twenty five year anniversary
Office Products International
twenty five year anniversary
Big Interview
Connecting the
business products world
ISSUE NO.2 61
Andrew Morgan, President, ECi Distribution Division p18
July/August 2016
JULY/AUGUST 2016 WWW.OPI.NET
NAOPA shortlist p58
The aftermath of Staples/Depot p27
p33 Dealers and technology: the issues explained p52 Furniture trends
Contents July/August 2016
www.opi.net
News
46 Does a silver bullet really exist?
6 Round-up
Essendant’s Mark Evans cuts through the technology noise
SP Richards acquires again; MBE for Brother’s Phil Jones; changes at UK and German dealer groups
49 The importance of being prepared
11 News Analysis
What will the Brexit vote mean? Fresh impetus for BOSS
A look at Bosnia/Herzegovina dealer R&S’ multichannel and multi-category approach
Features
Events
56 NeoCon
Visitors of this year’s trade show once again came away inspired
18 Anytime, anywhere
ECi’s Andrew Morgan advises dealers on what their key technology priorities should be...
58 NAOPA
This year’s NAOPA shortlist – and how to get involved
27 The billion-dollar bungle
Category Analysis
18
Counting the cost of the failed Staples/Office Depot merger
52 Furniture
As the workplace evolves, what does that mean for the furniture in it? OPI investigates...
33 What the experts say... What are the technology issues for independents today? OPI asks the tech experts
Regulars
40
5 Comment
40 The technology tipping point
63 Where are they now?
Omnichannel is the way to go, according to the big retailers, and technology is its great enabler
Santiago Bilinkis
65 5 minutes with... Tanja Müller
43 Tech talk
52
SP Richards’ Paul Gatens on the opportunities and challenges that dealers face in the tech arena
66 Final word Jerg Luetkens twenty five year anniversary
twenty five year anniversary
Big Interview
Connecting the ISSUE NO.2 61
business products world
Andrew Morgan, President, ECi Distribution Division p18
July/August 2016
JULY/AUGUST 2016
27
Office Products International WWW.OPI.NET
“I believe that in some ways we are close to a tipping point again in the industry for accelerated consolidation. The only thing missing is the requisite capital infusion. But if Staples starts acquiring aggressively, I believe we could potentially see investment capital return, signifying a roll-up of large independent dealers.”... For the full story, turn to page 27
NAOPA shortlist p58
The aftermath of Staples/Depot p27
p33 Dealers and technology: the issues explained p52 Furniture trends
w w w.opi.net | OPI Magazine
3
Editorial Editor-at-large Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net
Editor Heike Dieckmann
Comment
+44 (0)20 7841 2950 heike.dieckmann@opi.net
Deputy Editor Michelle Sturman
Surprise surprise!
+44 (0)20 7841 2942 michelle.sturman@opi.net
Sales and Marketing VP – Continental Europe, Middle East and Africa Ewan Dickson +44 (0)20 7841 2954 ewan.dickson@opi.net
VP – North America and UK Chris Turness +44 (0)20 7841 2953 chris.turness@opi.net
Director of Growth Services Jeremy Hughes +44 (0)7807 810617 jeremy.hughes@opi.net
Digital Marketing Manager Aurora Enghis +44 (0)20 7841 2959 aurora.enghis@opi.net
Events Events Manager Lisa Haywood +44 (0)20 7841 2941 events@opi.net
Production and Finance Studio Joel Mitchell +44 (0)20 7841 2943 joel.mitchell@opi.net
Operations & Production Eda Sismanoglu +44 (0)20 7841 2950 eda@opi.net
Finance Kelly Hilleard +44 (0)20 7841 2956 kelly.hilleard@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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It’s been a month full of surprises, hasn’t it? And I’m not just talking about the England football (soccer) team’s humbling defeat at the hands of Iceland at Euro 2016… Thinking about it, perhaps it wasn’t that much of a surprise after all given England’s track record in major tournaments. But I digress – the real shock, in my opinion at least, was the outcome of the UK referendum on 23 June and the decision to leave the European Union. This is something that has really set the cat among the pigeons on a number of levels – social, political and economic – and the Technology is at the fallout is bound to be felt for forefront of almost some time to come (read everything that’s more on page 11). happening in the Technology is at the business world today forefront of almost everything that’s happening in the business world today, and this month’s issue is a Tech Solutions Special that really covers a lot of key areas. I hope that in the following pages you find something useful that will help you develop your business. Going back to surprises – Joel Vockrodt of US dealer Office Peeps received one of the nice kind recently, winning the iPad mini that was on offer to one lucky participant in OPI’s 2016 Reader Survey. Thank you to Joel and everyone else who took part in this extremely valuable exercise for us. Look out for some interesting improvements to OPI in the near future. Have a great couple of months.
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.
Andy Braithwaite Editor-at-large
Office Products International Ltd (OPI), 2nd Floor, 112 Clerkenwell Road, London, EC1M 5SA, UK Tel: +44 (0)20 7841 2950
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5
News n Round-up
News from opi.net SP Richards makes another acquisition SP Richards (SPR) has made a bolt-on acquisition to its Impact Products jan/san and safety products unit. The US office products wholesaler has entered into a definitive agreement to acquire the feminine care, toilet seat cover and food service paper business of Rochester Midland, which will add about $20 million in annual sales. This latest acquisition – for which no financial details were provided – came just shortly after SPR announced it was buying $180 million distributor Safety Zone.
Wholesalers
Dealer Groups
Strategic changes at Superstat It’s a time of change at UK dealer group Superstat after co-founder and Managing Director Chris Collinson announced that he was retiring from the group effective 1 July 2016. Collinson has been in the OP industry for 37 years, starting out as a packer at Neville & Gladstone when aged just 16. He co-founded Superstat with Ivan Dunn in 1994 and it is now wholesaler Spicers’ number one dealer group with a dealer base of more than 380 that has combined annual sales of £200 million ($290 million). Superstat confirmed to OPI that the group will now be run by the board of directors and that it would not be looking for a direct replacement for Collinson. News of Collinson’s retirement came shortly after the group announced the outcome of a strategic review of its operations in the context of the current market situation. As a result of this review, a number of staff cuts have been made and the group said it will make a significant investment in technology, including further development of the Oasis ordering platform. At its annual conference in June, Superstat also revealed a potential new hub concept as part of a revamp of its Cadabra managed services unit after the announcement that almost 60 smaller dealers will no longer have access to overnight deliveries from Spicers. Superstat said there was already a pipeline of possible hubs and that the initiative was underpinned by a robust centrally-managed data management system, part of the aforementioned technology investment. Chris Collinson
HP Inc announces supplies changes HP Inc is to make significant changes to its channel supplies inventory as it looks to implement consistent pricing globally. The changes came following the sale of some of HP’s software assets to Open Text for $315 million announced in June. HP explained that it will fully reinvest the gains from this in its Printing business in order to reduce supplies channel inventory and to increase marketing. As a result of the inventory reduction, CEO Dion Weisler said he expected sales through unofficial channels to be minimised and grey market activity to be eliminated. Weisler also said HP was moving from a push model to a pull approach, driven by market demand. He further confirmed that pricing would effectively come down, “broadly speaking”, as HP adopted more of an everyday low price strategy and ran less promotional activity.
Vendors 6
OPI Magazine | July/August 2016
News n Round-up
Wholesalers
Dealer Groups
Essendant CFO recognises Staples threat
Kaut-Bullinger to leave Soennecken
Essendant CFO Earl Shanks has said that the new mid-market push by Staples could be a threat to some of its independent dealer customers. However, while Shanks said that dealers traditionally win on service aspects and through their customer relationships, he pointed out that Essendant’s mission was to “enable all our customers to be successful” and was certainly not critical of Staples’ new mid-market strategy that was announced recently. He also said that the wholesaler was “disappointed” the Staples/Office Depot acquisition did not go through. If it had, of course, Essendant would have acquired around $500 million in diversity contracts from Staples. Now, he explained, the wholesaler’s growth of its corporate accounts business – worth about $200 million in annual sales – would have to be organic.
In an important development in the German office products market, leading independent reseller Kaut-Bullinger has left Soennecken, having been a longstanding member of the dealer group. No specific reason has been given so far, but OPI understands that Soennecken’s decision at the end of 2014 to go direct to end users did not sit well with the dealer. Kaut-Bullinger is also under new leadership, with Oliver Mathes having taken over as sole Group Managing Director from Johannes Peter Martin in December 2015. Kaut-Bullinger is Soennecken’s second-largest member after Plate. It will leave the group at the end of this year.
Senior marketing change at Lyreco Lyreco’s Group Marketing Director John Watson is leaving the global office supplies reseller after 24 years with the firm. In a letter to suppliers, Lyreco stated that as part of a number of organisational changes at all levels of the group marketing team, Watson had “decided it is the right time for him to look for the next opportunity and will take the chance to relocate back to the UK”. Lyreco has appointed Watson’s successor from within after Franck Suhit was named Group Marketing Director as of 1 July. Suhit has been with Lyreco for more than 20 years, the past ten of those in charge of the French marketing structure. John Watson
People 8
OPI Magazine | July/August 2016
Management changes at Office Friendly UK office products dealer group Office Friendly has announced that Managing Director Steve Harrop has stepped down with immediate effect. In an open letter to all Office Friendly stakeholders, Harrop said that a tough personal life Steve Harrop in 2015/2016 had led to “an assessment of my values and personal goals”. The same day, Financial Director Julie Hawley was promoted to the post of Interim Managing Director. Hawley has been in the OP industry for 26 years, the past ten at Office Friendly, having joined the dealer group from wholesaler Kingfield Heath (now part of the EVO Group’s VOW wholesaling business) in 2006.
Dealer Groups
MBE for Brother’s Phil Jones Brother UK Managing Director Phil Jones has been awarded an MBE in recognition of his services to business. Having joined Brother UK as a fax salesman in 1994, Jones has held a series of roles at the firm, including UK Sales and Marketing Director. He was made Deputy Managing Director in 2012 and Managing Director a year later.
People
Phil Jones
News n Analysis
What next after Brexit vote? Sales and margin pressures are likely for the business products industry
Thursday
23 June 2016 is set to go down as a historic date, not just for the UK and Europe, but for the world as a whole. In voting to leave the European Union (EU), the UK sent shockwaves around the globe. It was an outcome that took many observers by surprise; it certainly shook the wider financial and business communities which had been banking on the Remain vote to prevail right up to the last minute.
“I suspect capital projects on furniture could be impacted in the short term, but pens and paper […] will still be required”
Ramifications It’s still early days yet, but there may well be a whole host of social, economic and political ramifications of Brexit; you only have to look at the resulting political turmoil in the UK for proof of that. So, what will it all now mean for the business products industry? The immediate impact of the vote to leave the EU from a financial perspective was a slide in the value of the pound sterling and a slump in worldwide stock markets, although the situation does appear to have stabilised somewhat about a week after the vote (when this article was written). This fall in the pound was predicted by many as the biggest short-term issue facing UK-based firms when OPI covered the Brexit issue before (see Hot Topic, OPI May 2016, page 22), leading as it would to price rises on products imported into the UK, ie the vast majority of office and business supplies. In fact, it appears that price rises were already on the cards even before 23 June, with the pound having been under pressure for several months since the Brexit referendum was announced. SPOT Group CEO Jeff Whiteway agreed that the “key impact” is
the weakness of the pound and the effect this will have on euro and US dollar-sourced products if it stays at current levels. “This will impact EOS, paper and Asia imports, so [it would be] material,” he told OPI.
Price increases John Watson, former Group Marketing Director at Lyreco, said there would probably be “a disturbance on the business” in the UK as inflationary impacts came into play, while the managing director of a leading UK reseller said his firm was currently evaluating potential price increases and the ability to pass these onto customers. However, Whiteway and Watson were both more concerned with the wider implications for the UK economy. “I suspect capital projects on furniture could be impacted in the short term, but pens and paper, as well as many of our consumable facilities supplies, tend not to be discretionary purchases and will still be required,” said Whiteway.
