OPI APP Oct 283 B

BIG INTERVIEW

Connecting the

business products world

Robert Brech, Kaut-Bullinger October 2018

INSIDE THIS ISSUE l Essendant/SPR merger off after Staples steps in l Staples Solutions goes after ADVEO l Amazon Business tops $10 billion

l The modern mailroom l OPI’s Top 100: who’s in it in 2018? l The six-pack guide to digital prowess l OPI Global Forum preview

CONTENTS 16 Big Interview Spotlight on German operator Kaut-Bullinger and its recent turnaround 22 Hot Topic What to make of Staples Inc and Staples Solutions’ wholesale interest I TOP 100OP OP I

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26 Top 100 Who are the core influencers of 2018? And what have they done to make the cut?

38 Category Update As the mailing sector evolves, the potential for all involved is considerable

Big Interview: Robert Brech, Kaut-Bullinger

Just over two years ago, the future of Kaut-Bullinger looked bleak indeed, blighted by financial troubles, costly legacy systems and a business model in serious need of an update.

Add to that a takeover bid from its dealer group Soennecken and you might say the situation was critical.

That’s when experienced restructuring expert Robert Brech was drafted in to grab the bull by the horns and turn around this centuries-old operator.

HOT TOPIC: GAME CHANGERS

42 Category Update A look at the stamping sector and its efforts to keep it alive and kicking 44 Advertorial International Paper continues to raise funds for breast cancer research 46 How to...

Make your digital journey easier with this guide 48 Research How is OP purchased in the digital age? What do buyers want?

50 Preview High-profile discussions and unrivalled networking are at the core of the seventh OPI Global Forum

REGULARS 5 Comment 6 News 52 5 minutes with...

Paddy Donnelly 54 Final Word Myers Jordan

October 2018

In terms of Staples’ reasons for acquiring Essendant, [Tom] Schinkel says that “for someone like me who has over 30 years under his belt as an industry observer and M&A adviser, it is exceedingly difficult to ascertain the strategic logic of such a move”.

It will probably become clearer once the futures of Staples’ US retail and Canadian operations are resolved; however, it is OPI’s understanding that these two businesses do not fit into Sycamore Partners’ strategic vision for Staples, and it is very much a B2B delivery play. Many questions remain as to how Staples will approach the integration of Essendant and what its go-to-market strategy will be for SMB customers. And how, for example, will it manage the overlap between its own mid-market sales teams and its new dealer customers?

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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 Reporter Lily Elden +44 (0)20 7841 2952 lily.elden@opi.net OPI Special Correspondent 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 Director of Growth Services Jeremy Hughes +44 (0)7807 810617 jeremy.hughes@opi.net Digital Marketing Manager Aurora Enghis +44 (0)20 7841 2959 aurora.enghis@opi.net

EVENTS Events Manager Lisa Haywood +44 (0)20 7841 2941 events@opi.net

PRODUCTION & FINANCE Studio Joel Mitchell +44 (0)20 7841 2943 joel.mitchell@opi.net Operations & Production Eda Sismanoglu +44 (0)20 7841 2950 eda@opi.net Finance Kelly Hilleard +44 (0)20 7841 2956 kelly.hilleard@opi.net

PUBLISHERS CEO Steve Hilleard +44 (0)20 7841 2940 steve.hilleard@opi.net Director Janet Bell +44 (0)20 7841 2941 janet.bell@opi.net Executive Assistant Debbie Garrand +44 (0)7718 660249 debbie.garrand@opi.net

W

Look at the big picture – and zoom in

hen I talked about “unlikely bedfellows” in this column a few months ago, referring to Staples Inc and its strategy to partner with independent dealers, I didn’t quite picture how crowded, international and diverse that bed would become. There are wholesalers in it now too, not just from the US, but the scene has also shifted to Europe.

The speed with which things are happening amazes me as well – anyone remember the long, drawn-out “will they/won’t they” Staples/ Office Depot merger saga that concluded only just over two years ago? It’s fascinating stuff and I’m delighted that in these pages – and much more regularly on opi.net, of course – we can bring you all the latest news and analysis (see Analyses on page 6 and 8, and our Hot Topic on page 22).

When I talked about “unlikely bedfellows” [...] I didn’t quite picture how crowded, international and diverse that bed would become And despite the fact that many industry experts don’t appear to be too surprised at what’s happening in the US and Europe right now, I can still hear myself mutter “wow” and “who’d have thought” occasionally. In fact, that was also one of my takeaways when I recently interviewed Robert Brech from German independent dealer Kaut-Bullinger (see page 16).

I knew the company was in trouble a couple of years ago, but just how much trouble and why I didn’t quite appreciate.

This brings me to one of the other main – certainly the biggest – features in this month’s OPI, our annual Top 100 list, now in its 18th year. Compiling this list is a real labour of love, involving hours and hours of discussions among the OPI team and with industry peers, an insane amount of emails and countless phone calls to all corners of the world. But every year – and this is a work in progress that actually never really stops – it’s great to delve a little deeper and learn more about how companies and people in markets big and small, remote or central, operate, the challenges they face and the opportunities they embrace.

You’ll find the complete list on page 36 and information on all Top 100 entries on opi.net this month. A snapshot is also highlighted in this issue. Why these? In short, because they’re new to this year’s list and/or they had a remarkable year for one reason or another – unfortunately we cannot feature all 100 entries in detail in OPI. HEIKE DIECKMANN, EDITOR Have a great month.

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October 2018

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NEWS

Analysis:

significant opportunity for [it] to grow and deepen its relationships with both independent dealers and other customer channels,” GPC noted in a press release. “As such, we are confident in our ability to drive growth and profitability for SP Richards and to support value creation for GPC shareholders.”

Finally, on 14 September, Staples and Essendant confirmed they had entered into a definitive agreement based on Staples’ $12.80 offer that valued the wholesaler at almost $1 billion, including approximately $500 million in debt. This also signalled the termination of the Essendant/GPC agreement, entitling SPR’s parent company to a $12 million break-up fee – which Staples had already said it would pay.

“We believe combining with Staples provides a tremendous opportunity to enhance our resources and ability to serve customers, while delivering compelling and certain value to shareholders,” said Essendant CEO Ric Phillips. “I want to thank all our associates for their continued commitment and dedication as we have navigated this process over the past several months.”

Essendant and SPR merger abandoned

www.opi.net

Staples to acquire Essendant for almost $1 billion

6

The proposed merger between US office products wholesalers Essendant and SP Richards (SPR) is off after the Essendant board recognised that an improved offer by Staples Inc was superior to the agreement with SPR owner Genuine Parts Company (GPC).

In the first week of September, Staples had reiterated its offer to acquire Essendant for $11.50 per share and urged the wholesaler’s shareholders to reject the SPR merger. Then, on 9 September, Staples made an improved offer for Essendant of $12.80 per share. This prompted the Essendant board to declare this proposal as “superior” to the terms of the GPC agreement, leaving GPC three business days from 11 September in which to come back with an offer that at least matched the Staples one.

However, GPC was quick to state that it would not make a counterproposal, asserting that its original April agreement with Essendant “accurately determined fair value for the transaction combining SP Richards and Essendant” and that it would keep SPR in the GPC fold – at least for now.

“We believe that the prospects for SP Richards remain strong and that there is

DEAL OR NO DEAL? While both parties said they expected the transaction to be finalised during the fourth quarter of 2018, a couple of matters need to be resolved to get the deal over the line.

Firstly, approval by a majority of Essendant’s shareholders is required. This is made easier as Staples already owns more than 11% of Essendant’s common stock, but the wholesaler’s largest shareholder, Pzena Investment Management, has declared that it will oppose the transaction, commenting it is neither superior to the GPC agreement nor adequately values the company as a standalone business.

At the time of writing, the situation with Pzena was still ongoing and the investment firm said it expected to engage with Essendant’s senior management and possibly with “other relevant parties”. It is not anticipated that this move by Pzena will scupper the deal, but it may have enough influence to eke a few more cents out of Staples.

We believe combining with Staples provides a tremendous opportunity to enhance our resources and ability to serve customers Secondly, the acquisition requires antitrust approval from the Federal Trade Commission (FTC).

The FTC has already issued a second request to Staples as part of its investigatory process, but while there is expected to be some resistance from within the industry to a combined Staples/Essendant, OPI believes that the deal will not be blocked on competition grounds (see also Hot Topic, page 22, for more on this antitrust issue and further analysis of the Staples/Essendant transaction).

Amazon has announced that sales on its B2B platform Amazon Business have exceeded $10 billion on an annualised basis. Without providing specific numbers, the company also stated that it now serves “millions of business customers and hundreds of thousands of business sellers around the world”.

The last time that a sales figure was given was back in 2016 when Amazon said the business platform had reached $1 billion in revenues in its first 12 months.

Growing the top line by more than $9 billion in just over two years is a fantastic achievement. Since then, of course, Amazon Business has expanded into seven markets outside the US, most recently debuting in Italy, Spain and France, while the marketplace ships to over 70 countries around the world.

The online giant gave a peek into the success of Amazon Business in the US, the UK – where the platform is now just over a year old – and Germany, which was launched back in 2016: • US: Amazon Business serves 55 of the Fortune 100 companies, 80% of the 100 largest enrolment education organisations, more than half of the 100 biggest hospital systems and over 40% of the 100 most populous local governments.

• UK: Amazon Business is used by more than 50% of the FTSE 100 companies and 16 of the 20 largest universities.

• Germany: Amazon Business works with 22 of the 30 DAX companies and 11 of the 15 largest cities in the country.

The caveat to all these statistics is, of course, that while the figures are no doubt impressive, they paint a somewhat one-sided picture. Yes, Amazon Business may serve 55 of the Fortune 100 companies in the US and so on, but it’s certainly not the only operator that does so, and the stats don’t reveal the percentage of orders that go to Amazon Business as opposed to other on- or offline resellers.

Aside from attracting a corporate and large customer base, Amazon in its recent messaging also pointed to how its growth is good for small businesses. It said that small, third-party sellers now make up more than 50% of the $10 billion in global sales, as the company has built features to enhance their visibility and make it easier for them to operate.

IN BRIEF Staples expands MPS offering Staples Inc – through its Technology Division – has expanded its current managed print services offering with the addition of Nuance Communications print management and document capture software solutions, which includes flagship programme Nuance Equitrac.

NEWS

Amazon Business tops $10 billion

WeWork expands enterprise services Collaborative workspace provider WeWork has widened its range of enterprise services with its fourth acquisition this year. The company has bought software and analytics start-up Teem for a rumoured $100 million.

HP advances 3D printing HP Inc has launched new 3D printing technology for the high-volume manufacturing of production-grade metal parts. According to HP, its Metal Jet printers will provide up to 50 times more productivity at a lower cost than other 3D printing methods.

International Paper SVP retires International Paper has announced SVP of Corporate Development Cato Ealy will retire effective 31 December 2018, after 26 years at the company. He joined in 1992 as Director of Corporate Development. In 1996, he was named as VP of the division and promoted to SVP in 2003.

Toshiba and Brother team up EOS vendor Toshiba America Business Solutions (TABS) and printer manufacturer Brother International have announced a strategic partnership. It will include TABS offering Brother’s Workhorse series of printers and scanners to customers and authorised resellers.

Alibaba reveals succession plan China-based online giant Alibaba has announced that Executive Chairman Jack Ma will step down from the company next year.

Over the next 12 months, Ma will retain his current position to ensure a smooth transition as he hands over the role to the company’s current CEO Daniel Zhang.

Staples snaps up another dealer

COPA reveals Leadership Award winners The Canadian Office Products Association has announced the winners of its Excellence in Leadership Award. This year’s recipients are former Fellowes President Jim Edmonds and CIS Office Plus President Nineeta Drepaul.

October 2018

Staples Inc has acquired CPI One Point, a dealer based in Lewisville, just north of the Dallas/Fort Worth metro area.

Founded in 1982 as a small computer supply company, CPI now offers a diverse range of business supplies products, including facilities, food service, safety and packaging supplies.

This latest acquisition for Staples comes after it acquired HiTouch Business Services in June, although OPI understands CPI is much more of a mid-sized dealer. Nethertheless, this latest deal indicates that Staples is not slowing down in its dealer acquisition strategy despite its pursuit of wholesaler Essendant.

ECi acquires Vineyardsoft Office products technology provider ECi Software Solutions has acquired software firm Vineyardsoft. The acquisition enables ECi to extend the benefits of Vineyardsoft’s flagship solution KnowledgeSync to a broader customer base, as well as put more resources behind advancing the product.

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NEWS

Analysis: Staples Solutions makes ADVEO move

ADVEO has confirmed that the industrial investor looking to take control of the wholesaler is Netherlands-based Staples Solutions

www.opi.net

European office supplies reseller Staples Solutions has emerged as the “international industrial investor” that has signed an agreement with ADVEO’s lenders to acquire all of the wholesaler’s financial debt.

According to a 5 September regulatory filing with the Spanish stock market, the seven financial institutions that collectively hold ADVEO’s €149 million ($173 million) of financial debt had reached a non-binding agreement with an investor for the full amount and had asked ADVEO to cooperate while a due diligence process – which could lead to a binding offer – was carried out. Two days later, ADVEO confirmed that the investor was Staples Solutions, the former European operations (minus the UK retail arm) of Staples Inc which is now majority-owned by private equity firm Cerberus Capital Management.

The terms and conditions of the agreement have not been disclosed, but Staples Solutions has informed ADVEO that its offer would involve a capitalisation of the wholesaler’s debt which would lead to a “significant” dilution in the number of ADVEO shares. Following the news, ADVEO’s share price initially plummeted by almost 60% to just €0.80 before stabilising at around €1 at the time of writing.

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REPAIRING RELATIONS Relations between ADVEO and its lenders are known to have been strained over the past few years, and it appeared that earlier this year the banks had said “enough is enough”. An impasse over the availability of extra cash to solve the wholesaler’s stock availability issues forced ADVEO to turn to investment firm Pimco in a proposed deal that would have left more than €90 million of bank debt frozen for a six-year period. Faced with that prospect, the banks agreed to cough up a further €20 million to boost ADVEO’s liquidity and those funds were made available to the company on 17 August.

