OPI 289 MAY 2019 B by OPI

BIG INTERVIEW

Connecting the

business products world

Kypros Kyprianou, Theo Paphitis Retail Group May 2019

The breakroom category continues to be a success story for many operators in the business supplies industry, with new developments creating plenty more potential

INSIDE THIS ISSUE l Facelift for Staples Inc l Comercial del Sur grows in France l US dealer groups: merger update l 2020 US Industry Week off

l MPS power shift l Work in progress at Complete l Furniture focus l Message from Mexico l State of the OP Industry 2018-19

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CONTENTS 16 Big Interview Ryman is a UK stationery reseller that is defying the challenges of the retail sector. Kypros Kyprianou explains why 22 Hot Topic Staples Inc buying DEX Imaging – is it an industry game changer? 26 Feature Adam Noble’s remit at Complete Business Solutions: to develop a consistent, consolidated brand in the UK market 28 Interview Spirit of Life honouree Brad Graves on his 2019 fundraising campaign at City of Hope

Big Interview: Kypros Kyprianou, Theo Paphitis Retail Group

At a time when retail is having a tough time and negative press is much more common than good news, Ryman is a stationery retailer that is doing rather well. This is thanks to a leadership team that is progressive while also holding on to the traditional values of a 126-year-old company. Kypros

Kyprianou, as Group CEO of the Theo Paphitis Retail Group of which Ryman is a part, talks to OPI’s Steve Hilleard about the state of the UK High Street and why there is plenty of life left in stationery retailing – certainly for Ryman. HOT TOPIC: CHANNEL CONVERGENCE

32 Focus Opportunities abound in the breakroom category

38 Category Update As the workplace continues to change, the furniture sector is reaping the benefits 43 Preview: European Special Issue Forum 2019 HEALTH & The OPI European Forum WELL-BEING heads to Berlin for debate, education and networking 44 Research Revelations from The State of the OP Industry 2018-19 46 Research Thriving non-core office and work supplies sales in Oz

REGULARS 5 Comment 6 News

Special Issue

VENDOR SPECIAL

48 5 minutes with... Nicole Speyer 50 Final Word Michel Spruijt

May 2019

Now that Staples has Dan Doyle Sr and his son, Dan Doyle Jr, on board – both highly regarded within the US imaging sector – will it roll out DEX-type MPS and other print-related services on a national basis? Perhaps, in terms of expanding DEX capabilities to more areas in the US. It already has a major presence in the south-east of the country, with over 30 locations offering printer and copier equipment, servicing and repairs, toner and ink, MPS, and document management solutions. DEX is mainly affiliated to Canon, HP, Konica and Kyocera, and it will be interesting to see how this plays out with the vendors in terms of sorting out their distribution footprint if DEX does go nationwide under Staples.

30 Spotlight A look at Mexican reseller/ wholesaler Clips

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COMMENT The OPI team EDITORIAL Editor Heike Dieckmann +44 (0)20 7841 2950 heike.dieckmann@opi.net Deputy Editor Michelle Sturman +44 (0)20 7841 2942 michelle.sturman@opi.net News Editor Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net Freelance Contributor David Holes david.holes@opi.net

SALES & MARKETING Chief Commercial Officer Chris Exner +44 (0)7973 186801 chris.exner@opi.net Head of Media Sales Chris Turness +44 (0)7872 684746 chris.turness@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 & FINANCE Studio Joel Mitchell +44 (0)20 7841 2943 joel.mitchell@opi.net Operations & Production Amy Byrne +44 (0)20 7841 2950 amy.byrne@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 Executive Assistant Debbie Garrand +44 (0)7718 660249 debbie.garrand@opi.net

Playing the waiting game

fter a number of quick-fire ‘wow’ stories at the beginning of this year, we are now in a state of limbo where all the announcements that were revealed with great fanfare need some time to unravel, develop and evolve. There are certainly questions that cannot be answered in a hurry. What impact would the DEX Imaging acquisition by Staples Inc have on our sector, for example, and indeed on the looming convergence of the OP and imaging/MPS space? Michelle Sturman has been investigating (see page 22). What is going to happen to ADVEO in various parts of Europe? There’s been no news of any substance, other than negotiations with potential buyers have ground to a halt both in Germany and Italy, and last year’s financial results of the wholesaler were a disaster.

We are now in a state of limbo where all the announcements [...] need some time to unravel, develop and evolve Across the Atlantic, how can the various channel partners in the US move on from the current stalemate around ‘Industry Week 2020’ (see page 10)? And when can we expect more tangible information on the proposed merger of three of the US dealer groups? The groups’ boards have recently approved a ‘memorandum of agreement’ document and progress is being made in the enormous task of bringing together and successfully servicing over 1,000 independent dealers (see page 8). On the issue of dealer groups and following our Hot Topic last month on the future of said groups, it’s interesting to see that two entities in the UK have now joined forces – Office Club and Nemo (see page 10). Out of the two, Office Club is the one that has a strong foothold in the retail sector through its dealer members. And retail – no surprise here – is having a tough time, in the UK as well as in many other markets, including the US where Staples’ retail stores could also potentially benefit from the branding rejig that is currently happening in the reseller’s delivery and online businesses (see page 6). Again, it’s a waiting game. One operator that has most definitely stood the test of time – and in retail too – is UK stationer Ryman. Why and how? Turn to our Big Interview with Kypros Kyprianou to find out (see page 16). Have a great month. HEIKE DIECKMANN, EDITOR

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business products world

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.

May 2019

Connecting the

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NEWS

Analysis:

Staples Inc gets major facelift

Reseller rebranded as the ‘Worklife Fulfillment Company’ Staples Inc had been promising some big changes to its brands and branding for some time, and in April its digital and delivery business in the US unleashed a new corporate logo, tagline and five new own brands. In terms of the logo, gone is the ‘slanted L’ staple that had been part of the company’s history for more than 25 years. The staple is still there, but has been placed to the side in a redesign that the reseller claims is simpler and more modern. It also provides more flexibility, with the staple shape being used to depict other products such as a desk, and modified in various ways across different marketing collateral. In addition, the It’s Pro Time and Make More Happen slogans have been retired, with Staples now calling itself the ‘Worklife Fulfillment Company’ in an effort to better connect with customers. “Worklife fulfilment is about helping businesses of all sizes as they create the most dynamic and productive work environments for their teams,” said Staples Inc CEO Sandy Douglas. “Our customers deserve more than just an algorithm for ordering products for their business. Our team’s role in their success is to provide product and service solutions at great prices, and to understand their business needs.” As part of its Worklife concept, Staples has developed five independent product brands in specific categories:

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TRU RED: business essentials such as pens, notebooks, shredders and organisational accessories l NXT Technologies: technology products and solutions l Coastwide Professional: facility supplies l Union & Scale: furniture and décor collections including the Lewis and Workplace 2.0 brands l Perk: breakroom essentials

These new brands are available on the Staples.com and StaplesAdvantage.com websites and will furthermore be sold through Staples’ “partner companies” Quill.com and HiTouch Business Services. TRU RED and NXT are also available in Staples retail stores, with plans for more brands to roll out to stores in the coming months. Additional products from each brand will be introduced throughout 2019. Central to the new branding will be an interactive digital experience which is intended to connect customers to products and solutions in a variety of ways, “from content and peer recommendations to intuitive shopping and buying tools”. Moreover, Staples is rolling out The Loop, a product solutions guide – in both digital and printed formats – dedicated to helping business professionals design and deliver smart solutions for their workplace. The Loop will feature ways to deploy and maximise a wide range of office products and tools. DRIVEN BY DELIVERY While, as mentioned, some of the new brands will be available in stores and Staples said it “plans to introduce new and exciting features for its retail business in the future”, the ownership of the rebranding is very much with the Staples Inc delivery business. It appears unlikely that the retail network in the US will adopt the new brand in what would be a time-consuming and expensive effort, but there may be separate, branding projects underway for the stores.

Our customers deserve more than just an algorithm for ordering products

More than 4,000 staff gathered in Florida, US, in April for the Staples rebrand kick-off

A Staples spokesperson declined to comment on the relationship between Staples Inc and Staples US Retail with regards to product brands, but OPI understands that it is akin to a licensing arrangement. The brands replace the use of the ‘Staples’ name on private label products, which may tie in with owner Sycamore Partners’ plans to spin off or sell the Staples assets in the US (delivery and retail) and Canada.

NEWS

Comercial del Sur expands in France Left to right: Carlos Benavides (Comercial del Sur), Romain Zwiller (SNH), Rafael Benavides (Comercial), Gérard Mikhaelian (SNH) and Roberto Frates (Comercial)

News surfaced recently in the US financial press that Sycamore is planning to issue debt on Staples Inc in order to recoup around $1 billion of its $1.6 billion original investment, and that it could take the delivery unit public within a year. What would then happen to the US retail and Canadian operation is still a subject of speculation, but in terms of brands, the new set-up does allow for product sourcing scale to be achieved without being tied to the Staples name. Even if the three entities are under different ownership, they could still be linked via product sourcing and licensing agreements. As one industry insider told OPI: “A brand is more than a logo and some PR. It’s a relationship with a consumer that endures over decades and delivers real value. Let’s see how that works for Staples ‘new’ idea.” A valid point, but there would appear to be a new dynamic at Staples Inc and its ‘customer first’ approach from within the company itself. As part of the rebranding launch, around 4,000 Staples staff members gathered in Florida for a major ‘Work It Live It’ sales conference. This event created quite a buzz on social media and demonstrated belief in and commitment to what the reseller is trying to achieve. Negative elements within some press channels have suggested the changes at Staples are about private equity coming in and stripping out assets. However, following the Essendant and DEX acquisitions – and potentially further deals in the pipeline – and now this major rebranding exercise, Sycamore has shown it is prepared to invest heavily in Staples Inc at a time when it was in desperate need of a transformational strategy.

Spanish operator Comercial del Sur has made another significant move in the French market after taking a partial stake in SHN, the parent company of superstore chain Hyperburo, effective 1 April 2019. SHN will merge into Comlandi, the company formed by Comercial when it acquired RP Diffusion and its Rouge Papier network of 350 stationery retailers in early 2015. Comlandi has acquired “a substantial amount” of SHN’s goodwill and all of its trading activities, including the transfer of customers that operate under the Hyperburo banner. Comlandi has also taken on SHN’s employees, the offices located in Fontenay-sous-Bois (near Paris) and the software and computer equipment required to carry out its business functions. In return, Comlandi is committed to paying a royalty to SHN over a four-year period, at the end of which Comlandi may also exercise a call option on the Hyperburo brand. The administrative operations of SHN and Comlandi have been consolidated at SHN’s Fontenay-sous-Bois location following the timely expiration of the lease on Comlandi’s previous offices. The enlarged group now employs around 85 staff in France. Hyperburo has 48 members and 55 stores, with annual sales of around €60 million ($68 million). The brand was established in 1989 and has existed under its current SHN ownership since the bankruptcy of the SACFOM group in 2013. It is not a franchise model in the pure sense, with its members being able to define their own procurement policies and set their own prices. The addition of SHN significantly increases the position of Comercial del Sur in France, more than doubling its existing wholesale revenues of around €30 million, while taking overall group sales to the €150 million mark. The Spanish firm has been able to significantly grow market share in its home market following the well-documented issues with rival wholesaler ADVEO and clearly sees opportunities to do the same in France. Next month’s Big Interview will feature Comercial del Sur’s joint Managing Directors Carlos and Rafael Benavides.

E-COMMERCE PACKAGING MARKET TO SURPASS

BY 2025

May 2019

$33.89 $ 3 9b billion l io on

NEWS

US dealer groups provide merger update US office products dealer groups Independent Suppliers Group (ISG), TriMega Purchasing Association and Pinnacle Affiliates are a step nearer to merging after their boards approved a memorandum of agreement (MOA) document. The groups first made public their intention to merge in early January this year, and in mid-April issued a statement outlining the progress they had made since then. In the short update from the Chairs of the three groups – Tonya Horn (ISG), Bruce Eaton (Pinnacle) and Ian Wist (TriMega) – it was confirmed that the approved MOA addresses the major elements of the proposed merger, with accompanying specifics to be incorporated into a definitive merger agreement (DMA). The goal is for the DMA to be executed and the new, as yet unnamed, entity (Newco) to be launched by 1 July this year. A few details about Newco did emerge from the update, with more information to become available over the next few weeks: l l

l l

The organisation will be structured as a cooperative, with TriMega and Pinnacle merging into ISG, the latter being the surviving entity. Its board of directors consists of 12 individuals – four from each group. These board members have already been selected and approved by each group’s board and began their duties in mid-April. Newco is committed to providing all of the existing programmes and services currently offered by the three dealer groups. “Substantial operational savings” have been identified through the merging of the three dealer groups which serve approximately 1,000 resellers. The expectation is that Newco will provide “immediate and significant benefit” to all shareholders, however large or small the dealer. The work of the steering committee – whose spokesperson is Dave Guernsey – is expected to be completed shortly.

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Wright to lead Fellowes’ sales in North America

Beth Wright has been named VP of Sales - North America at Fellowes Brands. The appointment comes following a number of internal organisational adjustments and the news that Sam Richardson has decided to leave the company to pursue other career opportunities. Commenting on Wright’s promotion, company CEO John Fellowes said: “Beth has progressed and been very successful in her nearly 20-year tenure in the business products industry and embodies the values of Fellowes. Over the coming weeks, she and her team will be working with customers to ensure that there is a smooth transition in our trade partnerships.”