Longer term, the situation is less clear. The process by which the UK negotiates its exit from the EU can take up to two years, and those negotiations will not start until a new Prime Minister is elected, which should happen in September. That takes real progress to the end of 2018, a long period of uncertainty typically despised by businesses and financial markets alike. It might mean a reluctance by firms to hire staff and make investments in large projects such as office moves or office furniture and IT refreshes. What’s more, just days after the vote there is already talk of large multinationals such as Siemens, Visa and Vodafone evaluating their presence in the UK. If they – and others – pulled out, that would, of course, mean job cuts. So, to sum up, the UK looks set for a period of economic uncertainty and a weaker pound and this is likely to put further growth and margin pressures on our industry.
w w w.opi.net | OPI Magazine
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News n Analysis
Fresh impetus for BOSS There’s optimism as new CEO begins tenure at UK trade association BOSS
UK
office supplies trade association BOSS unveiled a new logo and mission statement during its Members’ Day at Stationers’ Hall in London in June, just a few days after its new CEO Philip Lawson started in his role. Lawson has taken over from Michael Gardner, who has now retired after more than eight years in the post. He paid tribute to his predecessor, telling OPI that Gardner had left BOSS in a stable financial condition and ready to face the challenges of the future. “There are no burning fires,” he said. “There has not been a massive reshaping, but we have a new logo and are refreshed and reinvigorated.” The new BOSS CEO said his main role was to grow the membership, and this will include connecting with dealers at a more local level and trying to attract new entrants from outside some of the traditional product categories.
Strategic review Following the news of his appointment in March, Lawson was involved in the final stages of a six-month strategic review of BOSS, undertaken by its team and board members. The results of that review were presented by incoming Chairman, Geoffrey Betts of Stewart Superior, to an audience of more than 90 senior level executives who attended a CEO Conference on the morning of the Members’ Day.
Philip Lawson
“There has not been a massive reshaping, but we have a new logo and are refreshed and reinvigorated” “This is a time of change and a pivotal moment, not just for office products but for other industries as well,” said Betts, adding that the review – which had also involved key stakeholders – has enabled a good view of what BOSS is and where it should be going. A series of roundtables – moderated by former EVO Group CEO Robert Baldrey – elaborated on some of the key areas that BOSS should be focusing on. It was refreshing to see so much engagement and input from the participants, including the CEOs of the rival SPOT and EVO groups jointly presenting the results of one of the roundtables. One senior industry figure who has been outspoken in the past about the need for BOSS to change is one of its former chairmen, Ron Wotherspoon. In an open letter he wrote in January 2015, Wotherspoon argued that BOSS had “lost its way” and should consider merging with the British Printing Industries Foundation (BPIF), which already provides management services to BOSS. Speaking to OPI, Wotherspoon said Lawson’s appointment as the new
BOSS CEO was “the perfect choice”, adding: “He has a long history of working in the trade, he has experience of senior management and he has many excellent personal qualities he can bring to the role.”
Concerns However, Wotherspoon admitted that he still has concerns about the changing market of providing services to businesses, which he described as “broader, bigger and more ruthless than ever”. He explained: “The ‘welfare state’ created for dealers by the wholesalers in the 1980s and 1990s no longer works and new relationships are required with new priorities for all our industries. We need an effective and much broader trade body providing collaborative services such as data, standards, training, accreditation, etc. “I stand by my letter of last year; the challenge is to BPIF and beyond, not just BOSS. But I am optimistic that with Charles Jarrold [CEO of BPIF] at the top and Philip running BOSS, we have good people in place to face a difficult future.” . w w w.opi.net | OPI Magazine
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News ■ And finally...
Comment In this issue, OPI asked industry insiders for their opinions on what is happening in the furniture category with respect to trends, technology and working practices. (To read more on the sector, read the Category Analysis on page 52) More power is being built into everyday items to allow for the charging of devices. We are seeing multi-purpose products being developed, such as lamps that incorporate USB charging in the base, for example. These types of products enable easy access points to charging while providing items that every workspace needs. There’s also a growing need for sound suppression materials. As collaboration spaces and open meeting areas continue to be a large part of the workplace, sound suppression is needed to help keep noise levels down. Paul Griffiths, General Manager, Safco There is an increased need for collaborative work areas, whether it be due to changing work styles driven by the type of work that is being done, or the way that different generations like to work. So we see growing demand for environments that foster collaboration, but these need to work for coffee breaks and impromptu meetings as well as function as lunch spots and quiet areas for people to work. The furniture in these environments needs to be comfortable, inviting to the eye and practical all at the same time. Some office furniture manufacturers have created alliances, or even acquired home furnishing companies, to help them cross over into this space. Allan Klotsche, President/CEO, Mayline Our customers’ requirements are changing. On the one hand, this can be attributed to technological progress, but on the other also to the increased significance employees attach to their work environment. The focus is on functionality and design, a sense of well-being and health as well as on efficiency and productivity. Torsten Buchholz, Office Furniture, Soennecken Technology and our changing work habits are both shaping furniture design. For instance, we don’t use a table for one thing alone. We might have meetings around it, eat our lunch at it, sit and have a quick catch-up, charge our portable devices or sit there to show colleagues photos, projects and ideas on a smart TV. Matt Allaby, Furniture Business Development Manager, VOW Customers are asking for different finishes, special sizes and personalised furniture. Increasingly, there are more accessories being brought to market for LED products and ergonomic/postural furniture, although the move to include these in more conventional systems is gradual. Marc Roca, CEO, Rocada
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OPI Magazine | July/August 2016
TWEET CHAT follow us on Twitter @OPInews, @andy_opi
@Knoll_Inc Today’s workplace is a stage, not an office. @FastCoDesign features Rockwell Unscripted #NeoCon2016 @Rockwell_Group @archiproducts #TheChurch2016 the astonishing @TomDixonStudio’s exhibition at @CDWfestival @Staples It’s #BringYourDogtoWorkDay! Luckily someone’s very well trained. Follow StaplesUS on Snapchat to see Cooper at work @OfficeSuppBlog Millennials want peace and quiet at work, not free snacks hvia @MONEY #officelife
$93.8 billion
opi.net poll results
Expected value of the global educational technology and smart classroom market by 2020
Resellers, how are your office furniture sales best described?
4.74%
50%
Expected growth (CAGR) of the global stationery and cards market between 2016-2020
$28 billion
Expected value of the accessories and peripherals market for smartphones and tablets in the Americas by 2020
$500 billion
E-commerce sales in Europe in 2015
SNAP SHOT Office and school furniture manufacturer and wholesaler OFM recently launched an Office Throwback Contest. The competition offered US office workers prizes for photos uploaded to Instagram of the oldest item in their office. Winners were awarded two modular stools.
15%
20%
15% Slightly growing or flat Growing strongly Declining We don’t sell office furniture
Big Interview | Andrew Morgan
Anytime, anywhere ECi’s Andrew Morgan is confident that independent resellers can compete in today’s digital commerce world, but argues they need to take full advantage of all the tools available to them 18
OPI Magazine | July/August 2016
ECi | Big Interview OPI: A challenge that you have in the office products sector is dealer consolidation. How do you cope with that? AM: We are continuing to see both dealer consolidation and attrition, but while there is a fair bit of that, it’s a little slower on the scale than this time last year. Obviously, with consolidation we like to keep those customers in the ECi portfolio of products and we’re doing a tremendous job and are being successful in that realm. From an attrition standpoint, we are trying to proactively let dealers know that if they are exiting the business or if they are anticipating an exit, let us know and we will do what we can to help. Every segment of the industry is trying to make sure that the volume stays in the independent dealer channel [IDC] as opposed to going to either the power channel or to the e-tailers. And we’re proactively attempting to communicate with those dealers and, again, keep that volume in the channel. What’s interesting is that over the past 30 months or so, despite dealer attrition and consolidation, the volume that the IDC is transacting has stayed on the positive side; so the channel is strong in ECi’s opinion. We continue to process and transmit larger numbers every month and every year, but to address your point, yes, the industry is doing it with fewer dealers than we did in the past.
by Andy Braithwaite andy.braithwaite@opi.net
IT’S
probably a safe bet to say that it has never been as important as it is today for independent resellers to harness the power of technology in order to successfully run their businesses. Customer service, ordering, pricing and margin management, marketing, sales tools, product content, e-commerce, data collection and interpretation – the list of technology-related touchpoints goes on and on. How, then, are dealers faring in this fast-changing world where the annual technology budgets of the major players run into the tens and hundreds of millions of dollars? And what are the key technology-related challenges that dealers should be prioritising? Who better to answer these questions than a former dealer himself who went on to set up his own e-commerce firm Red Cheetah and is now President of the Distribution Division at software solutions powerhouse ECi? OPI: Let’s start off by looking at ECi. You were acquired by Carlyle a couple of years ago now; how has that influenced the business? Andrew Morgan: I think it’s been a very positive influence. Carlyle and Ron [Books, ECi CEO] and his team have driven some very good changes in the business. From the standpoint of acquisitions, we’ve made three over the past year across ECi as a whole. One of those was in distribution which was the addition of JumpTrack. From the Carlyle perspective, we embarked on several strategic initiatives that are focused on serving our ECi customers better. One of those is systems consolidation which has been a prioritised focus of ours in this industry over the past year. This initiative started with a detailed analysis of all of the systems we had focused on in the office products industry to understand what are the best go-forward platforms. Once that was completed, we began focusing on consolidating the solutions that will allow us to invest more aggressively in those areas and better serve our customer base. Think of a world where every million dollars of investments will be spread across two systems as opposed to five. That will significantly help our dealers.
“Think of a world where every million dollars of investments will be spread across two systems as opposed to five”
OPI: If you were to identify two or three key product development areas that you’ll be focusing on in the next 12 months or so, what would they be? AM: The first is mobile. We launched the Office Shopper mobile app a little more than a year ago. The penetration has been good, but still slower than what we would anticipate or like to see in the channel. I think it’s imperative that dealers embrace the technology and not wait for it to be ‘perfect’. As with all software, we will continue to roll out enhancements and revisions to the Office Shopper app, but I think dealers need to keep up with the e-tailers and the Staples and Office Depots of the world. They have to proactively embrace that technology and truly train their sales teams on how to drive that adoption within their customer base. The second one – and this is a long piece of functionality that ECi has had with the Acsellerate product – is Profitability Manager. I am constantly amazed at the fact that more dealers are not heavily engaged in Profitability Manager from Acsellerate because, from a margin enhancement capability, it is second to none. The opportunity to be able to market and merchandise better those SKUs that w w w.opi.net | OPI Magazine
19
ECi | Big Interview will enhance your margin is imperative, and we’ve seen dealers that have embraced this particular piece of functionality truly have great success stories in profitability. And then the third one is a wider IDC need, and that’s content. As you know, there are several initiatives going on right now with broadening content and content accessibility, and ECi wants to play a role in that. We want to make sure that the search features within our applications and software are tuned so that dealers can truly sell multi-faceted content. We continue to see traditional office supplies sales decline year over year, but see the expansion of everything from jan/san and MRO to breakroom and coffee services driving their top-line revenues. So content, and the ability to process it in a better, faster, more efficient way, is on ECi’s radar as well. OPI: Let’s talk about dealers and technology in general. How do you think dealers are doing on the technology side if we benchmark them against the likes of Staples and Amazon? AM: I believe dealers are still hesitant to embrace change over the larger picture. I think that they are still hesitant, as we discussed earlier, to embrace a mobile app, to change the sales process that’s needed for their teams to be able to sell the benefits of it to the end users and to truly change their business model. I consider this is the main challenge that the IDC faces. At ECi, we have a tremendous amount of functionality and technology that goes underutilised and there are times when dealers get a tad myopic in what they are attempting to do as opposed to truly embracing technology, embracing change and again driving it through their organisations. There are some very progressive dealers which do just that and they continue to grow and be successful.