Now, it appears the banks have taken matters into their own hands by agreeing to offload the almost €150 million in financial debt – apparently without the company’s prior knowledge – and cut their losses on ADVEO. How many cents to the euro they are recouping has not been disclosed, but they are no doubt taking a severe haircut on their investment – unconfirmed reports in the Spanish press refer to the banks accepting 20 cents in the euro.

In its stock market filing, ADVEO put on a brave face by saying the proposed transaction would solve the wholesaler’s structural debt problems and allow it to pursue its strategic goals. However, it remains to be seen what impact ownership

by Staples Solutions would have on that plan – and the company as a whole – should the proposed debt purchase go through.

ADVEO cautioned that Staples Solutions’ non-binding proposal is subject to the satisfactory outcome of the due diligence process and potential further negotiations. As such, there was no guarantee that an offer would be made.

Any transaction would also require approval from the European and Spanish antitrust authorities although it seems unlikely that a Staples Solutions/ADVEO combination would be blocked on competition grounds. For more on this development, see Hot Topic, page 22.

IN BRIEF Klinck leaves Depot Office Depot Europe has confirmed that Chief Sales Officer Direct and E-Commerce Oliver Klinck has left the company. According to a spokesperson for the reseller, Raffael Reinhold of parent company Aurelius has taken on Klinck’s role on an interim basis until a replacement is found.

BIC takes control in Africa BIC has entered into an agreement with Kenya-based FMCG manufacturer Haco Industries to take charge of its own products in the region. The deal will result in the transfer of Haco’s BIC manufacturing facilities in Kenya, along with the distribution of stationery, lighters and shavers in East Africa, to BIC. New MD for Cromwell UK-based MRO reseller Cromwell has appointed a new Managing Director. The company is now led by Neil Jowsey, who has considerable experience driving growth at blue chip B2B and B2C companies.

Tech Data implements cost-saving measures US-based IT distributor Tech Data has designed a Global Business Optimisation Program. This is centred around reducing costs, including enhancing the company’s regional go-to-market models to deliver greater value to channel partners, and digitising processes to drive a more responsive work environment.

Office Choice gears up for growth Australia-based dealer group Office Choice has created a new leadership position in response to the expansion of the business. Jamie Keyzer has been promoted to COO from his current position as National Operations Manager.

Management change at Static Control US-based print components manufacturer Static Control has announced Bill Swartz’s replacement. Ken Lalley will take over as CEO and also continue as Managing Director of Static Control’s European Operations.

New management for Jiffy UK-based packaging manufacturer Jiffy Packaging has named Richard Gregg as its new Managing Director. Gregg joined the firm on 1 August, taking over from Max Weller who left the company in January.

Hon enhances CET Designer US-based office furniture brand The HON Company has improved its design and specification tools with the launch of CET Designer Extension. It provides manufacturers and dealers with solutions for space planning and product ordering, and the ability to design, specify, and visualise projects all in one

Emerald Brand launches licensing division

US-based office products manufacturer Emerald Brand has introduced the Emerald Ecovations division, which is responsible for licensing its sustainable Tree-Free raw material and finished products to companies and brands across the globe.

Tree-Free is made from renewable resources and is used to make different types of specialty packaging, including towel, tissue and packaging paper. The licensing enables companies to add sustainable solutions into their own line of disposable paper and plastic products.

Emerald Brand said the launch comes at a time when price instability and a lack of high-quality recycled material options have left many brands searching for affordable and sustainable raw materials.

ISSA launches Next Gen programme Global cleaning industry association ISSA has launched Next Gen, a programme for young professionals, which replaces its predecessor, the Young Executive Society (YES) initiative. It aims to improve member benefits and increase participation of young professionals in the association and the industry.

The programme is open to all ISSA member company employees under 40. It also comprises a mentor scheme for industry professionals over the age of 40 to share experience with those in the programme.

Next Gen will feature two distinct tracks: ISSA Young Emerging Leaders for those looking to move up to the next level of their career; and ISSA Young Executive Development for those already in executive roles and looking to round out their leadership skills.

Popular programmes such as the YES Professional Development Workshop, educational sessions and webinars, and networking events will continue under the Next Gen brand.

53

%

OF EMPLOYEES IN THE UK EXPECT TO BE MOBILE BY 2025

NEWS

First Ride of Life celebrates success

Charitable funds raised by the UK business supplies sector and its long-established annual Climb of Life (COL) initiative have been boosted by the addition of a sister event, the Ride of Life (ROL).

Leading figures in the industry took part in a cycling event in aid of The Institute of Cancer Research (ICR). Durable UK Managing Director Sean Starkey and Safescan UK and Ireland General Manager Steve Robinson set up the event to tap into the increasing popularity of road cycling.

On 7 September, 28 riders set off from the ICR campus in Sutton, Surrey, on two proposed routes and collectively rode over 1,658 miles (2,668 km) in less than six hours. The charity ride has so far raised over £12,500 ($16,200), with donations still coming in. The organisers are hoping to turn it into a regular fundraiser, similar to COL. At this year’s COL, meanwhile, OPI will join about 120 members of the UK OP industry on 2 November in the Lake District where the group will attempt to climb the most difficult mountains in the country, typically in very hostile conditions.

OPI has begun its annual fundraising for the 2018 Climb of Life, which is aiming to reach a total of £1 million ($1.3 million) raised for cancer research. Indeed, this year’s theme is called ‘The £1 Million Mountain Challenge 4 ICR’ – the total amount raised so far currently stands at about £900,000.

For more information on the Climb of Life, or to support the OPI team with a donation, please visit www.justgiving.com/fundraising/ col2018.

opi.net poll

www.opi.net

DO YOU THINK THE BACK-TOSCHOOL SEASON WILL BE...

10

The same as last year

23%

Better than last year

31%

Worse than last year

47%

Bong appoints new CEO

European envelope and packaging manufacturer Bong has announced that Håkan Gunnarsson has stepped down as CEO. He will stay on for a maximum period of six months to ensure a smooth handover to his replacement Kai Steigleder.

Steigleder joined the business in 2014 as Bong’s Managing Director for Central Europe, its largest business unit. Previous to this, he held sales and management roles at various companies including Pflüger Kuvert and Jefferson Smurfit Group.

Office Outlet CVA approved

Creditors for UK-based retailer Office Outlet (formerly Staples UK’s retail stores) have approved its Company Voluntary Arrangement (CVA) proposal, with 93% voting in favour of the deal.

Under the terms of the CVA, the worst performing four of its current 95 stores will close later this year. The remaining stores and the online business will continue to trade as normal. Office Outlet has spent the past two years carrying out an operational reorganisation since being bought by Hilco in late 2016, which has included dividing up 35 of its larger stores by subletting space.

Office Outlet said the CVA, along with initiatives already put into action, will create a stable platform from which to implement the business turnaround and return the company to profitability.

EUROPEAN OFFICE STATIONERY MARKET TO GROW AT A CAGR OF

3.13% BETWEEN 2018-2022

BIRD FEED

@Gojo_Europe #DidYouKnow 35% of foodborne illness cases are attributed to poor sanitation and 16% of these are due to contaminated equipment or environment? Ensure a complete hygiene regimen is in place and stop the spread of infection #FoodSafety #InfectionPrevention

@Compleat_Office Multiple studies show that green tea can reduce bad breath #WisdomWednesday

@Pelltech Ride of Life 2018 is go! 60+ miles with the good folk of the office products industry in support of The Institute of Cancer Research

@BIGstertweets First look at #WeGrow school in NYC and we couldn’t be more excited about this new educational ecosystem where children can learn through discovery & learning Powered by @WeWork Follow us on Twitter @opinews

Office Environment Company reveals merger plans

NEWS

Toppin honoured by City of Hope

US-based independent dealer Kerr Office Group (KOG) has purchased the assets and goodwill of Office Environment Company (OEC), strengthening its position in Kentucky, where both dealers are based.

The merger means KOG will gain access to furniture brand Haworth through OCE, providing a solid platform upon which to grow its contract furniture business. In return, KOG will provide OEC with a broader array of services including Canon copiers, IPC janitorial equipment, janitorial supplies, managed network and print service capabilities and residential interior designs and furnishings.

OEC CEO Tricia Burke will join KOG’s management team and the integration of the two companies is expected to be completed in the next few months. Financial details of the transaction were not disclosed.

The US business supplies industry gathered last month at Chicago’s Navy Pier to honour SP Richards CEO Rick Toppin who collected the 2018 City of Hope ‘Spirit of Life’ award. The award is presented to industry leaders who have made a significant commitment to philanthropic and charitable industry endeavours and Toppin joins a distinguished group of past recipients.

As part of the City of Hope National Business Products Council, Toppin headed this year’s Generations of Hope campaign, helping to raise a record-breaking $15.1 million for the California-based clinic and medical research institute.

Next year’s honouree is 3M VP and General Manager Brad Graves, and the 2019 Spirit of Life Gala dinner will be held on 26 September, once again at the historic Navy Pier.

October 2018 11

NEWS

BSA pays tribute to OP legends Three well-known OP veterans, Mike Rowsey, Joe Templet and Wayne Beacham, were presented with awards at the BSA Annual Forum in Indianapolis (IN) last month. They are pictured below with their wives (left to right): Cindy Rowsey and husband Mike, who was presented with the BSA Leadership Award; Lifetime Achievement award winner Joe Templet and wife Vicki; and Lucy Beacham and husband Wayne, the 2018 Legend of the Industry honouree.

One of the major talking points at the BSA Annual Forum was the consolidation of OP events into what could potentially become ‘Industry Week’. For more information on this and the BSA event overall, visit opi.net.

Big Buyer expands target markets Italy-based office supplies and stationery show Big Buyer will return for its 23rd year with a focus on channels complementary to the OP industry.

Alongside the established segments such as office supplies, paper products, writing instruments, promotional products and school supplies, the 2018 show will also feature growing trends in bookshops, concept stores and toys.

As in previous years, the three-day exhibition will play host to a variety of events and seminars, including the return of the visual merchandising workshop hosted by expert Doriano Missora as well as a talk dedicated to the evolution of the store conducted by Davide Cavalieri, a leading expert in retail marketing.

This year’s AIFU (a key Italian office supplies association) conference will focus on flexible working, while the 12th edition of the Top Design Award will showcase the best in OP visuals and functionality.

Big Buyer takes place from 21-23 November 2018 in Bologna, Italy.

www.opi.net

GLOBAL SHIPPING VOLUME TO SURPASS

12

100BILLION N PARCELS IN 2020

Joan Miller passes away

Kathy White and Joan Miller OPI is sad to report that well-known and respected OP icon Joan Miller passed away on 21 August at the age of 87. Joan founded full-service office furniture dealership Business Interiors in 1970 where she remained Chairman of the board.

Joan’s passion for design, business focus and strong leadership made Business Interiors one of the top companies in the office furniture industry, as well as a recognised women-owned business.

The company has won numerous awards from customers, vendors and other organisations, including Women’s Business Enterprise of the Year three times from the Women’s Business Council – Southwest. Joan was also active in many organisations in Tarrant County (TX), including Tarrant County United Way, Girls Club of Arlington, the Soroptimist Club and Mercantile Bank.

In 1982, Joan’s daughter Kathy White joined the company as Data Processing Manager, later becoming VP of Finance and then CEO.

UK expansion for BakkerElkhuizen Netherlands-based manufacturer BakkerElkhuizen has acquired the distribution activities of UK partner Osmond Ergonomics. The two businesses have worked together for 20 years, and the purchase of the distribution division is part of BakkerElkhuizen’s aim to benefit from the growing market in the UK. BakkerElkhuizen now has a base in London, with Country Manager for the UK and Ireland Tom Meylink continuing to split his focus between servicing its partners in the IT, office supply and furniture channels, and informing ergonomic specialists and assessors on products and trends in the health and well-being sector.

All staff at Osmond’s distribution arm will remain in place; founder Guy Osmond will focus on other aspects of the business, while Meylink will take over Osmond’s responsibilities at the company, including maintaining relationships with resellers.

The companies declined to provide financial details of the transaction.

BIG INTERVIEW

Back from

THE BRINK

In a rare interview with Kaut-Bullinger, Group Managing Director Robert Brech talks openly about the hugely challenging past few years at Germany’s largest independent dealer

J

ust over two years ago, the future of Kaut-Bullinger looked bleak indeed, blighted by financial troubles, costly legacy systems and a business model in serious need of an update. Add to that a takeover bid from its dealer group Soennecken and you might say the situation was critical.

That’s when an experienced restructuring expert was drafted in to grab the bull by the horns and turn around this centuries-old operator. OPI’s Heike Dieckmann spoke to the company’s Group Managing Director Robert Brech about the current state of affairs, about what went wrong back then and what’s now going right.

www.opi.net

OPI: Let’s set the scene and start with your career background – what is it that qualified you so well for the Kaut-Bullinger challenge in 2016?

Robert Brech: To start with, most of my background is in the retail and B2B business. I started as an apprentice in a wholesale company when I was 18.

I then worked for several of the really big retail and department store chains in Germany, including Kaufhof – which at that time was part of the Metro Group – Karstadt and its two subsidiaries Wehmeyer and SinnLeffers, and Woolworth. The latter of these was sold to Cerberus Capital Management in the US. In most of these companies I worked in the capacity of a director, CEO or COO. I’ve always reported directly to the supervisory board and was on many occasions involved in the restructuring of the business. This then often led to the ultimate sale of the company or it was launched back into the market in a much better state.

I also founded a small company called RBC Consultants in 2009. I still own that company and am the majority partner, but I’m now obviously engaged full-time with Kaut-Bullinger. RBC also specialises in restructuring activities.

16

OPI: So you are clearly a turnaround expert, which I guess is what brought you to Kaut-Bullinger in 2016.

RB: Absolutely. I’m always involved in organisations that are struggling and need an overhaul. Nobody ever calls me from a company that’s doing well, with growing sales, a nice gross profit, etc. Every company I’ve worked for was in real trouble when I joined and Kaut-Bullinger was no exception when I was asked to come on board.

OPI: What did you find when you started in August 2016? Your predecessor Johannes Peter Martin had left eight months prior and you took over from one of the remaining managing directors which was Oliver Mathes at the time.

RB: All I can say is that Kaut-Bullinger was in desperate need for a deep restructuring. As soon as I joined, every single aspect of the company came under very close scrutiny – everything from ERP and IT systems, merchandising, logistics, purchasing, sales and finance. The latter was obviously hugely important. Our cash flow and liquidity was terrible and the company was in very serious financial trouble, on the brink of insolvency even.