IN BRIEF EVO’s CSR EVOLUTION UK-based EVO Group of Companies has launched a major CSR initiative, dubbed EVOLUTION. It includes increasing the hours of staff training and a £750,000 ($980,000) investment in supply chain software to help reduce its impact on the environment. Massive losses for ADVEO European wholesaler ADVEO posted a loss for 2018 of more than €180 million ($202 million). There was a significant deterioration in the group’s financial result in H2, while its 2018 sales slumped by 28% year on year to €343.5 million. Top appointment at NZOS New Zealand’s leading independent OP dealer NZOS has named Mike Nugent as its new Managing Director. He has taken over the role from Mike Manikas who will now focus on “specific strategic opportunities” at the reseller. Expansion for Imperial Dade US jan/san and food service distributor Imperial Dade has acquired Edmar Cleaning, a New York state-based distributor of paper, plastic, chemicals and jan/san supplies. ALSO expands in Eastern Europe European distribution group ALSO has agreed to acquire Solytron, the largest local IT distributor in Bulgaria. Founded in 1991, Solytron has enjoyed phenomenal growth in the past few years, tripling sales between 2011 and 2018 to around €110 million ($125 million). New marketing head appointed at AIA/OfficeZilla Promotional and business products group AIA Corporation, the holding company for office products dealer franchise OfficeZilla, has appointed Billie Jo Mathusek as its new Director of Marketing. FedEx Office opens 2,000th store FedEx Office has opened its 2,000th US location in Chesapeake, Virginia. The company said its retail growth is being fuelled by the growth of e-commerce, and the convenience and services it provides for e-tailers and customers in terms of deliveries and returns.

NEWS

Industry Week in the US confirmed as a “no go” for 2020

The attempt to establish an Industry Week for the US office products channel in 2020 has been brought to a halt. For more than 12 months, the Business Solutions Association (BSA) has been leading efforts to streamline the US events calendar by establishing Industry Week. Towards the end of 2018, the initiative – involving more than 100 people and driven by a BSA Point Team comprising representatives from across the sector – appeared to be gathering momentum. However, the trade association has now confirmed that Industry Week will not take place in 2020. It stated: “Because of the inability to gain consensus, the industry being in a state of flux, and the unrealistic desire to sustain legacy events and programmes by some stakeholders, the group is not able to take necessary steps (sign contracts, etc) to make a 2020 conference a reality.” The BSA said it would continue to evaluate and work on these issues and determine if a future event is achievable.

BIRD FEED

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Dorchester Stroke Club helps those who have had strokes, restoring self-confidence and assisting in social and speech rehabilitation. Nominated by Matt Biles, our Print Operator, we donated £500 to this great #charity #charitytuesday

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UK dealer groups to combine

We have officially launched a Driver Academy scheme, established as a platform to assist current employees, and shortly new recruits, to achieve their career goals within the transport and logistics industry

@AmpliCEO

I’m very happy to share that @GopherSport has awarded @AmpliVox with a 2018 Gopher Sports Supplier of the Year Award

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UK office products dealer groups Nemo and Office Club have announced they are to merge. The groups – both members of purchasing organisation BPGI – issued a joint press release stating that they are to join forces, creating an entity that will have almost 320 dealers representing end-user sales of approximately £500 million ($650 million). Each group will maintain its own identity under its current team “for the foreseeable future”, although as part of the transaction, Office Club CEO Toby Robins will take on a non-executive Chairman role. “With Office Club becoming part of the Nemo family, there are benefits to members, vendors and staff,” Robins said.

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Our brand new EMEA customer engagement facility is home to a virtual supermarket, smart demo kitchen, technical hall, digital room, graphics studio, congress hall & business networking area to support every step of your innovation journey Follow us on Twitter @opinews

NEWS

SPOT sells Oyez business unit UK office supplies group Spicers-OfficeTeam (SPOT) has sold its lucrative Oyez Professional Services and Waterlow Business Supplies unit (collectively known as OPS). The legal and HR forms and software business was acquired by UK software and services giant Advanced. OPS has annual sales of about £5 million ($6.5 million), but its operating margin – as of 2017 – was more than 34%, making it a highly profitable business. Profitability was expected to improve further in 2019 as new services such as the cloud-based Oyez Gateway forms library are introduced. No financial details were provided, but SPOT owner Better Capital said the proceeds received represented “a substantial proportion” of the carrying value of its investment.

WHO’S WHO IN OP

Top 100 new entry 2019: Raffael Reinhold, CEO, Office Depot Europe

EOSA expands membership The European Office Supplies Alliance (EOSA) has added four new members in the past ten months. The most recent addition to the group is Pagro Direkt, an Austrian reseller that has succeeded TEKAEF as the EOSA member in that market. At the beginning of this year, Luxembourg’s Chapier joined the alliance, replacing former member Muller & Wegener which was acquired by French reseller Bruneau last year. In addition, at the end of 2018, Office 24 from Spain and Lomax of Denmark signed up with EOSA, taking the total number of members to 12.

GLOBAL LUGGAGE MARKET TO REACH

$54.61

billion BY 2025 PICTURE OF THE MONTH

WORLDWIDE SPENDING ON ARTIFICIAL INTELLIGENCE SYSTEMS IS FORECAST TO REACH

$35.8 8 billion n

in 2019

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As the final season of Game of Thrones hits the screens, Office Depot Europe-owned Viking Direct in the UK garnered a lot of good publicity after working with artist Andy Singleton to make a 13-metre (130 ft) dragon made entirely out of paper. The project took 110 hours to complete and involved the equivalent of 1,200 sheets of A4 paper.

Raffael Reinhold has been named CEO of Office Depot Europe. He succeeded Neil Maslen at the beginning of April – Maslen had been in the top job at the reseller for only 15 months. Reinhold, an operating partner at parent company Aurelius, now combines the CEO position with his previous role of Chief Sales Officer for the Viking Direct channel. He took over that role in September 2018 – initially on an interim basis – following Oliver Klinck’s departure. Before joining Aurelius in early 2017, Reinhold held senior management positions at retail and mail order operator KarstadtQuelle, and travel company Thomas Cook, both of which were owned/ part-owned by what became now defunct entity Arcandor. Reinhold is tasked with leading Depot Europe through its continued transformation, with a “strong focus on further growth, customer experience, e-commerce and technology”.

UK-based B2B distributor Exertis Supplies has promoted Andrew Beaumont to the position of Managing Director following Raj Advani’s relocation to Portugal. In what has been a planned move, Beaumont moved up from his Operations Director role on 1 April, succeeding Advani who will stay on as Commercial Director. The change comes following Advani’s decision to move to Portugal, although he will still be in the Exertis office every other week. “I am still passionate about Exertis and will continue to focus on vendor relations and do everything I can to support Andrew to help the business exceed its goals,” he stated. Beaumont knows the Exertis Supplies business well. He first joined the firm in 1998 – when it was known as Advent Data – spending over 13 years as Financial Controller before joining the Myers Group in 2014 as Head of Finance. He returned to Exertis Supplies as Operations Director in 2017.

New CEO for Best Buy

North American consumer electronics giant Best Buy has announced that Hubert Joly is to step aside as CEO. Current CFO and Chief Strategic Officer Corie Barry will take over as CEO on 11 June, with Joly taking on the newly-created board role of Executive Chairman. Joly joined Best Buy in 2012 and has been credited with leading a turnaround of the retailer, refocusing operations on its core North American market and driving its digital strategy. Barry, meanwhile, has been with the company since 1999 and has held a variety of financial and operational roles within the organisation, both in the field and at its corporate campus. She was named CFO in 2016.

IN BRIEF Storey Kenworthy acquisition US independent reseller Storey Kenworthy has acquired fellow Iowa dealer Rite Price Office Supply. The deal takes the number of Storey Kenworthy locations in the state to 12 and comes just 18 months after it bought Vinton-based Monkeytown.

NEWS

Exertis Supplies names new Managing Director

Dual role for Donahue Genuine Parts CEO Paul Donahue has taken on the additional role of Chairman of the company’s board. He replaces former Chairman Tom Gallagher, who will remain on the board as a director. BOSTA’s Wollaert to step down Belgian stationery and office products association BOSTA is on the hunt for a new general secretary after Bea Wollaert’s decision to step down after 11 years in the role. Staples Canada testing new delivery solution Staples Canada is piloting a same-day delivery service in the Toronto area in partnership with online grocer Instacart. It marks the first time Instacart is testing in the OP category alongside its grocery delivery business in the country. Jalema buys German brand European manufacturer Jalema has acquired Germany-based Dataplus, a maker of polypropylene OP products. Its production facilities are being moved to Jalema’s headquarters in the Netherlands, where the factories are currently being overhauled to accommodate the new machinery. Co-working consolidation Collaborative workspace provider WeWork has bought office management platform Managed by Q for a rumoured $200-$250 million.

Corie Barry

OPI.NET POLL

Which of these issues is the most challenging for you? Big box dealer acquisitions 9% Customer retention 12%

Digital transformation 13%

Demand reduction in traditional OP 15%

May 2019

Channel changes (wholesaling, dealer groups) 13%

Amazon and online competitors 38%

Anti-dumping duties in Australia Australia’s Anti-Dumping Commission (ADC) has said it will levy duties on A4 copy paper imported from Finland, Russia, Korea and Slovakia. Following a year-long investigation after local producer Australian Paper claimed it had “suffered material injury” from copy paper imports, the ADC has imposed tariffs ranging from 3.8% to 16.4%, effective 11 April 2019, for a period of five years.

BIG INTERVIEW

RETAIL rejuvenated

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yman is something of an institution in the British retail space. With a chequered history dating back to 1893, the stationery retailer survived two world wars and considerable political upheaval, many recessions and, in this era of digitisation, the many challenges that the retail sector is facing right now. Long a household name in the UK, the company was propelled further into the limelight when Theo Paphitis, Chairman of Theo Paphitis Retail Group (TPRG) of which Ryman is a part, appeared on reality TV show Dragons’ Den for nine series from 2005 until 2012. Paphitis – flamboyant, charismatic and very much ‘out there’ – is one part of the TPRG and Ryman equation. The other is Group CEO Kypros Kyprianou. Like Paphitis, he’s of Cypriot heritage as well as a huge football fan. But he, by his own admission, is the relatively quiet and shy one, the one sitting in the back of the office crunching the numbers and working on day-to-day strategy and operations. And all of that he does very well, as OPI CEO Steve Hilleard found out when Kyprianou visited OPI’s offices in London in early spring to discuss why this operator is still going strong after all these years.

OPI: This is the first Big Interview with you, although we featured the company – Ryman – before as part of our chat with Theo Paphitis 11 years ago. How did you end up working for Theo? Kypros Kyprianou: OK, let’s go back to the very beginning. My parents were first-generation migrants from Cyprus. They came over to the UK in the early 1960s and I spent my formative years growing up around very small businesses – that’s what everyone in my family was involved in. I went to school in north London and was a keen footballer, and my dream was to become a professional footballer playing for Tottenham Hotspur Football Club. I also had a good careers adviser who told me to by all means do the football, but something else as well. And so I did. I dropped out of football at the age of 16 when I was released

by Tottenham. I tried to get involved at a lower level, but it was too difficult. Instead, I continued school and then went to City University and studied Actuarial Science – in short, it’s a discipline that applies mathematical and statistical methods to assess risk in insurance, finance and other industries and professions. After I graduated, I got a job at the Bank of Cyprus, in some way going back to my roots. It wasn’t what I had had in mind when I left university, but I had just got married to my wife Fanoulla, needed the money and actually ended up working there for 15 years. The bank really encouraged me to develop my career at the firm, as it was looking to build a larger business market in the UK. Entrepreneurs like Theo Paphitis were target clients, and the bank wanted to build a team to develop its corporate business – I was the perfect fit. I ended up heading the corporate banking division and that’s how I met Theo – he was one of my customers. He convinced me to work for him as he wanted to strengthen his commercial team. That’s when I moved from banking into retail. Theo was also Chairman of Millwall Football Club at the time, of course, and had taken the club

BIG INTERVIEW Kypros Kyprianou

Despite all the doom and gloom about the state of the High Street and the retail space, [our predecessors] faced far more serious situations than we do now out of administration. I started in January 2004 and by May of that year, I was sitting in the Millennium Stadium watching Millwall play Manchester United in the FA Cup final. Having grown up as a complete football fanatic and now being involved in some way with a football club that was playing in the FA Cup final cemented my decision that it had been a good time to move on. That’s 15 years ago.

OPI: OK, tell me a bit more about Ryman and some of its core milestones? KK: Sure. Ryman the Stationer was founded in 1893 on Great Portland Street in London, a road it still resides on after 126 years. For a brand and a business to survive for that long is quite remarkable. We cover some of this in our conferences in fact, in terms of however tough we think it is doing business right now, let’s not forget what our predecessors went through – including two world wars. Despite all the doom and gloom about the state of the High Street and the retail space, they faced far more serious situations than we do now.

May 2019

OPI: Millwall Football Club is still a long way from Ryman though and, while not my club of choice, a bit more exciting than stationery I might add. KK: That’s a case of perception I guess. When I joined, Theo owned a couple of lingerie businesses and now he also has Boux Avenue.

