initiatives. For example, a gel roller has been

How do you communicate policies to every employee? Like all the strategic directions decided by our headquarters, the environmental policy is communicated to all staff members at every level. The PCE environmental policy is based on four key pillars: • The preservation of natural resources: limitation of our consumption of these resources (such as quantity of plastic used for the production, use of recycled plastics, use of water, electricity) • The prevention of pollution: permanent waste reduction • Conformity to all new regulations concerning the environment • Communication: towards our employees first, but also towards our customers, consumers and suppliers. Many tools are used to ensure that we achieve the optimum level of communication throughout the whole company. Certainly our main target is to increasingly share a vision, and to share our values. This is achieved in several ways. First, a paragraph is added in every employee’s job description

concerning the company’s environmental policy and how each employee has to follow it by putting some rules into practice. Second, all employee appraisal forms include a section concerning the efforts made by each employee, in his or her own job, to take care of environment. Finally, every quarter the Quality, Safety, Environment department sends a newsletter to all employees to keep them informed of the progress of Pilot’s projects concerning the environment, including results such as of the ISO 14001 regulation audit. Does senior management lead from the top? Yes, the senior management team is fully involved in this strategic direction, at a worldwide as well as a regional level. For PCE, CEO Marcel Ringeard chairs the debriefing meetings of all environmental audits carried in the company; he is also the chairman of the monthly projects meeting where all the work to reduce the environmental impact of new products is evaluated. He is personally following the key performance indicators for our environmental policy. The reason for this involvement is very simple; it is a strategic orientation and the company wants all employees to understand the importance of this commitment. How do you ensure that the company operates as sustainably as possible? The credibility of our approach is based upon acting at every step of the product life, from conception right to the end of a product’s life, through the entire manufacturing process. As mentioned, all Pilot products sold in Europe are produced by factories certified to ISO 14001, which is a commitment, continually improved, to follow very strict and demanding environmental rules during all manufacturing steps. w w w.opi.net | OPI Magazine

Vendor Focus | Pilot

Moreover, in terms of the products themselves, Pilot carries out lifecycle analyses, conducted by an external laboratory, in order to improve our knowledge of the impact of our products on the environment. This kind of analysis has confirmed that the main impact that pens have on the environment is essentially in the usage of raw material (76% of the total impact). As a result Pilot makes the components of pens a priority and we use recycled plastics. Pilot has also carried out a carbon footprint analysis to gain a better knowledge of the impact of company activity, to ensure we are going in the right direction, and to find new ideas to improve our product conception, our production process and our logistics organisation. Thanks to this analysis new actions can be taken, such as a reduction in the quantity of plastic used for packaging, moving from clam shell to blister cards, or increasing the number of refillable products in our sales as well as the refill sales.

production used 30 tonnes of postconsumer recycled plastic. Every year, with the evolution of Pilot’s range, more classic products are being replaced by Begreen products, such as the Rexgrip range. In 2012 the Acroball range will follow. Another goal for us is to change the consumer’s mind. Often green products are perceived to be more expensive than standard products, (which is not the case for Pilot), and boring. Regarding this last point, Pilot’s target for young consumers is to develop well-designed pens that are fun. There is some confusion in the writing instruments market, for consumers as well as resellers, about what is green and what is not. As a consequence there exists some misinformation. It is important not to

As well as the B2P, what green products do you currently offer? Pilot manufactures and sells a whole range of pens made from recycled plastic, under the Begreen range. All these products are made from a minimum of 70% recycled plastic and are produced according to the same concept as the Ecomark label. This range generates 7% of PCE turnover and is growing fast. Thanks to the launch of the Begreen range, 149 tonnes of plastic have been saved. For example, the B2P gel

forget the fact that the majority of a pen’s environmental impact comes from raw materials. This is the key point on which pen manufacturers have to work, and different solutions could be introduced on this basis to reduce this specific impact. That is the reason why Pilot has been the first in the world to develop pens made of recycled plastics.

Pilot in Europe • HQ in Annecy, France • N° 2 brand in the European writing instruments market • Present in 32 countries • 45 million pens manufactured yearly • Total turnover: F125 million ($169 million)

behaviour is evolving in the right direction. For the B2B business it is different, as many companies have an environmental policy and plans to reduce the impact of their activities. This means that there is a strong commitment from companies to buy green products, refillable products, recycled paper and so on. In this case, good intentions are followed by actions, which is a movement strongly supported by customers. Is Pilot targeting any specific countries for green products? The target for our environmental products is worldwide, as people’s sensitivity towards protecting the environment is growing in every part of the world, whatever a country’s economic situation.

In a few years it will no longer be a must for a product to be environmentally friendly, it will be the standard

Do you find that consumers want to buy green products? When households are asked whether protecting the environment is important to them, everybody says yes, of course, it is a major issue now and moreover for the future. But when they are in shops, it seems that they take into account a large number of criteria, the environment not being the most important. However, we can see that consumer

OPI Magazine | December 2011 / January 2012

Do you have more green products coming soon? Yes, our research and development departments are working on the development of new Begreen products, which will be on the market within the next two years. Will customers increasingly demand green products? Yes, at first this demand will continue to increase, but in a few years it will become obvious to consumers that a product should be environmentally friendly. That means it will no longer be a must for a product to be environmentally friendly, it will be the standard. So it will be a weakness for products without this characteristic. Article content supplied by Pilot Corporation

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Special Report | Catalogues

Going paperless? Once all the talk was about the paperless office, now it’s the paperless catalogue. But is it just an overreaction to the online revolution?

