Opi magazine usa issue 259 may by OPI

twenty five year anniversary

The word in office.

magazine

Big Interview

Stefan Sonesson, Managing Director, RKV p14

May 2016

Breakroom:

Opening the Door for Opportunity

Baldrey leaves EVO p9

Whatâ&#x20AC;&#x2122;s the state of the OP industry? p43

p10 Staples battles FTC in court

p34 Riding the breakroom wave

Contents May 2016

www.opi.net

News

43 State of the OP Industry report

6 Round-up

OPI and MWA’s annual survey of the global business supplies industry: the results in a nutshell

Banner and XMA win contracts; Officeworks eyeing larger stores; BSA recognises Wilbur

Breakroom Special

9 News Analysis

Baldrey out at EVO; ADVEO unveils strategic plan; Staples versus FTC

30 Perfecting the breakroom

Trends in the breakroom sector are emerging thick and fast – here’s OPI’s short selection

Features

14 Sitting pretty

There aren’t many independent dealers, or indeed dealer groups, that have stood the test of time in the Swedish market. OPI talks to Managing Director Stefan Sonesson about what makes RKV stand out from the crowd...

32 Own the breakroom Dan Ragan highlights the importance of locking in customers with all-inclusive breakroom solutions

34 Category Analysis

It’s a sector full of prospects, but resellers are advised to jump on the breakroom bandwagon before the opportunity passes

22 The Brexit vote

What would a Brexit mean for the business supplies industry? OPI speaks to those who have a stake in the outcome

Regulars

27 MyO strikes back

5 Comment

After several years of battling all manner of challenges, Italian reseller MyO finally looks to the future with optimism

46 Where are they now? Allan Crump

49 5 minutes with...

40 Content marketing: breaking down the buzz

Dennis Albers

What does content marketing mean and why should OP resellers get involved? Find out...

50 Final word

Elizabeth McLaughlin twenty five year anniversary

ISSUE NO.2 5 9

twenty five year anniversary

The word in office.

magazine

Big Interview

Stefan Sonesson, Managing Director, RKV p14

May 2016

Breakroom:

Opening the Door for Opportunity MAY 2016

Office Products International WWW.OPI.NET

“If there is a Brexit and then we have a period of two years while we negotiate the terms of that exit we could see an extended period of pound/euro parity, and we would be in unprecedented territory. That would have a pretty monstrous effect on pricing and I’m not sure if anyone is prepared for a circa 25% increase in the price of goods.”... For the full story, turn to page 22

Baldrey leaves EVO p9

What’s the state of the OP industry? p43

p10 Staples battles FTC in court

p34 Riding the breakroom wave

w w w.opi.net | OPI Magazine

Editorial Editor-at-large Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net

Editor Heike Dieckmann

Comment

+44 (0)20 7841 2950 heike.dieckmann@opi.net

Deputy Editor Michelle Sturman

Gimme a break

+44 (0)20 7841 2942 michelle.sturman@opi.net

Sales and Marketing VP – Continental Europe, Middle East and Africa Ewan Dickson +44 (0)20 7841 2954 ewan.dickson@opi.net

VP – North America and UK Chris Turness +44 (0)20 7841 2953 chris.turness@opi.net

Director of Growth Services Jeremy Hughes +44 (0)7807 810617 jeremy.hughes@opi.net

Digital Marketing Manager Aurora Enghis +44 (0)20 7841 2959 aurora.enghis@opi.net

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

Production and Finance Designer Joel Mitchell +44 (0)20 7841 2943 joel.mitchell@opi.net

Operations & Production Eda Sismanoglu +44 (0)20 7841 2950 eda@opi.net

Accountant Mark Wallis +44 (0)20 7841 2956 mark.wallis@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

OPI is printed in the UK by

The carrier sheet is printed on Satimat Silk paper, which is produced on pulp manufactured wood obtained from recognised responsible forests and at an FSC® certified mill. It is polywrapped in recycleable plastic that will biodegrade within six months.

The eagle-eyed readers among you will have spotted the slight change to the OPI logo on the cover to mark our 25th anniversary this year. Things are coming along nicely as we get ready for our big birthday bash in Chicago in November to coincide with our 2016 Global Forum, and we hope to see many friends, old and new, there for this special occasion. Watch out for more details coming soon! I love the breakroom picture on page 34 – it says it all, really, doesn’t it: “Amazing breakroom spaces”. And it’s certainly been an I love the breakroom picture amazing category for those on page 34 – it says it all, resellers that have embraced really, doesn’t it: “Amazing diversification out of traditional office supplies. breakroom spaces”. It’s We’ve got a lot of great certainly been an amazing breakroom-related content category for those resellers in this month’s Breakroom [embracing] diversification Special – see the Category Analysis (page 34 – look out for that picture!) for details of a European wholesaler that’s seeing 25% growth in this category. Still not sure how to sell breakroom products? Look no further than page 32 for some top tips. For an-depth view at how the wider business supplies market is evolving, a must-have resource is the annual State of the OP Industry study published by OPI and Martin Wilde Associates. The latest report has just been published and we’ve got a special ‘teaser’ for you on page 43. Have a great month.

CBP0009242909111341

Andy Braithwaite Editor-at-large

No part of this magazine may be reproduced, copied, stored in an electronic retrieval system or transmitted save with written permission or in accordance with provision of the copyright designs and patents act of 1988. Stringent efforts have been made by Office Products International to ensure accuracy. However, due principally to the fact that data cannot always be verified, it is possible that some errors or omissions may occur. Office Products International cannot accept responsibility for such errors or omissions. Office Products International accepts no responsibility for comments made by contributing authors or interviewees that may offend. Office Products International Ltd (OPI), 2nd Floor, 112 Clerkenwell Road, London, EC1M 5SA, UK Tel: +44 (0)20 7841 2950

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News n Round-up

News from opi.net Investment firm takes stake in Coolblue Dutch investment firm HAL has taken a 20% stake in former European Office Products Awards (EOPA) Reseller of the Year Coolblue. Coolblue – which started as a pure online reseller in 1999, but now has seven physical locations – had annual sales of around 555 million ($627 million) in 2015, growing the top

Large Resellers

Big government contract wins for Banner and XMA Incumbents Banner and XMA have successfully rebid for the £250 million ($359 million) Crown Office Supplies framework agreement for the UK public sector. The new Crown Office Supplies framework agreement replaces the current Government Office Supplies contract which expired at the end of April. Banner and XMA were each awarded one of the two available lots on that contract in 2011. The government said that it had achieved savings of almost £22 million over the contract’s duration. Similarly, the new Crown Office Supplies framework has been divided into two lots, Lot 1 comprising office supplies (including general office stationery, office paper, catering supplies, janitorial and washroom supplies, and small office machines) and Lot 2 electronic office supplies (EOS), mainly ink and toner cartridges. EVO Group’s Banner has been awarded Lot 1 and Westcoast-owned XMA Lot 2. The framework runs for a maximum of four years, with an initial two-year period followed by up to two one-year extensions. The government’s procurement service estimates the total value of the framework to be between £240-£265 million, split 50-50 between the two lots.

line by more than 50%. HAL’s investment is thought to be around 140 million, which would value Coolblue at some 700 million. The Dutch reseller was recognised for its dynamic approach and customer service focus at last year’s EOPA.