OPI: When I talked to JP Martin back in 2012, he said that Kaut-Bullinger had been doing ok financially when he joined three years prior, but that plenty more could be done to improve the balance sheet further. Something obviously went badly wrong in the years that followed...

RB: Our consolidated financial statements of 2016/2017 give you a clue: when I started in August 2016, I had to take immediate emergency measures to prevent the threat of insolvency. These involved the termination of external consultancy contracts, the insourcing of certain tasks, and the reduction of stock levels in the warehouse as well as in our stores. We also had to stop all unnecessary expenses.

BIG INTERVIEW Robert Brech

I’m always involved in organisations that are struggling and need an overhaul. Nobody ever calls me from a company that’s doing well, with growing sales, a nice gross profit, etc These were all things that had been neglected in the prior years, with the consequence that, particularly from the beginning of 2015, Kaut-Bullinger had to cope with an increasingly difficult relationship with its dealer group Soennecken. Confidence in the top management of the company was also dwindling fast, both from our finance partners as well as our suppliers.

The management report at the time also revealed that the replacement of the Managing Director as well as the dismissal of the Chairman of the supervisory board were prerequisites if there was any chance of a successful turnaround, and for trust to be restored with our suppliers and, even more importantly, our remaining investors and new financiers.

OPI: What was your first priority when you joined?

RB: To stabilise the company financially, with everything it entails – dealing with banks, credit insurance companies, customers and suppliers.

None of them were happy for many different reasons. But I also had to take a very close look at all internal processes and change many of them in a comprehensive cost-cutting exercise.

By the time I started on 8 August 2016, the new contract with Büroring and its associated wholesaler InterES was already signed and in place. That relationship is working really well for all parties which is important. We are a very big partner to InterES with considerable purchasing volumes and we use Büroring’s central billing facility with suppliers.

October 2018

OPI: A dire financial performance was also the message that came out of Soennecken in the spring of 2016 when Kaut-Bullinger ultimately had to leave the group. You were one of its biggest members to my knowledge.

RB: We were. And yes, we were in financial trouble among many other things and that contributed to the Soennecken situation because we couldn’t fulfil our financial commitments. The reason we left Soennecken in May 2016, however, was because the group tried to take advantage of Kaut-Bullinger’s weakness with a takeover bid – in line with its then new ‘going direct’ route – and that attempt failed.

That’s the time when the supervisory board approached me to come and restructure the company. It was a hugely critical time in the history of Kaut-Bullinger which, as you know, has been around since 1794, so a very long time.

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Robert Brech BIG INTERVIEW

about €16.5 million while the office supplies business is 60% (€66 million), and the office systems division 25% (€27.5 million).

OPI: Which part of the organisation is growing the fastest now?

RB: The only part of the business that’s growing at the moment is our office systems division. We’ve got very high hopes for this business segment which includes MPS, furniture and systems installation, maintenance and repair, as well as our 3D and graphics business as part of our agreement with HP. It’s the latter two HP categories that are doing particularly well.

The office supplies business is more or less flat now.

OPI: Ingo Dewitz recently left as Managing Director of Büroring. Will that cause any disruption?

RB: Definitely not, it hasn’t so far and I’m sure will not have any impact at all.

OPI: Let’s go back to the situation when or even before you started. All of this must have had an impact on staff. Were there many redundancies?

RB: There weren’t, but we certainly had some staff turnover. We had quite a few married couples as employees, and because of all the instability and uncertainty, they felt they weren’t secure in their jobs anymore and one of them resigned.

We also lost some very high-profile people – employees in leading positions in areas like purchasing, financial control, marketing and so on – and that left some dangerous gaps we’ve had to fill.

In total, we lost about 20 people in 2016, but we’re now back with the right people in all the key roles. It wasn’t an easy process because of all the bad press we received at the time. Job security and a good working environment are obviously very important and there was the perception that Kaut-Bullinger couldn’t offer either.

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OPI: How’s Kaut-Bullinger looking today, in terms of its performance?

RB: Our revenues as well as gross profit took a real hit back then, and both are looking much better now. Our total sales in 2017 were €110 million ($128 million).

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OPI: Has your broad business model changed in the restructuring period? For the benefit of our readers and as a recap, I believe Kaut-Bullinger is split into several divisions – the office supplies business (Kaut-Bullinger Bürobedarf), the office systems business (Büro-Systemhaus), and the retail stores. Is that correct? And then you have BüroExpress as your online portal.

RB: Fundamentally, it’s the same. We have a complex company structure with many different divisions and brands, and we’re in the process of simplifying our model, but broadly speaking, you’re correct.

All but our retail stores is B2B business. Retail now accounts for about 15% of our total revenues, ie

OPI: Let’s talk about retail. This part of the company has been struggling for some time I believe.

RB: That’s correct, retail is a decreasing channel, not just for Kaut-Bullinger, but for the industry overall.

We do what we can to mitigate this, but the decline in retail is just a reality that we have to live with.

We have 11 stores at the moment, but we’re not there yet with our retail consolidation. Our intention is to close stores where we’re losing a lot of money, so there are probably four more stores that will have to go.

OPI: Is your flagship store in Munich profitable? That seems to be the one where you invest the most?

RB: I wouldn’t say it’s doing extremely well, but as you say it’s our flagship store and we can’t touch it because it’s our retail face. We have several other stores that are still performing reasonably well and we have no plans to close them or very severely cut down our retail presence. We need retail, but it’s a fine line and we can’t be losing a lot of money from the stores, of course.

As I said, there’s some consolidating to be done still.

The only part of the business that’s growing at the moment is our office systems division OPI: In terms of the overall German market, you are a big player in our industry. Do you consider yourself to be a truly nationwide operator?

RB: From a retail perspective, definitely not, and I think it’s wrong to even attempt geographical expansion beyond the south of the country – the general retail climate doesn’t support that and nor do our resources.

From a B2B perspective and particularly for the office systems business, we’re completely nationwide, yes.

OPI: Who are your customers – what’s the core?

RB: In B2B, it ranges predominantly from very small to medium-sized companies. We have 50,000 B2B customers in total and the largest part of our revenues comes from companies that have between 20 and 300 staff. But we also have some of the really big operators – BMW or large insurance company Allianz are just two of them.

OPI: What is the competition for you – other independents or the likes of Staples Solutions, Office Depot, Lyreco, etc?

Robert Brech BIG INTERVIEW

RB: I’d rather not answer this question. I’m very familiar with Staples’ and Office Depot’s private equity owners – like I said, I sold Woolworth to Cerberus many years ago. What I would say is that we are totally different to everyone else. Most of our competition comprises very small and local operators and none of them can offer the same broad business model and range of services – we do retail, delivery and contract. Nobody else does that, not to mention our vast product portfolio through the various divisions as well.

The fact that we’re so versatile is mostly an advantage, though not always, as we also have the costs and challenges of a multichannel business. But we can compensate. If business is slow in retail, we have B2B; if office supplies is stagnating, we have the systems business with all the service solutions that come with it. That’s a real differentiator.

OPI: No conversation is complete these days with talking about Amazon. What’s your view on Amazon and Amazon Business?

RB: Well, you’d have to be blind and ignorant to not at least appreciate Amazon for what it’s achieved.

It’s a fantastic business with a model that just works, including its marketplace.

OPI: You are an Amazon Business marketplace operator, aren’t you?

RB: Yes, we’re trialling this at the moment from a retail perspective and for office supplies, and we are keeping a very close eye on it. I know that Amazon is often regarded as the enemy, but the sales figures for us are certainly looking good, and they are increasing all the time. That’s about as much as I can say.

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OPI: Let’s talk about products. Where are the biggest opportunities for you?

RB: The office supplies focus obviously remains one of our core competencies, but there’s no growth there because of digitisation and decreasing demand. The real opportunities for us currently are in the specialist niches such as 3D and graphics in the office systems business.

Under the office supplies umbrella, we are looking at safety and workwear products, but it’s still in its infancy. An excellent sub-category for us in this business segment is promotional materials – it’s growing very nicely and there’s plenty of potential.

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OPI: What is your prediction of the future for independent dealers in Germany?

RB: For the small operators, it’s not looking good and I don’t believe they really have a future, certainly not a bright one. You have to have a certain size, be competent in many – and often new – areas and have an international outlook.

OPI: Excuse me for being so blunt, but Kaut-Bullinger doesn’t have an international outlook as far as I’m aware. Am I wrong?

RB: Not entirely. We don’t have any plans internationally for the retail business and I don’t think there’s a lucrative long-term future anyway. But it’s different for our office systems division – there’s definitely international potential.

Of course, several of our agreements, like the one with HP, restrict us to German distribution only, and the same is true for our furniture installation solutions.

But in the long term, there’s potential I’m convinced, and I’m cautiously optimistic about our international role in this industry.

The fact that we’re so versatile is mostly an advantage, though not always, as we also have the costs and challenges of a multichannel business OPI: Talking of the long term, you refer to yourself as a restructuring guy. Doesn’t that imply a somewhat short-term outlook?

RB: That’s a very easy ‘no’. Restructuring is my remit in all the companies I’ve worked for – I’m the person who carries the water to put out the fire.

But it’s about more than just putting out the fire; it’s about knowing when you can start rebuilding and optimising the company for the future. My tasks at Kaut-Bullinger were set out to me very clearly by the supervisory board and the management team, and they are definitely long-term tasks.

My plan for the turnaround of the company was three years from when I started and it looks as if it’s going to be a few months longer. The total process will be finished at the end of the next business year, ie at the end of March 2020.

But phase one is done – simple survival. Phase two is also very nearly done – optimising workflow with customers, suppliers, employees and products.

As of 1 April this year, we’ve switched from the brutal restructuring that involved a huge amount of cost-cutting to the beginning of phase three, a ‘smooth’ restructuring, whereby we talk in more detail about the strategic future of the company – in terms of retail, our branding, our company set-up, etc.

Overall, we’ve come from a really critical situation and we’re not in that situation anymore. We are comfortable where we are at the moment and we’ve come a very long way. It’s a different company now, with mostly the same people, many of the same suppliers and customers, but with a changed mentality. The focus is to grow and earn money, make a profit and be really successful again – long-term – and we’re getting there.

HOT TOPIC

Game CHANGERS One of the main talking points in North America and Europe has been the future of the office products wholesaling channel. Recent developments indicate similar, game-changing outcomes for both continents – by Andy Braithwaite

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hen Staples and Office Depot decided almost simultaneously in 2016 to sell off their European operations – and their other international units too – in order to focus on the North American market, it appeared that, in terms of the office supplies industry, Europe would go one way and North America another, each forging its own strategic path.

The same set of basic issues affect the industry, of course, no matter which side of the Atlantic you happen to be on: declines in traditional categories, the digitisation of the workplace and business processes, and the rapid growth of the e-commerce channel, to name but three.

There were also two other industry factors common to both the US and Europe: firstly, the presence of weakened wholesalers that were experiencing declining sales and profits as well as uncertainties about their strategic relevance in their respective markets; and secondly, private equity ownership of the separate US-based Staples Inc and Europe-based Staples Solutions entities, each one taking a hard look at its own strategic options.

When Staples Inc sold its European operations to Cerberus Capital Management, the US firm retained a 15% stake in and board representation of what has become Staples Solutions. To what extent that relationship has evolved is not known,

but it is interesting that within the space of just a few months, both Staples-branded businesses in the US and Europe have made significant – and very similar – strategic moves.

So what is the strategy? Acquire the region’s largest office products wholesaler to create a path straight into the heart of the lucrative mid-market/small business customer market, a segment long coveted by the big global operators. Although neither the Staples Inc acquisition of Essendant (see Analysis, page 6) nor the Staples Solutions purchase of ADVEO (see Analysis, page 8) had been finalised at the time of writing, it would be a surprise if the transactions did not get over the line in the coming weeks. And each will lead to some interesting new market dynamics in their respective regions.

It is exceedingly difficult to ascertain the strategic logic of [Staples'] move [for Essendant] DODGING A BULLET? One of the first to react to the news that Essendant’s board had accepted Staples’ offer and terminated its SP Richards (SPR) merger agreement with Genuine Parts Company (GPC) was veteran industry consultant Tom Schinkel. In the June 2018 issue of OPI, Schinkel had already offered a “contrarian view” of the possibility of an Essendant/SPR combination, arguing that it was not a positive development for the industry. Following the “courageous decision”

by GPC not to pursue the Essendant transaction, Schinkel says that SPR and the industry have “dodged a bullet”.

“Nobody knows what the future brings, but today more than ever there is a premium on 'clarity of

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purpose',” he notes, adding: “My bet is that SPR is gaining the upper hand in this respect.”

In terms of Staples’ reasons for acquiring Essendant, Schinkel says that “for someone like me who has over 30 years under his belt as an industry observer and M&A adviser, it is exceedingly difficult to ascertain the strategic logic of such a move”.

It will probably become clearer once the futures of Staples’ US retail and Canadian operations are resolved. However, it is OPI’s understanding that these two businesses do not fit into Sycamore Partners' strategic vision for Staples, and it is very much a B2B delivery play. Many questions remain as to how Staples will approach the integration of Essendant and what its go-to-market strategy will be for SMB customers. And how, for example, will it manage the overlap between its own mid-market sales teams and its new dealer customers?

The combination of Staples’ technology platform and Essendant’s operations could be compelling MASS EXODUS? There is a strong feeling within the independent dealer channel (IDC) that there will be an exodus of dealers from Essendant to SPR once the Staples acquisition is finalised. To what extent this will actually happen remains to be seen; naturally, there will be dealers that won’t be comfortable partnering with a wholesaler owned by Staples, but as one industry veteran puts it: “The combination of Staples’ technology platform and Essendant’s operations could be compelling.”

There was a speech at SPR’s ABC show in San Antonio, Texas, in August that included this line: “These disruptive times can lead to strange bedfellows.” This is something that could be applied at many levels in the US office products market at the moment, but at least one leading IDC executive has expressed dismay at the apparent willingness of some dealers to work with Staples.