OPI: If you were a dealer, what would be the priorities for you from a technology perspective? AM: If I went back to the days of being a dealer, the top priorities for me would be SKU selection and margin enhancement. We continue to see margin erosion and as I see it, it’s unbelievably important to tie margin enhancement and SKU selection in with content adoption because it does not work to throw a million SKUs online and not know what you’re selling or what the margin potential is. So, the first thing I would look at is a programme where I could enhance my margins by the SKU selection. If I was a stocking dealer, I would let that drive my stocking position and then I would embrace mobile; I would make sure that my sales teams had all of the value propositions to go to my end users and drive mobile adoption. It is not about how a dealer or ECi thinks they should order, it is how the end consumer wants to place orders, and that shift to mobile continues to take place. Back in the late 1990s in our dealership I was a very early adopter of e-commerce and I would do the exact same thing with mobile – I would create value propositions and metrics for my sales teams to drive every single end user I could to mobile. It will facilitate both growth and help with retention.
“Dealers get a tad myopic in what they are attempting to do as opposed to truly embracing technology”
OPI: We had the news recently that Amazon Business hit $1 billion in sales after just a year in existence, and some of the growth predictions I’ve seen for the next few years are astronomical. When you look at Amazon Business and the fact this part of the company is targeting the small/ medium business customer – the bread and
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Big Interview | Andrew Morgan
“Independent dealers need to tell their story from a technology, content and reliability perspective”
butter of the independent dealer, how much of a threat do you think that will be, or already is? AM: I would say it is a threat for the dealers that are not embracing technology and change. One of the things that I have always been bullish on – and will continue to be – is the relationship that the dealer has with these accounts. What I’m seeing is a lot of C and D items that are going to Amazon. Again, I think this plays to the accessibility and ease of ordering and the content selection. If dealers can combat those and maintain that personal relationship, they’re positioned very well to not lose accounts to Amazon in that manner.
AM: I would say so, and I think we’ve seen for years in this industry that there is sometimes a lack of marketing to their existing customer base from dealers. Dealers need to have very open and honest conversations with their end users regarding the Amazon experience. I don’t think that the concept of ‘well, I haven’t heard from the end user so everything is good’ holds true. You need to have those conversations and business reviews with the end user to make sure that you do understand what their wants and needs are from a technology perspective and what their perceptions are of the Amazons, the Staples and the Office Depots of the world.
OPI: Is Amazon really the benchmark, the pinnacle of the online experience in terms of product availability, service and price (or at least the perception that Amazon is cheapest)? AM: You just hit on it, Andy. I think it is not the pinnacle of the e-commerce experience; I don’t believe that it is the down-and-dirty lowest price, but that is the perception fed by Amazon’s marketing and by those that do buy from Amazon. And it’s the exact same experience that hit the IDC with the explosion of retail stores and the availability of product all those years ago. Independent dealers need to tell their story from a technology, content and reliability perspective, because once you get under the Amazon hood, it is truly not the pinnacle of the e-commerce experience, nor is it always the cheapest price. So the dealer is not outgunned by anything other than perception.
OPI: How would you expect Amazon Business to evolve over the next 18 months or so? AM: I’ve seen the same projections as you and I think they’ll continue to drive that business very well. It will be spread out over more than just traditional office products and Amazon Business will continue to grab market share. I also believe that they will continue to push the envelope on areas like same-day delivery. So it’s imperative for the IDC to combat all of this with all of the things we’ve just discussed.
OPI: So is there a communication gap that dealers need to address?
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OPI Magazine | July/August 2016
OPI: Do you think they’ll have feet on the street, ie Amazon sales reps knocking on customers’ doors? AM: Personally, I don’t see that happening. I’ve been wrong more times just today than I would care to admit, but I don’t foresee that happening because it would be such a change in the business model for Amazon. So no, I don’t see them putting feet on the street, but again, Amazon has always proven to be a little bit unpredictable. OPI: How are your relations with the wholesalers? You had all that stuff with United [Stationers, now Essendant] and
ECi | Big Interview
“The relationships between ECi and the wholesalers have never been better”
MBS Dev a few years ago and about whose role it was to provide technology solutions. Are you comfortable or happy with the situation as it is now? AM: I would still argue that there’s a lot of overlap in the industry, but I would also say that, as a whole, the industry is acting more unified in its approach. I think we’re doing a lot of the right things and the relationships between ECi and the wholesalers have never been better. OPI: When you look at the two major OP wholesalers, would you say your relationships with them are on an equal footing, or are you having more strategic discussions with one or the other? AM: No, I would say that they are equal. We have always been relatively agnostic in our approach with the wholesalers and we’ve never positioned one over the other. It is equal between the two because, at the end of the day, we have dealers working with both of them. And at the same time, both wholesalers are doing great things for their dealers. OPI: If you could ask them to either do one thing or stop doing one thing, what would that be? AM: Just one, huh? OPI: Well, you can make a whole list if you like. AM: Honestly, Andy – and this is going to sound like I’m shying away from it, but you know me and you know I don’t tend to shy away from too many things – I think that independent dealers are in a great spot with their wholesalers. The control that the wholesalers are enabling with some of their search is fantastic and the opportunities that they’re presenting to their dealers are great. So there’s nothing – given the capability – that I would tell Essendant, SP Richards [SPR] or Supplies Network to stop doing because I think they’re truly doing great things for the dealer. OPI: But…? AM: There is no ‘but’. Again, I’m not a shy man and I truly think that what the wholesalers are doing has the best interests of the dealer in mind. A year ago, I would have said more focused product expansion, but, as you can see from recent announcements, both Essendant and SPR are making aggressive moves in that area.
They’re doing great things merchandising and search-wise; they’ve handled the conflicts that naturally occur between the wholesaler and dealers that want to exercise their own merchandising and marketing. So no, there was no ‘but’. The wholesalers are doing things that will continue to be good for the channel. OPI: Just to finish off: if you could dust off your crystal ball and look into the future, where do you see the whole technology field going? The Internet of Things seems to be a bit of a current buzzword, for example; is that something that impacts what you do at ECi? AM: The Internet of Things is mobile based and for me it is the ability to purchase anything from anywhere. That means content, SKU selection and mobile, and it’s the relationship we talked about earlier that will cement that business with the millennials and the next generations as they come though. I’ve got young kids; my six-year-olds can operate an iPad and an iPod and everything else and have been for years, and they aren’t going to stand for the non-availability of products on mobile platforms, so that’s where I see it going. There are so many things that are important, from e-commerce and all of the things we’ve discussed, but in the future the Internet of Things, in my opinion, will be anything from anywhere. OPI: Are you optimistic that dealers will embrace this or concerned that, if they don’t get on with it pretty soon, it might be too late? AM: I don’t think it’s too late and I am optimistic. We will continue to see attrition and consolidation in the industry based on a number of factors. As technology continues to speed up it’s going to continue to play a part in that attrition. The dealers that understand it, embrace it and set goals and metrics with key performance indicators have got a tremendous future ahead of them, I really do believe that. The ones that don’t, we’ll see how that plays out, but I’m optimistic and very bullish – and have been since I first got into this industry – about the future success of the independent dealer. .
Read more about ECi’s platform strategy, and Morgan’s views on the dealer groups’ e-content project and the role of the Business Solutions Association on opi.net in our Big Interview Xtra exclusive online content.
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Staples/Office Depot | Hot Topic
The billion-dollar
Were there really any winners that emerged from the 15-month battle by Staples to acquire Office Depot? OPI Editor-at-large Andy Braithwaite takes a look
by Andy Braithwaite andy.braithwaite@opi.net
SPOT
the difference between 1996/97 and 2015/16: Staples tries to acquire Office Depot, the transaction gets challenged by the US Federal Trade Commission (FTC), the parties go to court, the FTC is granted an injunction and Staples abandons the deal, leaving its rival in a weakened position. Talk about not learning from your mistakes! Joking aside, the world is obviously a very different place than it was 20 years ago, hence the second attempt to buy Depot. But, with the unprecedented pace of change that we are seeing in our industry today, it’s pretty damaging to be in regulatory limbo for 15 months while your competitors take advantage of the uncertainties in the market. At the time of the announcement in February 2015 when Staples agreed to acquire Office Depot, Staples had already embarked on a reinvention strategy to combat the threat of Amazon. Depot, meanwhile, had its
hands full with the integration of OfficeMax, acquired just over a year earlier. Industry consultant and M&A specialist Thomas Schinkel says he was “blown away” by Staples’ decision to “play games from the 1990s” and to try and acquire Office Depot. “Ultimately, if you are on a reinvention course and you launch this [acquisition], there is a huge contradiction,” he states. “There is no doubt that it harmed their reinvention process and basically set them back about two years in their competition with Amazon.”
“I think they made a huge strategic blunder with this Office Depot deal, and what informed it was greed, arrogance and short-sightedness” Schinkel puts the blame fairly and squarely on the Staples board of directors and their legal advisors. “I think they made a huge strategic blunder with this Office Depot deal, and what informed it was greed, arrogance and short-sightedness,” he says. “What also bothers me is that they laid off hundreds of people [as a result of the merger w w w.opi.net | OPI Magazine
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Staples/Office Depot | Hot Topic termination]. I think all the board members should resign: they should get in a new board and a new management team and create a Staples for the 21st century.” We have previously suggested that Staples’ attempt to acquire Office Depot was part of a wider master plan instigated by Staples CEO Ron Sargent to fatally wound his nearest direct rival, but Schinkel doesn’t buy into that idea.
“I have yet to hear anything more than a handful of dealers tell me specifically that they took measurable business from [Staples or Depot]” “The argument could be made that he made a mistake, but to think the whole thing was thought through at so many levels below the table – I just don’t agree with that. You’d have to be so Machiavellian, and I don’t think Ron Sargent is that kind of person.”
Dealer advantage? So, with the distraction of the proposed merger, have independents been able to grab some market share from the big boxes? “It’s hard to determine,” notes Mike Maggio, President of US dealer group TriMega. “Anecdotally, we probably had some success in the SMB category based on their turmoil, but I have yet to hear anything more than a handful of dealers tell me specifically that they took measurable business from either one due to the uncertainty surrounding the acquisition.
Thomas Schinkel
Counting the cost It might appear flippant to say that it’s the lawyers and bankers who have done well out of the Staples/Office Depot transaction, but it’s probably true. In their 2015 annual 10K filings with the US Securities and Exchange Commission (SEC), Staples and Depot revealed acquisition-related costs of $147 million and $111 million respectively. In addition, further expenses of $24 million and $25 million respectively were noted in the companies’ Q1 2016 10Q filings with the SEC. These expenses principally relate to professional services, regulatory advice, legal fees, etc, and there will be more to come when second quarter 2016 filings are made. To finance the deal, Staples agreed two banking facilities, a $3 billion five-year asset-backed loan and a six-year $2.5 billion term loan. In its Q1 10K filing, Staples reported interest, fees and payments totalling approximately $154 million related to these financing transactions.
of other industry constituents – who were, often unwillingly, dragged into the fray – such as the dealer groups, wholesalers and some of the big resellers, that total appears to be a very conservative estimate indeed. The financial markets also took a hit. While an OPI source on Wall Street admitted that investors are fairly secretive about their positions, he did confirm that the event-driven investment community (ie those that trade on mergers and acquisitions) had widely-held positions in Staples and Office Depot and that the collapse of the deal may have shaved 1-1.5% off their funds’ results for this year.
Ironically, one investor that came out of it unscathed […] was Starboard Then, of course, there is the $250 million break-up fee that Staples has paid to Office Depot; the impact of lost sales and profits due to the transaction (mainly Office Depot in North America, and both Staples and Office Depot in Europe); the cost of Office Depot delaying parts of its integration process with OfficeMax; and a host of other hidden costs such as the impact of high staff turnover rates, management attention focused on the acquisition, etc. What does all that add up to? It’s hard to tell, but $1 billion wouldn’t seem an unreasonable figure. If you further take into account the costs incurred by a whole host
Given that these types of investors typically operate with low-to-mid single digit gains, then this certainly was a big deal for them. Ironically, one investor that came out of it unscathed, and even in the black, was Starboard, the activist investment firm that is credited (or blamed even?) with starting the whole Staples/Office Depot merger process (although Ron Sargent says – and there are documents to back this up – that talks between the two companies began before Starboard began loading up on Staples shares). By the end of 2015, Starboard had largely exited its positions in both Staples and Office Depot, selling out at a profit.