Independent Resellers

Officeworks eyeing larger stores Mark Ward, CEO of leading Australian office supplies reseller Officeworks, says the company’s stores may increase in size. While the global trend in the office supply superstore channel is for smaller (and fewer) stores, Ward has told the Australian press that there is scope for Officeworks to actually increase the size of its stores as it adds new products and services. Mark Ward

Large Resellers 6

OPI Magazine | May 2016

Officeworks’ average store size is 1,200 sq m (12,000 sq ft), with the largest location about 2,700 sq m. However, in an interview published in the Sydney Morning Herald (SMH), Ward said he is considering larger stores – between 3,000-4,000 sq m – to accommodate category expansion. While the traditional office supplies market in Australia is estimated at A$11 billion (US$8.6 billion), the wider business supplies market is five times larger, including categories such as jan/san, office furniture, arts and crafts, tech products, copy and print and 3D printing. Ward even suggested Officeworks might sell drones in its stores. In the SMH interview, Ward also revealed that the recent acquisition of UK DIY chain Homebase by Bunnings has led to a change at the office supply retailer within the Wesfarmers group. Ward previously reported to Bunnings CEO John Gillam as part of a wider Wesfarmers home improvement and office supplies reporting structure. Following the Homebase acquisition, he will now report directly to Wesfarmers CFO Terry Bowen.

People

Associations

BSA recognises Wilbur Office products industry veteran Mike Wilbur has been selected as the 2016 recipient of the Business Solutions Association’s (BSA) Lifetime Achievement Award. Wilbur’s career in OP began in 1970 and has spanned more than 45 years, beginning with his role as Account Manager at Dymo Products in Berkeley, California. In 1976, he joined ACCO International as District Sales Manager, a role he held until 1980 when he moved to K&M Company, which was eventually acquired by Avery Dennison. Until he departed Avery Dennison in 2005, Wilbur held ever-increasing positions of responsibility. He later joined Shachihata USA Mike Wilbur

as VP of Sales and Marketing where he played a key role in making Xstamper mainstream in the office products channel. Most recently, he held positions with Taylor Corporation (Navitor Division). Over the years, Wilbur has been involved in a number of industry boards, including OPWA, AOPD’s Business Partners Advisory Council and the BSA Board of Directors. He is the BSA’s Immediate Past President. Wilbur will receive the BSA Lifetime Achievement Award at the President’s Reception and Dinner on 7 September during the 2016 BSA Annual Forum, taking place between 6-9 September at the US Grant Hotel in San Diego, California.

Co-working areas in office supplies stores proving popular Staples is teaming up with co-working facilities company Workbar to offer shared working spaces in the office supplier’s retail stores in the US. The first Workbar spaces will open in three Staples stores near Boston (MA). The 2,500-3,500 sq ft (250-350 sq m) areas will offer a mix of high-end workspaces, conference rooms, private phone rooms, wi-fi, printers and refreshments. The Staples Workbar locations will be operated and staffed by Workbar employees and members will now automatically be enrolled in the Premier level of the Staples Rewards loyalty programme. In a similar initiative, French franchise chain Bureau Vallée has opened its second in-store co-working area, Beev’up.

Large Resellers

After the first Beev’up store opened in Lille at the end of 2014, Bureau Vallée has chosen its own flagship store near Paris for the concept’s second location. The concept is similar to the Staples and Workbar agreement in that a portion of the store’s floorspace is transformed into a co-working and meeting area, but Bureau Vallée is going it alone. As well as co-working facilities, Beev’up offers office rental and meeting room hire and is also being marketed as an area that is available for workshops and presentations.

soft-carrier names Managing Director

Michael Weber

European wholesaler soft-carrier has expanded its management team with the appointment of a Managing Director. Taking on this new role from 1 April is Michael Weber, a qualified mechanical engineer with a background in technical sales who most recently worked for German IT systems group Schäfer. Weber’s appointment comes after another year of double-digit growth for soft-carrier and strengthens what has been termed a “lean and mean” management and organisational structure at the wholesaler. Founder/CEO Thomas Veit said he looked outside the industry for the best candidate and that Weber’s experience would be especially important as soft-carrier develops its logistics and distribution platforms.

Wholesalers

Essendant pledges $1m donation match for City of Hope In support of Spirit of Life honouree Joe Templet and to help kick-start the National Business Products Industry’s (NBPI) newest fundraising project, Essendant has generously offered $1 million in matching funds. For donations of any amount, including annual NBPI personal gift clubs, Essendant will match gifts dollar for dollar up to a total contribution of $1 million, doubling the impact of contributions. Essendant’s pledge will go a long way towards achieving a new NBPI fundraising project aimed at raising $3 million over three years for the Chemical GMP Synthesis Facility at City of Hope. Gift levels begin at just $10 and also include higher-level donation opportunities payable over five years that include name recognition on the City of Hope campus and inside the NBPI Chemical GMP Synthesis Facility. w w w.opi.net | OPI Magazine

news n Analysis

Baldrey out at EVO

Robert Baldrey

Robert Baldrey made a sudden exit as CEO of EVO Group in April

After

several months of relative calm, the UK wholesaling channel again hit the headlines in April when Robert Baldrey unexpectedly left his role as CEO of EVO Group, the £660 million ($944 million) business that includes wholesaler VOW and reseller Banner.

of what we achieved. Good luck to all my colleagues.” Baldrey joined the Vasanta Group as CEO in 2010, becoming CEO of the enlarged EVO Group at the end of 2014 following the acquisition of office2office (o2o). Prior to joining Vasanta he had spent several years

The onus will be on Haworth to drive the business forward in line with Endless’ goals No reason was given for his sudden departure, although EVO said that Baldrey had left by “mutual consent”. Whatever the differences between EVO’s owner Endless and Baldrey, neither party has said anything in addition to the official press release, bar a short Tweet that the former CEO put out which read: “My adventure with Vasanta and EVO has come to an end. It’s been great fun and I’m proud

at rival Spicers, eight as European Finance and IT Director in the UK, and six years before that as Financial Director of Spicers France. Whether you see Baldrey’s departure as a surprise depends on how you view the world of private equity: his almost six-year stint as CEO under Endless’ ownership – first at Vasanta and then at EVO – could probably be regarded as a pretty good run.

Now all eyes will be on how Baldrey’s successor Steve Haworth approaches the CEO role after moving up from his position as Group Sales and Marketing Director. He knows the company and its private equity owners extremely well, so there will be no ‘getting my feet under the table’ issues involved – which may have influenced Endless’ choice. The onus will be on Haworth to drive the business forward in line with Endless’ goals in a way that Baldrey, in their opinion, was not able (or willing) to do – whether that is related to profit growth, o2o integration or some other area(s) of the business.