Most industry stakeholders that OPI has spoken to recently are still adopting a ‘wait and see’ stance until there is confirmation of Essendant’s future. However, they have raised a number of key points and questions which include:

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What will this all mean for Essendant’s largest customer, WB Mason? It seems inconceivable that Mason will cooperate with Staples, but its relationship with Essendant runs so deep that any uncoupling would likely result in a high degree of disruption. Alternatively, would SPR be willing and able to conduct business with Mason on the same or similar terms to Essendant? l How will a $2 billion SPR be able to effectively compete and provide the IDC with adequate resources versus the $15 billion scale of a combined Staples/Essendant? At the ABC, SPR has already been asking dealers to accept “entirely new levels of partnership” and to “put aside trust and control issues”. There will likely be repercussions for the ways dealers and wholesalers conduct business together. l

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Wholesale Changes HOT TOPIC

What will be some of the other implications of a Staples/Essendant merger? Various industry players will be put under greater pressure. These include ‘B’ brands and private label suppliers; smaller, stockless dealers; dealer and buying groups; and service providers. “There are a lot of people who won’t be here in two years’ time,” says one leading vendor.

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HOSTILE TAKEOVER Meanwhile in Europe, the news broke in early September that Staples Solutions was in negotiations with ADVEO’s banking syndicate to acquire almost €150 million ($175 million) of the wholesaler’s financial debt.

In some ways, it is a back-door move to gain control of ADVEO: hammer out a debt-repurchase deal with the banks, recapitalise the debt into ADVEO shares and become the majority shareholder. Interestingly, it is something that has been negotiated between Staples Solutions and ADVEO’s lenders, not with the wholesaler’s management team. In that respect, it is a hostile takeover just as Staples Inc’s move for Essendant is in the US; senior management has had an obligation to participate in the due diligence process, but has had no input into the agreement itself.

Understanding Staples Inc’s strategy for Essendant makes it easy to see why Staples Solutions in Europe would want to acquire ADVEO – the strategies are essentially the same: gain a stronger foothold in the B2B mid-market sector via local dealers, make significant cost-of-goods synergies and optimise distribution networks.

ALL EYES ON THE FTC Staples’ acquisition of Essendant now rests in the hands of the US Federal Trade Commission (FTC) which is currently conducting an antitrust investigation into the transaction. This is very much a ‘behind closed doors’ process, but sources close to the Staples camp have suggested that, as of early September, the FTC was much further advanced in its investigation than it was with its concurrent look at the now-defunct Essendant/SPR deal.

The same sources also point to a high level of confidence at Staples that the FTC will not block the Essendant acquisition. This is largely due to the presence of a standalone SPR that will act as a competitive buffer and still give traditional office products dealers a choice of main wholesaler.

It has been suggested that the FTC will frown upon the new Staples model of being both a supplier to and competitor of its dealer customers. This is similar to the old Boise Cascade business of the 1980s and early 1990s before it spun off its wholesaling arm into Associated Stationers (which later merged with United Stationers and is now Essendant). There was an FTC ruling at the time that prevented Boise from receiving wholesaler discounts on products that it then sold directly to end users.

However, OPI understands that the FTC has not even brought up this so-called dual distribution issue in its current investigation, and the topic would appear to be something of a red herring.

Larger Essendant first-call dealers that use the wholesaler’s Vertical Markets Group (VMG) are known to have told the FTC they will be forced to raise prices if Essendant is acquired by Staples. This is largely due to the premise that one of the first things Staples will do is shut down VMG as it directly competes with Staples Business Advantage on larger corporate and public sector accounts.

Still, it would be a surprise if these arguments carried enough weight with the FTC. SPR would likely be in a position to provide VMG-like support and there is still enough competition in the contract segment with the presence of Office Depot and the growing threat of Amazon Business.

The feeling is that you have to be part of something big – scale matters in this industry

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Long-time industry operator and non-executive Director of soft-carrier Peter Damman does not view Staples Solutions’ bid for ADVEO as a surprise. “For years, the larger players have asked themselves how they can better serve the SMB sector, which is more profitable than the contract business,” he says. “The fastest and easiest way to do that is via dealers, so I think this is a very smart move by Staples.”

He argues that suggestions dealers will leave ADVEO in droves if owned by Staples is wide of the mark. “There is not a lot of crossover between the traditional ADVEO resellers and Staples’ contract business in Europe and dealers want to buy with the best possible terms,” he states.

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Damman believes the acquisition of ADVEO could lead to a domino effect in Europe. “There are a lot of people that want to sell at the moment,” he notes, “and the feeling is that you have to be part of something big – scale matters in this industry.”

Whether that means a 'wake-up call' for Office Depot or moves by some of the European dealer groups to grow now that they will potentially be competing with the €1.5 billion combined end-user sales of Staples and ADVEO remains to be seen, but Damman predicts a “bumpy ride” ahead for the European OP industry in the coming 12 months.

The ADVEO deal also raises questions about Staples Solutions’ strategy in the UK. The latter has shown its strategic hand by making the move for ADVEO. But ADVEO does not have operations in the UK, and the two main wholesalers VOW and Spicers – part of the EVO and SPOT groups respectively – both have long-standing private equity owners.

SPOT owner Better Capital has publicly stated that it intends to wind down the fund that owns SPOT and, in a sense, businesses owned by private equity are always on the market anyway.

Could that mean Staples’ next target is one of the UK's hybrid wholesaler/reseller groups? If so, which one? You could argue that SPOT might be the cheaper option, but that EVO is better placed operationally and that its Banner contract business would be a more attractive competitor to ‘take out’ than SPOT’s OfficeTeam.

For now, this is just pure speculation, but as we should all now realise, never has the saying ‘the only constant is change” been more relevant than in today’s office products world.

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Who are the companies and personalities that are shaping the business supplies sector today? Take a look through any issue of OPI and you will get a good idea of the hottest properties right now. But there are also many operators away from the limelight that are doing something special and have become – or are becoming – part of the core fabric of our industry – by Heike Dieckmann

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very year, the search is on to find our industry’s biggest achievers and influencers around the globe – companies and individuals alike. In today’s digital age, that may sound reasonably straightforward. Far from it.

Our annual Top 100 list is actually a year-round project that monitors closely who’s coming, who’s going, where they’re doing that and why. Throw in the word ‘international’ and it makes for quite an involved task. At this point, many thanks to all industry executives and OPI’s Advisory Committee who help with the research in arriving at our final Top 100.

So who is shaping the business supplies sector today? Some individuals in our list are no-brainers. They are driving and affecting change, and making sure that their companies will still be in the Top 100 next year and for many years to come.

year’s new entries and it’s exciting to see the number of executives that are only just starting to make their mark as CEOs, presidents, managing directors and so on: Neil Maslen, Robert Brech, Ric Phillips, Rick Toppin, Gerry Smith, Johann Pintarich, Bob Hodan, Paul Yardley, Dolph Westerbos... Will they become the next Ron Sargent, Jack Miller, Irvin Helford or Eric Bigeard – industry legends that have truly shaped the industry? Or will they match the phenomenal record of four personalities that appeared in our first ever Top 100 and are still in it today? Step up Bruce Eaton, Dave Guernsey, George Gerardos and Shoichiro Iwata.

You can’t help but feel that churn is going to get faster in the years ahead, as companies can’t keep pace, succession becomes even more of an issue in a declining sector, and size – as well as agility – grows in importance.

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It’s exciting to see the number of executives that are only just starting to make their marks as CEOs, presidents, managing directors, and so on

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That may sound a tad overdramatic, but looking back over the past couple of years, the pace of consolidation has most definitely accelerated.

Importantly, consolidation seems to be a different ball game now from when we started the Top 100 list in 2001. Channels, certainly in the mature markets, were defined – resellers bought resellers, wholesalers bought wholesalers, manufacturers bought manufacturers. In fact, if you didn’t toe the channel line, you would likely come under fire, with the term ‘conflict of interest’ frequently used. Those days are over and this issue of OPI alone proves it.

Overall, there are 15 newcomers this year – that’s four more than last year. Not a massive increase and not really a big deal. But combine that with last

CELEBRATING SUCCESS Pessimism aside, our Top 100 aims to celebrate success and there’s plenty of that around too – you only have to take a look at these four aforementioned individuals who have been going strongly for so many years. The words that spring to mind are perseverance and progression.

What is also fantastic to see is how many independent dealers are bucking any negative trends and going all out to stay relevant. Here’s a shout-out to new Top 100 candidates John Givens of Source Office & Technology and Richard Coulson of Complete Business Solutions!

Entries for all our Top 100 individuals can be found on opi.net.

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It’s been another busy year for American Office Products Distributors (AOPD) under the leadership of Executive Director Mark Leazer. While the dealer network has been actively monitoring the uncertainty and consolidation efforts in the industry, its board and staff have been diligently exploring how AOPD can be more successful in its primary mission – winning more regional and national account business for its members.

Mark Leazer

Executive Director, AOPD lists of AOPD Business Partner products are some examples of this.

Importantly, explains Leazer, AOPD continues to grow, despite the secular headwinds in the industry, with figures up 6% in 2018 through July in AOPD contract sales. He remains confident that there’s a chance of double-digit growth for the whole year. “We continue to add new contracts at a consistent clip and have added two new healthcare GPOs in 2018

In the face of all the industry uncertainty, and even with the loss of a few dealers to acquisition, many of our dealers continue to invest and move forward with a couple more at various stages in the pipeline,” he comments.

“In the face of all the industry uncertainty, and even with the loss of a few dealers to acquisition, many of our dealers continue to invest and move forward. We often forget that the rest of the world doesn’t know or care that much about the latest acquisition rumour in

the OP world. At the end of the day, end users just want to get their business and facility supplies quickly, efficiently and at a reasonable price.”

And it is AOPD’s role to provide the tools and resources necessary to help users find and choose AOPD and its dealers, according to Leazer.

October 2018

Part of this year’s efforts have been the launch of a new brand and website to more effectively reach its target markets. Along with that new brand, AOPD is developing more ways in which to become more seamless and cohesive in its marketing and technology. Continued development of its POS reporting module, PSN systems and preferred online subs and shopping

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While Sycamore’s initial – and then hostile – takeover bid for US wholesaler Essendant was made in May, the thinking behind that move became a little more obvious a few weeks later when Douglas said his strategy was to “build partnerships with local dealers”. The nature of these partnerships wasn’t made completely clear at the time, but his statement was quickly followed by the news that Staples had bought one of the largest independent dealers in the US, HiTouch Business Services. Most recently, it also added smaller operator CPI One Point.

The acquisition of dealers is evidently just part of the strategy, as the past few months have shown. While a future tie-up of Staples and Essendant looks likely, it’s by no means a done deal yet (see also Analysis, page 6, and Hot Topic, page 22).

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CEO, Staples Inc

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Out of all the new entries in this year’s Top 100, it is without a doubt Staples Inc’s Sandy Douglas who has made the biggest mark on his company and indeed the industry as a whole in the shortest period of time.

Following the departure of Shira Goodman at the end of January, Staples’ owner Sycamore Partners quickly appointed Douglas as new CEO, in charge of the company’s North American B2B delivery entity, which does not include the separate US and Canadian retail units and is run separately.

Douglas didn’t start in his role until April 2018, following his planned retirement from Coca-Cola on 1 March that was announced in October 2017. He had been with Coca-Cola for the past 30 years and most recently served as head of its $10 billion North American division.

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About 20 months into the post now, Office Depot’s CEO Gerry Smith had a year that was perhaps a little less dramatic than that of its chief rival Staples in terms of potential overall impact on the industry, but it was equally as eventful. Smith’s strategy to become a more driven and energised B2B services-focused, omnichannel reseller with a real penetration into the SMB market is beginning to bear fruit.

The US-based reseller added three more very sizeable independent dealers to its portfolio over the past year – Western US dealer Complete Office Solutions in October 2017, New Mexico-based Sandia Office Supply in March 2018 and then finally leading Chicago area reseller Garvey’s Office Products in August.

The acquisitions added several hundred million dollars to Depot’s top line. All three companies continue to operate under the same names and are separate entities within Depot’s Business Solutions Division (BSD), essentially meaning that Depot merely acts as a wholesaler for these local dealers.

Starting to reflect the importance of the acquisitions as well as its e-commerce growth, in its Q2 results, BSD reported sales of $1.3 billion, up 4% compared to the second quarter of 2017. Without the impact of the added dealers, sales were relatively flat vis-à-vis the prior year.

Retail continued to be down 5% to $1.05 billion but overall, Depot’s Q2 results were heavily influenced by last year’s acquisition of CompuCom, pushing total company sales up 11% to just over $2.6 billion.

Smith was certainly pleased with the company’s performance in the quarter and says that “the execution of our strategy is driving improved sales trends across all three of our operating divisions”.

Office Depot also completed the sale of the OfficeMax business in New Zealand to Platinum Equity in May.

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When Denis Mathieu took over from retiring Robert de Montigny as Novexco’s CEO in mid-2016, he quickly put a three-year plan in place that was based on three major pillars: brand awareness, acquisitions and organic growth. The ultimate aim? To improve the customer experience.

The most urgent of these plans was a rebrand as there simply wasn’t a cohesive brand and somewhat of a split identity in the organisation, which comprises a dealer group, wholesale operation and contract business division. Hamster – the new brand – was launched in April. As Mathieu says: “The idea behind it is that we’re always moving. Like the little thing in our head that is always spinning, we are always looking for better solutions and better answers. We believe that we’re different from the competition and we want to show the market that difference.”

The new Hamster brand spans all of Novexco’s divisions and allows its dealers in particular to keep their own regional name and identity, but combine it with the national Hamster brand – a win-win, according to Mathieu. Dealer conversion to the brand after only six months is already 90% complete.

Acquisitions are another priority and Novexco has made three strategic purchases over the past two years, giving it a wider footprint in terms of geographic reach as well as product and service expertise. But organic growth is also vital. Overall, the group went from 400 employees to 500 in the past two years. It now has 109 stores through its 75 dealer members and revenues in 2017 increased by 19% – 12% organically, plus 7% through acquisitions.

Novexco’s contract division – hugely boosted by the acquisition of Lyreco Canada in 2014, particularly from a national Canadian coverage point of view – now accounts for 70% of total revenues and grew by 13% organically in 2017.

In its current financial year, says Mathieu, the organisation is setting new records in terms of total sales, investment and profit.