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Hot Topic | Staples/Office Depot “Likewise, when it comes to acquiring sales assets, we know of a few dealers picking up some, but overall there was not the flood of assets available that were expected.” Prominent Virginia-based independent dealer principal Dave Guernsey says the net benefit was that there was less focus from Staples and Depot on competing in the market, but this looks set to change now that both have said they will once again target small business customers.
“We could potentially see investment capital return, signifying a roll-up of large independent dealers” “Office Depot is pretty sound in our markets, so I expect them to become more price aggressive to take market share,” he states. “Staples is certainly more capable than Office Depot of launching a new [SMB] programme. That said, they’ve told analysts seemingly every year that they were going to fashion a programme and go after the SMB space. In past years, that announced strategy served to excite the markets because they always feel independents are vulnerable.”
He adds: “But every year, the effort was fairly lukewarm and independents were able to beat it back. Maybe this time they will be really serious about the effort, in which case we will need to be even better with defending our market share.” Maggio echoes this point about it not being the first time Staples and Depot have said they will target small business customers, but also sees other forces at play. “My concern is if they take some of the money they were going to spend on Depot and look to buy up ten or so large dealers,” he speculates. “I believe that in some ways we are close to a tipping point again in the industry for accelerated consolidation. The only thing missing is the requisite capital infusion. But if Staples starts acquiring aggressively, I believe we could potentially see investment capital return, signifying a roll-up of large independent dealers.”
Hot Topic Xtra: Strategic reviews, a sell-off of their businesses in Europe – how will things pan out for Staples and Depot? Check out our exclusive online content as we take a look at the most likely – and some left-field – scenarios.
Did Staples stand a chance? Staples and its legal team came in for some criticism when they decided not to call any witnesses in the court case versus the US Federal Trade Commission (FTC). However, a look at the 75-page court opinion from Judge Emmet Sullivan shows it would have been nigh on impossible for Staples to overcome the FTC’s legal challenge to the Office Depot acquisition given the arguments it (Staples) was putting forward in terms of product groups, customer segmentation and the presence of adequate competition. The FTC based many of its arguments on a Supreme Court decision related to a previous antitrust case involving a company called Brown Shoe. This case law demonstrated that, for example: • office supplies (excluding products such as ink and toner and jan/san supplies) represent a distinct “cluster” group of products for antitrust purposes; • antitrust laws exist to protect competition, even for a targeted group that represents a relatively small part of an overall market (eg large corporate customers). Given these factors, the last remaining hope for Staples was to demonstrate that
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OPI Magazine | July/August 2016
viable competition existed for the sale of core office products to large enterprise customers throughout he US. Amazon Business, despite its phenomenal growth, does not have RFP experience and there are pricing and service issues too; WB Mason has said it will focus on its ‘Masonville’ market and has abandoned plans to expand across the US; and independent dealers are not players in this Fortune 1000 market.
“Large B2B customers do not view any alternative sources for bulk procurement of basic office supplies” As Judge Sullivan summarised: “The record evidence shows that large B2B customers do not view any alternative sources for bulk procurement of basic office supplies that would retain the current competitive conditions of the market.” In other words, the overall market for business supplies, and issues such as the digitisation of the workplace, Amazon, etc, were all irrelevant. The FTC was well within its rights
to focus on a narrow set of customers and a specific group of products. Given all that and with the benefit of hindsight, Staples’ case does now appear to be rather weak, so its best hope was probably to force a dismissal of the case as it tried to do. Common sense would possibly have told Staples not even to have taken on the FTC, but it had a legal obligation to do so as part of the Office Depot merger agreement.
Technology Experts | Opinion
What the
experts say…
What are the technology issues currently facing independent dealers? OPI asked some of the prominent software providers and internet marketing experts in our industry for their views
E-COMMERCE
continues to take huge strides across the OP industry and the big players pour vast amounts of resources into developing their digital capabilities. To operate on anything like a level playing field, independent dealers must plan and invest in their own technology solutions if they’re not to be left floundering in the wake of the giants. Are they following the mobile movement, differentiating themselves enough and making effective use of data? OPI finds out...
Alex Nicolaides President, Logicblock Core challenge One of the pressing issues is a general unwillingness to work together within the industry from a technology perspective. There’s no ‘one magical solution’ for all dealers – they all have their own technology challenges, with alternative ways of going to market and differing aspects they need from a software system.
Mobile commerce The mobile movement has really grown and most dealers now understand the need for a responsive website that can provide a user-friendly mobile experience. Dealers that recognise this and choose a technology provider which can meet this need are much better placed to compete in the digital commerce age.
The endless aisle I see value in this if dealers have a bricks-and-mortar store. Some of our clients have a premium e-commerce site with a kiosk in store to order out-of-stock items, which is a fantastic idea and makes complete sense. The question is, how many others will adapt to this new model and how long will it take?
The need to differentiate This is extremely important whether you are local, selling nationally or even globally. Not only are you competing with the big boxes, but also the major internet retailers.
At Logicblock, we suggest a four-rule principle. 1. Experience – the site must be user and mobile friendly 2. Design – must be unique and stand out from the crowd 3. Content – is critical and can include custom banners, landing pages, blog posts, etc 4. Pricing – don’t price yourself out of the online game
Amazon Business This will continue to grow. After all, it’s Amazon and it is taking price, delivery, extreme ease of use and overall user experience into consideration. It even has a ‘Live Expert’ area that offers advice and answers to product questions directly from manufacturers. Technically, anything is possible, especially with a flexible technology platform.
Effective use of data Most dealers aren’t doing this. Many still don’t have or know how to create a Google Analytics account, for example, and this is a free tool that contains a wealth of information. We feel that one of the most overlooked pieces of data inside analytics is user behaviour: what do users do when they get to your site, how do they browse, where do they drop off? We offer two reports that often get overlooked. Keyword Searches tell you what users are searching for on your site and ensure the right keywords are part of your SEO strategy while Shopping Carts tell you the number of abandoned shopping carts on your site. If you have none, why is that? If you have too many, are pricing or unexpected shipping costs to blame? There are several outstanding third-party solutions that can deliver dynamic, targeted content to shoppers based on their behaviour, but we don’t see enough dealers taking advantage of these options. w w w.opi.net | OPI Magazine
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Opinion | Technology Experts
Craig Greitzer
Rick Marlette
VP of Sales, BMI
Co-owner, OPSoftware
(Business Management International)
Core challenge Operators such as Amazon and eBay are able to dedicate extensive resources to technology. You see that in visible areas such as their desktop and mobile e-commerce applications, but it’s also happening behind the scenes with their logistics mechanisms. Margins are slim and efficiency is the key to profitability. Technology is the single best investment that independent resellers can make.
Mobile commerce The adoption of mobile has been very slow. Most independent dealers just don’t see the need to invest right now which is a mistake. BMI released its mobile e-commerce solution in 2015 but the adoption rate has been underwhelming. As more and more young people come into the workforce, independent dealers will be left out if they don’t adopt mobile technology.
The endless aisle With margins being what they are on supplies, almost all dealers are adding other lines. The wholesalers have been expanding their offerings and this is a trend you’ll see continue. But managing all of the related data (SKUs, pricing, etc) can be an obstacle if dealer software systems don’t have the appropriate power and scalability. Dealers should also carefully choose what additional lines they go into or risk trying to be all things to all people, which is a challenging business model.
Amazon Business There’s no question that Amazon is the biggest threat to independents. Part of its customer attraction is the ease of doing business enabled by better technology. Independent dealers must continue to play their trump card by offering a personal touch but, more importantly, must be able to offer the same kind of customer-ordering experience that Amazon does.
Effective use of data As an industry, independents could do a better job of mining their own data. But simple things such as follow-up emails to customers who’ve recently purchased, with offers of accessories, similar items or consumable products, would be a good start. Some wholesalers have these email programmes in place, but this is something that the independent dealer could be doing better.
Core challenge Getting reliable, accurate and sustainable competitive intelligence on Amazon continues to be a main objective. I think this is even more critical now that Staples and Office Depot have been wounded by the failed merger. Amazon poses many unique problems not found with other competitors – its product data is a blending of information from multiple sellers and is often duplicated, poorly attributed and just plain wrong. Wading through this mess to provide consistently accurate and reliable intelligence is a major undertaking.
Mobile commerce I haven’t seen independent dealers rushing to adopt mobile and this will cost them business in the long run. Adaptive websites are the only path that makes sense in the independent world. Apps are too expensive and problematic when you start altering end-users’ devices. You should always assume that any and all future problems the user encounters with their device will be blamed on your app.
Amazon Business I think the Amazon Business uptake numbers are misleading. My wife was converted to an Amazon Business customer and all she buys is running shoes and Kindle books on her personal credit card – she’s not a ‘business’. Then there’s the sworn testimony from an Amazon Business VP admitting it had no significant contracts and often did not even bid on contracts. However, if Amazon ever gets out of the way of its own ego and chooses the acquisition path, it could be real trouble. Many people don’t remember that Office Depot struggled to enter the B2B space until it started making acquisitions.
Effective use of data Many dealers are unwittingly turning their data over to third parties with no restrictions or compensation. Most have no idea how valuable, sought after, and in the wrong hands potentially damaging, their data is. As a minimum, dealers should be demanding compensation if third parties are using, selling or attempting to sell their data. Restrictive-use contracts should also be in place before any transfer of data is allowed. Dealers are the sole owners of their data and it’s high time they stopped handing it over to anyone and everyone for free.
“I haven’t seen independent dealers rushing to adopt mobile and this will cost them business in the long term” 34
OPI Magazine | July/August 2016
Technology Experts | Opinion
Jennifer Schulman
President, Fortune Web Marketing Core issue It’s the lack of flexibility. We work with most of the major third-party vendors in some capacity. All want to be the best at what they do, but in some respects they fall short. If you want to have a flexible system that, for example, offers SEO-friendly options, social media integrations and design customisations, you have to walk the walk, not just talk the talk. Technology providers must design their platforms to be flexible enough to accommodate the latest design, SEO, analytics, etc, and work together for what is best for both the dealer and the industry.
Mobile commerce
“Technology providers must design their platforms to be flexible enough to accommodate the latest design, SEO, analytics, etc, and work together for what is best for both the dealer and the industry”
There’s still resistance in moving to mobile-friendly sites, with dealers thinking B2B users aren’t using mobile when researching or purchasing for their business. That’s simply not true. The next big thing from a mobile marketing standpoint is to capitalise on ‘micro-moments’ – a term coined by Google that refers to the times people reflexively turn to a device, increasingly a smartphone – to learn something, do something or buy something. If brands can understand how impactful these micro-moments are, they can really get ahead of the competition. Smaller brands have an even greater advantage in competing against larger brands if they can be there in their customers’ micro-moments.
The endless aisle I love this idea, but I don’t think everyone needs an actual in-store kiosk yet. Just placing a tablet or laptop in the store to allow customers to browse or buy other items that the in-store stock does not accommodate is a great idea. If you have an e-commerce site, the ease of providing an endless aisle experience is not hard to do at a basic level.
The need to differentiate Differentiation is always key. Who wants to look, function and market themselves like everyone else? Find your voice, find your niche, differentiate your brand. Content is crucial – you must engage your audience and provide something useful that no one else does. When it comes to e-commerce premium product content is imperative – without high-quality descriptions, images, video, etc, you will lose the sale.
Amazon Business Amazon is not going away and continues to remain the biggest threat to the independent dealer. However, we have many independent dealers as our clients that will still be around for decades as they think outside the box and put a tremendous amount of value on a strong online presence and dedicate resources to achieving that goal. They are additionally leveraging every bit of technology in the marketplace and pushing technology providers to do better. Crucially, they also focus on the business to experience (B2X) factor, which looks at every single way a customer engages with their brand – from website content and social media to the trucks and delivery man that bring the goods – in order to optimise that experience.