ADVEO unveils strategic plan The pan-European wholesaler is focused on improving profit and reducing debt

LeAding

European office supplies and EOS wholesaler ADVEO released its much-anticipated strategic plan recently, following several months of management changes under the leadership of Jaime Carbó after he took on the CEO role last August. While the previous plan in 2012 was heavily weighted on defining the group’s business model and customer segments, this latest plan puts the main focus on key financial goals – mainly increasing EBITDA and reducing net debt. It comes after a challenging 2015 for ADVEO when sales fell by about 4% to €907 million ($1.2 billion), EBITDA was down 41% to €21.5 million and net debt rose to €305 million, €29 million higher than at the end of 2014. ADVEO’s share price

is also in the doldrums, with shares trading at around €4.50 versus €13 in April last year, giving it a market value of less than €60 million. Under the new plan, the target is to grow EBITDA to €64 million and reduce net debt to around €120 million by the end of 2019. How does ADVEO intend to do that? On the EBITDA side, the majority of the growth is planned to come from the Iberia region, which reported a €15 million loss last year after continued issues with its IT system integration. Strategies for achieving this include growing the Calipage dealer network, introducing the Carip purchasing platform for non-aligned resellers and a further reduction in fixed costs. The debt-reduction goal rests on a combination of a decrease in

commercial debt from a channel and product “optimisation” strategy, and more efficient cash generation. This will likely involve the renegotiation or elimination of unprofitable or low-margin channels and product segments, so it will be interesting to see where ADVEO goes with that. These and other elements of ADVEO’s new plan will be covered in next month’s Big Interview with CEO Jaime Carbó. Jaime Carbó

w w w.opi.net | OPI Magazine

News n Analysis

In the balance Staples’ chances of acquiring Office Depot look better than they did a month ago

far as antitrust court cases go, the preliminary injunction (PI) hearing that pitted the US Federal Trade Commission (FTC) against Staples over the proposed acquisition of Office Depot might go down as one of the more entertaining ones – certainly for those following the proceedings on a daily basis at the end of March and in early April. The coup de théâtre was the decision by the Staples defence not to call any witnesses at all and to rest its case after the plaintiff – the FTC – had wrapped up its side of things at what most observers expected to be the halfway mark of the hearing. Why did Staples’ legal team do that? According to Staples’ lawyer Diane Sullivan, the FTC had “failed utterly” in presenting its case and the government’s antitrust body’s case was “fatally flawed”. Her reasons for saying that were partly down to the sensational revelation that Amazon Business witness Prentis Wilson had refused to sign an FTC-written draft statement that contained information that was “not true”.

OPI Magazine | May 2016

Presiding judge Emmet Sullivan was scathing in his remarks over the way the FTC had gone about preparing a statement for its witness. “It’s very disturbing when the United States of America […] attempts to persuade any declarant or witness to say something for the benefit of the United States of America that is not true,” he said in court. One statement that was struck out of the draft declaration was the following:

“Currently, Amazon Business does not believe it will be in a position to respond more comprehensively to large office supply customer RFPs until the beginning of 2017. And Amazon Business will do so only if it can successfully develop and launch the required technologies over the course of 2016.” Under cross-examination from [Diane] Sullivan, Wilson admitted that Amazon Business was already

Judge Sullivan’s open scepticism to the FTC’s case no doubt emboldened the Staples legal team

Judge Emmet Sullivan

Leading the defence: Diane Sullivan

toner. Staples was boosted when FTC expert witness Carl Shapiro appeared to suggest that ink and toner did form part of the market. The FTC responded by arguing that “the relevant market is the line of commerce that would be substantially lessened by the merger” and that ink and toner are “subject to different competitive conditions”, such as managed print services. Judge Sullivan’s open scepticism to the FTC’s case no doubt emboldened the Staples legal team, leading it to rest its case early. However, the judge certainly didn’t show any favouritism during final arguments on 19 April, offering glimmers of hope to each side

The FTC had “failed utterly” in presenting its case and the [...] case was “fatally flawed” Sullivan. It read: “The FTC has asked us to insert the following sentence: ‘It is not clear that Amazon Business will add all or even most of these capabilities over the next two years.’ This is FTC’s highest priority item.” Again, Wilson had refused to put his name against this draft statement, saying under cross-examination: “We’re working to get these out and […] we have early versions and others we’re working towards.” Staples’ other main line of attack was over the FTC’s definition of the “relevant market”, the main point of contention being whether or not ‘office supplies’ includes ink and

and possibly swinging things back in favour of the FTC. As we have said before, the hurdle that Staples has to clear in preventing the PI from being granted is higher than the one facing the FTC to have it awarded. All the FTC has to show is that it has the “building blocks” in place to pursue its own litigation. Staples’ legal team did a good job seizing on its opportunities during the hearing, but will it prove to be enough to convince Judge Sullivan that the FTC does not have a case? That’s by no means certain, and all eyes will now be on the verdict, expected on or just before 10 May.

before aNd after Two recent OPI polls reflect the changing opinions about Staples’ chances of successfully acquiring Office Depot. Poll 1 was conducted before the preliminary injunction hearing in the US while Poll 2 was conducted after the hearing.

Do you think Staples will be successful in acquiring Office Depot?

Poll 1

Not just about the us Even if Staples is victorious in blocking the FTC’s preliminary injunction, it does not automatically mean that it can go ahead and close the acquisition. It still requires approval in Canada and must fulfil the conditions agreed in February with the European Commission over the sale of Office Depot’s European business. Canada is an interesting one. The Canadian Competition Bureau (CCB) has so far followed the lead of the FTC in the US, even announcing its challenge to the merger on the very same day last December and admitting that it had cooperated closely with the FTC. The question is whether or not the CCB would continue to mimic the FTC’s moves should the latter abandon its challenge if it was not granted a preliminary injunction or the parties in the US reached a settlement. In March, Staples and the CCB agreed on a timetable for Canada’s Competition Tribunal (CCT) to hear the case. However, the hearing is not scheduled until February 2017 and the date for mediation of 30 May 2016 is still later than the 16 May cut-off date allowed in the merger agreement extension signed by Staples and Office Depot in January. Therefore, this CCT hearing simply won’t happen. The most likely scenarios are that a) the CCB will drop its challenge should the preliminary injunction not be granted in the US; or b) should the FTC and Staples reach a settlement in the US, then the CCB and Staples will come to an agreement in Canada, possibly leading to the sale of Office Depot-owned Grand & Toy. In Europe, the events in the US mean it is now crucial for Staples to find a buyer for Office Depot’s European operations. Remember, the European Commission required the sell-off of Depot’s European contract business and all operations in Sweden, but Staples said it would go further and sell the entire Depot business in Europe. OPI sources have pointed to a lack of noise in the market regarding the sale of Office Depot Europe, but speed is now of the essence – it would be ironic if the whole transaction was delayed because of issues in Europe rather than the US. Not to mention that it is in Staples and Depot’s best interests to consummate the merger as soon as they possibly can because the FTC can still theoretically mount a legal challenge even if it does not get the preliminary injunction.

Poll 2 w w w.opi.net | OPI Magazine

News n Analysis

responding to RFPs, even though he wasn’t sure if Amazon Business was responding to all the customer requirements. He also said he was not comfortable with the 2017 date, stating: “We would like to be able to respond to them sooner, if possible.” The draft statement from the FTC also focused on the wide variety of services and features required by corporate customers, including contract pricing, rebates, customer service, desktop delivery, off-contract sales, IT interfacing and loyalty programmes. A note from Amazon Business’ legal counsel to Prentis Wilson and the Amazon Business team was quoted by

News ■ And finally...