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Siobhan O’Connor, Managing Director of Codex Office Solutions, has now been at the helm of the Ireland-based reseller for four years. In this time, she has overseen two acquisitions, secured a substantial government contract, and spearheaded the development of new categories and ranges, along with a total rebranding of the business, from Codex Office Products to Codex Office Solutions.

Staples customers and grow the business particularly within the print, facilities supplies and furniture accounts.

Similar to many independent office products resellers, Codex is focusing on expanding its adjacent category segments as stationery spend within its customer base continues to decline. Investment in its Print & Design department is paying off with 20% year-on-year growth. It’s a similar story

Other highlights over the past year include winning the BOSS award for Dealer Excellence (in the category of sales over £5 million/$6.6 million) at the end of 2017, being shortlisted for the OPI 2018 European Office Products Awards, and jumping four places in the Great Place to Work awards.

Codex scored a major coup with the acquisition of the Staples Advantage Ireland office supplies business for the facilities supplies category and its Interiors & Furniture division.

“For the rest of 2018 and into 2019, we will continue to develop products within the various categories and work closely with our partners – in particular VOW and ACCO Brands – which continue to add value to our propositions,” says O’Connor.

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In June this year, Codex scored a major coup with the acquisition of the Staples Advantage Ireland office supplies business, which O’Connor says fits well into the Codex corporate accounts division, enabling the reseller to cross-sell across all categories within the Staples business. The deal allows Codex to expand the range offering to

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ERP system – all businesses have moved to one platform; new management every year; and poor implementation of its new central warehouse in 2017.

Norström, however, says he is extremely positive about the future of AllOffice. The company’s short-term priorities are to create a sales-driven company culture and at best-in-class central warehouse and distribution system. To support the sales and marketing organisations, a new CRM tool was implemented in September.

Norström believes distribution is vital for its business and customers, but a shortage of truck drivers in the country means the company is investigating other avenues, including the use of its own drivers or local carriers.

Next year, the key objectives are to prepare the organisation for growth.

“AllOffice now has the recourse and skills to drive profitable growth. In addition, through a more sales-oriented approach, the new CRM tool and improved central warehouse, we are building a platform to enable us to assimilate any future acquisitions,” says Norström.

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Following the purchase of fellow Swedish office products company Ocay in September last year, AllOffice is now one of the country’s largest suppliers of business supplies and services.

Owner Carl Lindgren has, in fact, been on somewhat of an acquisition spree for the past two years, acquiring eight companies including Ocay. AllOffice now covers a wide number of categories, including jan/san, office supplies, breakroom and coffee, packaging, workwear, furniture, and document management solutions. The addition of Ocay has boosted the company’s retail stores to 31, with total sales of nearly SEK1 billion ($110 million).

As of the beginning of this year, all of the new businesses have been merged into one organisation under the AllOffice umbrella. In March, Lindgren handed over the reins to OP industry veteran Niklas Norström, who joined the company from Durable Scandinavia, where he was also CEO. Prior to this, he enjoyed a long career with Office Depot.

The company has been challenged by a number of issues: the integration of its

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This April saw the formal coming together of Switzerland-based reseller iba and multichannel operator Office World to form a new company known as OWIBA. And while the two brands remain completely independent, parent company MTH Retail Group says that the two entities will be working much closer together in the future. This is expected to result in better collaboration between the B2C (typically Office World) and B2B (typically iba) channels and is very much in line with MTH’s broader policy.

Johann Pintarich took on the CEO responsibility at iba when former Office World/iba CEO Christa Furter left at the end of January, only a few months after both companies were bought by MTH from Swiss parent company Migros in October 2017. Pintarich has over 15 years’ experience in the office supplies industry, having spent the past eight years as Managing Director at MTH’s Pagro subsidiary in Austria.

The largest B2B office supplies reseller in Switzerland, iba currently employs around 190 staff, with annual sales topping CHF90 million ($93 million).

Office World also had a new CEO, Annett Seonbucher, but she left after only a short time in the job and was replaced by Patrick Lobsiger. This happened at the time of going to press and no information on Lobsiger was available (look out for more information on opi.net and in the forthcoming issues of OPI).

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This April saw the formal coming together of Switzerland-based reseller iba and multichannel operator Office World

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Most recently, it was a personnel issue that’s made the headlines at Büroring, when Ingo Dewitz left the German dealer group at the end of August. Dewitz joined Büroring in 2010 and had worked as Joint Managing Director with Jörg Schaefers – sharing the roles of sales and marketing (Dewitz) and finance, IT and logistics (Schaefers).

Schaefers, a long-standing Büroring executive who began working at the group in 1998 and became a member of the board in 2012, initially took over all responsibilities after Dewitz’s departure. He was joined by Thomas Grzanna, fellow board member and CEO of Büroring member Grzanna Büro Service, in mid-September on an interim basis until a permanent successor is found. Grzanna has taken on all of Dewitz’s previous tasks, but Schaefers will remain in a supervisory role for the time being.

All round, Büroring has had quite a bit on its plate, most notably with its €4 million ($4.7 million) logistics upgrade and the teething problems that this presented. With order values declining and packaging as well as freight costs increasing, 2017 was all round a challenging year – that was the gist of the group’s AGM in June. That said, total group sales of €212.4 million were up by 6.9% compared to the previous year, the “best sales figure of all time”, according to the management team.

During the meeting, the group emphasised the progress that’s been made in the areas of product expansion and e-commerce, both of which will continue to drive members’ revenues. It also elaborated on its focus on forging more and better partnerships where synergies can be realised and cost taken out. Its deal with fellow cooperative Egropa, which was voted on at the AGM, is just one example of such a partnership.

On a different note – and that must be hugely satisfying to Schaefers and his team – Büroring over the past two years or so has been able to bring on board Germany’s two biggest independent dealers. Kaut-Bullinger joined in mid-2016 amid plenty of controversy (see also Big Interview, page 16) while Northern Germany’s Plate moved to the Thomas group at the beginning of this year. Both had Grzanna been with Soennecken for many years.

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Dolph Westerbos is another new entry to OPI’s Top 100 who has quickly made its mark on the European business supplies sector. He was appointed CEO of Staples Solutions in November 2017, taking the helm almost a year after Staples’ European operations split from US parent Staples Inc when they were sold to private equity firm Cerberus Capital Management.

Westerbos joined from global technology distributor Westcon Group where he was also CEO. Prior to Westcon, he held executive management positions at IT giant Dell as well as logistics groups Brambles-CHEP and ModusLink.

Netherlands-based Staples Solutions now spans 16 countries, operating both a contract and retail model. Its retail presence is dwindling, however, and is now confined to three countries and about 100 stores in Germany, Norway and Portugal. This marks a severe cut-down from the number of 160 stores in four countries that was publicised just a few months ago, but is exactly in line with expectations given the retail climate in much of Europe.

Combined revenues in 2017 were €1.5 billion ($1.8 billion).

The company operates several brands across Europe, both from a contract and retail perspective, including Staples, Mondoffice (Italy), JPG and Bernard (France), Pressel (Germany) and Kalamazoo (Spain).

Westerbos’ core focus, he says, is “to invest in key growth areas designed to improve the company’s competitiveness, position it for long-term sustainable growth, and capture opportunities that emerge from changes in the workspace products, service and solutions industry”.

One of these investments appears to lie in acquiring ADVEO (see also Analysis, page 8) which was revealed by the pan-European wholesaler in September. This is by no means a done deal, of course, but the intention is certainly clear as to where the opportunities lie.

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Greg Lienard

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Based in Singapore, Greg Liénard has been Managing Director for Lyreco Asia-Pacific since 2011. As such, he has a thorough understanding of the region and its dynamics, and 2018 has been a busy year for the reseller and Liénard in that part of the world.

The France-headquartered company made some strategic moves brought about by Platinum Equity’s acquisitions of Staples and OfficeMax in the Australian and New Zealand markets and the call for the consolidation of competitors. Lyreco had initially tried to acquire Complete Office Supplies (COS) in Australia, but the reseller wasn’t for sale and ultimately ended up buying Lyreco Australia in a role reversal.

Liénard has been busy for much of 2018 with responsibility for the divestment of the company’s Australian operations to COS. His focus is now entirely on the Asian market, with a new corporate centre being established in Singapore. Already enjoying high double-digit growth in that part of the world for the past few years and rapidly gaining market share, 2017 saw a disruptive go-to-market strategy initiated for every country in the region to accelerate the process exponentially.

Lyreco continues to chase its objective of becoming the leader in Asia and it’s no secret that it is also committed to making acquisitions in the region. Liénard says he will be focused on implementing this strategy in the coming months.

On top of these operational responsibilities, he also took on the role of Innovation Director for the entire group in 2016 to help the distributor reinvent its business model and adapt to the challenges of the entire industry.

These include understanding megatrends such as the arrival of new generations into the workplace and the impact that has on the OP industry; and a deep immersion into the world of startups. Key achievements so far have included putting together disruptive processes and onboarding completely new profiles in the organisation that will enable Lyreco to achieve its goals.

As a result of dedicated positions both at its headquarters in Marly, France, as well as in London, UK, there are already more than 15 new projects in the pipeline that customers will ultimately benefit from.

Lyreco continues to chase its objective of becoming the leader in Asia and it’s no secret that it is also committed to making acquisitions in the region

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Craig Noyle/Garry Mc Cluskey Directors, Inovocom

solution which was developed due to the high cost of international platforms.

Inovocom is also looking to grow its range of services in the Southern African Development Community region, as well as further afield into East and West Africa and other global markets.

The group recently published its eleventh annual office products catalogue for Office Active, as well as a comprehensive back-to-school (BTS) publication, which is linked to a unique online BTS ordering solution that has experienced huge growth year on year. Office Active has also achieved Gold status for HP Inc. Launched at the beginning of this year, Inovocom has joined four other international dealer groups – Office Choice (Australia), TriMega Purchasing Association (US), Novexco (Canada) and Office Friendly (UK) – as part of the inaugural International Office Products Alliance (iOPA). iOPA was created to share knowledge, experience and intellect of globally-recognised companies within the office products market – it’s not an international buying group arrangement – and Noyle and Mc Cluskey are looking at the possibility of hosting the iOPA delegation during 2019 in South Africa.

Craig Noyle

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Craig Noyle and Garry Mc Cluskey, co-founders and Directors of South Africa-based independent marketing group Inovocom, are well-known in the country’s stationery and office products industry. They first met at another South African dealer group, and in 2008 decided to launch Office Active – now Inovocom – with ten founding members.

Since then, Inovocom has diversified its operations, currently representing three individual dealer groups that total approximately 130 dealers: Office Active (Southern Africa’s largest independent dealer group of stationers), Office Club and Alliance Furniture. According to Noyle and Mc Cluskey, the different dealer group brands enable all individual dealers to retain their trading identity which is important and has been well received in the market.

On top of the issues facing all operators across the industry, such as the decline in the traditional OP segment and growth in adjacent categories, the local South African market is stagnant and also faces its own unique set of challenges. The volatility associated with foreign exchange and emerging market economies, for example, has forced Inovocom to create and adapt its own relevant solutions. A good example of this is the group’s own in-house e-commerce

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This year, Winc has focused on bringing together Staples Australia (rebranded to Winc in 2017) and OfficeMax to create a “future-facing, growth-oriented business solutions company with customer experience at the heart”, according to CEO Darren Fullerton.

Fullerton has been working closely with the teams at Winc, OfficeMax and Platinum Equity to ensure a seamless transition. The combination of the two businesses in Australia, he says, creates an entity that can offer greater value and more choice.

Having celebrated its first birthday in September, the Winc brand was launched specifically to bring to market a ‘new’ company with a renewed passion and focus to support customer success in a challenging market. At the end of last year, Winc appointed a dedicated Chief Marketing Officer (CMO), illustrating its determination to make the brand a success. The remit of CMO George O’Neil also includes the reinvention of Winc’s legacy e-commerce business.

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Kevin Obern returned to his role of Managing Director of OfficeMax New Zealand, ending a 29-month secondment to OfficeMax Australia along with two other members of his senior team.

This most recent change of location and focus came as a result of the purchase of OfficeMax Australia by Platinum Equity, the commencement of merging that business with Winc (previously Staples Australia) and the acquisition of OfficeMax New Zealand – also by Platinum Equity – in May 2018, followed by the divestment of Winc New Zealand to a local buyer.

With a new private equity owner, the OfficeMax New Zealand business is expected to ramp up its growth, especially in its already successful adjacent categories. It will also be on the lookout for potential acquisitions in the breakroom, hygiene, packaging, furniture and safety categories where it has established itself as a significant player.

The acquisition of Waiwhetu Distributors, a cleaning and hygiene supply specialist business, was completed in early 2018 and has been fully integrated into the OfficeMax business.