by Bruce Ackland bruce.ackland@opi.net

Well

we’ve certainly been here before, haven’t we? It’s impossible to consider the future of traditional printed catalogues without being reminded of the hysteria of the “imminent” paperless office that perpetuated throughout the last decade. Certainly the case for a slow death of printed catalogues appears a done thing with the apparent rush to digitise. As resellers see their portion of online sales grow, the cost of producing printed materials will become less attractive. Nevertheless, this is not a cut and dry area. Jennifer Smith, CEO, Innovative Office Solutions, says: “Net priced catalogues, which seemed to be required for a long time, have diminished dramatically. Innovative has no net priced catalogues outside of flyers and the occasional custom contract catalogue for a customer. “This is a change from when we used to commonly provide net priced small (3,000 items) catalogues in three pricing levels, and a net priced ‘general line’ catalogue to schools. In today’s world with most users having access to our website, net priced catalogues are no longer required.” As Innovative’s workforce demographic changes, it does predict this need for a printed catalogue will diminish over time, at least in terms of a large annual catalogue that is outdated as soon as it’s printed. Nevertheless, Smith says that search tools and content are still not entirely replacing the

ease of browsing that a physical catalogue can have. Innovative still issues a large quantity of list priced (lined out) catalogues. Many users also enjoy being able to give it to other employees to pick out products for ordering. Indeed, the case for the future of printed catalogues is pretty strong. And who would disagree with those in the ‘pro’ corner when so many experts who declared a decade ago that not a scrap of paper would be used in offices by now have some serious egg on their face?

Robust Mike Metchikoff from Office Products Marketing and Advertising (OPMA) has very strong views on the robustness of the physical catalogue. His agency specialises in producing printed catalogues and flyers as well as electronic marketing tools, and it’s difficult to argue with the three key reasons behind his opinion. Firstly, printed catalogues provide an additional ‘touch point’ to keep the reseller’s brand in front of the consumer; secondly, they allow resellers to communicate their breadth of line more easily than online; and thirdly, he believes the majority of consumers purchasing office products still feel it is easier to research their shopping offline. Certainly it’s true that there will always be that demographic which prefers to hold a catalogue in the hand when purchasing products online or otherwise. It’s not dissimilar to the argument some years back that all newspapers would die out with everyone reading online; there is a significant number of people who want to read from a physical document.

OPI Magazine | December 2011 / January 2012

Elliot Jacobs Mark Evans, Director of Marketing at United Stationers, also believes there is still strong current demand for the printed catalogue. He points to end-consumer research which reveals that while consumers primarily order online they still prefer to shop offline. “This distinction between ‘ordering’ and ‘shopping’ is an important issue that we as an industry need to pay attention to,” Evans explains. “Moving forward, e-commerce user experience and functionality will need to be improved to the point where end-consumers feel that they can shop a broader array of products with the ease-of-use that traditional catalogues have provided. Until the online experience is significantly improved, catalogues will remain an important part of the resellers’ marketing strategy.” In the UK, Elliot Jacobs, Managing Director of reseller UOE, sees a definite split in the use of catalogues between the older established buyers and the younger consumer, as one might realistically expect. He says: “There is clearly still a demand for them, but more from the longer-standing buyers than

Catalogues | Special Report the new, internet-savvy younger ones who have grown up expecting websites rather than hard copy to provide the fastest answer.” Jacobs says that UOE has cut its catalogue order this year by about a third, even though it is seeing growth in sales. He adds that companies which used to hand out catalogues to all buyers often now only keep one for the senior buyer, restricting others to core-list buying and online range-controlled search.

While customers are doing much more self-service through the internet, there are still stages of the buying process that online may never replace or replicate, such as presenting customers with pre-selected products that they can quickly browse through, thereby streamlining the product selection stage of the process. Another company that is firmly in the pro-printed catalogue corner is Integra Office Solutions,

the UK and Ireland’s biggest dealer group. Integra’s Managing Director Aidan McDonough insists that while online solutions are becoming an increasing part of the marketing mix, catalogues remain “a cornerstone of the B2B offer”. He adds: “Buyers like to use catalogues, especially outside highly-controlled contract environments. Customers like big catalogues and an element of choice and don’t like to be too tightly controlled. They enable consumers to browse, then use online solutions to price-compare. For dealers it’s important to have a printed catalogue as part of a multi-channel campaign to promote their businesses.” Arnold Theuws from leading Dutch dealer group Quantore sees printed catalogues as a solid ingredient going forward in the OP reseller’s marketing plans. He says: “Catalogues are still important and our dealers certainly value being able to present them on the desks of the customer. They will become less important and the number of copies will go down over the years, but they will keep an essential role in the marketing mix.” Switching continents and we find that in South Africa catalogues are just as important and ubiquitous as they have always been. Just about all commercial stationers in the country are reliant on printed catalogues. Most end-users rely heavily on catalogues to ensure that correct descriptions are given when ordering items, as the terminology of stationery can be challenging to them. Most catalogues in South Africa have approximately 150 pages and some stationers produce more than one catalogue for different products such as furniture, specialised filing and office machinery. Eugene Kleynhans, Executive Director of The Southern African Association for Stationery, Home and Office Products (Shop-sa), says: “Currently, physical catalogues remain as important as they have

The debate Printed vs. online Printed

• A significant number of customers still prefer to buy from printed catalogues • Many search tools and content are still not entirely replacing the ease of catalogue browsing • Catalogues can be easily passed around from colleague to colleague • Research reveals that while consumers primarily order online they still prefer to shop offline • Consumers demand choice when it comes to how they buy products • Printed catalogues are an important part of a marketing mix • Some social and global areas don’t have the bandwidth or internet availability for only online shopping

Online

• Quick updating and tailoring of offers and content • Enhanced product information without regard to space and cost • Leveraging analytics • Reduced waste and expense of producing and distributing physical catalogues • Easier to control merchandising in real time • Reviews and comments on products • Showcasing an unlimited number of products • Using demonstration and training videos • Taking advantage of the mobile revolution (tablets, smartphones etc.) • Benefiting from search engine optimisation

w w w.opi.net | OPI Magazine

Special Report | Catalogues

Eugene Kleynhans always been. With the massive influx of Chinese alternative products, the range of items has grown to such a degree that the only real method stationers have to market these ‘new’ products to their customer base is through catalogues, invariably paid for by suppliers. Any other form of marketing of these new products is too expensive for the majority of independent, and even the larger, stationers.” In Australia, once again, catalogues are still an important part of the OP resellers’ overall offering. Mark Ward, Managing Director of Officeworks, explains: “I think that physical catalogues still play a very important role in being able to show customers your overall range and offer, but they are just one of the many mediums retailers need to use to reach customers.”