But evidently, they didn’t interest me quite as much as Ryman did – it was stationery retail that really caught my attention! So no, from the outset it doesn’t come across as exciting, but once you’re into it, there’s a lot of detail. There’re many relationships that you need to manage in terms of supplier base, and it’s interesting working with 200 store managers and all the other colleagues to deliver the consistency that we need. And you do meet people that absolutely love stationery, are passionate about it and want to introduce something new in the sector.

Kypros Kyprianou BIG INTERVIEW

Theo didn’t get involved until 1995 when Ryman was part of the Pentos Group. It then still included greeting cards shop Athena and bookstore Dillons. It all came crashing down around that time, with the group getting into serious financial difficulties. Theo, who had some mobile phone concessions with Ryman stores, bought the chain in March 1995 because he believed the brand and the business had a future – in his opinion, it hadn’t failed because it had a bad proposition, but because of wider management issues and financial distress. After the founder, Henry J Ryman, Theo has been the longest-running owner of the company. He’s added other retail stationery chains to the group since. He picked up Partners the Stationers in 2001 – that was about 88 stores. Ryman was more business and functional stationery, while Partners was social stationery. In 2007, Stationery Box was another chain that was bought. At that time, Theo decided to consolidate all the brands and he went for the one with the most heritage – Ryman. Everything is centralised now – we’ve got about 200 stores and are headquartered in Crewe in South Cheshire. OPI: But you are based in London, aren’t you? KK: Crewe came through the acquisition of Partners. One of our other board directors, Malcolm Cooke, who was originally from that part of the country, relocated there as well as Simon Lakin, another of our directors, who was previously Finance Director of Partners. Yes, both Theo and I are based in London, but the business operates out of Crewe and has done so for many years. OPI: How many staff do you have? KK: We have just over 2,000 employees – about 1,600 of those are store-based.

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OPI: I know you’re a private company and don’t have to reveal this information, but as the financial year has just ended, what numbers can you give me? KK: We had sales of £128 million ($170 million) in 2018. We’ve grown sales and profit in the year just ended, ie March 2019, and that’s broadly on a same-store basis. We’ve also opened some new stores, but these have mainly been relocations of existing businesses. As I said, nothing compares to what our founder had to put up with, but through all the economic cycles and challenges, Ryman has made a profit every single year over the past 24 years since Theo has owned it. We are relatively pleased with the results, though there’s still plenty of potential.

OPI: What do you attribute your success to? KK: Attention to detail is definitely one thing. There’s always been a consistency about the business: it’s well stocked, availability is good, store colleagues are well informed and have a good customer service ethic. And there’s always been evolution. We introduce something new every year. You have to manage things tightly, but you also have to have some vision of where the business is going. I believe we’re doing both things well.

OPI: You said the word ‘challenge’ already. It’s no secret that the High Street in this country – and the equivalent in other countries I’m sure – is indeed a very challenging retail environment. How are you faring versus other businesses which are filing for voluntary administration or failing to pay the rent? We’re hearing about them on a daily basis – it’s a brutal landscape out there. KK: There are many reasons why businesses fail. Sometimes it can be down to the financial structure that may lead to short-term, cloudy decision-making, and there isn’t really an issue with the core proposition that a business has. But there are other factors that might lead to difficulties. As for the High Street, there’s no doubt we’re going through a huge structural change in terms of how people buy. That said, there is still a need for convenience and availability in the right location. In fact, location is crucial for us. Over the years, we’ve chosen or remained in locations where people are working, commuting, studying or congregating for leisure purposes. However, in some towns, footfall has all but disappeared, and if there are specific industries or out-of-town centres that emerge which decimate the amount of people milling around, then you can have the best proposition in the world, you’re just not going to do the business. What we’re trying to do is create an interest where there is footfall, and grab our fair share of that footfall with some good offers. Customer loyalty is also important. Ryman has been around for a long time and we’ve always had a strong focus on delivering good customer service in the stores – that creates loyalty and retains customers.

Ryman has made a profit every single year over the past 24 years since Theo has owned it OPI: Apart from B2C end consumers, a lot of your customers are small businesses located in or near the High Street or in urban areas like London where convenience is a factor. But then you get a player like Amazon with its Prime service. How do you stop my office manager here at OPI from ordering what she needs from Amazon versus walking to the local Ryman store? KK: Amazon is obviously grabbing market share. But there are key customer segments that do shop at Ryman – I referred to them earlier – and maybe they don’t want to wait for a delivery, however quick. There’s also convenience outside e-commerce. Our customers know they can have the product straightaway for the ‘inconvenience’ of walking to a nearby store. I sometimes say we’re the click-and-collect without the click, because people know that Ryman will have what they need in store, so there’s no need for the click bit – they can just turn up and select their products.

BIG INTERVIEW Kypros Kyprianou

The basket value at a Ryman is of a size which works in retail and that’s very different from some other sectors. Some of the first businesses to disappear from bricks-and-mortar retail were white goods companies. It just didn’t work for them anymore on the High Street because of e-commerce. Selling high-value, bulky goods in this space is very difficult.

OPI: Through the stores? KK: Yes. Companies like DHL or Western Union like the fact that we have national coverage, a respected brand and a workforce that is engaged and knowledgeable. Services now account for a meaningful part of the business. What I mean by services is printing and binding, for example – all done in store. We then partner with the likes of DHL to deliver those services. We’re not pure retail, and while there’s always room for improvement, we want to focus on our strengths. OPI: That brings me to your competition. WH Smith is probably the only other main High Street foe that you have in terms of core range. Then, a bit more marginally, there’s Smiggle and Paperchase. And, of course, the

May 2019

OPI: You mention click-and-collect which leads me to omnichannel and how this seems to be the go-for strategy right now. But not for Ryman it appears. You have a Chairman who is extremely well known from his TV and other appearances, who promotes small business on Twitter and is generally very active on social media. Then you’ve got a brand that’s over 125 years old and very well thought of. Why don’t you have a better small business delivery proposition? A Ryman app or potentially a same-day service that would compete with Amazon Prime? KK: Wow – there’s a lot in that comment. We do have click-and-collect and customers are of course free to use that. But, like I said, they often don’t feel the need to because we are a specialist with a known range. There’s something else you refer to – our long-standing heritage. We have a history of store retailing – that’s what we’re about. Your observations are fair and perhaps we’re not as advanced in terms of merging online and offline as we should be. But we do actually have a lot of what you’re alluding to. We have recently introduced two-hour delivery for our B2B customers in London, for example, and we can fulfil e-commerce orders from stores. To be a complete multichannel operator, you have to change the mindset of the organisation.

You have to slightly move away from what is the core of your business, focus on the considerably smaller part and grow it. Sure, there are aspects of the Amazon proposition that I’d like to have, but we’re still growing our store business and the reason we do that is because we’re focused on our key strengths. It doesn’t mean we can’t or shouldn’t work harder on the opportunities that exist online and with B2B, but we always need to think about our stores – they are what makes Ryman unique against all the other companies out there. We have 200+ stores across the country that need to be maintained – rent, rates, people, IT and so on. As such, they have to pay for themselves. Even if I’m selling you a business account and deliver directly to your office, I still need you to use the local store for top-ups or emergencies. All that said, we’ve also introduced a number of services to our business over the past ten years.

Kypros Kyprianou BIG INTERVIEW

former Staples brand Office Outlet which went into administration in March. I remember you predicting an outcome like this for Office Outlet a couple of years ago. Why did it all go wrong for new owners Hilco? KK: Staples was the biggest stationery retailer in the world for decades. It had enormous clout and was run by very good people. When it decided to call it a day in the UK and indeed Europe, you had to take a step back and question the way forward. You asked earlier why we don’t do more omnichannel stuff and try and rival Amazon. Like I said before, it’s about location, who we attract and what we’re good at. You’re not going to get in your car and drive 10-15 miles out of town to fill your boot with office supplies when you can press a few keys on the keyboard and have the order delivered to you. I’m sure the management at Office Outlet worked very hard and did some good things to make that business successful – which it had never been financially incidentally – but there were just too many factors weighted against its concept at a time when consumer shopping habits had changed so fundamentally. OPI: Are you having conversations with the administrators right now? KK: We look at a lot of businesses all the time, so I can’t comment on a specific one. I’m just giving you my view in terms of what somebody would have to get their head around to have a chance of making that business a success. OPI: What about WH Smith? I know you and Theo like getting one over on them for some strange reason. KK: I don’t know why you think that... OPI: Didn’t you put a Ryman store underneath its head office? “Just for a bit of fun” were Theo’s words when I spoke to him about it many years ago. KK: Wardour Street in London – yes. You’ve got a good memory.

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OPI: I also remember one of the WH Smith stores shutting down near your office some years ago and you not being very upset about that. KK: Well, as you know, I have a strong sporting background, so I’m competitive by nature. But I also respect the opposition. Everybody has to diversify and find a niche in some way. WH Smith did that with certain areas of the business, particularly its travel shops, and it’s done a fantastic job with it. The company has created considerable shareholder value I believe – if you’ve invested in WH Smith over the past ten years, you probably haven’t done too badly.

OPI: A lot of that hasn’t come from growth, but from better cost management. KK: True, but at least it realised that costs needed to be managed. It focused on some specific segments and has done a good job with those.

Kypros Kyprianou with Theo Paphitis

OPI: Let’s talk about Smiggle. Are you surprised this Australian retail chain – very successful in its home country – has done so well here in difficult trading conditions? KK: What Smiggle has done is bring something new to the market which obviously resonated with a very young customer group – the products are desirable, exciting and vibrant. It’s got good margins too, looking at its accounts. OPI: It needs those margins given the retail locations it goes for. KK: Yes, and it’s the only thing I would have questioned – being in the top shopping centres is expensive business. That said, because of the products Smiggle sells, it needs to be in high footfall locations, so that makes sense. And the spaces are pretty tight. We’re not talking about a 3,000 sq ft (300 sq m) store – that would be a different story. It’s more like 250-500 sq ft. OPI: Have you made any efforts to have part of your stores migrate towards that more ‘desirable’ product range, as you call it? KK: It’s desirable for a certain demographic or market, not for everyone. Ryman has a typical store footprint of 1,500 to 2,000 sq ft. As such, we simply can’t do everything. What we stock and how we manage the space has evolved over many years. We’re very strict about the best brands we want to work with; if I’m taking something out, I’m effectively making space for something that has given me a good return in the past. In other words, I’m not going to swap my notebooks to put in kids stationery. Also, if someone is doing a great job with it – and Smiggle clearly is – it’s probably not the thing for me to

OPI: You talked earlier about some of the services you’re offering now. Does that service proposition also extend to other divisions in the group? I’m guessing you won’t be selling stationery in Boux Avenue. You’ve done a joint store initiative with one of your other group chains, however – hardware retailer Robert Dyas. How’s that going? KK: First up, absolutely no chance as regards selling Post-it Notes in Boux Avenue. OK, other than the pink, heart-shaped ones! But you can go onto the Boux Avenue website and you can go onto the Robert Dyas website and have your product delivered to a Ryman store because with Ryman we’re nationwide. But that’s about the extent of the collaboration with Boux. As for Robert Dyas, when we bought the chain in 2012 – and it’s a business that’s even older than Ryman – we had the obvious discussions around whether an overlap and a joint store would make sense. It was all quite conceptual, but when last summer negotiations came to a head with our landlord for Ryman in Bexleyheath just outside London and we couldn’t agree a rent, it just so happened that we had an oversized Robert Dyas store on the same high street. It was a lunchtime chat with Theo where I explained the issue and suggested a joint store.

There’s still no clear understanding of where we’re headed [with Brexit]. And for business, this uncertainty is bad

OPI: How’s this joint store performing versus the two standalone ones that you previously had? KK: Well, both brands are doing the same amount of business, but I’ve only got one lot of rent. It’s going well, but in this case it was pure circumstance, combined with some previous brainstorming that accelerated our action. Are we going to expand on it? Possibly. Ryman is truly nationwide – all the way from St Andrew’s in Scotland to Penzance in the south-west of England. Robert Dyas, on the other hand, is a very

OPI: Presumably you don’t have existing Ryman stores that have considerable idle space? KK: Sometimes you have floors that are not utilised, but we typically keep trading to a single floor. I’m sure we can find new sites that will house the two brands – the concept has been proven now, so let’s see. OPI: We’ve covered the A word, but what about the B word as my final question – the saga that is Brexit? What has that whole political debacle done to your business or is likely to do? By the time this article gets published, we might finally have a clearer idea. What have you been able to do to mitigate or prepare for some of the impact you might face? KK: Well, to start with, let’s ignore whether the Brexit decision was right or wrong – that ship has seemingly sailed now. What is far from over is how the decision that’s been made is being executed. There’s still no clear understanding of where we’re headed. And for business, this uncertainty is bad. There might be ultimate strategic benefits or opportunities as a result of uncertainty, but in terms of running our businesses on a day-to-day basis, our customers being confident and our colleagues being happy, you need as much clarity as possible. Our people are hugely important to us; I think our longest-serving member of staff has been in the organisation for 52 years. We have some very loyal people here and it’s our duty to ensure they receive good information as we interpret what is happening. We’ve tried to reassure all of them, particularly anybody from continental Europe, that things aren’t going to drastically change for them overnight, but it’s a worry. The supply chain is also massively important. We’re keeping close to our supplier base and establish what contingency plans they have and what they can do for us in case of disruption. But I can’t go and rent more warehouse space, buy a load of product and put it in there in case disruption occurs. I’ve got some protection because I’m well-stocked. As I said earlier, availability is one of the key attributes of the Ryman business. We’re in a healthy position and let’s be honest, there’s not going to be a run on stationery. I’ve spoken to chief executives of other businesses that have spent a huge amount of money on planning for Brexit – they’ve had weekly meetings that last hours. They’ve got contingency plans, but with those plans comes a financial cost. What we’re doing is remain as fluid and agile as possible. We can do that as a business with private shareholders and no debt – I most certainly am very grateful that I don’t have our bank asking me for a Brexit plan.