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AMERICAS NEW Jaime Alverde Losada CEO, Office Depot de Mexico Patricia Barber CEO, The Supply Room José Mário Britto & Thiago Britto Chairman & Managing Director, Inforshop NEW Sandy Douglas CEO, Staples Inc Bruce Eaton Chairman/President, Pinnacle Affiliates/ Eaton Office Supply Tony Ellison CEO, Shoplet.com Sean Fleming CEO, DM Supplies Network Paulo Garcia Managing Director, Kalunga Mike Gentile CEO, Independent Stationers NEW John Givens CEO, Source Office & Technology Dave Guernsey CEO, Guernsey NEW Matthew Hebert CEO, Office Partners NEW Bob Hodan President, Basics Office Products Kevin Johnson CEO, Warehouse Direct Mark Leazer Executive Director, AOPD Sid Lerman President, The Weeks Lerman Group DG MacPherson CEO, Grainger Mike Maggio President, TriMega Purchasing Association Denis Mathieu CEO, Novexco Leo Meehan CEO, WB Mason Ric Phillips CEO, Essendant Jennifer Smith CEO, Innovative Office Solutions Gerry Smith CEO, Office Depot Rick Toppin CEO, SP Richards Prentis Wilson VP, Amazon Business Joe Yorio CEO, School Specialty

ASIA Shoichiro Iwata CEO, Askul Shailesh Karwa & Sharad Dalmia Co-CEOs, Work Store Gregory Liénard Managing Director, Lyreco Asia-Pacific Worawoot Ounjai CEO, COL

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Darren Fullerton CEO, Winc Dominique Lyone CEO, Complete Office Supplies Kevin Obern Managing Director, OfficeMax New Zealand Brad O’Brien CEO, Office Choice Pejman Okhovat CEO, Warehouse Stationery Grant Sheridan CEO, Office Products Depot Gavin Ward CEO, Office Brands Mark Ward Managing Director, Officeworks Paul Yardley CEO, GNS Wholesale Stationers

EUROPE Raj Advani Managing Director, Exertis Supplies Adriano Alessio General Manager, Gruppo In Ufficio Tim Beaumont Managing Director, Nemo Group Philip Becker Chairman/CEO, EOSA/Hedera Carlos & Rafael Benavides Managing Directors, Comercial del Sur Sergey Bobrikov General Director, Komus Udo Böttcher Managing Director, Böttcher Robert Brech Group Managing Director, Kaut-Bullinger Jaime Carbó CEO, ADVEO NEW Richard Coulson CEO, Complete Business Solutions Simon Drakeford CEO, EO Group Dr Benedikt Erdmann Chairman, Soennecken László Fehér Managing Director, Corwell George Gerardos CEO, Plaisio Gert Gerber Managing Director, Office Supplies Denmark Xavier Guichard CEO, Manutan Julie Hawley Managing Director, Office Friendly Steve Haworth CEO, EVO Group of Companies Joe Hemani Chairman, Westcoast NEW José Hernández Sanchez General Manager, Carlin Danièle Kapel-Marcovici CEO, Raja Group NEW Martin Kelterborn CEO, Offix Group Alper Kisa Vice General Manager, Akoffice Neil Maslen CEO, Office Depot Europe Aidan McDonough CEO, Integra Business Solutions Hervé Milcent CEO, Lyreco Paul Musgrove Managing Director, Nectere NEW Niklas Norström CEO, AllOffice Şerban Oarză CEO, RTC Proffice Siobhan O’Connor Managing Director, Codex Office Solutions Theo Paphitis Chairman, Ryman Bruno Peyroles CEO, Bureau Vallée NEW Johann Pintarich CEO, iba Nicolas Potier Managing Director, Bruneau Šarūnas Pranukevičius CEO, Officeday Laurent Proy Managing Director, Alkor Groupe NEW Georgi Raitchev Logistics & Export Director, Office 1 Superstore Ferdinando Rese President, Errebian NEW Jörg Schaefers & Thomas Grzanna Joint Managing Directors, Büroring Richard Scharmann CEO, PBS Holding Hans Schmid President, Printus Dieter Schmidt Managing Director, Plate NEW Jean-Yves Sebaoun Managing Director, Fiducial Office Solutions Stefan Sonesson CEO, RKV Miroslaw Szydlowski Managing Director, PBS Polska Arnold Theuws Managing Director, Quantore Igor Trifonov CEO, Samson Jan Van Belleghem Managing Director, Interaction Frank van Zanten CEO, Bunzl Thomas Veit Managing Director, soft-carrier NEW Heikki Vienola CEO, Wulff Group Francesco Villa General Manager, Gruppo Buffetti Dmitry Vinogradov CEO, Merlion Michael Voll CEO, Despec Nordics NEW Dolph Westerbos CEO, Staples Solutions Jeff Whiteway CEO, SPOT Group Felix Zimmermann CEO, Takkt

MIDDLE EAST/AFRICA Trevor Girnun Managing Director, Waltons Abdulrahman Ibrahim CEO, HPG NEW Craig Noyle & Garry Mc Cluskey Directors, Inovocom

CATEGORY UPDATE

POST modern

There’s a shift in the type of mail being sent through the post and those operating in the mailroom and packaging sector are having to adjust their strategies accordingly – by David Holes

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he number of traditional letters sent by post continues to decline. In the UK, the Royal Mail’s letter revenues fell 7% in its Q2 to the end of June, with overall volumes down 6%. The European market has also recently seen the new General Data Protection Regulation legislation– more commonly known as GDPR – coming into force to tighten up on data protection and privacy rules, and this is likely to have a further impact on volumes as a result of the reduction of direct mail and marketing materials being sent through the post.

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Whatever touchpoints customers choose to interact with – letter, email, SMS, online chat, etc – they expect the conversation to pick up seamlessly from wherever it left off

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Swedish packaging and envelope supplier Bong estimates that envelope market volumes across Europe have decreased by 7% over the past year.

Particularly sharp falls were evident in Scandinavia where the digitisation of mail has developed the most.

The decline is less severe in other European countries where greater importance is still placed on individuals being able to choose which way they would like to receive their communication.

TOTAL COMMUNICATIONS The majority of organisations are now managing all their business communication methods together, combining both digital and physical mail to offer a seamless multichannel experience.

As Phil Winfield, Head of Communications at Neopost reports, this shift in business model is key: “Whatever touchpoints customers choose to interact with – letter, email, SMS, online chat, etc – they expect the conversation to pick up seamlessly from wherever it left off. These additional channels also mean businesses are now having to find new ways of managing customer preferences better, to ensure that the right message always reaches the right recipient via the most effective method.

“Organisations are increasingly looking to manage their communications via one tool – a centralised platform that can easily personalise correspondence and send it to stakeholders via their preferred channel. Bringing everything under one roof has a positive impact on productivity and cost effectiveness, but for companies with more limited resources, managing centralised total business communications internally can prove challenging. This means we are seeing a growing demand for outsourcing services.

“From a single dashboard companies can now upload their outgoing documents and the printing, enveloping, franking and distribution is then handled by a provider offsite. It’s making multichannel communications more accessible for everyone,” he adds.

We see strong demand for high-quality shipping materials such as labels that are specifically designed to suit large envelopes, parcels, mailing tubes and boxes The online retail revolution is not just being led by the big brands, however. Small and micro businesses are having an impact too, helping to fuel demand for mailroom and postage supplies. Online platforms like Amazon Marketplace, Etsy or eBay and e-commerce software for websites have made it quicker and easier than ever to launch a small business.

“These days, anyone can easily start their own company and begin selling – whether that’s full time, as a hobby or a side project,” explains Mills. “You only have to look at the global success of Etsy, which has two million active sellers and over 34 million active buyers, to get a sense of the scale of this market. Many of these traders have very different mailroom requirements compared to those of larger scale organisations.”

“This is an important market that needs catering for and Avery is tapping into this by offering lower minimum order quantities and more affordable, flexible solutions. There is a real opportunity for the industry here to offer cost-effective mailroom services to help these sellers with their shipping needs.”

MULTITOOL DEMAND More benign developments in this sector are also having an impact on the types of products that are being sourced for use in mailrooms.

Acme United is a specialist supplier of cutters and blades designed to quickly and efficiently open parcels and packages. The company is consistently seeing double-digit annual sales growth and Managing Director of Acme in Germany, Georg Bettin, says there’s strong demand for higher-quality cutters that are going to withstand the rigours of the modern mailroom. “But it’s not just the business sector generating this demand,” he adds. “The rise in online shopping means we’re seeing increased interest in our portfolio of cutters from consumers.

Consequently, we’re launching a new range which combines several different functions within a multitool or pocket-knife design.”

Another consideration in the packaging sector is to minimise waste and reduce costs. This is partially driven by a heightened interest in environmentallyfriendly solutions and a switch away from materials like plastics.

German shredder manufacturer HSM, for example, has introduced its ProfiPack packaging machines which convert used cardboard boxes into high-quality packaging and filling material. Designed for use in dispatch areas, these machines take sheets of waste

October 2018

TAKING THE STRAIN Unsurprisingly, there are challenges as well. The increase in the volume of incoming parcels is placing a growing burden on mailrooms, for example. In addition to business mail, many employees are now choosing to have their personal items delivered to the workplace rather than their home. The added sorting and distribution of more parcels not only requires increased time and manpower, but also makes demands on – often limited – company storage space. If parcels flow into a mailroom faster

Acme United’s multitool cutters

than staff can get them out, it quickly leads to internal bottlenecks and misplaced deliveries.

All of this is also fuelling demand for tools that can simplify and automate internal parcel management and distribution, says Winfield: “Whether it’s barcode scanning technology or pick-it-up-yourself lockers, businesses are now looking for ways to alleviate this growing pressure.

“In addition, the news headlines are often filled with stories relating to suspicious packages being sent in the post. Recently, two men were arrested for sending suspicious liquids to a UK hospital. It’s an uncomfortable fact, but the growing numbers of parcels being sent is likely to lead to an increase in threats like these. As a result, demand for security scanners that can detect malicious packages is also on the rise.”

Bennett concurs: “Tracking services and our range of security-coded and tamper-evident packaging are required more and more to ensure full traceability and indicate if unauthorised attempts have been made to open a shipment.”

CATEGORY UPDATE Mailroom & Packaging

PART AND PARCEL All that said, while physical mail may be decreasing, the rapid rise of volume in the parcel and packaging sector is more than making up for the decline in traditional letters.

Simon Bennett, Sales & Marketing Director, European Distributors, at Bong, believes this segment offers promising opportunities for growth. “Our light packaging sales increased by 8% in the first half of 2018. With annual sales of SEK415 million ($45 million), our packaging business now accounts for about 20% of our consolidated revenues.”

Royal Mail is reporting a similar situation, with parcel revenues up 6% in Q2, boosted by the growth of e-commerce. All of this has led to increased interest in the mailroom products needed to deliver items safely and securely. As Fiona Mills, Marketing Director at Avery UK, comments: “We see strong demand for high-quality shipping materials such as labels that are specifically designed to suit large envelopes, parcels, mailing tubes and boxes.”

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Mailroom & Packaging CATEGORY UPDATE

cardboard of varying sizes. They then perforate them to produce a lattice-like material that can be used in a variety of ways – as a padding mat, a packaging wrap or for filling spaces within boxes to prevent items moving about (see image, right). Fundamentally, it takes a problem – bulky used boxes that would normally be thrown away – and turns it into a solution, ie free packaging material that is produced in an environmentally-sound manner.

Packaging made by HSM’s ProfiPack machines

IN GOOD HEALTH The mailroom and packaging sector continues to undergo some fundamental changes. As traditional mail volumes are being replaced by a surge in parcels, the products, logistics and service industries needed to cater for this shift are quickly evolving to adapt to these new needs.

As a category, this is a sector with no doubt many challenges, but nevertheless one that’s in good health, with many lucrative opportunities to explore.

AMAZON – SHIPPING PHENOMENON

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The rapid transformation of Amazon from its foundation as an online bookstore in 1996 to the global behemoth it is today is a remarkable tale – much envied as well as often derided. The business recently passed $1 trillion in value and is now ranked as the second most valuable public company in the world (behind Apple). Forecasts predict that 2018 will see Amazon sales accounting for 49% of total US e-commerce spending.

The company’s expansion shows no signs of slowing down and experts believe it will play a huge part in redefining global shipping and delivery services over the next decade.

There are now over 100 million Amazon Prime users globally and this is further driving growing demand for ever-faster delivery times across the planet. The business already uses its Amazon Logistics arm to deliver most of its own packages, but it’s now also begun offering some Chinese wholesalers the full use of its delivery services and networks. It seems unlikely to stop there and continued expansion could ultimately see it rivalling established global shipping services.

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AIR AND SEA SOLUTIONS The company currently runs its own cargo aircraft fleet, with Amazon Air flying 32 Boeing 767 freighters out of Kentucky in the US. It plans to increase aircraft numbers to 100 and there’s speculation that it won’t be long before it starts leasing its own shipping vessels for parcel transportation on the high seas, meaning it can completely bypass traditional global logistics providers.

Back on terra firma, Amazon is looking to take on delivery giants like FedEx, UPS and DHL with a new ‘last-mile’ delivery service made up of independent couriers.

The scheme is piloting in the US, where entrepreneurs will be invited to run their own local

networks of delivery vans – Amazon has just bought 20,000 of them. Although operated as independent businesses, drivers will wear Amazon uniforms, their vehicles will be branded with Prime logos and they will only be able to use them for Amazon deliveries.

PIE IN THE SKY It may sound far-fetched, but a patent for flying warehouses filed by the company reveals some of the possible technological solutions that it may look to implement in the future. Known as ‘airborne fulfilment centres (AFCs)’, these giant airships are designed to float above cities carrying goods to be delivered by an army of drones.

Other applications could see them fly over sports events or music festivals and deliver snacks or merchandise to spectators on the ground. AFCs could even be used as giant advertising boards, with customers able to order the items they see displayed.

Another technological development that may completely revolutionise delivery services– and this is non-Amazon related – is the rise of 3D printing.

Printers have already moved beyond using just plastics and resins to create objects and can now use strips of steel and titanium to build up items from scratch. It’s possible that one day manufacturers and e-commerce retailers could cut out the physical supply chain completely and you’ll simply download an e-product from the web that’s then constructed in front of you on your home 3D printer.

Pie in the sky indeed!

CATEGORY UPDATE

T

Reports from the stamping sector reveal a successful 2018, with burgeoning confidence for the years ahead – by David Holes

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he stamping category continues to move forward, with sector leaders bullish about strong growth figures and lucrative prospects now being realised in diverse markets across the globe. And in a segment that may seem threatened by an increasingly digital world, product innovation and new ideas are keeping stamping manufacturers relevant in the modern workplace.

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ROSY PICTURE Austrian stamp specialist Trodat states that it’s been an excellent year so far: “We are already running ahead of 2017 figures and expect an even better H2,” says Managing Director Roland Rier. “The Asian market, especially China and India, is booming and both North and South America are on the rise. European sales overall are flat, but within the EU countries such as Germany are still delivering good increases compared to last year. As a whole, I expect a growth figure of over 5% for 2018.”

Fellow Austrian manufacturer COLOP paints a similar picture. “It’s been a great year for the company,” declares Franz Ratzenberger, Head of International Sales & Marketing. “Although the European OP market is declining, there’s renewed interest – both at home and abroad – in products that are ‘Made in the EU’ and we’re managing to maintain our position. Economic difficulties have had an adverse effect in several countries, with a number of South American currencies and the Russian Rouble weakening compared to a strong Euro.

Consequently, some of our competitors have withdrawn from these markets which has created opportunities for us to step in and strengthen our presence there.”