Comment

TWEET CHAT follow us on Twitter @OPInews, @andy_opi

@StaplesB2B

There has been a lot of activity recently in the OPI LinkedIn group about all kinds of business-related topics. Below is a round-up and small selection of the most interesting questions and answers. OPI’s Andy Braithwaite asked what potential members see for 3D printing in the business supplies reseller channel. Currently there is a plethora of manufacturers which is probably unsustainable. What happens when Ricoh, Canon, Xerox et al enter the market? They are likely to look to their existing resellers rather than the business supplies channel. There is an opportunity if the issue of supporting machines in the field can be addressed. Gordon Christiansen, Managing Director Europe & SVP of Marketing, Highlands It is still very early days and it needs improvement; good machines are too expensive. Vernon Denton, former agent for Canon, Fellowes & Schleicher Sales Development Consultant Eric Shackleton wanted to gauge thoughts on whether managed print services (MPS) is just another ‘copy plan’ in disguise. MPS is more about retaining print customers. With the ease to shift suppliers for toner, etc, the real focus of MPS is to lock in customers for an agreed time to allow the business model to pay out. Terry Walker, Sales, Acquisition and Integration Consultant Unethical use of a good product doesn’t make the product itself bad. Securitisation is an excellent financial instrument but misuse led to the most severe recession in history. Likewise, Total Volume Plan is a good solution when it reflects the customer’s print use correctly and transparently. It actually creates a sound contract based on the economic life of the print equipment that very much serves the interest of the customer. Suhale Vorajee, Head of Marketing and Solutions, BNP Paribas Leasing Solutions UK Denise Belgacem, Account Manager and Sales & Marketing Support, Fellowes UK, asked how to build loyalty and keep customers coming back in today’s world. I don’t think loyalty is altogether extinct, but the internet does give people the option to shop around, so you can’t afford to get a customer experience wrong. Loyalty these days is based more around service than it is around pricing, although the pricing has to be right too, obviously! James McLaren-Rowe, Managing Director, Amadeus Office & Educational Supplies, Furniture & Storage Have a look how valuable your products/services are for your customers and you will get the answer. I agree with [the above] comments: service makes the difference, especially in [e-commerce]. Ramon Vidal, formerly European Director Supplies Business Unit, Tech Data Europe

OPI Magazine | May 2016

How are businesses evolving the #breakroom for more engaged employees? Fresh food, smart design, and good #coffee @TStormGraphics

Breakroom collage, office decal @shoplet

Mugs are an office staple because, after all, who can live without their favourite cup of #coffee!? #ShopletTalks

$5 billion+ Expected office stationery sales in Europe by 2020

14%

Percentage of UK workers using colouring books in the office

597 million

Number of cups of coffee consumed, on average, every single day across the US

opi.net poll results OPI conducted two polls asking the same breakroom-related question – one last month, the other a year ago. The results make for an interesting comparison. What is your biggest growth category in breakroom? Results 2015 Coffee 33% Food 5% Breakroom disposables 5% Cleaning products 57% Results 2016 Coffee 30% Food 20% Breakroom disposables 20% Cleaning products 30%

SNAP SHOT In honour of the launch of season six of Game of Thrones, Viking Direct in the UK surprised its staff with a Game of Thrones-inspired games room to say ‘thank you’ for all their hard work. The room features stained glass windows with key moments from the show, a cardboard Iron Throne and dragon eggs made from drawing pins.

Staples UK recently launched a colouring catalogue for office workers so that they can make the most of their break time. It’s a downloadable PDF available from the How creativity can boost your business according to science article in the Knowledge Centre section of the Staples UK website.

Big Interview | Stefan Sonesson

Sitting

pretty There arenâ&#x20AC;&#x2122;t many independent dealers, or indeed dealer groups, that have stood the test of time in the Swedish market. Those that have owe it in large part to very strong relationships â&#x20AC;&#x201C; with customers, suppliers as well as their peers

OPI Magazine | May 2016

RKV | Big Interview

by Heike Dieckmann heike.dieckmann@opi.net

Sweden, many dealer groups have fallen by the wayside over the years, due partly to consolidation that has affected both the groups and the dealers within these groups. RKV is the last cooperative remaining and it’s faring very well indeed, putting up a good fight against the global players that have had a very strong presence in the country for many years and that, incidentally, are also partially responsible for the amount of reseller consolidation which has occurred. One of RKV’s core attributes is its endeavour to help members be fiercely focused on their local market, giving them the tools and combined purchasing power to explore any specific niches and opportunities while at the same time shining with unmatched service. OPI spoke to Stefan Sonesson, who has practically spent his entire career at the dealer group. With plenty done and no doubt more to do, Sonesson still clearly gets an enormous buzz from seeing the group’s members thrive and sees a bright future ahead. OPI: Stefan, you are something of a ‘lifer’ in OP terms. What brought you to RKV? Stefan Sonesson: I joined RKV in 1995 as marketing manager following a few years of doing market research in various companies and then studying marketing and economics at Växjö University in Sweden and at Eckerd College in the US. I was basically looking for a marketing job after university and saw the position of marketing manager advertised at RKV. I got the job and I’ve been here ever since and became Managing Director in 2004 – that’s the simple story. OPI: So office supplies wasn’t some kind of calling for you, or any type of family link? SS: Definitely not! When I came to RKV I didn’t know anything about the OP business. I joined because I wanted to work in marketing. The concept of a dealer group and selling office supplies didn’t really mean much to me, but that has changed. Today, I love the products and the business, and I think RKV has seen great developments over the past 20+ years. OPI: What have been the core milestones? SS: Well, the group was created in 1967. At that time it was just a few family-owned businesses cooperating with purchasing agreements and

volumes. It wasn’t until 1987 that the group established its first centralised office. When I joined, I was the third person at our central office near Borås, in the south of the country. Today, it’s five of us working for RKV full time. OPI: How’s RKV set up today? SS: It’s completely owned by its members. Each member has one share and one vote. We have 25 members with 59 stores and locations, covering more or less all of Sweden. Our combined turnover is about F130 million ($147 million). Each member pays an annual fee depending on its size and we pay rebates based on purchasing volume in our central agreements. So if you are a loyal member and buy under RKV agreements, you get a nice kickback. Overall, we’ve gone through a stable period and had good volumes within the group, and these in turn have given good rebates.

“Our members are family-run businesses that are hugely entrenched in their community” OPI: I seem to remember that there were several dealer groups in Sweden at some stage. What’s the situation now? SS: We are the only independent dealer group of family-owned companies in the office supplies space now. And yes, you’re right. Several years back, we used to have at least four groups in Sweden. One of them was Kontorsman. Our current Purchasing Director Michael Alfinson was the Managing Director at the time. He joined RKV in 2004 and that was when Kontorsman split up. Most of the members came to us and some went to another group called Niofem which, as you know, joined RKV about 18 months ago. OPI: Tell me about your typical member. SS: Overall, they are all B2B and focus on delivery, although maybe three or four are a bit more retail based. A couple of members, for example, also have bookstores but it’s 98% B2B. So the stores our members have are more like cash-and-carry stores. We as RKV only have what we call a split warehouse where we take in imported products, mainly private label, and then redistribute them to our members. As such, in addition to their stores, most members still have their own warehouse as well. This gives superior service at a local level. OPI: How big is your average dealer? SS: It varies. The smallest one has revenues of maybe F1 million while the largest one has w w w.opi.net | OPI Magazine

Big Interview | Stefan Sonesson around F25 million – the majority are in the middle somewhere. What’s important in my view is that all of them have stores and all of them employ salespeople in the field who call on local businesses. And it’s that local focus that matters so much. Our members are family-run businesses that are hugely entrenched in their community. That also means that they often adapt their offering to the peculiarities of that community. So they will work with the range that we present in the RKV catalogue, which is about 7,000 SKUs, but at a local level they might also be specialists in, say, furniture, IT solutions or workwear. OPI: You mentioned Niofem before. Is that integration process now complete? SS: Yes, it is. Like I said, these dealers joined us at the beginning of last year. At that point they had already produced their own catalogue, which they launched in late 2014, and they also had to honour their various supplier agreements, etc.