May 2019

For more exclusive content from the interview, including Ryman’s focus on manufacturer brands, its take on stocking products in adjacent categories, and the positioning of the London Graphic Centre, visit the May issue in the Magazine section on opi.net.

Theo sprung into life immediately and we went for it. We maintained the identity of both brands, so you’ve got Robert Dyas on the left-hand side and Ryman on the right of the facia – quite simple and with no fancy new brand and people not recognising us. Our biggest challenge was the logistical one of payment – we wanted to make sure that customers could check out with one basket at one till, ie not go and pay for the Robert Dyas product and then be told to go to the other side of the store and check out at Ryman. This needed some IT development which we dealt with, and within six to eight weeks we had the store up and running and operating.

south-centric brand – Solihull is the furthest north we go. As such, there’s clearly an opportunity to push Robert Dyas further north with the assistance of a brand that’s very well-known already. And, of course, there are towns where Ryman hasn’t got a presence, but we would need to find stores with the capacity to accommodate both.

BIG INTERVIEW Kypros Kyprianou

do, as I’m taking something out to replace it with something another operator is already doing well in. Space is a real premium and we think very carefully about it.

The recent acquisition of DEX Imaging by Staples Inc caught the OP and imaging channel off guard – but is the deal really a game changer? – by Michelle Sturman

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SURPR ISE!

HOT TOPIC

ccording to many industry insiders, particularly those in the office equipment and imaging channel, the February announcement by Staples Inc to acquire DEX Imaging will have repercussions throughout the sector. The purchase of the second-largest document imaging technology provider in the US by Staples seemingly came out of the blue and took many by surprise. As Steven Swift, co-founder of IDeAs, a network of independent document advisors, explains: “One well-known dealer in the US said he was so shocked he thought it must be a joke! The acquisition pattern has always been for mega-dealers to be sold off when they reach a certain size so that investors can cash out, but the sale has always been to an OEM. Now, for the first time since the 1990s, we see an office products reseller acquiring a major imaging dealer business.” This is probably one reason the (pending) deal came as a bombshell to those in the imaging channel rather than the OP industry. The latter has watched the big boxes – namely Staples and Office Depot in the US – snap up other large resellers over the past year or so and move further into services. The purchase comes as the business supplies sector and the office equipment dealer channel undergo major change and consolidation.

The acquisition of DEX could be as relevant as the Essendant deal But for those in both sectors, it makes good business sense to strengthen and engage their existing customer base by cross-selling other products and services. A recent opi.net poll (see page 24) reveals the top issue in the managed print services (MPS) space is the convergence between OP and office equipment dealers. DISRUPTING THE INDUSTRY Staples has made no secret of the fact that it sees itself as a ‘disruptor’ in the industry as it – like the rest of the OP sector – battles against e-commerce, retail slowdown, changing purchasing habits in the B2B sector and secular declines in core office products. As Staples CEO Sandy Douglas pointed out in a recent OPI

We are no longer OP dealers, but business consultants NEXT MOVES? Staples has bought the expertise it needs to further its B2B-oriented strategy. “The acquisition of HiTouch Business Services, Essendant and DEX in the past year demonstrates Staples’ execution of its diversification and its strategy of becoming more of a product and services player,” says ECi Software Solutions Field Marketing Manager – Distribution Division Danielle Ybarra. Now that Staples has Dan Doyle Sr and his son, Dan Doyle Jr on board – both highly regarded within the US imaging sector – will it roll out

DEX-type MPS and other print-related services on a national basis? Perhaps, in terms of expanding DEX capabilities to more areas in the US. It already has a major presence in the south-east of the country, with more than 30 locations offering printer and copier equipment, servicing and repairs, toner and ink, MPS, and document management solutions. DEX is mainly affiliated to Canon, HP, Konica and Kyocera, and it will be interesting to see how this plays out with the vendors in terms of sorting out their distribution footprint if DEX does go nationwide under Staples. Staples/DEX will be on a strong footing, and many in the imaging sector are expecting this tie-up to change the rules of the game, but it will take time before the full manifestation of this is realised. “One obvious move could be further print consolidation, with Staples continuing to acquire smaller dealers. However, it also now potentially has a base to extend well beyond office printing and supplies, into other, faster-growing and more mainly service-led businesses,” comments Swift. Staples and DEX may be the most prominent example of convergence between OP and office technology dealers, but it follows the way of IT and managed print dealers, which Ybarra sees as a necessity in today’s landscape. “Dealers are looking to diversify by moving into adjacencies or other categories that they can serve with the majority of their existing infrastructure,” she adds.

May 2019

CHANNEL BLENDING Indeed, many in the business supplies sector who OPI spoke to referred to the blending of the office products and imaging channels. As President of COS Business Products & Interiors Skip Ireland explains: “We need to provide our clients with the best business tools available in our marketplace. The solutions on offer today are a blend of many categories, technologies, channels and products. We are no longer OP dealers, but business consultants and have to cast a wide net, driven by technology-based solutions. “Technology guides everything we do. To just sell products is a death knell and we are moving into a true contractual selling environment. While OP can certainly be covered under agreements, it does not push them. What does are managed print services, A3 copier and A4 printer programmes. Once this is negotiated, traditional products such as OP seem to follow automatically. Customers' critical decisions are now centred around their technology partner and we must win that decision to remain relevant,” adds Ireland. There are two important points raised by Ireland that resonate with other industry members – the

HOT TOPIC OP & Imaging Channel Convergence

feature (see Big Interview, OPI April 2019, page 18), any acquisition should be complementary and, perhaps more importantly – as the DEX deal demonstrates – plug a gap. While Douglas, understandably, was tight-lipped regarding DEX as the transaction hasn’t closed, he did hint that there might be some potential for DEX to work with Essendant dealers. Interestingly, the office products channel has generally been quiet about the acquisition, unlike office technology and equipment dealers. However, as Brian Stevenson, Director Technology and Managed Services for US dealer group TriMega, says: “The acquisition of DEX could be as relevant as the Essendant deal. We have seen the OP and MPS worlds creeping closer together for the past few years, and lately, we’ve witnessed traditional print and copier dealers begin to acquire OP companies. The sheer size of the Staples-DEX merger will clearly disrupt our industry, and the convergence of OP and MPS is now officially underway.”

OP & Imaging Channel Convergence HOT TOPIC

digitisation of the office and the move from transactional to contractual solutions. The print industry has tended to split into two branches – resellers focused on either services or transactions. However, the reality of ‘everything-as-a-service’ will increasingly take hold over the next few years, and end users that are comfortable with subscription services in one area will look for similar solutions in others. “As the Internet of Things truly takes hold, the OP world will begin to ‘manage’ a number of appliances. Today, managed coffee services is a real thing. Tomorrow, it’ll be water, jan/san, and other products that can conceivably be connected to the network and require a periodic replacement or refill. Printers are a classic appliance and the training needed to manage and repair a printer will be similar to that required to support other office devices,” says TriMega's Stevenson. John Givens, CEO of Denver, Colorado-based dealer Source Office & Technology, believes that the changes within the industry and the Staples-DEX move to be an “exciting and bold transition” from a national player. It will also make it easier for regional and local dealers to investigate the MPS opportunities and adopt a similar strategy,

OPI.NET POLL

Resellers, what is the biggest issue for you in the MPS space? Convergence between OP & office equipment dealers (32%) Developing the mid-market (5%) None, we don’t do managed print (18%) OEM channel strategies (27%) Adopting the right technology tools (18%)

tailored their new generation of MPS solutions to fit the realities of OP resellers. In reviewing these simplified programmes, I believe there’s a strong likelihood that many progressive dealers will shift to selling more contracted supplies, further increasing the growth rates of MPS in North America.” Indeed, according to estimates from various market research firms, the global MPS market is forecast to be worth around $60 billion within the next 6-7 years, more than double its value in 2016. Part of this will be down to the office products industry, especially with Staples-DEX in the picture, along with the shift to contractual services through

The power may now be shifting to the imaging channel

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according to Givens. “I wouldn’t be fearful that Staples will enter the small and mid-market with MPS – it will be good at a national level and the current imaging channel won’t be able to keep up with it. This will be good news for the independent dealer channel,” he says. He explains that there are compelling reasons for dealers to enter the imaging space. These include the large-scale opportunity for revenue and gross profit in terms of device sales; revenue annuity stream through the toner and services that need to be provided; and the deeper engagement with customers. He adds: “If they are already an office products customer, it allows you to provide more services and solutions than a competitor.”

A HELPING HAND Many OEMs including HP, Brother, Konica Minolta and Canon and other companies such as European aftermarket print consumables firm Armor and US-based Clover Technologies are committed to growing the contract side of their business. The speed and success of these initiatives, according to Stevenson, will be determined by independent dealers and their key distribution partners. He says: “OEMs have also

purchases such as the one last year by HP Inc of the UK’s Apogee. A recent Big Interview (see OPI March 2019, page 16) with HP Inc, General Manager and Global Head of HP’s Supplies Printing Business Mercè Barcons reiterated the OEM's move into a more services-orientated business. This has been further confirmed by HP Inc CEO Dion Weisler, who recently said the company was “accelerating its transformation with momentum in services, solutions and 3D printing”. Two research reports from OPI and Martin Wilde Associates – The State of the OP Industry 2018-19 (see also 'Ringing the changes – again', page 44) and Boiling the Frog: Revisited – both confirm that the decline in print consumables and accessories is accelerating, while at the same time more businesses are investigating MPS. “With print volumes falling and many manufacturers struggling in an increasingly commoditised industry where technology is no longer such a differentiator, the power may now be shifting to the imaging channel,” says IDeAs Swift. “The channel has a powerful asset in terms of its large customer base and strong client relationships, which gives it the potential to sell a broader range of products and services to offset the decline in office printing,” he concludes.

FEATURE

The COMPLETE picture:

a work in progress

OPI catches up with Adam Noble, Managing Director of UK dealer Irongate, who has recently also taken on the Group Managing Director role at parent company Complete Business Solutions

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dam Noble is a busy man at the moment: not only is he still Managing Director of Derby, UK-based dealer Irongate, but he was drafted in by Complete Business Solutions CEO Richard Coulson towards the end of last year to act as the group’s Managing Director, succeeding Leigh Everington. Irongate was one of a number of high-profile acquisitions that Complete made in 2018. Its fellow members in the Vertical Alliance, Anglo and Office Gold, also came under Complete ownership during the year in deals that have taken the group’s annual sales run rate to around £120 million ($158 million). Noble is currently racking up the miles as he splits his time between his Derby base, Complete’s head office in Wakefield (Yorkshire) and the 20 other locations the group has dotted around the country. His brief from Coulson is to develop a consistent, consolidated Complete brand and to finish building the portfolio of services available across the UK. Or, as Noble puts it: “A national business with a national distribution footprint under a single brand offering an unprecedented range of specialist knowledge in products and services.” While there are already some levels of consistency across the business, Noble admits that, due to the pace and number of acquisitions, there is still a lot of work to be done to bring the entire group under a common culture, operating process and a single go-to-market model.

Between them, the individual businesses across Complete have a wide range of specialised skills and competencies. Irongate and Wales-based SET (acquired in 2016), for example, are strong in workwear and have their own manufacturing facilities in this category; Irongate has a well-developed managed print services (MPS) offering (called RAM Print); Anglo in London is well known for its ‘green’ delivery proposition; Taalus (now Complete Technical Solutions) and Simply Outsourced have audiovisual, IT, MPS and managed IT capabilities; Aquila has developed highly-regarded interiors project know-how; and Office Gold has a thriving food and beverage service.

What we are aiming to do is offer customers solutions that enable them to simplify the way they do business and give them more transparency around their purchases HOMOGENOUS OFFERING The task now is to take the best of all of these areas of specialisation and mould them into a focused, homogenous group offering that customers see value in. “It’s all very well going out in the market saying we sell print, office, etc, but the client can get those anywhere from other suppliers,” Noble points out. “At Complete, what we are aiming to do is offer customers solutions that enable them to simplify the way they do business and give them more transparency around their purchases – with in-house, end-to-end controlled services and in-house national delivery anywhere in the UK.”

We must not lose sight of the bigger picture and the wider goals we are trying to achieve “We do ask ourselves questions about our optimal distribution model and it will be a matter of continual development because we are not where we want to be yet,” adds Noble. “We will take the best of both worlds [in-house and third-party] to find the most cost-effective and efficient set-up – and the one that gives the best service levels to the client.” He estimates that when all locations across the Complete network offer the full range of products and services available, he would be looking at potential annual organic growth rates of up to 20%. The workplace and furniture offering, for example, represents £20 million in annual sales and the goal is to grow that to £50 million over the next five years. There are similarly ambitious plans for the IT services division which now has around 100 engineers across the UK. A key driver to this growth – and also one of Noble’s main challenges – is bringing all the businesses together on a single IT platform as acquisitions are integrated.