He adds: “The Asian markets have been particularly

pleasing, with our newly-created subsidiaries in China and India already delivering beyond our expectations. Closer to home, we’re finding that our highly automated production facilities in Austria

Digitisation is our enemy […] but it also gives us the opportunity to innovate and develop new ideas and services and the Czech Republic are now very competitive compared to our Far East rivals, which are struggling with ever-increasing production costs.”

German metal stamp vendor Reiner has also had a positive year, with a modest increase in sales. But as Director of Sales & Marketing Gerolf Heldmaier admits: “Handstamps now only account for 10% of the company’s total revenues, though they are still in demand worldwide. Our focus is still on the EU, but the African, South American and Middle Eastern markets are also important.”

Taiwan-based Shiny Stamp, meanwhile, has announced a concerted push into 22 French-speaking African countries – from Algeria to Madagascar – and has appointed France-based TMP as its new distributor across the region. “This move will, we believe, result in much-improved service levels and realise the full potential of our products that we know exists in these countries,” says Deputy Executive Manager Jimmy Chen.

To stay relevant in a mature market like this, you have to continually address unresolved customer needs Likewise, Reiner acknowledges that document digitisation will inevitably lead to less demand for stamping products, but says that it is fully prepared for this and has been developing alternative products to mitigate the effect: “We refer to them as marking devices or electric stamps,” says Heldmaier. “Interest in these identification products is now burgeoning worldwide and there’s a clear transition from stamping to marking needs that is more than compensating for the sharp decline in traditional stamp sales.”

This drive to remain relevant, through the development of new ideas, is also evident from COLOP’s narrative. “Innovation is deeply rooted in our history,” says Ratzenberger. “But it’s innovation not just in the sense of product development, but also in terms of the other aspects that surround it, such as communication and sales. We are permanently thinking about the future of stamps and how that will impact the future of COLOP, and we will react accordingly. However, it’s too soon to make any announcements, but rest assured, there will be news about fresh developments soon.” Watch this space.

October 2018

THREATS AND OPPORTUNITIES But, to put it quite bluntly, is there still a longer-term place for a physical hand stamp in today’s technologically advanced world?

“Digitisation is our enemy,” admits Trodat’s Rier. “It’s obvious that the reduction in the use of paper and paper-related processes represents a threat to stamping products. But it also gives us the opportunity to innovate and develop new ideas and services. Without giving too much away, we have products in the pipeline that will use very simplistic stamping technology – one could even call them a ‘downgrade’ on our usual output.

“At the other end of the scale, we are also developing ‘smart’ stamps for completely new applications that people wouldn’t currently use them for. But we have to play our cards close to our chest here, for obvious commercial reasons. Essentially, it boils down to the fact that to stay relevant in a mature market like this, you have to continually address unresolved customer needs.”

CATEGORY UPDATE Stamping

NEW LINES The stamping market continues to innovate and all the sector leaders that OPI spoke to have launched new products and developments this year.

On the back of the successful launch of its Professional 4.0 range of 22 models in 2017, Trodat has announced the addition of a further seven models that will be hitting the market towards the end of this year. Designed with the ethos of ‘Stronger, Cleaner, Faster’, their solid, polished stainless steel construction is aimed at providing maximum stability and durability in tough working environments. Size and weight have been kept as small as possible and a new band drive and special grip zones on the feet aim to make it easier and quicker to set the current date. Climate-neutral manufacturing methods using 100% green electricity and the use of high amounts of recycled material reinforce the range’s environmental credentials.

In addition, the company launched the first Printy 4.0 date stamp in September this year. Known as the Printy 4750, it claims to offer an easy, intuitive and clean ink cartridge change coupled with excellent handling characteristics.

Shiny Stamp has launched its Premier Line, a new range of pre-inked flash stamps available in 26 mount sizes and six pocket-style mounts. “Drawing on over 20 years of experience in flash stamp production, we believe new production techniques will improve quality and make this range one of the easiest to manufacture on the market,” says Chen.

COLOP, meanwhile, has been focusing on branching out from its traditional OP roots into other channels, with an emphasis on using personalisation to bring its range to consumers who may not previously have considered a stamping product.

“E-commerce sales are particularly important in this space,” says Ratzenberger. “Purchasing a personalised stamp online needs to be easy and clear.

The ability to mark your name or deliver a message with a stamp is highly underrated and the potential market here is huge. We see a lot of opportunities in this segment, but you have to attract users in a different way. We are using modern trends like augmented reality and working with different colours to give our products a much more modern appearance.”

Reiner has also been seeing something of a shift in its business model. “Demand is increasingly driven by tenders or projects for specific applications,” says Heldmaier. “Professionals, such as customs officials, for example, will request particular combinations of number and dates, with special fields unique to their needs.”

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ADVERTORIAL

Maintaining THE momentum International Paper and its HP Office Papers will keep running the Pink Ream campaign in 2018 in support of the fight against breast cancer

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nternational Paper Europe, Middle East & Africa (EMEA) launched the Pink Ream campaign in 2017 with distinctive, specially-designed packaging for reams of HP Office paper.

For the initiative, the manufacturer collaborated with the Susan G Komen Europe Network and for every special edition Pink Ream sold, International Paper donated €0.10 to European programmes focused on breast cancer research, awareness and prevention. A total of €198,000 ($230,000) was contributed.

This year, the Pink Ream campaign is continuing the battle in partnership with Think Pink Europe, an umbrella group that unites over a dozen national breast cancer organisations. Among the many activities supported by Think Pink Europe is the flagship initiative, the Race for the Cure (see page 45), the world’s biggest walking and running event which is designed to raise public awareness of breast cancer.

The HP Office Pink Ream will be available throughout October – global Breast Cancer Awareness Month – and International Paper has again guaranteed a minimum contribution of €100,000. Of the total amount raised, 80% will be donated to local associations while

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Since launching the HP Office Pink Ream in 2007, the paper manufacturer has donated more than $700,000 to breast cancer research

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20% will be invested in pan-European programmes – all through Think Pink Europe.

In its fight against the disease, International Paper EMEA is following the lead of its parent organisation in the US. Since launching the HP Office Pink Ream in 2007, the paper manufacturer has donated more than $700,000 to breast cancer research. This and similar initiatives express the company’s commitment to community engagement, which is part of its approach to create value for all stakeholders for generations to come.

THE MOST COMMON CANCER Source: Think Pink Europe IN EUROPE:

500,000 CASES

DIAGNOSED ANNUALLY

IT CAUSES 130,000 DEATHS EVERY YEAR

FOCUSING ON OBESITY, ALCOHOL CONSUMPTION, NUTRITION AND EXERCISE CAN CUT THE RISK OF CONTRACTING THE DISEASE BY 30-40%

BREAST CANCER AFFECTS ONE IN EIGHT WOMEN

ADVERTORIAL International Paper

PINK REAM CAMPAIGN WINS EOPA 2018 AWARD International Paper’s HP Office Pink Ream campaign, which ran from May through December 2017, made a real splash on a European level, both from a sales as well as philanthropic point of view. During this period, International Paper set aside €0.10 from the sale of each ream of HP Office to donate to the Komen Europe Network, part of the world’s largest breast cancer group, the Susan G Komen organisation in the US. The amount given to the non-profit organisation after the campaign was nearly double the planned minimum International Paper pledge of €100,000 ($117,000). The funds will support European programmes that focus on breast cancer research, awareness and prevention.

The campaign attracted much attention, not least from the judging panel of OPI’s 2018 European Office Products Awards (EOPA). Having been shortlisted following the judges meeting in December 2017, International Paper’s HP Office Pink Ream campaign ultimately won the Initiative of the Year award at the EOPA presentation dinner in Amsterdam, the Netherlands, in March 2018.

THINK PINK EUROPE: RACE FOR THE CURE

October 2018

The Race for the Cure is the world’s biggest walking and running event in the fight against breast cancer. Over 30 years ago, Nancy G Brinker promised her sister Susan to help end the disease that had taken her life: breast cancer. In 1982, she founded the Susan G Komen organisation and a year later arranged the first edition of the Race for the Cure in Dallas, Texas.

There are now over 150 races all over the world with about one million participants. The walking and running event crossed the ocean almost 20 years ago and touched down in Rome, Italy, where the largest edition of the Race for the Cure worldwide is still organised, hosting 67,000 participants.

Across Europe, the Race for the Cure is now held in Brussels, Antwerp, Namur, Bari, Bologna, Brescia, Athens, Bucharest and Sarajevo. Think Pink Europe will host all European Races for the Cure – and similar events – on 29 September 2019.

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HOW TO...

Packing a (digital)

PUNCH Getting fit for digital is no mean feat, says Rob Laurens. But with his ‘six pack’ in place, business leaders can follow a framework that will make the journey considerably easier

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n the first part of this How to… guide, I talked about the process of getting fit for digital business. This concluding second feature looks at the components that ensure an organisation is able to compete more effectively in the digital age.

I call it the ‘six pack’ – the source of modern business strength, speed and agility.

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1. MINDSET The first component, mindset, is about being open to the opportunities and new ways of working that digital tools and techniques enable. To shift an organisation from simply doing digital to being digital, leaders must possess a growth mindset which is appropriate to the digital business age.

This is characterised by an appetite for personal development and an openness to new ideas and opportunities. Digital should prompt the questioning and rethinking of assumed certainties. It should reflect the need to listen more closely to customers, institutionalise learning, and encourage closer collaboration and continuous improvement on behalf of those customers.

Leaders in most companies don’t need to be digital business specialists. But they must be able to unleash their thinking from the strictures of the past and instil that growth mindset in everyone within their team, empowering them to think differently. That means helping employees get into the zone by asking some searching ‘“why’ and ‘what if’ questions. It’s part of the important loosening-up process to get everybody aligned and ready to effect change.

Not everyone is comfortable with change, so leaders should work to minimise stress. Diagnosing the sources of resistance is the first step towards good outcomes. Colleagues may feel uncertainty about the future, have concerns about a perceived

loss of power, or about their competence. They may also be wary of increasing workload and actual professional harm in the shape of redundancy. Most of all, they will want to know the implications for them.

2. CORE The next component is core strength. As with the human body, a strong business core supports most activities. It is the foundation for digital business success, the main driver of your brand. Surprisingly, few companies regularly work on this, but it’s important to do so, particularly in times of significant change. A lack of clarity at the core will be amplified through digital channels, so it’s essential to ensure that your understanding of target audiences, and how they buy, is bang up to date. Only then can you be confident that your value propositions, purpose and values remain relevant in the market.

To shift an organisation from simply doing digital to being digital, leaders must possess a growth mindset which is appropriate to the digital business age Start by defining or redefining your audience personas. These pen portraits should provide an instant and human insight, revealing their attitude, behaviour and motivation in a digital context. Then create customer journey maps as a graphical representation of all the places, aka touchpoints, your customers come into contact with your company – be those digital or in person. That will give you a holistic view of customers’ route to purchase and help you understand, from their point of view, what it is really like to buy from you.

4. POWER The fourth component is about how you configure your human and cloud-based technical assets to maximise your power to execute in an always-on digital world. Think of people and technology platforms working together as your business muscle groups – the organisational biceps, triceps and quads that help you do the heavy lifting and get things done effectively and efficiently.

You need the right tools for the job. Fortunately, a new generation of cloud-based digital technology can now make all businesses stronger, faster and more agile. These tools have changed the game, making what used to be hard easier, and what used to be expensive much cheaper.

In summary, the key benefits are cost, flexibility, security and scalability – and the relative ease of adoption and integration. They provide the power to revolutionise business processes, helping companies increase the productivity of their people. But you still have to figure out which tools to buy, understand how they will integrate with current legacy technology and how they will contribute to the creation of a better customer experience. Technology in itself is not a silver bullet – it’s only as good as the people who configure and operate it.

resources more efficiently. That’s why organisations of every size and type now ‘do’ tracking and collect data. Unfortunately, relatively few companies take this further, do analytics and make data-driven decision-making part of their DNA. Digitally fit businesses don’t sit around guessing.

They test. They track. They prove and demonstrate with data. They are able to easily access that data and quickly make sense of it to see what’s really happening in the business, enhancing the decision-making power of their people.

6. AGILITY The final component of digital business fitness is where it all comes together; developing the agility to respond rapidly to changes in the business environment without losing momentum or vision.

To succeed, we all have to make decisions faster, identify opportunities faster and get our products to market faster. As such, the only way to keep up is to create a culture of agility. All the other five focus areas we have looked at so far – mindset, core strengths, skills, power and data – contribute to an agile ethos characterised by flexibility, adaptability, balance and coordination.

Agility improves performance by achieving clarity through action. That means less pontificating and more doing and testing.

That’s it. A simple six-step process and a six pack of focused workouts to help you get your enterprise fit for digital business. It’s a framework that any leader can use to get their organisation in better shape to thrive in an increasingly digital business world – an holistic, people-first approach to change, designed not only to improve business performance in a digital world, but also to improve the overall health and well-being of a company.

6.

Increase your overall business AGILITY

5.

Gain insights & optimise by taking control of

DATA

1.

Develop a digital MINDSET

DIGITAL FITNESS COMPONENTS (THE SIX PACK)

4.

Get your tech & team in shape to improve execution

POWER

2.

Strengthen your business CORE

3.

Harness new digital tools & techniques with new

SKILLS

October 2018

5. DATA The fifth element is about how you use data to improve targeting, optimise customer experience and continually improve operational performance and productivity. In the digital age, a failure to use data effectively for decision-making will put a business at a significant competitive disadvantage.

We live in an age where information is power, where we can make smarter decisions and allocate

Rob Laurens, founder and Principal Consultant at Kaisen Digital, has spent the past 20 years helping organisations harness digital ways of working to accelerate growth, minimise waste and deliver bigger profits.

Working with SMEs as well as FTSE100 companies, he guides and coaches business leaders through the process of change, identifying and closing the capability gaps of their people, processes and platforms.

HOW TO... Transform to Digital

3. SKILLS Component three reflects the need to develop new skills throughout the business. Let’s take the marketing function as an example. In the digital age, marketing people need a whole new skill set; let’s call it ‘whole-brain’ marketing. They need a deeper knowledge of their audience so that they can take advantage of more precise ways to target prospects.

They need to understand the often long and complex customer journey. They need a working knowledge of website usability, technology and tracking. They also need to understand the marketing maths and turn data into actionable insights.