“At a local level [dealers] might also be specialists in, say, furniture, IT solutions or workwear”

So last year was effectively a year of transition, with overlaps in different areas. We started combining our volumes and while this took some effort, it’s all complete now and it was good that we didn’t have to rush the process. It gave us the chance to get to know each other and find out how we all work. Now we’re on track with the same catalogue, the same supplier agreements, a good overall organisational structure and, of course, great purchasing power. The only thing that remains outstanding is for those Niofem members that are ready to join our e-commerce platform; we’ve included some of them so far, but not all. OPI: What’s the state of the Swedish market and how do your dealers stack up in that market? SS: The market is growing slightly and our dealers on average have the same increase or perhaps a bit better. Last year we took some small market share. It varies in the different regions and also by member, but overall our competitors had quite a tough time and we benefited from that. OPI: Who are your competitors? All the globals have a big presence in Sweden... SS: And in reality, the global players are the biggest competitors to our members. There are some Swedish companies, but not many and there are just not many independent dealers left. We also compete with the mass market operators and the supermarkets to some extent. The competition varies more in the rural areas, where there’s less of a focus on the big operators which are usually in the large cities. OPI: Is that also where your members are? SS: In the main, yes, but you also have to bear in mind that Sweden is a very long country – almost 2,000 km from north to south, so we have members that, for example, have a very good grip on the market in the north of the country or indeed some other, more remote, parts. Like I said before, that’s our main point of differentiation: to have a very local focus and be the best supplier to small and medium-sized businesses. That is where we excel. OPI: But are the likes of Office Depot, Staples and Lyreco not going to the same customers as you do? SS: They do, in part. To start with, they have a much bigger part of the corporate cake than our dealers – although some of our larger members are also playing in that field – and

OPI Magazine | May 2016

RKV | Big Interview they also serve the SME sector, but we are definitely closer to that local market with our field sales force, local stores, etc. OPI: What about online operators? SS: We have a selection of small B2B web stores concentrating on office supplies. And over the past 2-3 years, we have seen some B2C-oriented players – those that have physical stores as well – launch a wider range of office supplies online. Adding office supplies as part of the long tail in e-commerce is definitely a change we’ve seen. OPI: How about your dealer members – how are they set up in terms of their online abilities? You mentioned your e-commerce platform earlier. SS: None of them are web-only operators, but most of them have a web store. We launched the first version of our platform back in 2000. As you say, digitisation has come a long way in Sweden and every year there’s a big increase in online commerce, particularly in the B2C sector. At RKV specifically, we are in the middle of developing our e-commerce platform for our members, and that relaunch will happen later on this year. So while most of our members have their own web stores, they are all run by RKV – we update the stores, include all the product information and imagery, run any marketing campaigns, etc. That’s a big part of our role as their dealer group so our members can concentrate on sales. Importantly, however, our members always maintain their own identity – the e-commerce platform is not RKV-branded in any way. Often dealers have been in the market for many years with strong local names. We’ve had discussions over time about having one common name and branding, but concluded that separate identities make us stronger. There’s no doubt that the internet is hugely important and every member ultimately needs to have a web presence, but they also need the physical stores and the field reps – we think it’s really important that this balance remains. And today, of course, most experts talk a lot about omnichannel… OPI: Is the Staples/Office Depot saga having much of an impact on your market? If the merger goes ahead, Staples will have to divest all of Depot’s operations in Sweden. What type of scenario would benefit the Swedish market and also RKV dealers the most? SS: It’s been more or less business as usual so far I’d say, certainly from an outsider’s

view. Staples and Office Depot are both doing well in the Swedish market, certainly if you compare their performances to the rest of Europe. Both companies have stores as well as contract operations in the country. If the merger goes through and Staples has to divest Depot in Sweden, that would be an interesting situation, but only for Depot – for Staples it would probably still be business as usual. Certainly there are some rumours and thoughts about possible buyers, but it’s still a wait-and-see scenario.

The RKV team, from left to right: Stefan Sonesson; Jessica Rydberg (Marketing Coordinator); Tord Arnholdt (Graphic Designer); Cecilia Larsson (Purchasing and Finance); and Michael Alfinson (Purchasing Director)

OPI: Staples/Depot aside, is there more consolidation to come in Sweden? SS: The main changes in the reseller channel have taken place, I believe, mostly years back when the globals came in and bought up Swedish companies. Wholesale-wise, Despec moved in, which leaves the vendor channel where there hasn’t been much movement, so we could see more consolidation in that space. OPI: Tell me more about the wholesalers. SS: Well, we did have an office supplies wholesaler in Sweden called Büngers. It was a family-owned business which was bought by Denmark-based Despec at the beginning of 2015. Despec is now the biggest OP and EOS wholesaler in the country. Then we have Papyrus, but they don’t carry a wide range of OP and are more prevalent in office paper, packaging materials and jan/san products. We mostly deal directly with the manufacturers for office supplies, but both Despec and Papyrus are also sizeable suppliers to us. w w w.opi.net | OPI Magazine

RKV | Big Interview OPI: Talking of vendors, has your manufacturer base expanded much given the rather stagnant state of the traditional OP category? SS: As you say, office supplies are more or less flat, although we had good results in some segments and it’s still our main product group. We’ve had some good increases in the jan/san category and some members have also expanded majorly into workwear and personal protection equipment, as well as packaging material. OPI: What dictates what categories these dealers expand into? SS: It can be anything from specific geographical reasons, ie what type of businesses operate in certain areas and as such what type of ‘business products’ they need, or it can be historically linked and simply go back to the origin of a member. It’s all about local entrepreneurship – our members see the opportunities in their local markets and, if they’re switched on, they respond to those opportunities. We help them with this in whichever way we can, with services like marketing, education and product pricing/availability. OPI: What about breakroom products? This month’s OPI focuses on the breakroom category, so it’d be interesting to hear how important this is to you. SS: Well, coffee in particular has always been quite an important product for us and many dealers have developed their breakroom range in recent years and some have also gone down the equipment-leasing route. But I wouldn’t say that the category is flying high and fast yet – there’s plenty of room for improvement. Jan/san is certainly the bigger adjacent category for us right now. OPI: Let’s move onto the Nordic Office Alliance (NOA) that RKV joined four years ago. How is that cooperation going? SS: It’s a work in progress but it’s going well. I’m the Chairman of the board and Michael, my colleague, is working with the purchasing group. We don’t have any permanent staff in NOA and it’s a voluntary-based organisation. When RKV joined NOA, the main focus of the alliance was on the private label, Nordic Office, which is imported from Asia and comprises mainly traditional office products, including toner and paper. We’ve since developed it with new product ranges, new packaging designs, etc. The biggest change, however, has been our cooperation – under the NOA umbrella – with

brand suppliers like 3M, Pilot and ACCO. We didn’t have this before and started going down this route about three years ago. Today, we have 10-12 agreements with big key suppliers and that has increased our purchasing power with brand manufacturers hugely. OPI: But the Nordic Office own brand remains an important component of dealers’ offering? SS: Yes, definitely. It’s something that is unique to a relatively small group of companies, something that differentiates us and can occasionally be used in tenders. But it’s not a big part of what we do – similar to our own RKV private brand which is just a small sideline for uniquely Swedish products. Our relationships with the brand suppliers are very important to us and we haven’t got a substantial private brand strategy.