Adam Noble: Managing Director of both Complete Business Solutions and Irongate

May 2019

BUILDING A COMPLETE BRAND On the question of a national brand, Noble is fully aware of the equity that many of the individual dealer brands have in their own local markets, but the aim is to continue to build out the Complete name in a way that does not adversely affect the view of the business from a customer perspective. “We must not lose sight of the bigger picture and the wider goals we are trying to achieve,” he explains. “We want to create a business services proposition that is unique from a products and services perspective, and we need to continue to showcase that under one brand and build that brand out throughout the country.” Looking at the wider UK business supplies market, Noble is optimistic for the future of dealers as long as they can demonstrate their value. His view of Brexit-related issues is that circumstances such as these are often used as an excuse to hide behind poor performance. In that context, he also points to the recession that began in 2008, which was one of the fastest-growing periods in Irongate’s history. Indeed, he argues that downturns and periods of economic uncertainty are “a great time” to get in front of customers and show them how you can help them do better business.

Of course, a lot of eyes are on Amazon Business and the new dynamic that it brings to the market. So far, Noble says, the impact of this operator on Irongate has been “patchy”. “People do use Amazon for some spot purchases or hard-to-find, one-off items, but we don’t have clients that have actually moved across to this player,” he notes. “However, we are seeing some start-up businesses going straight to Amazon without us ever having a chance to speak to them. If the dealer is not visible to these new businesses and Amazon becomes their primary supplier, that could be a concern if it develops into a wider trend.” One way to counter that is by having added-value, customer-sticky services as well as a competitively-priced supplies offering. That is clearly what Complete is trying to achieve, wrapping it up in a classic ‘local presence-national strength’ model. In addition to its organic growth ambitions, Complete is planning further strategic acquisitions to boost geographic volumes in all regions and add further services to its portfolio. In fact, the group’s board has devised a plan to reach annual sales of £250 million within five years. That means that Noble on the operations and Coulson on the strategy and acquisitions side both look like having their hands full for some time to come.

FEATURE Complete Business Solutions

The development of a groupwide national distribution service is underpinned by the new Nexus Point national distribution centre near Birmingham which serves as a central delivery hub. There is also a 20,000 sq ft (2,000 sq m) space for stocking custom print products for customers as well as a 20,000 sq ft unit that just handles the furniture/workspace division and its national in-house installation teams and fleet.

INTERVIEW

what has already been achieved over the years and what the centre is currently working on (see also ‘Science Creating Hope’, OPI March, page 47). OPI: You went on the City of Hope Tour and Hall of Fame Dinner in February this year. What were your key takeaways from that event? BG: This is about the tenth tour I have been on and

APPLYING SCIENCE FOR A

brighter future

rad Graves is this year’s City of Hope (COH) Spirit of Life honouree. Fundraising began in earnest a few months ago following the City of Hope Tour and Hall of Fame Dinner. Here, Graves talks to OPI about why he feels so passionate about the work that this facility carries out and why his company – he is VP and General Manager of 3M’s Stationery and Office Supplies Division – has been such a long-standing COH supporter.

COH since our industry started raising funds for this organisation more than 35 years ago. For my part, I have been involved since 2002. I am humbled and honoured to represent the National Business Products Industry and leading this year’s Science Creating Hope campaign. I am also very proud to be 3M’s third honouree – previous executives were Chuck Harstad and Jack Truong. 3M’s connection with COH just makes sense.

OPI: What makes COH so special for you? BG: I believe there are three things that set COH

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OPI: Why does it make sense – can you elaborate? BG: Well, both organisations have been around for

OPI: Our industry as a whole has had a sizeable impact on the City of Hope’s work. BG: Absolutely. With a successful campaign

this year, this industry will eclipse $200 million raised, with all monies spent on helping COH’s mission to find cures to cancer, diabetes and other life-threatening illnesses. COH is able to bring new treatments from the laboratory directly to the patient in record time. That is partially the case because the centre has three manufacturing facilities on site that can quickly turn breakthrough discoveries into treatments that help save or improve the lives of millions of people around the world.

OPI: Tell me about your – and 3M’s – involvement with City of Hope. Brad Graves: 3M has been a staunch supporter of

over 100 years and we both have a commitment to and a passion for science. But science for the sake of it does not help anyone until you apply it to something. Our brand identify is 3M Science. Applied to Life. And what could be more important than saving lives when applying science – precisely what COH does. It’s the essence of our Science Creating Hope campaign this year. The amazing thing about COH is how it seamlessly connects scientific brilliance with empathy and compassion to deliver that hope. Even more importantly, it is not just unfounded hope, but is based on a long track record of tangible results. I know OPI has been a great supporter of COH for many years, so you know all the statistics about

each time I come back more impressed and more committed. We had a great turnout with about 120 industry representatives attending this year’s event. We heard from numerous doctors and researchers about the groundbreaking treatments they are developing. What really hit me was listening to the Chief Medical Officer, Dr Michael Caligiuri, talk about how important it is to get the diagnosis correct the first time. He talked about the importance of second opinions and provided the entire group with his phone number for any of us to call for help with that second opinion. I am personally aware of at least three people who used that number within a week of the tour – they all received an immediate response.

Brad Graves with his wife Vicki at the City of Hope

apart from other great institutions: expertise, speed and compassion. We have talked about the first two, but what’s truly special is the personal touch that you rarely hear about in today’s medicine. COH lives by its mantra of ‘There is no profit in curing the body if, in the process, we destroy the soul’. Every patient I have ever met first talks about the personal care and compassion the entire staff exhibits – COH never forgets the importance of human relationships in all it does. I encourage everyone to join our Science Creating Hope campaign – COH’s work benefits all of us, now and for generations to come.

SPOTLIGHT

Clips founder José Peregrina (l) with his son and current CEO Eduardo Peregrina

MAKING

MEXICAN waves Operating an office supplies company in Mexico has its challenges, but local operator Clips has found a winning formula, as CEO Eduardo Peregrina tells OPI

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lips is an office supplies operator based in Baja California, the northern Mexican state that shares its border with the US. The company was founded in 1979 when José Peregrina opened a small stationery store in the state’s capital Mexicali, staffed by just two employees. Step by step, the business grew throughout the 1980s, with an expanding school and office products range and the opening of four more retail outlets. In the mid-1990s, Clips opened a warehousing facility to support its emerging wholesale operation. A few years later, in 1999, José’s son Eduardo – now CEO of the company – joined the team, bringing with him a new approach that shifted the focus away from 100% retail and more towards B2B delivery and wholesaling. Eventually, all retail stores closed down, with 65% of revenues now coming from the B2B business and 35% from wholesale. The latter is due to the fact that there are no sizeable wholesalers in the country – along the likes of an Essendant or SP Richards in the US, for example – with Clips effectively acting as a logistics partner for many of its customers.

EXPANSION AND GROWTH Peregrina’s change in strategy paid off and resulted in further expansion and growth. In 2002, Clips opened an additional 30,000 sq ft (3,000 sq m) warehouse and B2B operation in the border city of Tijuana. The end of that decade, meanwhile, saw the Mexicali business relocate into new and larger facilities. Two years ago, in 2017, Clips added a further location when it acquired a dealership in the city of Ensenada. Today based in three of the biggest cities in Baja California – Tijuana, Mexicali and Ensenada – operating in this part of the country nevertheless presents some unique challenges, as Peregrina points out: “The state of Baja California is very different compared to the rest of Mexico. We are located on a peninsula that sits a long way from the majority of the country’s population; the poor road infrastructure also means it is very expensive to bring in merchandise from cities such as Mexico City or Guadalajara. Consequently, importing product from California in the US is far more efficient for us. This is something we do very regularly and these imports accounts for about 50% of our stock.”

FRAGMENTED MARKET Technically part of North America, Mexico in its industry make-up is in fact more in tune with Central and Latin America. Customers are still serviced by the many small stationery stores which, while still very traditional, have had to evolve and diversify in recent years by, for example, offering additional product lines and add-on services such as gift-wrapping. Staples Inc does not currently have a presence in the country, but several of the other big operators – Office Depot, OfficeMax, Costco, Walmart and Sam’s – are all there in force, serving predominantly small and medium-sized businesses. National and regional supermarket chains are also now getting in on the act, introducing a school and office supplies aisle to their retail outlets and, as such, says Peregrina, representing significant competition for OP operators of all sizes. “There are some national players like Papeleria Tony and Offix,” he comments, “but the lack of infrastructure in this area works in our favour in this case as these operators don’t have any coverage in our region.” Describing shopping and buying habits, Peregrina explains that compared to countries such as the US, Mexicans don’t yet buy much online, although companies like Office Depot and OfficeMax are already capitalising from the opportunities that e-commerce offers consumers. And as the online channel is expected to grow, Clips is also working on its e-commerce strategy and is hoping to have its web shop fully up and running by the end of 2019. Here too, there are significant challenges to be overcome, according to Peregrina, often to do with a lack of suitable online content – images, videos, summaries of product features and benefits, etc – that is provided by Mexican suppliers. “This is very different to the level of information that is available from the major wholesalers in the US, for example, and is something we really struggle with.”

Clips’ customer base predominantly consists of medium to large businesses and factories that typically order in large volumes and which often have very specific requirements. Out of the product categories the company sells, the one that’s currently delivering the highest levels of growth is jan/san, says Peregrina: “We first started in this segment about ten years ago and completely failed. We then hired a couple of people with experience in the jan/san category and since 2015 we have seen consistent growth. Initially and perhaps partially because nobody else was doing it, our sales team was highly sceptical that expanding into this product area was a wise move, but the results today show that we were right in persevering. “Essentially,” he adds, “our diversification into adjacent categories and the desire to be a one-stop shop has paid dividends. Our customers really appreciate it. An added bonus is that we are large enough to have substantial buying power, yet lean enough to be able to accommodate any particular needs.”

FAST FACTS Founded: 1979 Headquarters: Mexicali, Mexico CEO: Eduardo Peregrina Staff: 100 Business model: B2B delivery & wholesale Coverage: State of Baja California

SPOTLIGHT Clips

That said, he adds, despite logistical challenges, 40% of product still comes from other parts of Mexico, with the remaining 10% imported from overseas. “In total, we stock about 3,500 SKUs across a wide range of product categories and we buy these directly from the major manufacturers in the absence of a wholesale channel.”

We are large enough to have substantial buying power, yet lean enough to be able to accommodate any particular needs GOOD FUTURE PROSPECTS Looking to the future, Peregrina is confident: “The Mexican economy is starting to pick up now. We’ve recently had a change of President. In anticipation of that, in 2018 the Mexican market slowed down and contracted, but once the new government took office last December and released its budget, economically things began to flow again.” That does not mean there won’t be plenty of challenges ahead: “Mexican politics is like a ‘Telenovela’ [soap opera] – you never know what’s going to happen next. For now, we’re trying to stabilise our operations and accommodate all the changes the new government is introducing. Events in the US obviously have an impact as well, with tariff issues forcing up prices, making it difficult – or impossible – to import some products via our regular US vendors. “Looking at the longer term,” he concludes, “our prospects are good and we are happy with our strategy and plans.”

May 2019 31

FOCUS

The breakroom category continues to be a success story for all OP channels. Indeed, new developments in the way food and beverages are supplied to office staff are having a significant impact on segments of this market – by David Holes

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he office breakroom has undergone enormous transformation over the past decade. Once regarded as an area merely to refuel as fast as possible, it is now seen as a business space with its own intrinsic value – fundamental to the provision of a productive, satisfied workforce and offering a chance for companies to reward their employees. “Companies want to make sure they have happy and engaged employees,” says Ellen Heesen, European Merchandising Manager Facility at Office Depot Europe. “At the same time, they want to deliver a positive impression to their customers. The breakroom experience is a good opportunity to achieve both.” And it’s an expanding category, according to Frank Hoard, Director of the Facility Supply Channel at Independent Suppliers Group (ISG) in the US: “Our members see continual growth here and it’s a natural fit for office products operators. Even if the office building is cleaned and serviced by an external contractor, breakroom products are usually still the responsibility of someone working on site who appreciates the chance to buy all office and ancillary supplies from one place.”