Effective use of data Resellers aren’t making effective use of data. We do our best to explain the free tools available, but many simply lack the time to use them. Sadly, they’re missing out on a wealth of information – from who is visiting their site, how they’re getting there, which online marketing investments are working, how social media is performing, what percentage of users are using a mobile device – it’s all right there, easy to collect and analyse. You can’t effectively market what you cannot measure. w w w.opi.net | OPI Magazine
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Opinion | Technology Experts
Software options on offer‌ DDMSPLUS
By: ECi Software Solutions Aim: To provide dealers with an affordable, comprehensive business management solution that includes order/inventory management, purchasing, AR/AP, e-commerce, analytics, security and expansion capabilities. How: Offering a cloud-based package featuring low up-front costs and all modules needed to grow; products are continuously developed and expanded to help customers remain competitive. Find out more: www.ecisolutions.com
Quote Commander By: AOSWare
Aim: Independent dealers need an easy-to-use interface to analyse pricing against the mega retailers to gain accounts and maintain profit margins. How: Quote Commander is a standalone product used to compare mega pricing utilising Item411 data. Pricing can be analysed and exported. Find out more: www.quotecommander.com
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OPI Magazine | July/August 2016
Dealer Commander
By: AOSWare
Aim: To provide OP dealers with the latest technology so they can compete and be profitable in the ever-changing marketplace. How: The state-of-the-art ERP software and SEO-friendly web platform helps independent dealers get found online and make intelligent purchasing decisions thereby maximising profits. Find out more: www.dealercommander.com
BMI Software By: Business Management International (BMI)
Aim: To improve efficiency and profitability for distributors through advanced technology and an advanced e-commerce site that provides a superior customer experience. How: By combining best practices with the latest Microsoft technology. Find out more: www.bmiusa.com
Item411/ Market Xpert By: OPSoftware
Aim: To help independent resellers compete against the national chains with unparalleled intelligence. How: Contains a suite of tools including one-off competitor item number lookups, unlimited Excel file SKU item conversion capabilities and sophisticated pricing formulas. Find out more: www.opsoftware.com
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Technology | Resellers
The technology tipping point Retailers are using technology to engage with customers at all points of the purchasing cycle and in increasingly innovative ways
CUSTOMERS
of all demographics are used to being able to research, compare and purchase with the click of a few buttons. Over the past few years this has escalated even further, enabling buyers to do all of this on the move. Instant gratification is rapidly becoming the norm. Retailers across the board – not just those selling office products – have generally been slow in the uptake of providing customers with this seamless, often personalised, shopping experience. However, this may have reached a tipping point now, driven mostly by mobile technology such as near-field communications, mobile payments and apps, as well as the influence of the tech-savvy and permanently connected millennial generation.
“All technology is becoming indispensable as it influences purchasing decisions” Cartridge World, for example, already offers a free app that alerts businesses when ink and toner is running low or if their printer requires maintenance services. But, stepping this up a few notches, the ink and toner franchise retailer recently announced a partnership with Samsung that will see the launch of the Printworld app which gives consumers access to ‘print-on-the-go’ technology by providing print and scanning functionality through mobile devices. Cartridge World said it would also be working with Samsung to
place thousands of printers in free wi-fi areas across the US and, in the future, expanding this across the globe. Other retailers such as Best Buy have made significant investments in both developing their own technology prowess as well as ensuring their customers have access to the latest available technology such as Apple Pay. Best Buy, incidentally, also opened its new technology development centre in Seattle (WA) last year with a focus on mobile and cloud technology, e-commerce and the omnichannel experience. Walmart, meanwhile, is said to be the first retailer to have created its own mobile payment system, Walmart Pay, which has been integrated into its existing mobile app. The retail giant is evidently taking investment in technology extremely seriously. At its recent annual investors conference, the company announced that its capital expenditure on e-commerce and digital would be around $1.1 billion in fiscal 2017. It appears that retailers/resellers are at last hard at work implementing solutions to provide flesh to omnichannel shopping experiences and experimenting with concepts that help bridge the gap between online and bricks-and-mortar stores.
OPI asked Staples for a quick update on its technology innovations OPI: What new technology is Staples using to improve customer service? Staples: From a customer service perspective, we recently enabled Facebook Messenger functionalities on our mobile website to enhance customers’ shopping session. They now have the ability to chat with sales specialists and customer service to get shopping assistance and post-sales support. Similarly, we have begun to transform the way we engage customers on digital. Using Proactive Chat based on data intelligence we’re able to understand behaviour and engage customers in real time to answer sales or support-related questions. OPI: Which technologies are becoming indispensable to the business? Staples: All technology is becoming indispensable as it influences purchasing decisions. Customers can get
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OPI Magazine | July/August 2016
Resellers | Technology
reviews online to better educate themselves about the products or services they want to buy. Mobile technology, meanwhile, helps fulfil the instantaneous need for information and answers questions to help capture the purchase ‘moment’ that is so important, providing the customer with the convenience that they desire. Also, as part of the omnichannel experience, the in-store kiosk creates a virtual endless aisle to help customers find a product online when it’s not available immediately for purchase in store. OPI: How is the new Interactive Store Map pilot going for you so far? Staples: The Interactive Store Map feature was launched in May on the Staples iPhone app (version 5.0 or higher) to create an easier and more convenient in-store shopping experience for customers. The features are focused on making it simpler to research, find, locate and purchase the products in-store or to plan a shopping trip. While it’s still very early, we’re encouraged by the response we’vw seen so far. OPI: What are you spending on technology R&D? Staples: Internally we have invested in an Applied Innovation Team. This group has grown organically and provides new, innovative thinking and ideas that have proven to be very valuable. OPI: Is there an update on the Easy button? Staples: The program is still in the beta stage, but we will be providing more updates on new functionality in the months ahead. OPI: How important is technology for a true omnichannel experience for customers? Staples: Without technology we don’t have an omnichannel experience. Working together, e-commerce and retail are seamlessly exchanging ideas and best practices to create a unified ‘commerce’ platform that serves the needs of our customers. OPI: Anything new coming up? Staples: We have a free Print-to-Staples Office 365 add-in. This means customers don’t need to spend time uploading documents or configuring print jobs – they can print directly from Microsoft programs to over 1,200 Staples stores nationwide and pick up their documents and presentations the same day. The Staples Easy System creates a seamless process between making a request, getting it on the list, approving it and submitting an order. There’s no login, no need to go to a desktop, or browse through a website. It utilises a modern one-time password security structure, with no access to a company’s systems or database. Finally, coming soon, Staples will have a back-to-school list scanning functionality.
Omnichannel
imperative Margareta Le Calve, VP Growth Countries & Head of Retail Europe at Office Depot, explains how the reseller is using technology to drive an omnichannel experience For several years there has been a general trend of declining transactions in retail due to the rise of online shopping. Several initiatives in Sweden and France – where Office Depot has different format stores – illustrate our focus on driving customers into stores by providing targeted promotions and additional services. With said growth of online shopping, an omnichannel approach is imperative. We know that the shopping journey can start online and end in-store where service is key, but it can also be the other way round with customers visiting a store first then looking for the best price/ delivery conditions online. Web-to-store and store-to-web are two facets of the same customer journey and the seamless integration of sales channels is crucial if you don’t want to lose customers along the way. The service we offer our customers is all about going beyond selling office supplies. In Sweden, for example, we are installing workstations for customers in store and offering free wi-fi and a coffee bar in some of the city centre stores. They can also order products that are not part of the store assortment through a connected workstation in store and have them either shipped to their home, office or opt for an in-store pickup. Another innovation in Sweden is our partnership with Urb-it, a collaborative delivery web-based platform that allows us to deliver products within the hour in Stockholm. Students pick up orders in store and get them to an office or home address by foot or bike – that’s quicker than any conventional delivery service. Driving traffic into stores is paramount for retailers and Office Depot has developed key partnerships in France to run geo-localised campaigns. As an example, we work with one of the main mobile phone operators in the country to send promotional messages to subscribers who are within walking distance of our stores. Customers can then redeem their promotional voucher in the nearest store. Overall, retail needs to adapt to shifting buying patterns and be an integral part of the customer journey. Margareta Le Calve w w w.opi.net | OPI Magazine
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Wholesalers | Opinion
Tech
talk
Along with the software providers, it’s the OP wholesalers that offer not only a host of technology aids for their independent dealer partners, but also some much needed guidance on what to do and how to do it. OPI speaks to Paul Gatens, SP Richards’ (SPR) VP of E-commerce and Marketing Services, about the many challenges in the technology arena and some of the solutions OPI: What feedback are you getting from your dealer partners about the technology debate? What are the issues and their biggest pain points? Paul Gatens: One of the really significant issues for dealers today is where to focus their technology resources, both in terms of money and personnel. The office product wholesalers, buying groups and software providers have all introduced a significant number of new capabilities over the past year or two. As a result, dealers are challenged with determining which of these offerings best fit their dealership’s business model and their current implementation capabilities. Prioritising the use of CRM systems, margin management analytics, SKU content expansion, search control, mobile applications, social media, email marketing and a wealth of other technology-related projects is a daunting task. To assist, we are working with all business constituents to try and make many of these new programs as turnkey as possible. We also assist dealers with implementations and with ongoing program-maintenance offerings. SPR invests millions of dollars each year in e-commerce and analytics capabilities for the independent dealer community (IDC). We encourage our dealers not to go it alone and to use and leverage these investments to the best advantage of their businesses.
Paul Gatens
“The endless aisle is an often-quoted Utopia, but it is fraught with many challenges”
OPI: Are dealers better placed today than they were, say, 12-18 months ago, to compete in the digital commerce space? If so, what have the OP wholesalers and the software providers, for example, done to make that happen? PG: The independent software vendors (ISVs) like ECi, Thalerus, Business Management International and others have invested heavily in their products in the past few years. The combination of wholesaler-provided content and search and merchandising enhancements like SearchPro, together with ISV development, has led to sites that now provide very competitive shopping experiences. OPI: Are resellers making effective use of data? If not, what should they be doing? PG: I would say that probably the biggest data analytics gaps today are around effective use of sales and margin management tools. Using a program like SPR’s MyAnalystPro or ECi’s Acsellerate is critical to improved dealer profitability. However, as with many of the technology advancements above, the key is finding time to do the analysis, run the reports and respond to the actions that the information prescribes. To assist, SPR now offers levels of ‘white glove’ service for MyAnalyst that provide ‘push reports’ to the dealers along with regularly scheduled calls to review the reports and discuss corrective action plans. w w w.opi.net | OPI Magazine
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Opinion | Wholesalers OPI: Are dealers competing in the mobile commerce arena yet? PG: In my view independent dealer community (IDC) focus on m-commerce has been sporadic at best. Some ISVs offer sites with responsive design, but many do not. A couple offer apps, but dealer subscriptions to the apps have been less than stellar and few that do are effectively promoting the capability. I would definitely single out Admiral Express as a notable champion of mobile technology. This dealer has made the app an integral part of their overall marketing plan and are seeing results. I hope that, as Admiral and others like them prove the model, more dealers will join in. OPI: What about social media – it’s becoming ever more important in generating, nurturing and maintaining customer relationships. How well are dealers managing that? Is that something SP Richards gets involved in? PG: Many dealerships struggle with the marketing time and resources that need to be dedicated to effective social media campaigns. In an effort to assist, SPR is providing automation, scripts and other tools through Campaign Advantage and PresencePro and other unique promotions. We understand the challenges dealers face and believe that, as their wholesale partner, we need to offer help. The Campaign Advantage weekly emails, for example, include automatically executed Facebook posts and tweets if the dealer chooses to participate. The PresencePro program, meanwhile, works with dealers to evaluate the success level of their online and social media presence including assisting in local search positioning. OPI: We hear a lot about the endless aisle concept. To what extent do you think this is necessary? And what are the technological challenges involved in this? PG: The endless aisle is an often-quoted Utopia, but it is fraught with many challenges. Building the e-content is the easy part. We have built content and made available to dealer sites 30,000+ branch-only or special order SKUs that the vast majority of our dealers haven’t turned on. Special order SKUs aren’t going to be available tomorrow. In order
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“One of the really significant issues for dealers today is where to focus their technology resources, both in terms of money and personnel”
to effectively merchandise them, a website must provide competitive content – indexed properly in search – and clearly communicate to the customer the delivery expectation. The dealer customer service experience must then reinforce that. There are also significant operational challenges to be overcome in the determination of the retail unit of measure to display on the site. SPR is working hard with key suppliers to get them to work more closely with the IDC to become more efficient in supporting this concept which we think is an important one. Identifying SKUs, manufacturers and shipping models that will work for all parties involved is where success will be defined. OPI: How important is differentiation in the e-commerce world? Is that still a topic even or just a given? PG: Differentiation is always important. Online differentiation specifically has challenges and nuances. While all dealers using a given ISV’s choice of site templates may be somewhat restricted in the look and feel of their site, what are they doing to customise what they can? Are they creating new and engaging ads and promotional offerings and changing them out frequently to keep the site fresh and relevant? Is their website a key focus of their selling strategy? Do they track their percentage of online orders, average order sizes and return rates? Are their sales people incentivised to drive more business through the site? This is where the leaders are differentiating themselves today. OPI: Lastly, if you could point to one thing that you have been focusing on more than anything in the past year, technologically speaking, what is it and why? PR: Personalisation is the current and future of online retail. Customer relationships must be retained and enhanced via the online experience. This can be done most effectively if you know who the customer is, what they like and what they are trying to do. We are focused on helping to bring the analytics and personalisation tools necessary to drive this type of improved IDC online experience. .