Future Peering into the future can be a dangerous exercise because so many outside factors can come into play. However, without wishing to once again summon the ghost of the paperless office, where will printed catalogues be in five years’ time?

For Bernie Garvey of Garvey’s Office Products, there is no room for debate. He says: “Each year we will see fewer and fewer physical catalogues. In five years I think my company will be completely out of print catalogues.” While many see the production of catalogues dwindling throughout this time period, most do see it as a much longer-term trickle away. With a completely different prediction, OPMA’s Metchikoff still sees a bright future for catalogues and uses the compelling case in point of the wildly successful internet-based BuyOnlineNow.com as evidence. He says: “When a company as successful as BuyOnlineNow.com announces that it is producing a print catalogue next year to educate its consumers on its breadth and depth of line, that indicates to me that there is definitely a future.” Again, McDonough endorses Metchikoff’s view of a more robust future for printed catalogues. “There will be more online versions of catalogues, but printed catalogues will be required to get key messages and product mixes in front of customers,” he says. “I perceive it is more likely that businesses will have a webstore and a printed catalogue rather than e-catalogues replacing printed – or possibly all three. As long as they all complement each other, they can coexist and work well. We have not seen a massive take-up of digi-catalogues and my perception is that they are not that easy to use.” Evans at United sees printed catalogues being around for the next five years, but warns they will have to become more targeted and focused against specific selling channels.

National Directory of Catalogs According to the latest research from the National Directory of Catalogs, the largest directory of US and Canadian catalogues, the number of print catalogues with online editions grew from 8,675 to 8,894 from 2008-2009. Catalogues available in online-only formats totalled 2,011, up from 1,868 in the previous year, while catalogues available in print-only formats decreased from 1,574 to 1,347 in the same time. Trish Hagood, President of Oxbridge Communications, publisher of the National Directory of Catalogs, says: “Online catalogues are continuing to grow, accounting for 10,905 (including 8,894 that are available in print and online format, and 2,011 online only) of the 12,524 catalogues listed in our new directory, but print catalogues are still seen as vital, with 10,241 of the total (8,894 that are available in print and online format, and 1,347 print only).”

OPI Magazine | December 2011 / January 2012

He explains: “When working with resellers to plan 2012 campaigns, we still see certain verticals and sales channels that have not made the online experience a centrepiece of how they are shopping. Catalogues still play a major role with consumers who do not have immediate access to a laptop or desktop with an internet browser. We see this with some field sales and some shop floor end-consumers, for example.”

Choice Of course, another area that cannot be dismissed is the consumer’s God-given right to choice. And it’s the consumer’s insistence on choice that is likely to keep breathing life into printed catalogues. Officeworks’ Ward adds: “I think that online is just another part of any business’s overall marketing mix going forward. It may end up dominating companies’ marketing in specific areas and for specific customers, but there will always be a batch of customers who like to receive their marketing another way.” In a country such as South Africa there are many factors that make this issue far less easy to predict. Shop-sa’s Kleynhans explains: “The printed catalogue’s future will slowly diminish and move to the web, but due to the fact that not all businesses in this country have web access, there will remain a place for printed catalogues. Bandwidth in this country also currently restricts the degree to which catalogues can be published on the web, although this is changing at a reasonably rapid rate.” Considering everything from global broadband availability and bandwidth restrictions to consumer choice and the requirements of a varied marketing mix, it seems unlikely that catalogues will completely disappear from view anytime soon. But what is likely, and indeed will have to happen over the next five years, is more of a re-imagining and re-focusing of catalogues to specific needs, markets and end-consumers. Like most things threatened by extinction, for catalogues it will be the familiar tale of adapt or die.

Donâ&#x20AC;&#x2122;t miss Paperworldâ&#x20AC;&#x2122;s largest networking evening 30 January 2012

Category

Analysis Round-up

Jan/san Cleaning solutions manufacturer AF International is set to unveil its new product packaging at Paperworld 2012 in Frankfurt, Germany. AF’s traditional silver and blue colour scheme has been updated to include yellow and more use is also made of images. “The addition of colour photos of the products has given the range a contemporary feel,” said Marketing Manager Karen Harrison.

Imaging supplies Global toner shipments are set to grow by about 70 million units over the course of the next four years, according to a new study by Lyra Research. Findings from the report, entitled ‘Worldwide laser toner cartridge forecast, 2008-2015’, show that growth in the laser printer market as a result of strong sales in emerging countries will create steady growth in the laser toner market. Consequently, shipments of laser toner cartridges will grow from their present figure of 379 million units to 445 million units in 2015.

Category Analysis calendar February Writing instruments Ergonomics March Breakroom supplies Security and data protection April Filing and archiving May Antimicrobial products Cut paper June Desktop accessories

Presentation and visual communication July/August Craft September Jan/san Marking and stamping October Mailroom and packaging November Imaging supplies Back-to-school

OPI Magazine | December 2011 / January 2012

Security and data protection

Lyreco UK and Ireland has established a new partnership with shredding services provider Iron Mountain that will allow customers to purchase shredding bags, which are ordered and collected by Lyreco drivers. Peter Eglinton, Director of Iron Mountain’s UK businesses, said: “The partnership will allow enterprises to benefit from secure destruction of their business records, helping them to protect their businesses from fraud and comply with the Data Protection Act.”

Presentation and visual communication Magic Whiteboard Products is launching its range of whiteboards in the US and Canada. The products are currently sold in the UK, Japan and Australia. Magic Whiteboard sheets can be stuck to walls and written on using dry erase markers. The sheets are reusable and recyclable.

Furniture Leading office furniture manufacturer HNI has bought privately-held designer and manufacturer of educational furniture solutions Sagus in an all-cash deal. Sagus – the second largest player in the North American educational furniture market – has annual sales in excess of $90 million. The acquisition includes the three operating divisions of Sagus: Artco Bell, Midwest Folding and LSI. HNI said that Sagus will continue to operate as a standalone business with its own brand position and strategy.