COFFEE IS KEY A recent UK survey found that 80% of employees said the provision of high-quality coffee in the office motivated them to give their best at work. “Among millennials, there is a strong sense that items such as free coffee should be provided as a perk in the workplace,” agrees Hoard. “And it has to be good-quality coffee too, with the more forward-thinking companies now offering everything from single-brew blends to bean-to-cup options.” Heesen also refers to the burgeoning interest in high-end coffee as driving this sector. “Companies like to offer several different flavours and types – latte, macchiato, cappuccino, espresso, etc – and allow people to personalise their drinks, choosing what strength they want and whether they contain caffeine or not, for example. Specialist coffees requiring different types of milk are now very ‘in vogue’ and small vending machines that can cater for these varieties are in increased demand, together with appropriate add-on attachments such as milk heaters and frothers. Different types of sweetener and non-sugar alternatives are also sought after.” She adds: “Different countries have different requirements. Instant coffee is still popular in the UK, but the German market is trending

Among millennials, there is a strong sense that items such as free coffee should be provided as a perk in the workplace BREAKROOM TRENDS Amid this rising demand for healthier options, Hoard says, there’s also more interest in locally-sourced products and food items that fit various dietary needs. He adds: “Meat and other protein alternatives are starting to replace fruit in many breakrooms in an effort to offer more low-carbohydrate items. For instance, ISG has

FOCUS Breakroom

towards fresh bean options. In the Netherlands, however, they still favour filter coffee, along with capsules and pods. Additionally, iced tea is now perceived as a low-sugar/low-calorie alternative. Big beverage companies are competing hard with each other to gain traction in this attractive sector, with new launches such as Fuze Tea from Coca-Cola – a fusion of fruit juice, botanicals and tea extracts – now hitting the market.” Helen Wade, Marketing Director at UK wholesaler VOW, explains that conventional black tea is in decline, while fruit and herbal tea consumption is growing every year. “We’ve also launched reusable infuser water bottles – where internal elements hold your fruit or vegetable of choice to flavour the water – as more people are using these at their desks alongside traditional tea and coffee drinks.” Heesen further remarks on the increased popularity of water: “People are drinking much more water as an alternative to sugary soft drinks, which is driving a trend for different flavours. Fruit types are very popular, though more exotic options such as jasmine and cardamom are widening the range. The imposition of sugar taxes around the world is having a positive effect on this market.”

members which now supply various dairy products – milk, yogurt, eggs and protein shakes – and non-dairy items such as almond milk. We see dealers that place themselves at the forefront of these breakroom trends gaining business at the expense of their larger competitors, simply due to their greater flexibility.” In the UK, flapjack bars incorporating fruits and nuts are popular, as are breakfast biscuits, rice cakes and popcorn, according to Wade. They are perceived as offering health benefits, although conventional snacking on confectionery hasn’t died yet, as she adds: “KitKat Senses are a popular boardroom offering, as are Nestlé Mini Breaks chocolate bars which have recently been relaunched. Plus Haribo in their various formats are a perennial favourite in our listings.”

May 2019

ECO OFFERINGS The rising demand for environmentally friendly products shows no sign of diminishing and the breakroom category – with its previous reliance on single-use products, plastic materials and throwaway packaging – is trying hard to clean up its act and provide greener alternatives. Hoard notes that in the US, until recently, sustainable breakroom items only enjoyed limited popularly in our industry and, geographically, were mostly confined to communities on the West and East Coast. However, he’s now noticing rising interest in other parts of the country, with the Midwest and southern states rapidly catching up with the environmental trend. He explains: “This is down to several reasons. Education as to how traditional plastic and foam breakroom items are impacting the environment is more widespread. Plus, increased competition in the manufacturing space is driving down the price of sustainable products, while raw material costs for non-sustainable items are increasing. Finally, the infrastructure needed to collect, recycle or compost is now more commonplace across

Breakroom FOCUS

the US, meaning a boost for products made from natural materials such as corn and bamboo.” Adherence to environmental standards and appropriate certification to show sustainable production methods are becoming the norm across the breakroom sector and new EU regulation to minimise the use of single-use plastic is having a big impact in Europe. Public support and campaigns, driven by huge media attention on how plastic is affecting land and marine environments, are forcing governments and law makers to act. “The shift within this category is rapid,” says Heesen. “The plastics ban is phasing out the use of plastic stirrers, straws and cutlery, and forcing a consequential rise in wood and bagasse (sugar cane) alternatives, together with recyclable/ compostable packaging and coffee cups. We are introducing new products that meet this brief on an ongoing basis.” KEEPING IT CLEAN Public spaces are the perfect environment for the spread of bacterial and viral infections among the workforce. Breakrooms can be particularly problematic as they involve foodstuffs, are used by a constant stream of people and feature many different surfaces – counters, light switches, door handles, chairs, eating utensils, etc – that people touch repeatedly. They may also involve harder-to-clean soft furnishings such as upholstered seating and curtains, where pathogens can linger.

[Dealers] must know their value proposition if they are to successfully sell to companies that normally buy from the big box retailers

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P&G Professional has launched a range of products specifically designed to combat these issues. Its Febreze Professional Sanitising Fabric Refresher claims to kill 99.9% of bacteria including MRSA and Salmonella enterica – a chief cause of food poisoning. Hard surfaces treated with its Microban Professional multipurpose cleaners will, it says, be virtually bacteria-free after five minutes but, crucially, they will carry on working for 24 hours despite multiple touches. As Renee Buchanan, Communications Manager at P&G Professional, advises: “A lot of customers are only interested in disinfection,

but it’s vital we provide training about proper disinfecting and cleaning processes – the two go hand in hand, particularly in a breakroom environment. It’s also essential that products are simple and quick to use, with clear instructions for users who aren’t professional cleaners. That way those tasked with cleaning these public spaces will use the products safely and effectively, minimising the chances of infection.” The modern office breakroom is about creating a welcoming space where staff can safely eat, drink and socialise. In tandem, it’s somewhere companies can reward their staff with a range of nutritious, healthy meals that will help maximise job satisfaction and productivity. And, of course, for resellers in our industry, the breakroom represents a category that sits very comfortably alongside more conventional product areas. “For those OP dealers that are continually seeing revenues drop in their traditional business, breakroom items are an easy add-on sale to their current customer base,” says Hoard. “However, they must know their value proposition if they are to successfully sell to companies that normally buy from the big box retailers. The benefits and savings to the customer, both financial and in terms of time-saving and improved productivity, must all be clearly spelt out when presenting a breakroom offering to a potential new client. Crucially, those benefits must then be followed through on and regularly demonstrated to show that the new programme is working.”

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Breakroom FOCUS

MICRO MARKETS – A RIPENING OPPORTUNITY? Micro markets are often described as a ‘convenience store at the office’, providing freshly prepared meals, snacks and drinks that employees can purchase on site from unstaffed kiosks. While they still represent a relatively small share of revenues within the breakroom sector overall, they are rapidly being adopted by an increasing numbers of businesses. OPI spoke to Christopher Blomquist, Director of Marketing at Parlevel Systems, a company operating in the convenience services industry (CSI) – a sub-category of the wider food services industry – about the opportunities available in micro market operations. OPI: What potential do you see in the micro markets sector? Christopher Blomquist: This segment is already a significant part of our business and it’s growing. Overall, there are 100,000 large offices – the environments where micro markets flourish – in the US, another 100,000 in Europe, 20,000 in Latin America and 5,000 in Australia – this gives you a good idea of the huge potential here. OPI: In addition to offices, are micro markets found in other locations? And are they replacing traditional vending machines in any way? CB: Micro markets are well-suited for workplaces, but they can find success in many different environments. We’re seeing them in hotels, schools, universities, campus cafeterias and more. Some workplaces are now completely replacing vending machines with micro market solutions, while others are running both in parallel.

OPI: What specifically does Parlevel do? CB: Parlevel provides the hardware and software for micro markets, delivering to our operators a complete, one-stop-shop solution for everything they need. The self-checkout kiosks, racking, coolers, freezers, security cameras, etc, can all be acquired through us. We then partner with local operators to service these locations with the food products. OPI: Given that micro markets are unstaffed, are there problems with food spoilage, cleanliness or dishonesty? CB: Micro markets are more complex to operate than a traditional vending solution – there’s a cold food supply chain to manage, for example, and there is more waste due to spoilage or, sometimes, theft. But this is totally overshadowed by the benefits. Replacing vending with a micro market can increase sales by 300%. OPI: How do the local food operators you partner with handle inventory management and restocking? CB: Parlevel’s management tool lets operators see in real time sales numbers across all the micro markets they service, allowing them to target high sellers and reduce less popular items. It also makes recommendations as to what products to stock. The system can additionally be used in conjunction with vending or coffee operations, allowing operators with multiple business lines to manage everything in one place. OPI: What kind of food and drink options are catered for? CB: Typically, a micro market stocks 200-300 SKUs, depending on overall size. Based on sales data over time, operators will know what sells well in which locations and tailor their range accordingly. OPI: Do micro markets offer non-food items or services? CB: Yes, many stock general convenience items like over-the-counter medication, office products and industrial safety gear. Some operators also think outside the box and offer special items like roses around Valentine’s Day.

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OPI also spoke to an executive – who wishes to remain anonymous – from a well-known US food and beverage supplier about the attractions of getting involved in this sector. Here’s what he had to say:

The micro market sector is very, very strong at the moment and we’ve seen 20% year-on-year growth for the past 3-4 years. We expect this to continue – figures predict that there will be over 25,000 micro markets installed across the US by 2020. We sell our products to wholesalers and redistributors, which sell them on to the micro market operators that, in turn, then sell to end users. The attraction to those in this industry is that there really is no maximum as to what you can charge.

Essentially, you can price items at whatever level the market can bear. With a vending machine, pricing options are far more limited. Micro markets are mainly installed in white-collar office spaces where the ‘closed environment’ coupled with key-card access offers the security that an unstaffed operation requires. One of their big advantages is that they can be built to fit whatever space is available. We have also seen a few operating on college and university campuses, but they can be more of a

challenge due to theft and food spoilage. Stock refreshing and inventory management works in different ways depending on the technological sophistication of the operator. At one end of the spectrum, it’s entirely automated, with items re-ordered electronically as individual supplies run low. At the other end of the scale, it can be a completely manual process, with a van driver visually checking stocks and topping up items on a daily basis. If I was an OP dealer, I would definitely be looking at getting into this sector. It’s a very lucrative market, but there are challenges. The cost of installing a micro market varies from $10,000

to $50,000, depending on its size. That’s a considerable outlay and means it can be some time before it begins to turn a profit. Another issue is working out how to handle the considerable amount of spoilage or ‘shrink’. Typically, you can expect to throw 10-15% of your fresh products away each day and this needs pricing into your business model. This market takes a lot of learning and most OP resellers are not yet willing to take the plunge. As far as I’m aware, there are only a couple of companies currently ‘kicking the tyres’ in the US, but no one has got into it on a large scale yet. That will change.

CATEGORY UPDATE

Furnishing THE FUTURE

Changing work methods, lifestyles and even health needs are having a radical effect on the way the modern workplace is organised. Furniture is a buoyant category right now, as David Holes finds out

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he past year has been good for the furniture industry, with suppliers reporting a strong order book. Large project needs caused by new construction builds or major office renovations have been one dominant reason for a significant rise in big-ticket purchases. In North America, the Business and Institutional Furniture Manufacturers’ Association recorded $150 million in annual sales among larger companies during 2018 – a 5% year-on-year increase. The driving factor is that big businesses which had been putting off capital investments are now making the money available to update their existing facilities or expand their operations into new locations. This follows a realisation that outdated offices were having a negative impact on their ability to attract and retain younger and talented employees, with Fortune 500 companies in particular now keen to invest in their buildings, with the intention of upgrading their image.

SOARING DEMAND The first quarter of 2019 has seen US furniture and visual communications vendor GMi Companies continue to experience tremendous growth in the contract furniture channel. As COO John D’Agostino explains, customers are becoming more selective and are now demanding more from a fit, finish, quality, delivery and support perspective. He adds: “Overall, demand for our products is forging ahead. Last year, we saw double-digit growth and we expect the same for the next 12 months. Companies of all sizes are looking to remodel and refresh their facilities to attract and retain talent. The dealers we partner with understand this shift and are looking for a vendor that is going to be able to support them through the entire process of specification and pricing of the project, plus meet production dates and provide on time, damage-free deliveries.” In the UK, it’s a similar picture, with sales of furniture and furnishings rising by more than 8% during the first half of 2018. Despite Brexit

uncertainties, UK employment is now at the highest level since records began in 1971. As a result, the bulk of these additional employees need to be accommodated within the office space. FUNCTION AND FORM British furniture manufacturer DAMS, for instance, has had an excellent year, with sales up an impressive 12%. According to Marketing & Communications Manager Simon Howorth, there’s currently a focus on the style and functionality of the office, with agile working areas, breakout spaces and collaborative working driving design and furniture take-up. He remarks: “Given that most staff spend at least seven hours per day in the office, the better it looks, the better people working in that space will feel. Working in a dull environment is unlikely to get the most from employees. Incorporating modern, appealing furniture that’s not only functional, but also visually stimulating, will help ensure they perform at their best.”

Companies of all sizes are looking to remodel and refresh their facilities to attract and retain talent There’s an active desire to move away from the dated designs prevalent in offices as little as a decade ago, according to Eddie Baird, Director of Furniture Sales at SP Richards (SPR) in the US: “A facelift for traditional furniture styles is long overdue, with functionality incorporated into refreshed products that allow employees to work with their furniture, rather than have it work against them. Height-adjustable products continue to be in high demand – the function can either be built into a new product or added as a height-adjustable base to update existing items.” He adds: “Users want more flexibility to move around while working. Staying static the entire day is not healthy or motivating and the 20-8-2 mantra is now spreading. The formula of sitting for 20

CATEGORY UPDATE Furniture

minutes, standing for eight and then moving for two keeps the body in motion and makes a person feel better, while staying active and alert.” Collaboration remains an important design element. ‘Landing areas’ made up of soft seating options that encourage employees to move around a building and interact with co-workers from teams that they wouldn’t otherwise encounter are popular, for example. “This helps to create a family-like environment, something younger workers will already be familiar with from their school and college days,” says Baird. “However, research for these types of products is often conducted on social media sites such as Pinterest or Instagram. Independent dealers that are not tuned into this can be at a disadvantage, preventing them from interacting with this new type of customer.”