“The main changes in the reseller channel have taken place, I believe, mostly years back when the globals came in and bought up Swedish companies”

OPI: So what’s the ideal positioning of RKV in your opinion? SS: First up, I really want RKV to continue to be the leading independent dealer group in Sweden, comprising family-owned businesses that have a really strong local grip on the market. RKV as the central organisation should provide all the essential tools for our members to prosper and progress. And if – or should I say when – the market changes, we will change with it and offer our members exactly what they need. Working with independents is a really positive thing. Being family-owned, they have their own direction and their own goals, but they want to cooperate within their dealer group and are also fiercely loyal to us. I see many challenges ahead, but nice challenges and to me the future looks very bright. w w w.opi.net | OPI Magazine

Hot Topic | Brexit Referendum

or In

out?

The UK vote on whether or not to remain in the European Union takes place on 23 June. What implications would a ‘Brexit’ have on the business supplies industry? OPI Editor-at-large Andy Braithwaite asks around…

by Andy Braithwaite andy.braithwaite@opi.net

“I’m not sure if anyone is prepared for a circa 25% increase in the price of goods”

this issue of OPI goes to press, the latest polls are putting the ‘In’ and ‘Out’ voters neck and neck ahead of the 23 June UK referendum that will decide whether the country stays in the European Union (EU) or not. The UK leaving the EU – a scenario commonly referred to as a ‘Brexit’ – would cause major upheaval on a social, political, cultural and, of course, economic level, both for the UK itself as well as the EU. But probably not immediately. “Fears that exporters would be left high and dry the day after the Brexit vote are unfounded,” notes Capital Economics in a report commissioned by Woodford Investment. “Under Article 50 of the Treaty on European Union, a country leaving the EU has two years in which to negotiate a withdrawal agreement before the treaties cease to apply to that country. During that two-year negotiation period, the UK would still effectively be in the EU with unfettered access to the single market.” A study by non-partisan European think tank Open Europe has calculated a worst-case and best-case scenario for the UK in the event

OPI Magazine | May 2016

of a Brexit. In the worst-case scenario, where the UK fails to strike a trade deal with the rest of the EU and does not pursue a free-trade agenda, GDP would be 2.2% lower in 2030 than if the UK had remained inside the EU. In the best-case scenario, where the UK strikes a Free Trade Agreement with the EU, pursues very ambitious deregulation of its economy and opens up almost fully to trade with the rest of the world, UK GDP would be 1.6% higher in 2030 than if it had stayed within the EU. There are other studies that paint different pictures. In reality, no one really knows what would happen should the ‘Out’ vote prevail, except that we are likely to enter a period of uncertainty – which is something that never sits well in financial and business circles.

Pressure on the pound That uncertainty is already being felt in the depreciation of the pound sterling since the Brexit referendum was announced. As former CEO of EVO Group Robert Baldrey points out: “UK companies that are buying things in euros or dollars have had a pretty rocky road over the past few months.” For EVO, the pound versus euro exchange rate will continue to be the main concern if a Brexit occurs. “We buy an awful lot of things from the continent,” he continues. “If there is a Brexit and then we have a period of two years while we negotiate the terms

Yes, positively 11% Yes, negatively 33% of that exit we could see an extended period of pound/euro parity, and we would be in No 56% unprecedented territory. That would have a pretty monstrous effect on pricing and I’m not sure if anyone is prepared for a circa 25% increase in the price of goods.” While Mike Pickles, Managing Director of UK storage products vendor Really Useful Products, also recognises the implications of a lower pound – not just against the euro, but other currencies too – in the cost chain, he feels a Brexit could have a negative impact on basic trade relations with European partners. “My view is that we are part of a club and that we should stay in that club,” he says. “If someone resigned from my club, I wouldn’t particularly embrace their decision. If I was from [continental] Europe, I wouldn’t be keen on working with people that had turned their backs on us.” With around 20% of Really Useful’s sales generated from the EU – in fact, Pickles himself was attending a show in the Netherlands when OPI spoke to him – he therefore has concerns that a Brexit could hit his company’s top line, with potentially “brutal” consequences.

Philosophical

Brexit Referendum | Hot Topic

could have a negative impact on the Swedish economy and a knock-on effect in the rest of the EU. “About 7% of Sweden’s exports are to the UK, [so a Brexit] will, of course, have an impact on the market and the economy,” he says. “Also, how will Europe’s largest economy, Germany, No be affected? Germany 56% is a main trading partner for Sweden, so any negative effects in Germany could be felt here as well.” While there are these doubts about what the economic fallout could be in the rest of the EU if the UK leaves, purely from a business perspective, Interaction Managing Director Jan Van Belleghem doesn’t believe his purchasing organisation will be negatively affected. “We do have a few UK-based suppliers, so in terms of sourcing, a Brexit is on our radar screen,” he notes. “But, if there were trade barriers or tariffs imposed, there would be a way around it: if a UK supplier became less competitive, we would be able to source from elsewhere.” Obviously, statements like that will be cold comfort to UK vendors, but Baldrey points to entrepreneurial spirit winning the day. “I’m a great believer in capitalism,” he states. “If there’s business to be done, people will find a way of doing business. I don’t buy this ‘we won’t be able to buy anything’ attitude. We are a big market for these countries – they will still want to sell us stuff and want to buy stuff from us too.”

One global vendor that has just shown its commitment to the UK is Fellowes, which will move to a new, state-of-the-art UK headquarters and distribution centre in Doncaster later this year. Although not officially a ‘European’ headquarters, the facility is Fellowes’ largest in Europe and houses its European shared services unit. Michel van Beek, President of Fellowes’ EMEA operations, admits there are concerns about a possible Brexit, but is quite philosophical about the situation. “We realise that we are not in a position that allows us to influence the outcome. Of course we see potential threats related to currency and the general economic What might impact, but not having a crystal ball makes it hard to anticipate what these might be. What we will do is to continue to focus on what we can influence and what we do best and continue to provide strong and differentiating sales and marketing support.” On the continent, Stefan Sonesson, CEO of Swedish dealer group RKV (see page 14 for this month’s Big Interview with Sonesson), believes a Brexit

Will a Brexit have an impact on your business?

Yes, positively 11%

Yes, negatively 33%

Source: opi.net poll

“If a UK supplier became less competitive, we would be able to source from elsewhere”

happen to the euro/pound exchange rate in the event of a Brexit?