Back-to-school The School and Office Products Network (SOPN) is partnering with the National Stationery Show in New York. The partnership aims to build the presence of national brands in the commercial/speciality office and back-to-school markets at the 2012 National Stationery Show and draw attendance from major retailers in the sector. The 66th annual National Stationery Show will be held from 20–23 May 2012 in New York.

Category Analysis | Facilities management

Facilitating

success The continuing growth of OP firms in the FM category looks set to continue, especially for the trendsetters that are

cornering all aspects of this broad sector

by Saqib Shah saqib.shah@opi.net

many product categories, the facilities management (FM) market will hopefully benefit from the winter months and holiday period that boost hot beverage sales. However, as recent positive economic trends within the sector have shown, this category is for life and not just for Christmas. Over the previous few years, FM has expanded both with regard to its product offering and its financial value. The sector is bolstered by the vast array of items tied into it, including cleaning and breakroom products as well as health and safety items. The growing awareness in the commercial sector of FM has strengthened it even further. According to market research firm Global Industry Analysts (GIA), the global market for FM is estimated at close to $301 billion for the year 2011 and is projected to further increase to $394 billion by the year 2017. A quick glance at recent trends in the commercial sector can help explain why these figures really do add up. In its report on the FM industry, GIA states that a growing number of businesses around the world are now outsourcing their FM requirements. Consequently, the status of FM within the

OPI Magazine | December 2011 / January 2012

commercial sector has, in the words of GIA, become much more “organised and efficient an activity, involving management of all non-core activities for public institutions and business enterprises”. One of the main reasons for this greater emphasis on FM is that the slow economic recovery around the world has prompted more companies to employ the services of specific FM contractors; the focus for many businesses has shifted to the cost-effective nature that a structured FM role can bring, including an overall reduction in costs. As a result, GIA claims that “most facilities management providers are working closely with their clients and are aligning their services with corporate objectives to provide additional value”. Within the OP industry, the FM category has contributed to growth across the supply channel. Big boxes Staples and Office Depot have witnessed solid growth in the sector. Meanwhile, wholesalers such as SP Richards, Spicers and VOW have all pursued initiatives to broaden their offering with regard to FM (see box ‘Wholesale initiatives’ on page 64).

Within the office products industry, the FM category has contributed to growth across the supply channel

Conquering the quest for convenience

VOW is increasing their FM product portfolio with another 2500 products in January 2012. So now you can fly in with standard next day delivery and save the day on more than 4100 lines across all FM categories. Donâ&#x20AC;&#x2122;t battle with the inconvenience of making your customers wait, give your VOW sidekick (aka Account Manager) a call.

Veto Ordinary Wholesaling

Category Analysis | Facilities management Wholesale initiatives The wholesale channel is arguably the busiest with regard to FM. Whether through the introduction of a larger product range or through new logistics initiatives, wholesalers have sought to expand their share of the market this year.

VOW

Earlier this year, VOW announced it was doubling the size of its FM product portfolio to include over 5,700 lines. Beginning in 2012, its resellers will be able to order over 4,100 products for next-day delivery. VOW also announced that it had created an online publication for its Winter Essentials FM range.

Spicers

Spicers UK & Ireland launched its ‘Workplace & Safety Solutions’ catalogue in April. Split into 12 sections, the catalogue contained over 4,500 products including 500 new additions. In August, the wholesaler reported it had achieved significant success; its catalogue led to average dealer sales increases of 19%.

SP Richards

In September, SP Richards launched a joint supply chain programme called Paper3 in partnership with TriMega. The initiative combines popular paper, cleaning and breakroom products in one shipment in an effort to boost the sale of tradtional OP items by attaching them to the cleaning and breakroom segment.

Looking ahead Going forward, however, OP companies cannot afford to rest on their laurels. As always, there is room for improvement and innovation. A major niche area that continues to increase in popularity is sustainability and the green agenda. The role of facility managers or FM firms is linked closely to a company’s CSR. Therefore they are, or will increasingly be, trained on how to improve energy efficiency and waste management. As a result they will inevitably bring this heightened eco-awareness to the procurement process. Resellers and dealers need to stock relevant green FM SKUs that appeal to these buyers. OPI spoke to Chris Whiting, VP Cleaning and Breakroom Supplies at SP Richards, and he explained one way in which the wholesaler is doing exactly that. “In the FM category, reducing consumption of paper products with controlled dispensers is an easy solution for an end-buyer to save on their budget and help the environment,” he says. “This type of solution selling is helping us transition from ‘convenience’ to ‘destination’.” Another area that companies are focusing on is their online brand presence. Office Snax, supplier of food and beverages for the commercial sector, has a

Facilities management | Category Analysis Breakroom in depth As previously mentioned, breakroom products are a lucrative source of revenue for a dealer or reseller that can successfully corner the market. Additionally, the niche sector is growing at a rapid pace to include a wide variety of SKUs, from snacks to hot and cold beverages. According to Bill Baker, Owner of Office Snax, the upcoming holiday season means that this is the ideal time to jump on the breakroom bandwagon. “We are entering the holiday time of the year so consumers are more tuned to coffee and tea,” says Baker. “Holiday season is the best time for a dealer to let clients know that they have the breakroom covered.” Before you go rushing to pick up your nearest wholesaler catalogue, however, OPI has rounded up some of the biggest breakroom news stories from the past year to give you a better idea of the ups and downs in this proliferating category. One of the fastest growing North American coffee providers is Green Mountain Coffee Roasters (GMCR), even though it missed its Q4 expectations. Total sales for the company’s third quarter increased by 127% to $717 million compared to the same quarter last year. Approximately 82% of sales in the quarter were from GMCR’s Keurig brewing system and its repeat portion pack sales. Keurig hardware is currently stocked by both the big boxes and dealers alike. Earlier this year Chris Stevens of Keurig gave a presentation at United Stationers’ Vision conference about how dealers can succeed in this largely untapped category. On the subject of United Stationers, the wholesaler also launched a coffee programme at its Vision conference. The initiative is designed to develop its members’ coffee proposition and drive incremental business. The programme includes a number of category intelligence, marketing and promotional tools. In the UK meanwhile, dealer groups Superstat and Praxis recently entered into a trading agreement with Liverpool-based distributor North West Tea Service (NWT). At the time, Superstat said that NWT would enhance its current offering of beverages and similar products to its members.