Opinion | Wholesalers
Does a silver bullet
really exist? Essendant’s Senior Director of Digital and Marketing Mark Evans asks the all-important question: What technology do resellers really need for their business?
by Mark Evans
WITH
all the technology coming into the market, how are resellers supposed to make sense of it, let alone determine what is best for their particular business? Is technology really the be all and end all, or should resellers build a solid foundation before determining what technology is needed? Most industries have examples of companies that are struggling to keep up with the market and the latest technology bells and whistles, while losing sight of the fundamental blocking and tackling. Instead of chasing technology, participants may do better by stepping back and focusing on their business objectives. It might sound counterintuitive, but the best technology decision for a business
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could be to first define its acquisition, retention and growth strategy with customers. This in turn creates a foundation that can determine the best technology to achieve these goals.
The reseller proposition For resellers, one of the first steps involves defining a value proposition, determining how to incorporate it into a strategy to grow the business, and identifying the best target audience. Once they decide on
Taking the digital approach is a great way to advance the business, and it will have a huge impact on technology decisions. Since there are no sales people to represent the reseller digitally, its digital assets, such as a website, must reflect the business’ core values. The aforementioned value proposition should be weaved throughout the website. There must be a robust search engine, intuitive navigation, rich product content,
“Taking the digital approach is a great way to advance the business, and it will have a huge impact on technology decisions” the audience, they have to evaluate what makes a customer a ‘good’ one and how they interact with these potential customers. Where will these interactions take place – will they be ‘live’ or digital via a website or email? What kind of promotional offers do they need?
and the ability to merchandise. With merchandising, resellers can up-sell and cross-sell to increase average order size. To drive traffic to the website, resellers need to deploy marketing tactics and promotions through mediums such as email or
advertisements. In addition, a website should have the capability to let customers sign up for communications, offering resellers a way to build their database and advertise directly.
The right stuff To choose the right technology, resellers need to take the acumen that built their success in the first place and then apply it to the digital aspect of the business. The common sense that has taken them this far needs to be leveraged to cut through the technology noise, focus on the business needs, and determine if the technology will meet their objectives. Any strategy needs to start with a sound software/hardware foundation that enables resellers to do all the things that got them to this point – but now with a digital spin. Any turnkey technology solution should have a flexible platform, a robust search engine, solid analytics, and the capabilities to merchandise and market to customers. It should be easy to update, expand and track success. Importantly, people who understand the industry and care about the customer experience and the success of the reseller should build the technology platform. But let’s be honest, there is no silver bullet. However, by leveraging business insights and good judgement, resellers can expand their digital reach by picking the technology that fits their strategy to acquire, retain and grow their business. Utilising industry experts who understand the market, know how to sell to end consumers, have a turnkey solution and marketing expertise , will offer resellers the best chance to compete on the digital front and expand their business.
In April 2016, Essendant finished merging its two largest businesses, Essendant Business Essentials (formerly known as United Stationers) and Essendant Facilities Essentials (formerly known as Lagasse), onto one common operating and IT system. For an update and more information on this newly integrated IT and ordering platform, visit opi.net.
R&S | Dealer Spotlight
The importance
of being prepared Laying the groundwork for any major business transformation is key to its success. For Bosnia and Herzegovina-based dealer R&S, this means preparing for growth and its country’s entry into the EU
by Michelle Sturman michelle.sturman@opi.net
THE
relatively small market of Bosnia and Herzegovina (its population is just under four million) may still be struggling with corruption, high youth unemployment and a complex system of government, but that hasn’t stopped it from applying for EU membership. The EU has stated that the country needs to undertake a number of reforms before it can be considered for entry, so its official status for the foreseeable future remains as ‘potential candidate’. The necessary adjustments include improvements to the economy, justice and political systems, improving transport and energy connections, working towards a cleaner environment, and strengthening the competitiveness of SMEs.
Moving forward While the application signals the intent of the country to move forward, it is expected to take years for it to go through. In the meantime, however, it already benefits from EU funding and assistance despite its non-member status. Recently, for example, Bosnia and Herzegovina gained access to the Competitiveness of Enterprises and Small and Medium-Sized Enterprise programme (COSME), giving its SMEs and entrepreneurs access to international markets, finance and the ability to build a better business environment. The new COSME deal will be a welcome bonus for businesses such as Sarajevo-based
Adnan Selmanagic
multichannel operator R&S which, while relishing the news of the EU application and already planning for entry, is also working hard on living up to its slogan of ‘makes your job easier’. The 20-year-old company, founded by Reuf Selmanagic and now run by his two sons Adnan and Kemal, is well established in the office supplies industry and is one of the leading importers and distributors of office supplies, promotional products, office furniture, computer equipment and cleaning products in the country. Sales of around €9 million ($10 million) in 2015 place R&S among the top three of suppliers in Bosnia and over the past four years the business has seen a steady increase in sales and margins of 15-20%. R&S Executive Manager Adnan Selmanagic says the plan for the next five years is to continue this trend which, he admits, will be challenging in the face of declining prices and margins on basic OP items such as toners/cartridges and copy paper. “Every year we must add new products and services in order to cover the expected declines on some basic OP products,” he adds. As a broad-based operator that covers five different product ranges, it has many specialist competitors, but this doesn’t worry Selmanagic unnecessarily. He explains that in order to initiate growth, the business closely follows market needs and trends. To this end, the brothers frequently travel to different industry fairs across the world. As a multichannel operator R&S is able to cover all bases. For some product assortments, the company is stronger in B2B, for others wholesale is the way forward, while for categories such as facilities management R&S sells direct to cleaning companies.
“We will join the EU most probably within the next decade and by that time we will be more than prepared to face the competition”
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Dealer Spotlight | R&S Its customers range from large private companies and government institutions to SMEs and retailers in small towns throughout the country. Selmanagic says that entering the B2C market is another possibility. He adds that this option wasn’t originally considered as viable in the company’s strategic plans for the next couple of years, but as the market is developing so rapidly, this timeframe may ultimately be brought forward.
Acquisition potential In the meantime, R&S has a number of other plans in the pipeline to grow the business. Over the next five years, the brothers will invest more in the business in Bosnia, while keeping an eye open for the possible acquisition of smaller players in the market. But, Selmanagic adds: “If everything goes to plan, we will be able to expand our business outside of Bosnia and Herzegovina following the five-year period. We will join the EU most probably within the next decade and by that time we will be more than prepared to face the competition.” The company’s 2020 goals include a new organisational matrix structure over the next couple of years and Selmanagic explains that the company’s growth and achievements will be strongly dependent on the successful implementation of this new structure. Additional short-term plans involve growing its market share in an environment that is generally stagnant. Part of this will be achieved through the execution of more challenging projects such as the complete outfitting of schools, courts and different offices which will not only comprise furniture, but also include IT and presentation products. A major trend that R&S is capitalising on currently is managed print services (MPS). According to Selmanagic, many of Bosnia’s larger companies are implementing MPS now, and R&S is responding to this demand. MPS is moving fast, however, he adds, and already R&S is seeing requests for more advanced
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installations with a focus on security issues. “This is an area where we can definitely become a leader through the implementation of these types of solutions.”
R&S fact box
Technological progress
Founded: 1996 HQ: Sarajevo, Bosnia and Herzegovina Owners/Managers: Reuf Selmanagic/ Adnan and Kemal Selmanagic Geographical coverage: Bosnia and Herzegovina Employees: 60+ Business model: multichannel operator SKUs: 5,000 in-house; 20,000 available
The use of technology such as new warehouse management software that is currently being chosen to streamline its logistics operations is helping to solve issues within its own business. Last year saw the introduction of new e-commerce software, but Selmanagic points out that as its major customers still prefer to place orders via email, the platform isn’t being utilised as it should. However, he says, a future task will be to motivate these clients through different marketing actions to use the online service more frequently. “There are many opportunities available to us since our country is still developing, but we need to stay focused on our plans and not jeopardise subsequent investments. We see many positive business trends, we have very young and motivated people, and an exciting future is ahead of us,” he concludes.
“Every year we must add new products and services in order to cover the expected declines on some basic OP products”
Category Analysis | Furniture
As the modern office morphs to accommodate new ways of working, the furniture industry is coming up with novel solutions to facilitate this
by David Holes
THE
workspace is changing and the furniture that fills it must adapt to remain relevant to new office practices. Trends that were in their infancy are now gathering pace and becoming common themes across the furniture industry. The desire to inject activity into the working day, with its perceived accompanying health and productivity benefits, is a major driving force in furniture design currently. Slogans such as ‘sitting is the new smoking’ are being pushed to warn against the dangers of a sedentary lifestyle, both at home and at work. As Allan Klotsche, President/ CEO at US furniture manufacturer Mayline, explains: “Companies are realising the benefits of sit-to-stand
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workstations and are trying to figure out how to provide affordable access to these solutions for all of their employees. However, while full-surface height-adjustable solutions may offer the greatest benefits, they’re not easily integrated into existing work environments. Consequently, some companies are evaluating desktop alternatives.”
Sit-stand focus Technology is also having an impact on this sub-category, according to Jim Berndelis, Head of Office Supplies and Furniture at Officeworks in Australia: “Electric desks allow workers to change the way they work at the click of a switch. Multiple height settings give them instant flexibility to, say, stand for the first half of the day and sit down for the rest.” “Sit-stand is the hottest trend by far,” adds Bryan Leister, Merchandising Manager at US
wholesaler SP Richards (SPR). “There’s now a real buzz around this category. Electric versions used to be expensive and companies struggled to justify the cost, but prices have reduced by over 30% in the past year and our sales have doubled.” Multi-height soft seating is now also receiving serious attention, says Kristen Hamer, VP of Business Development at MooreCo: “Unique sitting positions within casual environments that promote movement and inspire collaboration are becoming the norm these days.” At Safco, its Active collection is specifically aimed at allowing workers to keep moving over the course of their working day through standing, active sitting, leaning or perching. “These small movements can add up to make a big impact on your work and life by promoting a more active working environment,” according to Paul Griffiths, the company’s General Manager.
Furniture | Category Analysis In another workplace design-related development, the old office environment of six-foot-high cubicle walls is fast becoming a thing of the past. Initially, the dividers got shorter, but now they’re being abandoned completely. As Beth Wright, Chief Commercial Officer at Bi-silque, says: “The walls are coming down. But this is increasing the demand for sound absorption panels that reduce acoustic echo and visible distraction.” That said, while the open-plan office continues to forge ahead, it is being met by resistance from those workers wanting privacy. “There’s still a big need for space division,” says Scott Bowers, Director of Product at GMi Companies. “The open office is very prolific, but people are also hungry for soundproofing and visual confidentiality and still want space division.” And solutions are being created for that need too. Mayline refers to its e5 hybrid solution. Says Klotsche: “It combines the best parts of open workstations and cubicles to offer seated or standing height privacy with storage options and access to surface-height power points. It’s clear this is the way millennials want to work. The spaces they want to work in are very different from the generations before them.”