Source: UBS

w w w.opi.net | OPI Magazine

Hot Topic | Brexit Referendum

Brexit: what does OPI’s LinkedIn group say? James McLaren-Rowe, Managing Director at Amadeus Office & Educational Supplies, Furniture & Storage: This is a tough one. We all procure some products from the EU, so a Brexit is likely to mean either an increase in bureaucracy or costs – or both – certainly in the first instance. Whether that settles down will depend on if import levies will be imposed by the UK government. But we’ll all be affected in the same way, so the impact will be across the board. I suspect it will drive some smaller businesses to the wall, unfortunately. “I think the complexities of the situation are significant. As a result, I feel a significant portion of the UK public is going to vote emotionally and on the basis of their understanding of selected issues rather than on the situation as a whole. Bruce Davie, Managing Director, ZenOffice: I am sceptical about the likely impact of a Brexit on the economy. A lot of the noise in the press appears to be a negative ‘doomsday’ scenario, which I don’t think will materialise. The UK is far too important to the rest of Europe for them to cut us adrift and trade with the rest of the world. Personally, I have never been a fan of the bureaucracy of

OPI Magazine | May 2016

the European Union. Common market, yes, but no to a ‘United States of Europe’. We should be brave and make the step to leave unless there are further concessions made to persuade us to stay. I don’t see this having any impact on our business in the north-west [of the UK]. Roll on 23 June. Trish Smith, Managing Director, Southern Office Supplies: We are the fifth largest economy in the world. [In 2014], we purchased £288 billion ($323 billion) in goods from the EU and sold [goods worth] £227 billion. These numbers suggest they need us more than we need them. Strong economic growth in many developing economies outside the EU has increased the importance of non-EU countries [and] the proportion accounted for by the EU has fallen consistently since 1999. We may go through a small recession and also see the Bank of England raise its rates, but we have to consider the long-term effects of in or out. Alan Conroy, Managing Director, Support Solutions: If the UK votes for a Brexit, the effect will really be down to the terms negotiated and the UK won’t have a veto on these

OPI contacted its LinkedIn group for opinion on what a Brexit would mean for the business supplies industry. Here is a sample of the answers from what turned out to be an interesting discussion, although one that overwhelmingly interested members from the UK

terms. A Norway-type agreement would mean that the UK ends up following EU rules and contributing to the EU budget. As someone on the outside looking in (from Ireland), this debate seems to be more about border control and migration than business or even EU rules.

investment in the UK in the past 40 years has been to build plants to supply the EU market, not just the UK. One assumes much of this investment will logically cease if we exited, as why invest in a market of 60 million [people] when you can invest in a market of over 300 million?

Martin Eames, Director, Product Promotion Services: To leave the EU is taking an unnecessary risk with our economy. If we leave, free trade is not a given and, regardless of the UK’s desire for a Free Trade Agreement with Europe, individual political lobby groups in Europe

John Thurgood, Owner, Total Office and The Treadmill Deskstore: Personally, I think the OP industry has bigger fish to fry. Speaking on behalf of a business that doesn’t export to the EU, I think a Brexit would have no impact.

“The UK is far too important to the rest of Europe for them to cut us adrift and trade with the rest of the world” may well start a tariff war to protect their local interests. At best, exiting from the EU will result in an escalation of bureaucracy for companies selling or buying from the EU, not to mention the short-term cash flow implications of clearing VAT on imported products on entry – as companies currently have to do on products imported from outside the EU. This will all increase the costs and prices of goods and services. Furthermore, most major inward

Also, I’m not convinced that the wider arguments of economic downturn stand up. The UK is a very high-profile and wealthy marketplace and the other EU member states are in no position to put barriers in place to trade with us. As a business owner with a glass half-full perspective, I’m disappointed with the doom and gloom expressed by so many on the basis of an exit. It’s like half the nation has given up on the UK.

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MyO | Dealer Spotlight

MyO

strikes back

Italy-based contract stationer My Office (MyO) has certainly had its share of battles over the past few years, but has put all the troubles behind it now as it looks forward to the future – and to growth

by Michelle Sturman michelle.sturman@opi.net

THE

years since 2009 could not be considered an easy ride for MyO (My Office) by any stretch of the imagination. Founded and based in the tiny Republic of San Marino – which is entirely enclosed within Italy – the company had to deal with difficulties in trading with Italian businesses that took exception to San Marino’s ‘tax haven’ status and the long-lasting controversy between the tiny sovereign state and Italy over fiscal policies. Formed in 1951 by young Chilean entrepreneur Ernesto Bianchini, the contract stationer was originally known as Karnak before it was changed to MyO in 2012 as a result of merging several acquired businesses in the office supplies market. The company had enjoyed steady growth over the years, partly through the aforementioned acquisitions, including a number of Italy-based businesses. In 2009,

“We have the skills and logistics capability to serve all kinds of customers…”

for example, sales were over €100 million ($114 million) and the firm boasted around 350 employees, hundreds of reps and “satisfying” profits. As Lorenzo Rudella, current Managing Director of MyO parent company BI/Holding – in which the Bianchini family are still 100% shareholders – explains, the problems between the two countries led to the 2010 decision to leave San Marino and establish an Italian subsidiary, close to Rimini, where it already had offices. “Although we didn’t know it [at the time], this was the beginning of a long, and somewhat dramatic, reorganisation process that eventually led to the complete desertion of our San Marino operations and the start-up of operations and facilities in Italy.” Rudella describes the years from 2010-2014 as “sailing against wind and tide” as MyO was forced to undergo major restructuring while battling negative GDP in Italy as well as a shrinking office supplies market. The reduction in sales of traditional paper-based office products, in particular, represents an “irreversible” trend, according to Rudella. In fact, he even cites MyO as contributing to the decline: “One of the biggest

Lorenzo Rudella

w w w.opi.net | OPI Magazine

Dealer Spotlight | MyO

results we achieved is the elimination of paper from the order processing workflow. All orders arrive in electronic format and are sent straight through to logistics for processing.”

“One of the biggest results we achieved is the elimination of paper from the order processing workflow”

Automating business Automation has become an integral part of MyO’s overall operation. Last year, the reseller invested over €400,000 in a new warehouse management system at its 44,000 sq m (440,000 sq ft) warehouse, which stocks around 12,000 SKUs. MyO also delivered to more than 50,000 companies all over Italy, averaging around 6,700 picking lines and 1,150 shipments per day, although its available capacity is much higher. The majority of deliveries were to SMBs, although it does have a contract business and recently won some large public administration tenders. As Rudella explains: “We want to improve this side of the business which today accounts for less than 15% of total sales. We have the skills and logistics capability to serve all kinds of customers and this is a segment where we can really grow.” MyO realises that product assortment is hugely important in today’s ever-changing business supplies landscape, and has to be constantly revised and updated. The company has been posting positive results in new categories such as personal protection equipment, breakroom and jan/san. Part of the new category success is attributed to the trust that customers place in MyO selling ‘non-traditional’ products. The company not only competes against the multinationals, but also the hundreds of small local office supply businesses, many of which are very aggressive in their pricing. Rudella notes, however, that MyO’s recent successes stem not only from its product assortment and service, but more importantly, from the quality of its relationships with customers. Despite offering sophisticated tools that allow customers to manage their own orders and accounts, he believes a direct approach with a professional sales person is still the best way to build long-term relationships.

OPI Magazine | May 2016

MyO therefore relies on retaining an exceptional – and very sizeable – sales rep team, something which is helped by its profit-sharing scheme. Every rep knows the total cost of goods and, within certain agreed boundaries, decides the end-user price with the margin split 50:50 with MyO. In addition, sales people are provided with several iOS-based tools to manage customer accounts. The tools are all cloud-connected and are updated in real time.

Onwards and upwards MyO fact box: Founded: 1951 HQ: Torriana (Rimini), Italy Managing Director: Lorenzo Rudella Geographical coverage: Italy Group: Interaction Employees: 150+ Sales reps: 300+ SKUs: 12,000 in-house; 21,000 available

Having streamlined the company and survived what Rudella terms its previous three “dark and red” years, 2015 saw the reseller post positive EBITDA with sales increasing once more. He now sees a light at the end of a very long tunnel at the company. And while sales have diminished substantially over the past few years – sales for 2015 totalled €65 million – from September 2015, MyO started to grow at a monthly rate of between 7-10%. For this year, the rate is expected to remain at 10%. The market itself accounts for around 2% of this growth, Rudella explains, while the remainder is derived from finally being able to concentrate all efforts on its daily business.