ofx_halfpage_sixreasons_Layout 1 11/28/11 12:56 PM Page 1

“An FM buyer is more likely to go for a reliable supplier and a continuous contract price, rather than a one-off purchase” website full of relevant product information and interactive features. It allows customers to download all of the company’s product images along with e-flyers. E-commerce, on the other hand, has not substantially caught on in the sector. Debbie Nice, FM Category Head at Vasanta, believes this is due to the procurement process. “FM customers tend to buy on account with dedicated purchasing systems,” she says. “An FM buyer is more likely to go for a reliable supplier and a continuous contract price, rather than a one-off purchase.” There is no doubt that OP companies excel in the FM sector. However, little improvements in some areas can help remove all the chinks from the industry’s armour and ensure that it remains fighting fit for many years to come.

Office Snax is pleased to introduce six new items to our 2012 product line up. Peppermint Puffs (OFX-00042) Hansel’s Gretzels (OFX-00043) Seriously Awesome Red Licorice (OFX-00044) Seriously Awesome Black Licorice (OFX-00048) Multi-Purpose Snax Dispenser (OFX-00064) Gumballs (OFX-00065) www.OfficeSnax.Us “The Leading Provider of Food Snax and Beverages to the Office Products Industry”

Category Analysis | Office machines

Moving forward forward forward forward As geographical shifts continue to alter the printing and shredding markets, vendors are finding new ways to stay relevant America and the Asia Pacific region for the seventh consecutive quarter of growth. Although Japanese manufacturers largely dominate the printer market, the earthquake that occurred earlier this year had little or no long-term effect on market conditions, reports the IDC. This once again highlights the dominating economic factors behind the soft performance of the US and Europe.

by Saqib Shah saqib.shah@opi.net

existing

as it does within the broader technology sector, the office machines category has not had a hard time keeping up with its changing landscape. Not only are printers and shredders constantly evolving in terms of design, but they have built up reputations as indispensable items. Nonetheless, it has been a challenging year.

New world order A varying degree of good and bad financial results has become the norm for the printer segment. Last year was particularly bad for low-end A3 monochrome laser multifunction printer (MFP) shipments which, according to Lyra Research, sharply declined. Ongoing issues related to the unstable economic environment – such as a decrease in employment among medium and large businesses and a general drop in the amount of office machines currently being procured – are cited as the reasons behind this drop. Meanwhile, A4 monochrome laser printer shipments are also set to suffer a drop over the next few years (see ‘Worldwide A4 monochrome laser MFP shipment forecast’ table on page 68). However, growth is occurring for faster models of monochrome laser and colour printers, just not in Western Europe and North America. According to the International Data Corporation’s (IDC) report on the hardcopy peripherals market, emerging nations contributed strong results in Q2 2011. Unit shipments increased 6% year on year in emerging markets such as Latin

OPI Magazine | December 2011 / January 2012

The big guns In September IDC reported that the major market players in hardcopy peripherals are Hewlett-Packard, Canon, Epson and Brother. Although the financial results of these manufacturers have been less than impressive, they have grown significantly in developing markets. Here is how they performed. HP Despite going through management changes and dropping its print station initiative this year, HP managed to hold on to the number one position. In the second quarter of 2011, the manufacturer had a 41.5% share of the market and shipped over 12 million units. IDC stated that despite nearly flat year-over-year growth, HP managed to gain one point of share from a year ago, driven mostly by gains in Latin America. Canon In second place was Canon, with a 19.5% share in the overall market, generally unchanged from a year ago. Canon’s share grew 1.8% year over year with more than 5.6 million units shipped. Central Europe, the Middle East and Africa were the company’s top performing regions with 14% and 9% growth, respectively. Epson Epson remained the number three vendor in the global market with a 12.3% market share, down two points from a year ago. However, its shipments decreased in most regions, resulting in a 12% year-over-year contraction during its second quarter. This marks the worst trend among the key players. Brother Brother was also in the top rankings, with a 5.6% share, up one point from a year ago. The manufacturer managed to ship more than 1.6 million units. Brother also posted the best growth out of all the major players at 4% year over year.

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Category Analysis | Office machines The best bet The shredder market has also been under varying forms of pressure this year. With in-fighting between major manufacturers such as ACCO and Fellowes and the external threat of paper-light offices and cloud computing, it seemed that 2011 would certainly prove a big test for the sector. However, a recent campaign in North America highlighted the indispensable nature of shredders for security. The fourth annual ‘National Protect Your Identity Week’ took place in the US in October and was co-hosted by the National Foundation for Credit Counselling, the National Sheriffs’ Association and the National Association of Triads. The initiative included a series of events on identity protection and waste disposal, and Joanne McNabb, Chief of the State Office of Privacy Protection, urged consumers to use shredders, a message that was repeated throughout the programme. North American legislature also supports the use of safe document destruction. In California and 15 other US states, if your business handles documents containing phone numbers, driver’s licences, bank accounts, insurance data or other personal financial information, state law requires that the paperwork be destroyed or otherwise rendered undecipherable. Meanwhile, the signs in Europe have also been positive, with ACCO reporting that its operating profit in Europe surged in its third quarter. The company’s International division reported operating income of $14.6 million for Q3, versus $5.3 million a year ago. Additionally, the company’s gains in shredder placements in Europe helped partly offset reduced demand in the region. Fellowes has also looked to extend its reach in Europe. This autumn the manufacturer opened a European distribution centre and Benelux headquarters in the Netherlands. Fellowes stated that the site would offer a significant opportunity for expansion as it aims to grow its continental European and export business. At the same time, however, Fellowes and ACCO have been locked in a legal battle about shredder patents. In June, Fellowes filed a lawsuit against ACCO following on from a similar lawsuit in November 2010. It claims that ACCO has infringed its US patent 468 relating to its Jam Proof technology. Nonetheless, as the respective results and initiatives for the two companies show, they are finding ways to progress in otherwise difficult markets such as Europe. The same