The nomadic worker According to estimates from US recruitment agency FlexJobs.com, an astonishing 40% of the workforce will be working freelance by 2020. The concept of the ‘nomadic worker’ is already firmly entrenched; nomadic both in the sense that employees may work both at home or in the office, but also in that they often choose to work at different locations within an office building. As a result, says Safco’s Griffiths, businesses are dedicating less
Sales success
It’s clear that the furniture category is in rude health, with many of the key players seeing strong sales.
“We’ve experienced tremendous growth. We’re newer to the contract furniture channel, but we’re very pleased because we’ve experienced triple-digit growth OPI Magazine | May 2016 53 since we’ve been in it.” – Jim Harter, VP of Sales, GMi Companies
permanent space to individuals: “Part-time workers and freelance employees with flexible working schedules must all be accommodated, together with products to help them keep their working tools easily accessible and organised. Designing flexible spaces with products that can transform to suit the different types of workers will be key.” In fact, any furniture that helps promote collaboration will continue to grow in 2016. The rising popularity of monitor arms whereby people can turn and show their screen to others nearby, or tables with built-in touchscreens which allow employees to collaborate on projects in real time, are good examples. Adding casters to workspace furniture also makes it easier to reconfigure the office environment as people’s work methods change. It is this proliferation of multiple types of work settings that is the biggest change affecting the furniture sector, according to John Michael, VP and General Manager of Furniture at Staples Business Advantage: “Many employees now ‘self-select’ where they accomplish their work. It’s critically important that companies deliver ‘total workspace solutions’, encompassing multiple work settings both inside and outside a company’s physical
location, so people can be connected wherever they execute their work. “For example, an increasing number of companies, including Staples’ HQ in Massachusetts, have walking trails outside the building where employees can remain connected by wifi and continue to be in a work setting.” He adds: “Spaces also have to flex more to accommodate a wider range of employees on any given day. But it’s not good for a company to have a space that’s a ghost town one day and overcrowded the next. How and where to accommodate a mobile workforce is a common challenge today. If people who normally work from home are coming in so they can work together, they need user-friendly set-ups that allow them to get accommodated easily, without the frustrations of
“The office furniture category has been on a steady climb every year over the past decade. As a manufacturer, it’s a challenge to see wholesalers and distributors sourcing products from Asia directly, but getting better-designed products to market quicker is the best way to stay ahead of the curve.”
“We saw the furniture category grow in low double digits last year, compared to 4-5% growth in the industry as a whole. Our 2016 numbers continue to outpace the industry, though have been slightly below forecast due to high month-on-month comparisons with the early part the previous year.” wof w w.opi.net | OPI Magazine 53
– Kristen Hamer, VP of Business Development, MooreCo
MooreCo’s configurable soft seating range
– Bryan Leister, Merchandising Manager, SP Richards
Furniture | Category Analysis tech issues or being unable to find what they need. The integration of suitable technology within furniture can help facilitate this.”
Living room to office Bringing the living room into the office is another, and also newer, trend that’s taking hold as both employees and employers try to create workspaces that look and feel more like home and present a more comfortable way to work. This is leading to product lines using different colours, styles and materials that would normally be found within the domestic environment. Equally, these products can sit easily within a home office setting, so they effectively serve a dual purpose. The steady rise of SOHO (small office, home office) working is also impacting companies’ thinking and generating spin-off markets in the process. As Klotsche explains: “When teleworking first started, companies seldom gave a thought to their employees’ work environment at home, but as more workers made the shift they’ve had to start thinking about budgets for home offices and furniture standards. “Most firms now provide an allowance for outfitting a home office, with some specifying the type of furniture they’ll reimburse for. E-commerce furniture dealers have stepped in to provide an easy, one-stop shopping experience for home workers, with some offering a full white-glove service to help with installation and removal of packaging,” he adds. The need to be connected at all times is also getting ever stronger, says Klotsche. “Just walk through any airport and see how many people are tethered to the few outlets that exist in a boarding area.
Mayline’s e5 desking and benching hybrid solution
“Employees will increasingly be looking for adaptability in both when and where they work and we’re constantly thinking about developing our furniture products to accommodate this shift” Consumers now expect integrated sockets in almost any piece of office furniture. There’s also nascent demand for surface-mounted charging pads.”
Staying connected SPR’s Leister agrees: “Built-in power, USB and docking stations are very popular additions. People are now working almost anywhere and they need their devices to stay charged. In October, our Lorell brand will be launching a series of smart LED lamps that include wireless charging, USB ports, docking stations and Bluetooth technology, as well as a line of modular soft seating with similar features.” MooreCo’s Hamer sees this trend becoming commonplace: “Simply adding USB charging ports to furniture negates the need for large charging ‘bricks’ – you’ll get quick phone or iPad charging without crawling about on the floor.”
“Despite challenges with currency fluctuations, recent data shows that growth in every channel of furniture was higher compared to the same period last year, which is promising” – Jim Berndelis, Head of Office Supplies and Furniture, Officeworks
“We expect to see significant growth in this category during 2016” – John Michael, VP and General Manager of Furniture, Staples Business Advantage
According to Smart Workplace 2040, a study by global real estate consultancy and research firm CBRE, 25 years from now work will be seen as something people do rather than a place they commute to. Work patterns will be radically different, with no fixed place or timetable. Instead, workers will choose where and how they work. This will mean they will most frequently conduct their business from home, with only occasional visits to workspaces where they can network with other individuals. GMi’s Bowers cites this vision as key to his company’s thinking. “The world of work as we know it will continue to move in this direction. Employees will increasingly be looking for adaptability in both when and where they work and we’re constantly thinking about developing our furniture products to accommodate this shift.”
“Over the past 12 months we’ve seen increased demand particularly from the SOHO furniture market, thanks to more people working from home or setting up small, often home-based, businesses. This gives our resellers the opportunity to support end users with direct, next-day delivery and offer added-value options like furniture installation” – Matt Allaby, Furniture Business Development Manager, VOW
“Over the past year, the majority of areas in the furniture sector have seen growth in both volume and value. Home office furniture has w w w.opi.net | OPI Magazine 55 witnessed sizeable increases recently” – Anthony Creaby Account Manager, Retail and Technology, GfK
Event Review | NeoCon
The chameleon As always, commercial interiors trade show NeoCon delighted and inspired exhibitors and attendees alike
Now
in its 48th year, NeoCon once again opened its doors for three days in mid June and welcomed almost 50,000 attendees to the Merchandise Mart in Chicago, US. The trade show covered almost one million sq ft (100,000 sq m) over three floors, with an additional floor of temporary exhibitions. The event is famed for being the launchpad of thousands of new products covering furniture, floor coverings, textiles, lighting, technology and much more. NeoCon also includes key vertical markets such as healthcare, retail, education and government. In addition to the huge trade fair which hosted almost 450 exhibitors, this year’s event offered visitors the chance to attend over 100 seminars led by industry experts, with a number of keynote addresses providing access to some of today’s foremost thinkers.
He says: “There was a real focus on collaboration and idea sharing (whiteboard tables), playful designs such as ping-pong-infused tables, and furniture that takes after residential styling rather than the cold corporate of old.” Rockwell in his keynote also talked about bringing theatre and play into the workplace, which has led to the idea of configuring office furniture in endless ways. Unsurprisingly therefore, Knoll was right on trend with its Rockwell Unscripted workplace collection – described as “a comprehensive, eclectic array of freestanding, architecturally-grounded and movable elements that can be used to create a variety of experiences for teams, small groups and individuals”. In a similar vein, Hon launched Arrange Tables at the show, an office solution that is also easily reconfigured depending on working requirements.
Privacy please! Another trend originating from the millennial generation is the apparent need for more peace and quiet in the office. A whole host of exhibitors were showing products and ways of managing sound, particularly geared for collaborative workspaces. “There were countless products focused on containing sounds such as acoustic panels, sound-masking elements and sound-proof pods,” says Morris.
Setting the scene One of this year’s keynote speakers was architect, designer and CEO of the Rockwell Group, David Rockwell. Addressing a big crowd, his core message was that traditional boundaries between residential and contract settings are increasingly blurring. Indeed, Office Environment Company CEO Tricia Burke, who attended the show, agrees that a major theme throughout the show was commercial furniture with a residential feel. “‘Resimercial’ was the buzzword at NeoCon this year,” she told OPI. The ‘resimercial’ trend has been building for a while as furniture, architectural and interior designers talk about the ‘living office’ and ‘bringing home to work’. New Herman Miller research suggests that this type of environment helps people feel more creative, more connected and more engaged in their work. The influx of millennials into the workplace seems to also be influencing this trend and driving it more mainstream. According to TriMega EVP of Marketing Michael Morris, who visited NeoCon with members of the dealer group’s Furniture Committee, furniture now appears to be very geared to millennial workers – in style, form and function.
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Keeping well Wellness in the workplace continues to play a major role which was very evident at this year’s NeoCon. Both Knoll and Safco’s Focal Upright division introduced the world to the new sit-stand – the pogo stick with a seat. These portable sticks allow users to sit, stand or perch to improve posture. “Active seating and a focus on well-being in the workplace is definitely here to stay with standing desks, sit-to-stand mounts, height-adjustable tables and desks, balance boards, portable seating, etc,” agrees Morris. As Burke explains, for dealers looking to take their furniture business to the next level, attending NeoCon should certainly be part of their business strategy: “NeoCon is a must for the latest workplace trends and insight into today’s end user.” Morris agrees: “I believe it’s impossible to leave the show without a reinvigorated energy and drive around growing your furniture business. It’s definitely time well spent.” The next NeoCon takes place 12-14 June 2017. .
Preview | NAOPA 2016
Simply the best
Find out about the most impressive and innovative products and leading players in North America – at this year’s NAOPA
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NEW c at
Young Executive of the Year
ory for 2 Eg
Convention Center in Washington (DC) from 20-24 July (for a Preview of the ABC, see OPI June, page 33). The NAOPA are split into two sections – the vendor and dealer awards. Vendor awards are given for the best product in the categories outlined in the shortlist, as well as for overall product innovation. An additional vendor trophy comes in the form of the popular People’s Choice award. For more information on the People’s Choice, see page 60. The dealer awards, meanwhile, are given to outstanding personalities in our sector and are no doubt one of the highlights of the ABC. This year, in addition to the Professional of the Year and Industry Achievement awards, sees the Young Executive of the Year accolade being awarded for the first time. .
ory for 2 Eg
often hear criticism that there’s not enough innovation in our sector. But this wasn’t at all evident when nominations came in for this year’s North American Office Products Awards (NAOPA). Not only did OPI – which has been organising these Oscars of the business supplies sector for the past seven years – receive a record number of entries, but the quality of nominations was also of a very high standard. The trends, if you look at the shortlist on the right, are clear: technology is becoming omnipresent, while employee safety and well-being is also a key topic. Once again, the NAOPA will be hosted during SP Richards’ annual Advantage Business Conference (ABC) which takes place at the Gaylord National Resort &
EW 6 - N cat 01
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NAOPA 2016 | Preview
NAOPA Shortlist Best Product – Core Office Products Quartet Fusion Nano-Clean Magnetic Whiteboards Avery Easy Align Self-Laminating Labels Ghent, a GMi Company Roam Mobile & Rolling Whiteboards HSM of America Securio AF300 Safco Products Onyx Hanging Organizers ACCO Brands
Best Product – Furniture Lorell MooreCo Safco Products Victor Technology Victor Technology
Lorell Desk Riser Shapes Modular Soft Seating Twixt DC240 High Rise Height Adjustable Laptop Stand with Storage Cup DC500 High Rise Mobile Adjustable Standing Desk
Best Product – Technology Products ACCO Brands Baumgartens Fellowes MMF Industries Newline Interactive
Kensington SD3600 Universal USB 3.0 Docking Station SICURIX Solid 300-ID Card Printer MobilePro Series Executive Folio for iPad Air/Air 2 PayVue Illuminated Cash Drawer TRUTOUCH X Series
Best Product – Cleaning & Breakroom 3M Full Brim Hard Hat, White, 4-Point Ratchet Suspension, with Uvicator 3M 3M Light Vision 2 Protective Eyewear Clear Anti-Fog Lens Rubbermaid Microburst 3000 Powered by Commercial Products LumeCel Sealed Air Diversey Care Consumer Brands SmartDose Simple Science CleanSmart Daily Surface Cleaner 3M
Product Innovation of the Year ACCO Brands Fellowes ACCO Brands ACCO Brands
Safco Products
Quartet Fusion Nano-Clean Magnetic Whiteboards AeraMax Pro AM III Kensington SD5000T Thunderbolt 3 Dock Kensington SmartFit Laptop Riser with Wireless Phone Charging Pad Twixt
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Preview | NAOPA 2016
People’s Choice Who do you think deserves to take home the People’s Choice award this year? Once again, OPI readers in the US and attendees of SP Richards’ (SPR) ABC event in Washington (DC) have the chance to vote for the product they believe has the potential to shape future sales as well as trends in our sector. So select your favourite from all the shortlisted products of this year’s NAOPA, highlighted on page 59. The vote is open now until 2pm (EDT) on 21 July, the first day of SPR’s ABC event and its Expo day.