May 2019

TECHNOLOGICAL TRANSITION The impact of rapid technological advances across society is having a knock-on effect on the furniture sector too. Worktables set up to promote interaction between multiple portable devices and meeting pods bristling with charging ports and other connectors are fast becoming the norm in progressive offices. Adaptable, smart furniture and modular seating that can be configured in multiple ways according to usage and the space available are also increasingly in demand. “Employees expect the same mobile and seamless connectivity at work as they have at home,” says DAMS’ Howorth. “Furniture that’s quick and easy to set up and facilitates wi-fi

connection is a high priority. This means people can pick up on tasks where they left off in another working area – whether that’s in a different part of the same office or an entirely new location. We’re additionally seeing a growing number of multi-use furniture solutions which connect to shared displays, specifically designed so that a number of people can collaborate on a project in real time and improve workplace productivity.” It’s worth noting that when people buy furniture they’re making a long-term, typically 7-10-year, commitment. This can make purchasers wary they’ll be left with a product that fast becomes redundant. Any techniques salespeople can employ to assuage these fears can be powerful. “People really want reassurance that they’re making the right decision,” says Baird. “Virtual reality programmes such as the Kits Collaborator can significantly help potential customers visualise how a particular item or suite of products would look in situ and give them the extra comfort they need to make the correct decision, faster. “Technology is starting to find a better fit within the furniture industry. For many years, users have wanted more technology embedded in their office furniture, but manufacturers didn’t really understand their needs. But with the integration of multiple enhancements – power and USB outlets, induction chargers, wi-fi and Bluetooth speakers, for example – now included in the design of products from the outset, technology is becoming the norm rather than simply an afterthought.” However, as Bruce Lovell, Consultant at the Furniture Institute Research Association in the

Furniture CATEGORY UPDATE www.opi.net 40

UK, points out: “These additions are moving features beyond those normally considered important for furniture – strength, durability and comfort – and into areas some manufacturers may be unfamiliar with. It’s imperative they have reliable access to regulatory information covering all the individual components that make up the finished product, ensuring full compliance and making sure it’s safe for end users.” COLOUR AND MATERIAL Technological additions aside, there has also been a shift in colour and material choices. In the US, mahogany has been the most popular colour for many years, but current trends show a strong preference for a weathered charcoal laminate finish. This new grey shade is now outselling mahogany by a huge ten-fold factor, with its popularity apparently down to the soothing ambience and ‘resimercial’ feel it brings. Scott Bowers, Director of Product at GMi Companies, uses an alternative term: ‘respitality’. This describes the combination of residential design sentiments and the functionality and durability required in hospitality settings. He says: “Office settings today are more fun and flexible. We partner with dealers to help them differentiate themselves from the commodity products and provide the higher-style, higher-design products made from premium materials that companies are asking for as they remodel or refresh their spaces.” Baird is also noticing the resurgence of solid wood being used in office furniture products. He elaborates: “While the demand for solid, real-wood desks isn’t growing, we are noticing wooden legs being used in conjunction with laminate tops and even as part of soft seating products. Wood is a warm product which gives the sense of quality and durability. Used as part of a mix of materials, it’s creating products that consumers are increasingly gravitating towards.” ERGONOMICS AND WELLNESS Despite all the attention given to and monies spent on community office areas, the change in working habits – such as more time spent out of the office – means that companies are devoting fewer resources towards space for individuals. The traditional 36”x72” desk size has given way to smaller 30”x72” or even 30”x66” versions. And with documentation now predominantly held electronically, less storage space is required. With more people compressed into a given area, the need to control noise levels has shot up the priority scale. Acoustic furniture including wall and ceiling tiles and decorative screens – aimed at suppressing sound and controlling reverberations – are in high demand in an endeavour to make the work environment as pleasant as possible. Baird also highlights rising interest in products with an ergonomic focus, such as chairs, desk risers, keyboard trays, footrests and monitor arms, all aimed at improving employee wellness: “We see more and more furniture salespeople becoming Certified Ergonomics Evaluators these days. This certification gives customers

With a few changes to the office set-up, employers can introduce a general sense of well-being and help to boost employee productivity levels more confidence in the information they receive and is a value-added service that more dealers should take advantage of. We have developed a seating line called Lorell Wellness by Design, which is endorsed by the American Chiropractic Association because it is designed specifically with ergonomics and well-being in mind.” As Howorth adds: “Put simply, a healthier workforce is a happier, more motivated and more productive workforce. Many people would like to make their health a priority and businesses can help them by adopting the principles of active, smart office design. With a few changes to the office set-up, employers can introduce a general sense of well-being and help to boost employee productivity levels.” AWAY FROM THE OFFICE Outside of the traditional office, other verticals are also experiencing high demand for modern furniture solutions that can improve the working environment. The education sector, for instance, is updating classrooms to integrate collaborative teaching zones and is undergoing a surge in demand for charging cabinets to facilitate the move towards the increasing use of mobile devices during lessons. In the healthcare sector, meanwhile, more assisted-living facilities are being built as the baby-boomer generation reaches retirement age

SECRETS OF SUCCESS Regardless of the verticals operators are selling into, Baird is keen to point out that the rise of internet resellers in the furniture category means the provision of content – images, videos, measurements, installation instructions and the main features and benefits of the product – is vitally important: “Many manufacturers are playing catch-up compared to other industries where this information has long been readily provided. We’ve invested a lot of time and capital here and believe the richer the content vendors can provide, the more success they will have with their products. This demand will only grow more important in the future and is the key to long-term success.”

CATEGORY UPDATE Furniture

and requires these services. Large activity rooms and casual sitting areas are typical group spaces within these care centres, and they all have their unique furnishing requirements. “The education and healthcare markets are important verticals for us,” Howorth reports. “Many of our furniture products cross over into these sub-sectors, which can be found in school IT suites, common rooms, libraries, receptions, hospital waiting areas and many more locations.” “Another rising vertical that has seen tremendous growth is the gaming industry,” adds Baird. “Significantly more chairs and tables are now being sold in this sector. These types of products fit within the transactional segment and are in high demand. In 2018, we launched gaming chairs in the Lorell line that have been very successful for us. We will continue to expand this offering in 2019.” Heavy-duty seating is another product category experiencing strong demand, according to Vanessa Warne, Furniture Category Director at UK wholesaler VOW: “These items are sometimes referred to as 24-hour chairs,” she explains, “and are designed for heavy use, commercial environments, such as call centres, which can be staffed day and night. We are also noticing increased demand for chairs specially designed for heavier-weighted people and have responded to this by adding additional SKUs to our seating range.”

WHAT’S IN STORE AT NEOCON 2019? 2019 marks the 51st anniversary of NeoCon, the world’s leading platform for the commercial design industry. Taking place from 10-12 June this year, the expo will once again be held at The Mart in Chicago, US, and feature the latest in game-changing products and services from both leading companies and emerging talent. NeoCon is widely recognised as the annual gathering place in North America for manufacturers, dealers, architects, designers, end users and the media in the commercial design world. It’s a vibrant hub that offers a non-stop schedule of product exhibitions, seminars and educational events and, of course, plenty of networking opportunities.

May 2019

INSPIRATION AND KNOWLEDGE Over 500 companies are expected to exhibit in 2019. Previous years have seen the show attended by more than 50,000 professionals from across the globe, all keen to connect, learn and do business. NeoCon caters to a range of verticals – everything from the workplace, healthcare, hospitality, retail, education, public space and government. In addition to the expo, the educational programme featuring 100 accredited seminars is complemented by daily keynote presentations offering expertise and insight into the most relevant topics in the furniture sector. This year’s keynotes will focus on the theme of ‘Human-centred design through programming

and products’. It’s based on the premise that when it comes to commercial interior projects, the human experience is the universal common denominator and the most important consideration when designing a built environment. The powerful keynote line-up includes Robin NeoCon’s annual Standefer, Stephen Alesch, Ilse Crawford and venue – The Mart Liz Ogbu. As Monica DeBartolo, Director of in Chicago, US Programming for NeoCon, says: “While they hail from diverse backgrounds, our 2019 presenters have all explored, studied and implemented practices and methodologies that focus on empathy and the human experience. This will come to the forefront in their dynamic presentations and will also be explored across NeoCon’s robust seminar programme. Whether it’s a corporate office, boutique hotel, urban environment or public space, ultimately it is the fundamental needs of people that will help define the future of commercial interiors.” This human-centric approach will also extend to the myriad of new product launches from manufacturers. Indeed, attendees will be among the first to see the next wave of products addressing these needs, showcased by leading companies and exhibitors from across the world.

Transform

EVENT

& EXECUTE EUROPEAN FORUM PREVIEW 2019

ould you like to keep up to date with the latest OP industry trends and news; understand the impact of new technology; and share frankly and openly ideas, challenges and best practices with like-minded executives? If so, and the highest level networking in the industry in a vibrant setting is also on your agenda, head to Berlin in early June. The eighth OPI European Forum for senior executives from the business supplies industry and associated sectors will be held from 5-7 June 2019 at the Westin Grand Berlin, Germany. Attended by company founders, CEOs, managing directors, directors and presidents, OPI forums have evolved to truly allow C-level executives to break out of their comfort zones and learn more about what concerns and drives the industry at large, and how that can and should be incorporated into their own organisations. The idea is to discuss the challenges that exist in our sector, and to jointly find answers and solutions – all under Chatham House rules. Over the past few years and in line with what’s happening in the world at large from a buying, selling as well as cost-efficiency perspective, there’s been considerable focus at industry events on digitisation and technology. This year is no different, with digital transformation, collaboration and buying behaviour all highly prevalent discussion points. But there’s plenty more on offer too, with interactive panel discussions, high-level keynotes and more informal, smaller roundtable sessions on a broad spectrum of issues. These include:

I greatly look forward to leading some lively and thought-provoking debates among delegates Baldrey will kick off proceedings with his take on the current state of the OP industry. As he says: “Change is the only constant in our industry at the moment. I greatly look forward to leading some lively and thought-provoking debates among delegates, as we together try to identify the best paths to success in the current environment.” To find out more about the OPI European Forum, visit www.opi.net/EF2019, email Chief Commercial Officer Chris Exner at chris.exner@opi.net or call him on +44 7973 186801.

5 – 7 JUNE

THE WESTIN GRAND BERLIN, GERMANY

EUROPEAN

Forum 2019

May 2019

• The changing landscape of wholesaling in the European market • Operating in a trade tariffs world • Brexit • Devising and implementing smart factory principles in manufacturing • Trade credit insurance • Trends, change and opportunity in the workplace

All these topics seek to stimulate thought and debate. Taking delegates through the jungle of challenges old and new, and to pinpoint some of the solutions, will be Robert Baldrey. A previous compère at OPI events and with his vast industry experience from across the channels, Baldrey is expertly placed to direct and guide the audience through what can frequently be uncharted territory. Anyone having been in previous OPI forum presentations on issues such as the blockchain, cryptography or cybersecurity will readily admit to a good dose of ignorance and lack of knowledge. Indeed, learning about emerging, new and often unfamiliar concepts and ideas is what the OPI European Forum is all about.

RESEARCH

100 80 60 40 20

from the the

Ringing the changes

â&#x20AC;&#x201C; AGAIN 0

Associates (MWA) and OPI respectively, is based on the results of 55 in-depth telephone and online interviews with senior executives in Australia, Benelux, Canada, France, Germany, the UK and the US (see Fig 1).

RESEARCH RESULTS

Overall, the study unearthed some fascinating

How did the global OP industry evolve in 2018? Importantly, what impact will the activities of last year have on 2019 and beyond? To find the answers, look no further than The State of the OP Industry 2018-19 report

ast year was yet another momentous year of change, upheaval and a fair few surprises in the global business products industry. Some of the most notable stories that unsettled our sector in Europe and the US in 2018 included:

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â&#x20AC;˘ Staples Inc owners Sycamore Partners bidding for and buying Essendant â&#x20AC;˘ Office Depot and Staples Inc both acquiring a number of independent dealers in the US â&#x20AC;˘ European business products wholesaler ADVEO filing for voluntary insolvency proceedings â&#x20AC;˘ Amazon Business launching in France, Italy and Spain

During such periods of industry convulsion, it is vital that senior executives have a firm perspective on what is happening in the market. What have been the effects of these and other changes? Where is the market going in terms of product demand and distribution? What are the underlying trends at work in the industry? It is precisely these kinds of questions that the sixth edition of the annual research study, The View from the Top: The State of the OP Industry 2018-19 (SOTI), aims to answer. This authoritative sourcebook for the OP industry, researched and published by Martin Wilde

findings across these seven markets:

The rate of decline in core OP demand may now be deepening slightly. As many as 82% of all respondents reported a core OP market decline in 2018, compared to only 68% in 2017 and 2016. The full SOTI report gives the reasons for the decline in each country, but also shows that there are some countries where respondents are still reporting some value growth in demand for core OP. It also shows how respondents believe this core OP demand will change in 2019. Survey respondentsâ&#x20AC;&#x2122; overall sales continue to outperform the core OP market. In total, 67% of respondents reported growth in their

Fig 1: Respondents by region Source: MWA

Australia: 7% Benelux: 5% Canada: 9% US: 25% France: 15%

Germany: 13% UK: 25%

Source: MWA

Distributor/reseller: 69%

Other: 5%

sales in 2018, compared to only 9% reporting growth in core OP market values in that year. The full report explains how respondents in each country achieved this growth in 2018 and forecasts their revenue expectations for 2019. Distributor respondents were more likely to report that margins were unchanged in 2018 (42%) as opposed to increasing (31%) or decreasing (28%). The full report details the average gross margins achieved and expected by respondents in each country in 2018 and 2019, and highlights the reasons for any margin changes.