OPI Magazine | December 2011 / January 2012

Printer technology is increasingly utilising wireless functionality to allow users to print from smartphones can also be said for printer manufacturers that are increasingly tapping into new technologies to boost their product. One example of this is the increasing amount of printers that offer wireless access. Printer technology is increasingly utilising wireless functionality to allow users to print from smartphones and other mobile devices. This directly relates to the proliferation of wireless technology in general. Larry Jamieson, Director of Lyra’s Hard Copy Industry Advisory Service, believes that these developments in mobile hardware will have a positive effect on the printing industry. “As more applications are now becoming available, some information accessed or created on mobile devices will naturally need to be printed,” he says. “The second opportunity is to share information that has been either accessed or created on the mobile device with other people who are not mobile device data-enabled. While there is a perception that data-enabled mobile device usage is universal, the reality is that most people neither own a smartphone nor a tablet PC,” explains Jamieson. As these comments show, technology segments including printing and shredding can fall prey to misconceptions. Instead of focusing on the pessimistic information regarding the category, vendors should focus on the extremely optimistic results generated by the emerging markets that have shown great signs of growth.

Your OPI

On the move

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

USA

OfficeMax has made a number of senior management changes. Chief Merchandising Officer Ryan Vero has left the company after 17 years of service. Once tipped as a possible successor to former CEO Sam Duncan, Vero recently slipped down the management pecking order at ‘Max when Michael Lewis was appointed as President of Retail. Recently-appointed ‘Max President of Contract Mike MacDonald has been forced to step down due to a family illness. Steve Mongeau, SVP Sales and Growth Initiatives, has been appointed as the interim Head of Sales for the North American Contract division until a permanent replacement is found. Jim Barr has been appointed as EVP and Chief Digital Officer. Barr joined ‘Max in mid-November and is responsible for the company’s e-commerce activities and multi-channel digital strategy, reporting directly to CEO Ravi Saligram.

US OP veteran Todd Elmers has joined eco-friendly foodservice products vendor Eco-Products. The former Corporate Express SVP has joined the Colorado-based company as Business Development Manager for the office products channel. Elmers spent eight years at Corporate Express before leaving in 2004 to set up office furniture wholesaler OfficeSource. OfficeSource grew quickly, making five acquisitions, but ran into cash flow problems during the economic downturn and was eventually bought out by United Stationers in 2009.

Europe Antonio Umbro has been named Sales and Marketing Director for Office Depot Italy. In what is effectively a country manager role, Umbro succeeds Depot’s long-standing Managing Director in Italy Luca Borroni who established the Viking business in the country in the late 1990s. Umbro spent ten years at Lyreco before joining Vodafone in 2006.

Office Depot has appointed Steve Schmidt as President of its International division. Schmidt succeeds Charlie Brown who was dismissed at the end of September for having an “improper relationship” with a colleague. Schmidt has been with Office Depot since 2007 when he was appointed President of the company’s Business Services Division (BSD). This summer he took on a corporate strategy and business development role following a management restructure which saw Kevin Peters named President North America. Depot said that Schmidt’s contract experience and his international roles at Nielsen prior to joining Office Depot made him the most suitable person for the job.

OPI Magazine | December 2011 / January 2012

The European Office Supplies Alliance (EOSA) has announced that its Chairman and CEO Peter Basci is to resign. Basci, who joined EOSA in 2007, will step down from his duties by the end of the year. Philip Becker, from Dutch EOSA member Hedera, has been chosen as his successor. Basci – the winner of the Industry Achievement Award at the European Office Products Awards 2011– has been the driving force behind EOSA for the last few years and led the move to a new corporate structure in 2010. He sold his company, Swiss B2B reseller iba, to the Migros group last year. Meanwhile, EOSA has announced that Jan Buck has taken over as its Head of International Purchasing, succeeding Veronica Avanzini. In his new role, Umbro will report to Regional VP Michel Milcent who is responsible for Depot’s operations in France, Italy and Spain. Visual communications products manufacturer Bi-silque has expanded its European sales team. The company has made three appointments as it strengthens its account management team and it has also tweaked its sales structure to create a specific role for the European retail channel. Prague-based Vasco Silva has been named Channel Manager for Bi-silque’s retail business across Europe as it looks to expand into this channel. Antonio Rodrigues (Germany, Austria, Switzerland), Manual Mexia (MEA, Nordic, Benelux) and José Saraiva (International Business Development) are the regional sales appointments, with all three being based at Bi-silque’s Portuguese headquarters. Well-known UK office products executive Paul Hardy has joined cleaning products manufacturer AF International. Hardy has been appointed as the firm’s European Brand Director. In this role he will predominantly be directing the AF sales teams in the UK, France and Germany to grow existing brand and private label business and to gain access to new markets. Prior to joining AF, Hardy was a director at European brands

distributor The Office Product Network (OPN) and has also worked for Systemcare and Bi-silque. Hardy told OPI that it was with a “heavy heart” that he had decided to leave OPN – which he stressed was a profitable business – but that the switch to AF was the right move for him at this time. Compatible imaging supplies manufacturer Katun has made two key appointments in France as it looks to develop the Media Sciences brand it acquired at the end of 2010. Jean-Philippe Guillouche has joined the company as Sales Manager France for alternative channels while Eric Lasne has been named as Distribution Sales Manager B2B. Guillouche worked for several years as Sales Director at aftermarket supplier Armor while Lasne has spent the last three years at EOS distributor Despec where he had pan-European sales responsibilities.

International Experienced Staples exec Jay Mutschler has been named as the new President of the company’s Australian and New Zealand subsidiaries. Spirit of Life honouree Mutschler will officially take on the role this month, replacing Paul Hitchcock who is leaving to “pursue other interests”. Staples will be counting on Mutschler’s 30 years of experience in the office products industry to implement a turnaround in the Australian business, which suffered a double-digit sales decline in the third quarter.