In addition, marketing executives must be flexible and agile in the way they work, able to collaborate effectively with all functions within the organisation, with a test and learn approach. That’s on top of knowing the ins and outs of each digital channel, from email to social media, with the ability to appreciate how each can play a tactical role in delivering the strategy. To deliver results, they also need to understand which technical tools they need and how to use them. Finally and importantly, marketing people need to be creative.

That’s quite a heavy job description which requires energy, experience, curiosity and plenty of both left and right brain thinking. Leaders must ensure that they have the necessary skills for digital business through ongoing training programmes, as well as through their talent acquisition activities.

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RESEARCH

regarded it as vital foundational market intelligence for their strategic planning processes.

“But of course, time marches on and in the six years since that original study the workplace has changed still further. As such, it is time not only to revisit some of the questions we posed in the original study, but to ask additional questions about workers’ needs and expectations in 2018.”

OP PURCHASING BOILING THE FROG: REVISITED PREVIEW

in the

T

digital age

here’s an urban myth which says that if a frog is placed in a saucepan of boiling water, it will jump out, but if it is placed in cold water that is slowly heated, it will not perceive the danger and will stay in the saucepan, where it will eventually be cooked to death.

What does that have to do with the business supplies sector, you may rightly ask.

Metaphorically-speaking, quite a bit. Back in 2012, Martin Wilde Associates (MWA) and OPI conducted research that tested the extent to which this principle applied to the office products industry. It was driven by two main premises:

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• The adoption of new office technology that kicks over traditional local cultures and working practices worldwide.

• Office workers aged under 35 – ie those at ease with the digital age – behaving very differently to their senior colleagues and their use of traditional OP items is more likely to be minimal.

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These two factors, it was feared, could over time heat up the OP industry ‘saucepan’ so much that the ‘frog’ – meaning demand for conventional OP items – will die. The resulting research report – called Boiling the Frog: The OP Industry’s Guide to Younger Office Workers – charted the changing demand within the office products industry.

As MWA Managing Director Martin Wilde says: “Our original Boiling the Frog report was an outstanding success and a landmark research publication for the office products industry worldwide. Many manufacturers and distributors have since told me that their management teams

Boiling The Frog: Revisited is priced at £2,950 ($3,800), but a discounted price of only £2,500 is applicable for all orders received before 12 October 2018. For more information, visit www.opi.net/ frogrevisited.

THE NEW OP BUYER With that in mind, MWA and OPI are in the process of launching a new research study, entitled Boiling the Frog – Revisited. This vital research – based on in-depth telephone interviews with 500 office workers (250 in the US and 250 in the UK), the majority of which will be under 35 – will, as Wilde points out, repeat some of the key elements benchmarked by the last study. But it will also look at the kind of working environment that these employees require and their experience of interacting with, and purchasing from, OP suppliers.

Due for publication in December 2018/January 2019, the report will investigate key topics that will have a major impact on the future of the industry, including: • Which OP items are regularly being used in the workplace and for working at home?

• Which products are being used more – or less – than in 2012?

• To what extent are product branding and product colour important?

• Do workers prefer to use eco-friendly products if there is no price difference?

• To what extent are documents printed out? Under what circumstances?

• Do workers now share a printer? How has sharing a printer affected usage?

• Are printer cartridges being sourced under an MPS contract?

• To what extent are documents filed/stored? Under what circumstances?

• What written communication methods are used formally and informally to contact those outside a worker’s company?

• What social networking sites are used for work?

• How important is it that an employer offers healthy snacks, ‘Barista-style’ coffee, sit/stand workstations, perch seating, monitor arms/ risers, ergonomic mice/keyboards, wrist rest pads, multiple screens, social spaces/breakout areas, office plants, natural lighting and the latest technology products?

• Where are hot drinks sourced from at work?

• What methods do workers use to select products?

Are online product reviews important to their buying decision?

• Do workers have the opportunity to buy products?

If so, where from?

• Is Amazon being used as a source of OP? If so, do employees use their own Amazon Prime account?

• What aspects of a supplier’s digital content and website most engage staff?

• How will the use of OP change in the next five years?

These and many other questions will be answered in Boiling the Frog: Revisited, so order your copy now.

EVENT

It’s GOOD to TALK C GLOBAL FORUM PREVIEW

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hicago is the host city for OPI’s seventh Global Forum which will be held from 11-13 November 2018. Now an annual conference, the invitation-only event will once again take place at the Sofitel Chicago Magnificent Mile at the very heart of the windy city. It promises to be a high-octane and high-profile gathering where today’s hottest topics will be discussed by the business supplies sector’s top-level executives.

While a sizeable percentage of attendees to the forum come from North America, it is very much a global event, with many delegates from all distribution channels flying in from Europe and Australasia in particular. It’s easy to see why the appeal is so broad. The biggest issues affecting our industry are rarely insular and confined to one country or region.

And even though markets are developing at varying paces and can be quite different from one another, best practice, benchmarking and learning starts with looking at the big picture and then honing in on specific aspects relevant to specific companies.

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THE BIG PICTURE Indeed, this year’s conference chair John Givens will kick off proceedings with just that – highlighting the trends, changes and opportunities in that big picture. Givens, as CEO of large and progressive independent dealer Source Office & Technology, is well placed to offer his thoughts on what’s going on, particularly in the US industry, right now (look out for our Big Interview with John Givens in the November 2018 issue of OPI). He will expertly guide the audience through a packed two-day agenda and a minefield of what’s feasible, achievable or perhaps not even that desirable.

The topics covered during the forum are numerous, and include some popular regulars: technology – this year covered in a keynote address that focuses on its rapid pace of change and impact on the workforce; ‘silver bullet’ growth categories; and cybersecurity.

Then, unsurprisingly, there’s the omnipresent Amazon – several sessions, both plenary and smaller roundtables, are dedicated to dealing with and living with the online giant.

MARK THE DATE The OPI Global Forum takes place from 11-13 November 2018 at the Sofitel Chicago Magnificent Mile, Chicago, US.

The biggest elephant in the room right now, of course, is the US wholesaling channel and what is going to happen with SP Richards (SPR), Staples and Essendant in particular.

Indeed, senior executives of these three protagonists – Staples’ Neil Ringel, Essendant’s Ric Phillips and SPR’s Rick Toppin – will be part of a Power Panel discussion with OPI’s CEO Steve Hilleard at the end of the first conference day. The debate will also be thrown open to Global Forum delegates – all, as usual, under Chatham House rules.

As Hilleard says: “How often do industry executives have the opportunity to share information, generate and encourage debate, and get some answers from those people at the very heart of the companies that are changing our industry landscape as we know it? Not just at the conference part per se, but also during the considerable networking time that the OPI events team always very carefully builds around all the official sessions.

Feedback from previous events suggests, in fact, that the very high-level networking opportunities are among the most important benefits of any OPI event and can’t be found anywhere else in our sector.”

For more information about the OPI Global Forum, visit opi.net/GF2018. If you would like to attend the event, please contact Steve Hilleard at steve.hilleard@opi.net.

5 MINUTES WITH...

Paddy Donnelly

CAREER Q&A Describe your current job.

CEO of ES Tech Group. My passion is product, so that’s the team I spend most of my time with. Having said that, I do make a point of getting out of the office and speaking to customers on a regular basis.

Describe yourself in one sentence.

Highly emotional and a little recalcitrant.

What would you be the patron saint of?

Getting shit done – a sign that adorns my office.

What scares you?

Amazon. I’m simultaneously in awe and terror of that business. Its capability to execute on its agenda is like nothing I’ve ever seen before. I think it may be the best run company in the world and its ability to disrupt markets is legendary – it can wipe out a significant portion of the value in any vertical just by issuing a press release.

What’s your most prized possession?

I have a drawer with some old cards my children made for Father’s Day and other occasions when they were tiny. I open it and read them every so often; makes my heart melt. These days they come in a text.

How times have changed.

weekend?

Best way to spend the when the so st, We live on the coa get the to e lov I d goo weather is boarding gie boo go and on it wetsu with my kids.

What’s your specialist subject?

Product. Building products, scoping features, scaling products, testing products. I’m obsessed.

What word do you use the most?

When.

If you could trade places with someone for a day, who would it be and why?

Elon Musk’s assistant. I want to understand what his day looks like. I imagine it’s something along the lines of 10am – solve space travel; 12 noon – fathom out renewable energy; 2pm – work out transportation.

I think he’s the most important business person on earth right now. I’m in awe of his capability to solve big problems and execute on wacky ideas.

If you could have the answer to any question, what would you ask?

Why can Elon Musk send 20-story rockets into space, accelerate them to 20,000 mph and then land them back on earth beautifully and gracefully, and yet I can’t make a phone call on a Virgin train without it cutting out every 20 seconds? TELL ME! Your favourite gadget?

That’s a tough one as I have a lot of them. I’m basing this decision on what would I turn around for to pick up halfway to the airport if I forgot it… my Bose QuietComfort 35 wireless headphones. I do loads of travelling and I can’t imagine flights and train journeys without them!

What was the last gift you gave someone?

I bought my Dad a Stanley toolbox caddy. He’s a DIY nut.

Do you have any famous ancestors/relatives?

I have an auntie who has an MBE for her services to education. I also have an uncle who went down in a Lancaster bomber somewhere in Northumberland in World War II – there is a memorial there to commemorate him and the crew.

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Where would you most like to visit?

I’ve always wanted to do Route 66 in the US. The sense of adventure and observ ing for myself the culture and the people of the flyover states. The rest of this yea r is slammed, but maybe I’ll get it on the calendar for 2019.

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If you weren’t doing your present job, what would you like to be doing?

I think I’d be doing mentoring for small businesses. I do a little of that at the moment as time permits and I really enjoy the process.

Worst moment in your career so far?

I lost my business partner and co-founder last year. It was unexpected, and he was way too young. We’d been through everything together, and despite pecking at each other like an old married couple constantly, I really miss him.

The industry figure you most admire?

Graeme Chapman. For his long and distinguished career in the OP industry and his second act in charity work with the Climb of Life.

We went out for dinner in Scotland when I was working in a dealership on the West Coast. He was visiting in his capacity as Chairman of Office Friendly. We drank whisky and talked about the industry and I remember walking away from that night thinking what an incredibly cool guy he was.

What do you like best about the OP industry?

The culture and the people.

The David vs Goliath aspect of it really resonates with me as we’re in the same position as a small software vendor with direct competitors that are billion dollar businesses.

What personal item do you have on your desk?

A sign that says: ‘A side effect of weirdness is AWESOME’.

FINAL WORD

THE IDC:

plenty to smile about

W

www.opi.net

hat’s going to happen? This seems to be one of the most frequently asked questions during industry discussions these days – whether it’s by dealers, vendors, buying group partners or even customers.

The main debate right now, of course, revolves around the wholesaler mergers and acquisitions.

But there are other issues too: the wholesale equity model, Amazon’s impact on the workplace, the incredible warpath of WB Mason, large independent dealer acquisitions, the rise of jan/san, and the consolidation of suppliers. Then there are questions around the future of the buying groups, the rise of additional wholesalers in the channel, the creation and control of e-content, and additional horizontal markets that could easily be leveraged by our channel.

It’s obvious that we are not headed towards a stable and stress-free future. And in the face of all this uncertainty, it’s no surprise that many dealers have decided to “get out while they still can”.

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THE IDC: THE PLACE TO BE Here are my thoughts on why I believe in the future of the independent dealer channel (IDC) and why, despite its turbulence, it’s a place I want to be in.

I am 27 years old and the oldest of five children in my generation at our company. We represent the fifth generation at Herald Office Solutions, which was founded by our great great-grandfather nearly 125 years ago. My youngest sibling is 23, so we are 42 years away from our generation being able to fully retire at the age of 65. That’s a very long time, but despite the challenges which no doubt lie ahead, we are excited about the future of this channel and our place in it.

First, we believe in the traditional independent dealer. Call me old-fashioned, but being able to call the owner or president of a company to discuss an issue or ask for help seems substantially better than automatic voicemails and a dial-by-name directory.

We are all here today because of our customers and their support of us, and we are confident that our support back to them is second to none.

We feel that the individual size of dealerships makes us agile, while the conglomerate strength of the independent channel makes us aggressive.

Through the support of the buying groups, we remain more than aggressive in pricing, while offering custom-tailored purchasing programmes to key customers which, over the years, have become invaluable partners.

Additionally, diversification within the IDC is unrivalled. At Herald, we sell not just office supplies and furniture, but we print newspapers, run MPS programs, sell copiers, have in-house embroidery, and dozens of other crazy niches that make us who we are. And this level of diversification is not limited to Herald, but one of the defining elements of businesses across our channel.

MAKING SENSE From a purely analytical perspective, the numbers behind the IDC make sense. Fortunately, freight costs are sky-rocketing across the US right now. I say “fortunately” because, at our core, Herald is a logistics and distribution company. We run a miniature freight company – purchasing products, warehousing them, and then redistributing them to our customers.

For the foreseeable future, it will be cheaper for us to buy a truckload of paper, warehouse it in our local market, and distribute it as individual cases, rather than someone not local to our town shipping across a state via a third-party carrier.

This model obviously won’t always be the most economically-efficient for all products, but it remains a powerful distribution platform and therefore keeps us dealers as a logical partner for businesses in our areas.

Myers Jordan, VP, Herald Office Solutions

We will adapt to the changing demands and are enthusiastic about the leg of the race we are about to run Finally, from a highly subjective and personal perspective, we believe in our people. Our vendors, wholesale partners and buying group teammates, combined with our partner dealers in the IDC, are people we believe are worth betting on. Closer to home, we have been blessed with a tremendous team of competent and passionate individuals who devote incredible energy to make Herald what it is. Generations have given their lives pushing us to where we stand today. Last, but never least, our customers are remarkable people that we hope to have the privilege of serving for decades to come.

In summary, despite the turbulence in the industry, we believe that we are not only here to stay, but that our best years are yet to come. The ‘Final Word’ that we hope to convey here is that the five of us look at the upheaval and we smile.

We will adapt to the changing demands and are enthusiastic about the leg of the race we are about to run. In other words, we look forward to the next 42 years in the IDC. Myers Jordan won the Young Executive of the Year accolade as part of the North American Office Products Awards which were held at SP Richards’ recent ABC event in San Antonio, Texas (see also ‘In search of the blue ocean’, OPI September 2018, page 39).

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