Research

the state of the industry report

After the utter turmoil of 2020 and constantly changing goal posts in 2021, what’s the state of our industry this year? OPI and Martin Wilde Associates provide some answers

Following on from a hugely disruptive initial COVID period that was marked by lockdowns in many parts of the world, 2021 was very much a year of transition for the business products market. Office workers were trying to get back to the office, continuing to work from home (WFH) or embracing a bit of both – hybrid working.

In terms of products, there was a deceleration in some of the pandemic growth around PPE and WFH items that had been seen in the previous 12 months. This was accompanied by something of a resumption of office-related product consumption, but still against a backdrop of workplace digitisation and secular declines in several ‘traditional’ categories, plus the ongoing shift towards e-commerce.

This dizzying concoction of product trends has been further complicated by significant price increases and – in many cases – severe supply chain shortages, as well as changes in some key distributor ownerships.

As such, now more than ever, business products leaders need to have a clear and informed perspective on what is happening – and will continue to happen – in the market.

Where is our market going in terms of products and distribution? What are the underlying trends at work in the industry and which new factors are coming into play? Most of all, where is our sector going in the future as we emerge from COVID-19 and some type of ‘normal’ life slowly returns?

It is these kinds of questions that The View From The Top: The State Of The OP Industry 2021-22 seeks to answer, providing, as it does, unique insights into the state of the industry in North America, Europe and Australia.

From offering data and observations of the industry today to forecasting which products and distribution channels will grow in 2022 and beyond, this ninth annual market research study by OPI and Martin Wilde Associates (MWA) serves as the authoritative sourcebook for the global OP industry. It is based on the results of 55 in-depth interviews with senior executives across various channels in Australia, Benelux, Canada, France, Germany, the UK and the US (see Fig 1 and Fig 2).

Fig 1: Respondents by region

Source: MWA (percentages rounded)

Australia: 7%

Benelux: 9%

US: 18%

Canada: 9%

France: 16%

UK: 29%

Germany: 11%

Once again, the research has unearthed some fascinating findings across these seven geographies. The historic rate of decline in core OP demand rapidly shallowed in 2021, for instance, with a gradual return to the workplace slowly coming into play. Only 57% of all respondents reported a core OP market decline in 2021, with only 18% believing that the value decrease in the year was more than 10%.

After seeing a dip in 2020, most survey participants’ overall sales grew in 2021. Overall, as many as 77% reported an increase in their revenues in 2021, compared to only 42% in 2020. Indeed, on average, respondents’ sales in 2021 were 5% above what they had achieved in 2019.

Distributor interviewees were more likely to report that their margins increased in 2021. As many as 53% referred to growth, while only 10% claimed margins had decreased.

The product categories that were most widely reported to be growing in 2021 were PPE/ workwear/signage products, cleaning/janitorial supplies and office furniture.

The most declining segments, meanwhile, continue to be traditional stationery products and cut-size office paper.

As regards supply channels, Amazon/Amazon Business and other internet-only OP resellers took the most share in 2021. According to the report, the pandemic and WFH have shifted demand further towards online channels, with mass market retailers benefiting from the lockdowns to a lesser extent in 2021 than in 2020. The average share of reseller sales taken online, meanwhile, also continues to increase slowly.

The channels most widely reported to be losing share in 2021, on the other hand, were the national contract stationers, OP superstores and small independent OP dealers, with COVID and new working arrangements vastly contributing to the decline. The full report forecasts the key growth channels for each country in 2022.

Other highlights from The View From The Top: The State Of The OP Industry 2021-22 reveal that the average share of distributors’ sales accounted for by janitorial/cleaning supplies, breakroom/catering products and MPS is projected to increase in 2022. The share of revenues in PPE/workwear/ signage products, however, is expected to fall back after the boom experienced in 2021.

Answering a perennial question among industry peers, the share of respondents producing a full range of paper catalogues is expected to decrease going forward, with some distributors shifting to smaller, midi publications and/or shortening the quantity produced.

With consolidation in mind, around half of all interviewed organisations are looking to acquire another business in 2022.

This year’s industry report also provides answers to a wide range of key topics on the current and future state of the market. These include:

• What was the value of the core OP market in 2021 and what will it be worth in 2022? • Which product categories were seen as opportunities by respondents in 2021 and what are they actively planning to develop in 2022? • What share of the core OP market does

Amazon/Amazon Business now have in each country and what actions will resellers be taking to combat this operator in 2022? • Which ‘new’ channels or distributors emerged in 2021 and what kind of impact are they having? • How important are online marketplaces in the business products space and who are the key players involved at present? • What effect did the change of ownership of some of the ‘big box’ distributors have on our market in Europe in 2021? • After the large decline in volumes from the corporate sector due to lockdowns and WFH in 2020/1, is it still financially viable to sell business products to the corporate end-user market and who – if anyone – is taking share from the contract stationers in this sector? • What will be the effect on our industry in 2022, following the ending of government support for businesses during the pandemic? • Which cost factors will be creating an inflationary economic environment in 2022?

What kind of percentage increases are respondents expecting and what do they propose to do to adapt to these?

Product Manufacturer/ Vendor/Paper Mill/ OEM: 38%

Other: 5%

Distributor/ Reseller: 56%