Your OPI

Inbox

Letter of the month

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

The OP industry seems to me every day a more and more out-of-date definition for the market I have worked in since 1995 for two main reasons: work is evolving more out than in an office, and demand for traditional products is, in most cases, declining and being replaced by new items that have nothing to do with our industry ‘know how’. Economic and social trends regarding tech, green, working environment and white collar employment seem to anticipate even worse ‘traditional business’ weather. So it’s time to stop this struggle just for everyday sales, take a breath and look for the essentials. We have to understand and re-plan our business or we slowly die. First we have to face a sort of Copernican Revolution, replacing the product’s central role with the customer (the marketing consultant Philip Kotler taught that many decades ago but still). The key issues are related to our customers’ changing behaviour. What do they need, what do they want and, above all, who are they? Here are some key issues: • You can’t sell office products to anybody who needs them. You have to focus on a very specific customer profile • You can identify needs that will survive the tech revolution or evolve with it. Furniture is a good example – human beings will always need a chair! • You have to adapt to the interactive role that customers want to play (two-way public relationships such as blogs and social media) • Brand is less and less related to a physical product and more to relationships (Apple and Apple stores) • You should be inspired by the success of players in other industries that have dared to be different (such as Zara). Do you agree? Francesco Villa, CEO, Buffetti, Italy

Write in and win!

If you are an independent dealer in these troubled times (which seem to get more troubled every time I read a newspaper), it must be easy to conclude that growing your business is too hard, and that the right thing to do is to retreat to the bunker and slash costs. We see a number of our dealer customers doing just that at the moment, shopping around to save a few pennies on products here and there. I would argue that it has never been more important for us all to work more closely together across the supply chain, certainly eliminating duplicated costs wherever possible, but more importantly, looking for new growth and profit opportunities where we can all benefit. There are a number of new products and services where dealers can find growth, such as FM or MPS. Successful dealers have realised that by morphing from a traditional dealer to a ‘one stop shop’ business supplies and services provider, sales growth and improved profitability can be found even now. Once you start to think about the products that an end-user might be buying apart from stationery, or the services they might be using, the possibilities to sell something new are more or less endless. Let’s focus on working together to sell more products and services to the end-user, not on beating each other up for a penny’s saving whilst someone else makes the sale! Robert Baldrey, CEO, Vasanta Group, UK I read with interest your article in the latest OPI (#214). I did, however, note that there was no mention about the rivalry between Graham Hart and Eric Watson and how they came together at the end. As for where are they now, Hart is the richest man in the Asian region with a fortune after selling Whitcoulls to the Americans for $350 million; Hart’s empire is now the second largest packaging company in the world. Considering that, I think Hart came out the overall winner of the whole industry during the consolidation of the 1990s. Frank Taylor, National Account Manager, Office National, Australia

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

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

Christian Langvad – Director of Purchasing, OTTO Office

Jay Baitler – Executive VP, Staples Contract

Andrew Morgan – President and CEO, Red Cheetah

David Fasbender – SVP Sales and Marketing, Smead

Marcel Ringeard – CEO, Pilot Corporation of Europe

Mike Gentile – President and CEO, Independent Stationers

Jonathan Smith – VP European Sales, Avery Dennison OP Europe

w w w.opi.net | OPI Magazine

Your OPI

5 minutes with...

Kasie Morley, President, Penny Wise Office Products, Jacobs Gardner Office Supply, Green Light Office Products Describe what you do in fewer than 20 words. My husband and I own three office products companies all headquartered in Bowie, Maryland.

“I have a large collection of shoes. It’s a serious addiction!”

What will be the biggest single factor affecting the OP industry over the next five years?

The worst job you’ve ever had?

The FSSI. The way the government chooses its office supplies vendors will have a major impact on dealers across the country.

Working at an advertising agency representing a well-known casino. Witnessing the greed and behind-the-scenes chaos took the fun out of gambling and casinos for me.

What one thing would you change about yourself? I’d love to be fluent in different languages

If you weren’t doing your present job, what would you like to be doing? I would work in television as a sports announcer. That way I could be sure my husband is always listening to me!

What sports teams do you support? My alma mater is the Michigan State University Spartans.

The industry figure you most admire and why? Firstly, Tom Gallagher of Genuine Parts for his intelligence, honesty and commitment to the industry. I also believe that my husband and business partner, Gary Luiza, and our company founder Dan Grossman are visionaries. They developed an electronic communications system to take customers’ orders ten years before the internet.

The most memorable experience you’ve had while in OP? While attending a meeting in New York I bumped into Jon Bon Jovi at the Plaza Hotel. Despite what you may have read in the tabloids, we are just good friends!

What do you like best about the OP industry? The spirit and commitment of independent dealers.

What do you like least? The first record you bought? This Year’s Model by Elvis Costello.

The way the industry has devalued its products. The aggressive reduction of prices has decreased their value in consumers’ eyes.

The most scary travel experience you’ve had while in the OP industry? I broke my rib in a limo accident on the way to a conference. Then on the way back to the airport with colleagues a tyre blew out on the airport shuttle van. Needless to say, no one wanted to be on my flight home!

Your favourite event on the OP circuit and why? SP Richards’ ABC. I’ve attended every single one. They are always fun and inspiring and I get to see all my favourite manufacturers in one place.

Your favourite holiday destination? In the summer my parents’ beach house on Lake Michigan. And in the winter Casa de Campo Golf Resort in the Dominican Republic.

OPI Magazine | December 2011 / January 2012

Any unusual hobbies or collections? I have a large collection of shoes. It’s a serious addiction!