Which is your
favourite?
Make your voice heard and help select the winner of this year’s People’s Choice award
Pick your favourite and text the unique code to 650 600 9016
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3M: Full Brim Hard Hat, White, 4-Point Ratchet Suspension, with Uvicator
3M: Light Vision 2 Protective Eyewear Clear Anti-Fog Lens
ACCO Brands: Kensington SmartFit Laptop Riser with Phone Charging Pad
ACCO Brands: Kensington SD3600 Universal USB 3.0 Docking Station
ACCO Brands: Kensington SD5000T Thunderbolt 3 Dock
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OPI Magazine | June 2015
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ACCO Brands: Quartet Fusion Nano-Clean Magnetic Whiteboards
NAOPA 2016 | Preview
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Avery: Easy Align Self-Laminating Labels
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Lorell: Lorell Desk Riser
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Safco Products: Twixt
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Baumgartens: SICURIX Solid 300-ID Card Printer
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MMF Industries: PayVue Illuminated Cash Drawer
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Sealed Air Diversey Care: Consumer Brands SmartDose
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Fellowes: AeraMax Pro AM III
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MooreCo: Shapes Modular Soft Seating
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Simple Science: CleanSmart Daily Surface Cleaner
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Fellowes: MobilePro Series Executive Folio for iPad Air/Air 2
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Ghent, a GMi Company: Roam Mobile & Rolling Whiteboards
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HSM of America: Securio AF300
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Rubbermaid Commercial Products: Microburst 3000 Powered by LumeCel
Safco Products: Onyx Hanging Organizers
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Victor Technology: DC240 Height Adjustable Laptop Stand with Storage Cup
Victor Technology: DC500 High Rise Mobile Adjustable Standing Desk
For more information on all shortlisted products, please go to www.opi.net/ votenaopa2016
Newline Interactive: TRUTOUCH X Series
w w w.opi.net | OPI Magazine
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Your OPI
Where are they now? Santiago Bilinkis
On
our travels around the world catching up with some of the people that shaped the OP landscape over the past 25 years, OPI caught up with Santiago Bilinkis, co-founder of Officenet and its CEO from 2002. Bilinkis put South America – or specifically Argentina and Brazil – on the global OP reseller map and created a tech-oriented mail order and contract stationery company that had revenues of approximately $60 million when Staples bought it in 2005. After the acquisition, Bilinkis stayed on in the CEO position until 2010 when he went back to his first love – creating companies. What’s your claim to fame in OP terms? I created Officenet in 1997 when I was only 25. It was just two years after finishing college, so I had very little professional experience and no background in the OP industry at all. My college pal – and co-founder/CEO Officenet Andy Freire – and I had a bold vision: to create the biggest OP reseller in Argentina and Brazil.
“My college pal [...] and I had a bold vision: to create the biggest OP reseller in Argentina and Brazil” In those days, the industry in the US was dominated by the big six: Staples, Office Depot, OfficeMax, Boise Cascade Office Products, Corporate Express and USOP. In our two countries in South America, there was no company like any of those, so the opportunity was obvious. Building Officenet became our biggest professional goal in life and we decided to approach the challenge by leveraging technology and focusing obsessively on customer service. But this was 1997, of course, so internet connections were very limited still, to say the least. Why office products? The OP industry was the perfect playground for us. It’s an industry that had – and still has – tremendous opportunities to apply brainpower and sophistication in all parts of the business. The combination of a very dynamic commercial side, a very ‘engineer-like’ operational side plus the emergence of the internet allowed us to come up with creative and effective new ideas. I simply fell in love with OP! Anything you miss? The people, no doubt. I had the chance to meet some extraordinary people on my OP journey. Even before we
“I am an entrepreneur and at some point I decided I wanted to go back to my roots of starting things up” launched, some US dealers like Claude Pope and Carlton Miller were extremely generous in sharing with us all they knew to help us get off to a great start. Later on, when Officenet was still tiny, I had the privilege to meet and become friends with the late Tom Stemberg. Being with him and ‘ping-ponging’ ideas about our business was one of the most exciting things I ever did. My relationship with Tom continued with Ron Sargent and many years later, as you know, led to Staples acquiring Officenet. That gave me the chance to become friends with many other industry icons, such as Joe Doody, Jay Baitler, Shira Goodman and Bob Mayerson. However great they were professionally, what I remember more about them is their great human qualities and their guidance. Why did you leave Officenet? I am an entrepreneur and at some point I decided I wanted to go back to my roots of starting things up. But leaving the OP industry was difficult, like breaking up with a partner you still love. What you do now? I build companies, under the umbrella of what’s called Quasar. I have to add, though, that the entrepreneurial world has changed completely from the late 1990s. When Andy and I created Officenet, the steps to launch a company involved many months of research to then put together a huge document called a business plan. No matter how deep you tried to go, it was always a theoretical exercise and everybody knew it meant very little. Today, everything revolves around experimenting. Whenever we come up with an idea for a company, we do not try to be clever and predict – in a lengthy document – if it is good or not. Instead, we create a prototype and try it! Many concepts just don’t work. But I learned that there is a beautiful way of failing: losing little time and money to figure out inexpensively what the winning ideas are, then build companies around the things that do work. Within Quasar, we create companies systematically, at least one per year. So I’m now the co-founder of many new ventures in Latin America, some of which are doing well and might one day eclipse Officenet in size or value. In hindsight, how do you view your time in OP? Well, no matter how many new firms we create, I think it is very unlikely that I will ever be a part of an exceptional industry like OP again – full of extraordinary people dealing with extraordinary challenges. Speaking at the OPI conference in Palm Beach in 2002 is one of the highlights of my career and it’s amazing now to take a look back, remember and reconnect with those fantastic years. www.opi.net | OPI Magazine
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Your OPI
5 minutes with... Tanja Müller, Marketing Manager, Büroring
Describe what you do in less than 20 words. Many things, but perhaps most importantly: PR, media and communications; marketing and advertising from concept to execution; automated catalogue production. The best piece of advice someone has given you. Don’t expect as much from other people as you expect from yourself. Conversely, however, don’t forget to occasionally think about your own needs rather than just others. Your greatest strengths. I’m honest, reliable and fairly stress-resistant.
“I’m honest, reliable and fairly stress-resistant” Your weaknesses. Impatient and quite stubborn. I have quite a few of the typical Scorpio traits… Favourite book. Denken Sie nicht an einen blauen Elefanten (Don’t think about a blue elephant) by Thorsten Havener. It explores in a fascinating way how we are all influenced, sub-consciously, by what goes on around us. Your favourite holiday destination. Somewhere by the sea.
What makes you laugh? A dry sense of humour and people who are clumsy.
Which three things would you take on a desert island? Only three? That’s difficult…
What do you like about your work? The constant change and creativity, being around people, my colleagues – almost everything actually. The most influential company in the OP industry. In the German market I definitely think it’s a combination of many companies – independent dealers. Aristotle was completely right when he said: “The whole is greater than the sum of its parts.” What’s the biggest challenge in your job? Every year, the putting together of our catalogue. As a one-off, dealing with all the probing questions and negative publicity when we had our distribution centre issues.
If you won the lottery, what is the first thing you would do? After recovering from the shock, I’d probably book a holiday somewhere. Things that make you angry. Unfairness, dishonesty and unreliability. If you could change one thing about yourself, what would it be? I’d like to be more patient. And I’d like to have more time.
How do you motivate yourself? Knowing that after every low, there’ll be another high. How do you relax? Doing absolutely nothing or, if the weather is nice, going for a drive in a soft-top car.
Your favourite movie and why? Schindler’s List. It shows on the one hand what utter cruelty mankind is capable of, but on the other also how to be incredibly compassionate and human in inhuman conditions. That message is as valid today as it was during WWII.
Your OPI
Final word Your industry, your opinions
Jerg Luetkens, Managing Director, PBS Network
Technology and the crucial role of data IF you run your own business, you know how hard it is to keep things up to date and adapt to new demands. It’s even harder to predict what demands you may need to adapt your business to in the future. With technological innovation happening at such a high speed, many major achievements of yesterday are being challenged today and may be obsolete tomorrow. You all know the well-documented examples of Nokia and Kodak. But compared to the speed of innovation of the consumer’s digital lifestyle, the majority of today’s smaller businesses are still stuck in the past. Many businesses try hard to generate a modern impression at the front end, but still exchange ASCII files via FTP or email, using systems that have been out of date for many years. The results are inefficient processes and insufficient data running through outdated systems. It’s a bit like flying with personal gyrocopters in our private lives while still travelling on horseback in business.
production, logistics, trading, stocking, selling and using it. Each of these steps requires a distinct data set enabling the transition to the next level. Vendors expend massive effort to maintain and distribute their product data in spreadsheets to trade partners and the whole supply chain is fighting hard to control these processes. Almost everyone in the value chain lacks actual quality data in a standardised format. You cannot run an efficient e-commerce system, customer relationship management programme or an effective supply chain without quality data. Wrong or incomplete data increases costs dramatically by breaking efficiency, creating mistakes, invalidating assumptions and inhibiting sales. In a nutshell – damaging your business. Many resellers work hard to establish more automated processes to gain efficiency and to ‘speed-feed’ different systems like logistics, cash tills, online shops, reporting, etc. Vendors have also started to understand the radical importance of quality data and increasingly invest to improve the overall experience to help their products sell better. Both trends together ultimately will drive customer satisfaction in all tiers of the chain. But so far, a lot of resellers have created better data by enriching it themselves. However, with the ongoing trend of a constantly-widening product portfolio, this ‘do-it-yourself’ data maintenance has become a significant bottleneck and is hindering economies of scale. The only option to fuel the massive demand for more data per product, more products and shorter product lifetimes will be quality data from the source, meaning the origin of the products. Providing quality products along with quality data will first become a strategic advantage, then quite simply a necessity.
“You cannot run an efficient e-commerce system, customer relationship management programme or an effective supply chain without quality data”
Competitive advantage Why does that matter? Well, technology used to be considered a support function in business. Now, however, it can be seen as providing a distinct competitive advantage and companies today must carefully evaluate what technology they adopt. The ‘DIKAR’ model describes why information management matters for strategic and operational decision making and to gain a competitive advantage over time. It also explains why an organisation’s ability to process information is a key organisational and managerial competence. • • • • •
Data turns into information by interpretation Information becomes knowledge by understanding Knowledge initiates action by decision Action generates results Results become a competitive advantage
Everything important in your business is based on data. Data about customers, their experiences, market trends, competition and many more areas. However, most processes start with the product to be sold – but it's data describing it in all relevant dimensions to enable
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OPI Magazine | July/August 2016
Want the Final Word? Email editorial@opi.net
IN THE NEXT ISSUE • Big Interview with Richard Coulson, Complete Office Solutions • Jan/san Special: OPI reports on trends, stats and best practice in this vital category for many resellers
Office Products International ISSUE NO.2 61
JULY/AUGUST 2016
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