The majority of respondents are looking to acquire another business in 2019 The categories most widely reported to be growing in 2018 were cleaning/janitorial supplies, catering/breakroom supplies and office furniture. The full report shows that, whereas ergonomic and well-being products were also often widely mentioned as growing in 2017, in 2018 it was typically technology products and – because of the European General Data Protection Regulation legislation – shredders and shredding services. It also forecasts the key product growth categories for each country in 2019.

Adjacent categories are on the rise. The average share of distributor sales accounted for by cleaning/janitorial supplies, catering/ breakroom products, workwear/PPE/signage products, business gifts/promotional products, well-being/ergonomic products and MPS are all projected to increase in 2019. Private label growth. The average share of sales accounted for by private label and online sales is expected to grow in 2019. M&A activity continues. The majority of respondents are looking to acquire another business in 2019. The full report indicates the types of company that are being targeted for acquisition and shows that only just over half of potential acquirers are looking to buy an OP specialist. OTHER FINDINGS The report provides answers to several other key questions on the state of the market: • What was the value of the core OP market in 2018 and what will it be worth in 2019? • What was the value of the addressable facilities supplies market – and its key constituent categories – in 2018? • Which product categories are actively being developed by respondents in 2019? • What share of the core OP market does Amazon/Amazon Business now have in each country, and which types of customer is it being most successful in capturing? • What has been the reaction in Australia to the entry of Amazon? • What are the recent and future results of the acquisition of Essendant? • What are opinions in Europe about the future survival of ADVEO, and how will the wholesale landscape look if the company does not survive? The View from the Top: The State of the OP Industry 2018-19 is available now for £850 (approx. $1,100). Please visit www.opi.net/ research/soti2019 to order your copy.

May 2019

The product categories that are most widely reported to be declining in 2018 were traditional stationery products, printer/IT consumables and cut office paper. The full report shows that there are some national markets where other products were among the top categories reported to be declining in 2018. It also forecasts the key product decline categories for each country in 2019.

The channels that are most widely reported to be losing share in 2018 were small independent dealers, national contract stationers and OP wholesalers. The full report shows that there are some national markets where other channels are among the top three reported to be in decline in 2018. In addition, it forecasts the key decline channels by country this year.

The State of the OP Industry 2018-19

Product manufacturer/ vendor/paper mill/ OEM: 25%

The channels that are most widely reported to be taking share in 2018 were Amazon/Amazon Business, other internet-only OP resellers and large independent dealers. The full report shows how – in some national markets – other channels have also enjoyed a very positive 2018. It also forecasts the key growth channels for each country in 2019.

RESEARCH

Fig 2: Respondents by activity

RESEARCH

GOING BEYOND the CORE

Sales of non-core office and work supplies in the Australian market are exceeding those of traditional office products for the first time ever, according to Penfold Research

he Office & Work Supplies in Australia, 2018-2020 report values the total office and work supplies (OWS) market at A$12.5 billion (US$8.9 billion). Of that, A$6.4 billion is non-core supplies and A$6.1 billion core office products. The study, conducted by Penfold Research, highlights how the decline in traditional business supplies is accelerating and suggests resellers move further into the non-core OP market. Out of the nine core product categories investigated, only the Art & Craft segment reported growth in 2018, while the worst performers were business machines, paper, and labels & mailroom which all declined in mid-single digit percentages. Interestingly, for the first time business supplies reseller Officeworks is the most recognised brand in terms of unprompted consumer awareness – putting it ahead of some iconic product-based brands. It was also the leading player in terms

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AUSTRALIAN MARKET TRENDS

• Significant consolidation across all sectors including dealers/resellers, retailers, wholesalers and suppliers • Ongoing strong growth in online purchasing, at the expense of store visits • Increased sales leakage from major dealers/retailers – via the use of secondary (usually online) suppliers for specific category purchases • Acceleration of private label brands • Corporate Social Responsibility is here and it’s important • Little to no progress in either the consumption of or preference for green office and work supplies

of performance at almost every level. The largest decline in unprompted brand awareness in the survey comes from OEM printer brands such as Fuji Xerox, HP, Canon and Brother. According to over 100 dealers and retailers surveyed, 2018 had a slightly better trading environment than the ten-year average. However, growth in the OWS market slowed to 1.2% in 2018, pulled down by accelerating declines in core OP of -2% last year.

There is a vast and developing trove of product categories beyond the traditional core office products which are growing healthily and are widely purchased by the same customers Says Penfold Research owner Andrew Penfold: “Fortunately, there is a vast and developing trove of product categories beyond the traditional core office products which are growing healthily and are widely purchased by the same customers. Despite obvious weakness in the declining core traditional OP market, there is a clear strategic path available to players via diversifying into related/ adjacent areas. “The broad OWS market is so large and multidimensional that even for those being

OP Market in Australia

Market expenditure (A$ billion) at end-user values

RESEARCH

supplies – is growing at a rate of 4% a year. More importantly, six of these seven non-core categories display growth, the top three being furniture, workwear and safety, and cleaning/janitorial. n Core market average growth (2015-2019): -1.7% per annum (and accelerating down) n Non-core market average growth (2015-2019): 4.2% per annum (and stable) The research found that office products 8 suppliers have been achieving 10% growth in this market, despite being ranked lower in terms of 7 6.6 6.4 6.4 6.4 6.3 6.1 6.1 customer service compared to other suppliers. 6.0 5.9 6 5.6 The highest non-core spending growth came from government, large and medium businesses, with 5 sales to micro-businesses falling. 4 In terms of market share, Officeworks and Winc are the top two non-core resellers. Winc is the 3 more developed operator, with a relatively strong presence across all categories, while Officeworks 2 is highly concentrated in the printing and furniture 1 categories. Next are supermarket chains Coles and Woolworths with their strong sales of kitchen 0 2019 2017 2018 2015 2016 supplies and jan/san products. n ‘CORE’ OP EXPENDITURE (A$BN) n ‘NON-CORE’ OWS EXPENDITURE (A$BN) “In several adjacent categories, there are significant numbers of small, less efficient players that, while certainly having expertise in their areas, Source: Penfold Research squeezed in a declining sector, there are almost are also vulnerable to larger professional players always other linked sub-segments that are entering. Many of these smaller suppliers are buoyant. It’s not necessarily quick and easy to independents operating in one local area. Some of start taking sales in a new area, but my research the more conspicuous segments where this is the indicates there is an exceptionally large scale of case are workwear and safety, office furniture, and opportunity for competent players.” printing services,” says Penfold. He concludes: “Although the report is based on NON-CORE STABILITY & GROWTH the Australian market, I believe the central findings Meanwhile, according to Penfold’s Non-Core are relevant in other countries too.” Office & Work Supplies 2018-2020 report, the Australian non-core OP market – comprising For more information on the state of the global kitchen supplies, cleaning/janitorial products, office products industry, see also ‘Ringing the furniture, printing services, promotional products, changes – again’ on page 44. workwear and safety equipment, and packaging

AUSTRALIAN OFFICE AND WORK SUPPLIES MARKET 2015-2019: CORE VS NON-CORE

May 2019 47

5 MINUTES WITH...

Nicole Speyer

CAREER Q&A Describe your current job. As Business Development Manager at PBS Network, I help drive the international expansion of our data and ordering platform within the OP industry.

What’s your life philosophy? No regrets. Life is all about making decisions. When you make them, beware that there will be consequences – deal with them, learn and move on. What special skill do you possess? My superpower is to simplify things. It comes in handy in my job where I’m surrounded by a lot of technical people. What makes you happy? Music and sport. Music is for the soul. It can soothe, touch, uplift… there is a song for every situation. Sport really takes away all the stress. After a long day, there is nothing better than a decent workout. What do you do in your spare time? I love outdoor activities, especially when I can combine them with music and/or sport. For recharge purposes though, I occasionally go wild and watch some Netflix programmes. What is the hardest thing you’ve ever had to do? Describe myself. Best compliment you’ve ever received? When a new customer told me it was mainly my attitude and commitment that eventually convinced the company to go with our solution. Best way to spend the weekend? Rainy day: Netflix, blanket, hot chocolate. Sunny day: relaxing by the lake. If you were President, what would be the first law you pass? I would make education accessible and affordable for everybody.

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Where do you most like to visit? I am curious about new places. I would love to see more of Asia, like Japan, or go to the Middle East and experience some history.

Nicole Speyer, PBS Networ k

If you could trade places with someone for a day, who would it be and why? Angela Merkel. I would love to experience the economic and social pressures coming from lobbyists and all the other sides that influence politics. We all know they are there, but I would be curious about the scope and intensity. What would you cook for a dinner party? To keep my guests happy, I think everyone would be better off if I ordered a takeaway. Unless they want pizza – I can do pizza! Your favourite gadget? My iPhone I guess. What kind of music do you like? Anything that is authentic and self-made usually grabs my attention. Your childhood ambitions? Construction worker. These people are hands-on, get stuff done and at the end of the day you can actually see progress. I’ve always loved that.

Your worst ever job? I don’t think there is a worst job. For me, it always highly depends on the people I work with. If my boss and team are supportive, respectful and loyal, then it is simply a matter of getting things done. If this is not the case, any job can turn into a nightmare. Luckily, I haven’t experienced the latter in a long time! Best moment so far in your career? When we won a pitch with several prospects involved that opened a new market for us. We worked very hard for it and the effort and dedication finally paid off. Your best piece of advice to someone who has just joined the office products industry? Learn the ‘who’s who’ of the industry. It is all about relationships. What do you like best about the OP industry? I enjoy the community. The events remind me of family reunions: there is always a good vibe and you see familiar faces – most people have been in the industry for years, if not decades. What personal item do you currently have on your desk? A pencil case with all my favourite pens in it.

FINAL WORD

The human TOUCH

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ollaboration has been a focus for businesses for a few years now and companies are investing heavily in the relevant technology. In 2019, the worldwide market for collaboration software is estimated to be worth nearly $9 billion and that figure is only set to rise. You can understand the investment. Collaboration in the workplace has long been a marker of an effective, highly-functioning team – the sort that takes a business forward – and technology has transformed what’s possible. For example, G Suite apps let team members across the world work on the same document in real time. Slack has also broken down internal siloes and made information from other departments and teams discoverable with its search function. These are just two of countless applications enabling collaboration. But in the rush to connect everyone and everything on every device, a vital aspect has been forgotten about: face-to-face interaction. How much did your business invest in improving this last year?

FACE-TO-FACE COMMUNICATION While we’re all busy working together digitally, we’re missing out on the benefits of collaborating in person – advantages that tie directly back to productivity and job satisfaction. Humans are social creatures and there is no better way to build relationships between colleagues than with face-to-face communication. Companies such as Google and Apple know this, and they’ve invested in workspaces that actively encourage communication and cooperation. They understand that, when people get talking, ideas are sparked. According to Forbes magazine, studies have shown that “it is more difficult to build trust in virtual teams, harder for informal leaders to emerge, tougher to create genuine dialogue, and easier for misunderstandings to escalate”. The primary goal for business leaders should be to recognise that tech isn’t the only answer. It’s all about breaking down divisions, removing subjectivity in problem-solving, and putting a stop to siloed processes. In a survey of 1,400 employees, executives and educators, 86% cited lack of collaboration or ineffective communication for workplace failures. Management needs to recognise the clear benefits of creating environments – both technologically and ergonomically – to boost cooperation and thereby enhance creativity. Leaders should never underestimate the value of encouraging self-expression. Listening and responding to others demonstrates to staff that their input is sought after and respected. This

will naturally improve individual morale, enhance motivation and foster a desire to be part of a productive team. Face-to-face interaction also has a very real physiological impact on employee well-being. Doctors at Stanford University School of Medicine in California, US, discovered that our bodies produce the ‘love hormone’, oxytocin, when we interact in person. It releases serotonin which courses through us resulting in a palpable sense of happiness. The message – at a fundamental biological level – is that the more we associate in person, the greater the sense of well-being felt.

Michel Spruijt, General Manager EMEA, Ergotron

Leaders should never underestimate the value of encouraging self-expression WORKSPACE CHANGES As a result of all of this evidence, what needs to change in the workspace? Google’s seven-seater conference bikes might work for some, but for most businesses it’s about bringing people and technology together in more effective ways. Central to this is the use of screens in the workplace. Presentations, task-based work, idea generation, planning and problem-solving – these are all activities that require information to be visible to everyone in order to cooperate. Five people hunched over a laptop or craning their necks to see a fixed screen isn’t effective, so put the information where everyone can see it by using a monitor arm. Multiscreen options are another good investment. Along with a choice of flexible, articulated arms and desk mounts, they make workspace collaboration much easier, more comfortable as well as healthier as a result of the ability to stand up while working. To get the ball rolling, begin by including the topic of collaboration in performance reviews and planning meetings. Dialogue will emphasise the importance and help increase the value employees place on teamwork in general. It will also aid in establishing goals that include collaboration, connecting it to deliverables and providing a measurement for improvement. Be sure to create a perfect marriage between shared brainpower and appropriate technology. If you get that balance right, you’re well on your way to a more productive, balanced and motivated workplace.

NEXT ISSUE Big Interview Carlos & Rafael Benavides, Co-Managing Directors, Comercial del Sur de Papelería Category Updates l Traditional OP l Visual Communications Preview SP Richards Advantage Business Conference