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? For an expanded entry, please contact Stephen Dias for further information and pricing. Tel: +44 20 7841 2952 Email: stephen.dias@opi.net Web: www.opi.net/calendar

FEB 20-24 AOPD 2012 Annual One-on-One Meeting La Quinta Resort, Palm Desert (CA), USA MAR 06-08 Paperworld Middle East Dubai, UAE

2012

MAR 06-10 CeBit 2012 Hannover, Germany

JAN 09-12 Hong Kong International Stationery Fair Hong Kong, China

MAR 14-18 Istanbul Stationery and Office show Istanbul, Turkey

JAN 10-13 International CES Las Vegas (NV), USA JAN 28-31 Paperworld Frankfurt, Germany

Contact: Michael Reichhold. Tel: +49 69 575 6200; Email: michael.reichhold@ messefrankfurt.com; Web: www.paperworld. messefrankfurt.com

MAR 21-23 Ed Expo & Dealer Conference Baltimore (MD), USA APR 04-07 World of Stationery Kiev, Ukraine APR 15-19 TriMega’s 16th Annual One-on-One Meeting Palm Springs (CA), USA

JAN 30 OPI European Office Products Awards 2012 Frankfurt, Germany Contact: Janet Bell, OPI. Tel: +44 20 7841 2941; Email: janet.bell@opi.net; Web: www.opi.net/awards2012

The 11th annual awards for the European office products industry, presented at an awards dinner during Paperworld Frankfurt.

FEB 01-03 Red Cheetah Coalition 2012 Austin (TX), USA

APR 24-25 The Stationery Show Business Design Centre, London, UK

May 08-10 Remanexpo USA Cobb Galleria Centre, Atlanta, Georgia, USA

JUL 04-06 ISOT Tokyo International Exhibition Centre, Tokyo, Japan

MAY 20-22 OPI Global Forum 2012 Chicago, USA

Contact: Janet Bell, OPI. Tel: +44 20 7841 2941; Email: janet.bell@opi.net; Web: www.opi.net/GF2012

An invitation-only forum for CEOs and senior executives from the business supplies and associated sectors.

MAY 20-23 National Stationery Show New York (NY), USA

AUG 27-30 Office Paper Brazil Escolar Sao Paulo, Brazil

MAY 24 Integra Sales Conference, Crewe Hall, Chester, UK

SEPT 08-09 Office Club Annual Conference Celtic Manor Resort, Newport, South Wales

JUN 14-15 UFIPA Convention Bandol, France

SEPT 19-21 Paperworld China New International Expo Centre, Shanghai, China

JUN 22-24 Nemo Conference Carden Park Hotel, Chester, UK

SEPT 25-27 Paperworld Russia Moscow, Russia

JUN 28-30 Superstat Conference Whittlebury Hall, Northamptonshire, UK JUL 11-15 SP Richards Advantage Business Conference Gaylord National Hotel and Conference Centre, Washington DC, USA Contact: Allayne Brackbill. Tel: +1 770 801 5609 Email: abrackbill@sprich.com

OCT 10-12 TriMega National Convention Orlando, Florida, USA NOV 13-16 United Stationers Vision conference The Venetian, Las Vegas (NV), USA Contact: Laura Gale Email: lgale@ussco.com

DEC 05-07 European Forum 2012 Grange St Paul’s Hotel, London, UK

Contact: Janet Bell, OPI. Tel: +44 20 7841 2941; Email: janet.bell@opi.net; Web: www.opi.net/EF2012

An invitation-only European Forum for CEOs and senior executives to discuss the state of our industry and our universal challenges.

w w w.opi.net | OPI Magazine

Your OPI

Final word Your industry, your opinions

Martin Eames, Managing Director, Supplies4Office

A fair deal for new products It

is generally accepted that new products are the lifeblood of any industry and yet, among its other problems, the UK office products industry has actually become structurally resistant to them. For example, working against them are: • Annual catalogues and range selection processes • A reluctance to delist tired, traditional products and replace them with new improved versions • A focus on category management and supplier rationalisation • Penal product listing costs, rebates and ‘soft money’ programmes • The service not product orientation of contract stationers and dealers • Inadequate contact points and ineffective communication channels with end-users. All these conspire to make the OP market a very difficult and uninviting environment into which to successfully launch new products. With such little encouragement, it is not surprising that there is relatively little genuine innovation from manufacturers and even when opportunities arise to present their products directly to users, few take up the opportunity. Yet the industry has never needed innovative new products more. A seismic change is the behaviour of office users under the age of 35: they simply do not use paper, which was the core product from which most traditional office products developed. Many products are now very tired and reaching the end of their lifecycle. Like most mature industries, OP has more than its fair share of mature people and maybe this is one reason why it seems to be unresponsive to the changing needs of the end-user. If you are over 45 you probably still take handwritten notes and print off hard copies of important documents to file – so what is the problem? Unfortunately, the under 35s, who are underrepresented in the industry but increasingly represented in offices, do not work this way; the ‘paperless office’ has arrived. The industry needs new, innovative products to stimulate this new breed of office consumer – in fact it has needed them for the last ten years. But to encourage them, the environment must be more attractive and everybody in the supply chain has a responsibility. • Manufacturers need to take a broader view of the business they are in, recognise their core competencies

and use them to develop new products • Manufacturers should set tough but achievable revenue targets as a percentage of total sales for new products • Manufacturers should invest in market research to understand the needs of the modern office worker • Wholesalers, contract dealers and dealer groups should give more recognition to manufacturers with proactive end-user marketing programmes. It is end-user adoption, not trade adoption, that creates brands • Wholesalers, contract dealers and dealer groups should make more use of web catalogues to refresh ranges and encourage new products to be launched at any time, not just at the annual hard copy catalogue launch • Wholesalers and contract dealers should stimulate the development of genuine new products by offering the benefit of lower first year listing costs, and should commit to list them for a minimum of two years • Dealers of all sizes should proactively promote and sample new products to stimulate their end-user customers to try new added-value alternatives • Dealers need to diversify into non-traditional growth products such as catering, packaging, janitorial, promotional and managed print services • Media owners should explore and deliver new and better communication channels to end-users. Mature industries cannot really be turned around but they can be sustained for longer by developing a climate of product innovation and continuous improvement. The OP industry needs to take coordinated action now in order for everyone to benefit from the added value that new products will generate.

All these conspire to make OP a very difficult and uninviting environment

OPI Magazine | December 2011 / January 2012

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

in the next issue • Arnold Theuws of Quantore takes the Big Interview hotseat on the subject of being a European dealer group • European retail: what’s happening? • A US dealer shares its secrets for success

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