Breakroom Feature | Trends

Perfecting the breakroom While health and wellness programmes are nothing new, their importance within the office environment is rapidly gaining ground, particularly in the breakroom. This translates into increased sales opportunities for OP dealers as the breakroom evolves

by Michelle Sturman michelle.sturman@opi.net

more businesses respond to the call for action over employee health and well-being, the effect on the humble breakroom has been quite dramatic. Coupled with other factors such as the trend toward more collaborative spaces, the influx of millennials in the workplace and a desire for more ‘refined’ products, the breakroom is now an entirely different beast to the original grey, uncomfortable canteen or linoleum-floored pokey kitchen.

Creating the perfect breakroom Today’s breakrooms are no longer the underutilised backwaters of the office, instead they have morphed into comfortable areas where employees can ‘work, rest and play’, albeit more likely with healthy food snacks than a chocolate bar. The breakroom is fast taking over the water cooler area as a space where work colleagues get together and socialise in (more) pleasant surroundings. Far more thought is also being given to the design of breakrooms which now ranges from cocktail bar set-ups with stools,

OPI Magazine | May 2016

barista-style coffee shops or a series of cosy spaces dotted around a building, to play areas filled with various entertainment options or tranquil spaces filled with natural light, plants and private seating pods. In an attempt to increase productivity while at the same time reducing abseentism, the breakroom has become a powerful business ally as it’s been proven time and again that a relaxing breakroom inspires employees. Indeed, the recent Staples Advantage 2015 Workplace Index revealed that 64% of staff attributed adequate breaks as a key factor in contributing to high productivity while 20% of staff cited a well-designed office as being an important differentiator between a happy and an unhappy place of employment. The Index also revealed vital differences between the generations in terms of where employees feel most creative and innovative. It will probably come as no surprise that millennials (48%) are most creative/innovative in non-traditional environments such as lounge areas, outdoors, cafés, etc. Only 38% of Gen Xers prefer this environment while it drops to just 27% for baby boomers. Almost a quarter of millennials (22%) surveyed feel a room equipped with recreational equipment is a good idea. In addition, more than half (57%) think

The big breakroom trends Design Breakrooms are evolving to become spaces that do not resemble the rest of the office in terms of décor and furnishings. In particular, they have become collaborative spaces that promote conversation and creativity in a more informal atmosphere. Breakroom design is motivating employees to spend time with colleagues over lunch or breaks, boosting morale and encouraging staff to remain in the office.

Food and snacks With the focus on employee well-being, many businesses are now looking to offer healthier food, from snacks such as granola bars, nuts and fruit, to less fatty and calorific meals including salads. This is even being translated to the vending machine.

Tea and coffee As part of raising productivity levels, companies are looking to provide staff with the drink of their choice in

Trends | Breakroom Feature order to stop dashes to the nearest coffee shop to get their caffeine fix â&#x20AC;&#x201C; which takes on average 20-40 minutes per trip. In ever greater numbers, businesses are also leasing brewing systems for the breakroom to provide barista-style beverages.

Appliances Todayâ&#x20AC;&#x2122;s breakrooms are frequently equipped with a fridge, dishwasher and microwave. And there are increasing requests for installed vending machines that accept credit/ debit cards as well as cash.

Creativity Breakrooms are quickly becoming the antithesis of the formal meeting room and instead are areas where creative ideas can flow between colleagues during breaks or meetings. To this end, re-writable wall paint can be used, along with whiteboards or similar products for brainstorming.

Promoting relaxation with creativity, the use of adult colouring books is catching on and moving from the home into the office.

for downtime viewing. The latter is especially useful for bringing employees together over special events or important news stories.

Furniture Gone are the days of hard plastic chairs and square formica tables. In its place are comfortable chairs and sofas, individual working pods and collaborative workspaces for groups.

Entertainment As part of recreation activities and the promotion of fitness, breakrooms are taking cues from companies such as Google. They are being kitted out with board games, ping-pong tables, arcade games, pool tables, libraries/ magazines, game consoles such as Xbox and PlayStation, and other sporting activities. The use of TVs is becoming popular, for both business uses in a more informal setting, as well as

Sustainability Sustainability is an issue that pervades all aspects of business and this includes the breakroom. Supplies such as paper towels, napkins, recycling bins and cleaning products are increasingly being purchased with a more environmental focus.

w w w.opi.net | OPI Magazine

Opinion | Selling Breakroom Lock in customers and add new revenue streams with allencompassing breakroom solutions – that’s the advice of Dan Ragan, National Sales Manager at US-based compostable coffee and tea pod vendor Pod Pack

by Dan Ragan

OFFICE

products dealers in their search for new sales opportunities could do well to follow the lead of their breakroom competitors by providing equipment, services and a wider variety of products to offices. By way of example, many OP dealers long ago added copiers to their offering, with a requirement of purchasing paper and toner. The contracts may vary, but the cost can be all-inclusive with a minimum number of pages purchased, or a simple rental with a requirement to purchase so many cases of paper per month. Contracts can also include a maintenance schedule that may carry an additional cost. These methods add value to the OP dealer and lock in this channel of supplies, while at the same time keeping the competitor out. The dealer has successfully increased revenue, and also owns the channel by controlling the equipment.

OPI Magazine | May 2016

Similarly, dealers can exploit the breakroom channel and the variety of products used. The OP wholesalers offer many breakroom items and also include options such as coffee brewing equipment and bottled or point-of-use water machines. However, there has been a pushback by dealers that do not want to add a full service department, with some simply selling the equipment to consumers with a promise to lower the cost of associated products. This has left some consumers with the belief that owning the equipment means they own the breakroom. As a result, they look for alternative sources such as wholesale clubs or grocery delivery companies to acquire said associated products.

for different channels. They may even pay for the marketing material through sales rebates. However, these methods do not create long-term channel growth, but rather an opportunity for consumers to purchase impulse items. OP dealers that fully embrace the breakroom channel will add a service department for equipment repair and provide a complete product line to the consumer. This complete line may include open brew, airpot systems, single-cup options, bean-to-cup brewers and liquid coffee. Having multiple options reduces the possibility of barriers to sales in the channel. But sales people will need training in each of the product lines to add value in sales presentations; they should take advantage of any training that may be provided by vendors at the OP dealer location or may be available through industry-specific trade shows. Consumers continue to look for quality and value in coffee programmes and are willing to pay for innovation. Some businesses, for example, may struggle with employee downtime due to trips to the coffee shop for an afternoon coffee. OP dealers can provide a solution to lost productivity by creating an in-house coffeehouse solution at a low cost. Consumers prove every day they are willing to pay $4 for a cup of coffee, so the concept of a quality solution is not foreign to managers. Many office managers also look for convenient solutions to include single-cup coffee. The single-cup channel continues to grow because there is no waste, the consumer chooses what they want when they want it, and the product is delivered in less than a minute.

Embracing the breakroom

Top tips for dealers

For years, OP dealers have sold breakroom-related products almost by accident as tins of coffee, cream, sugar, stirrers and many other items became available through the wholesalers also looking to increase sales. The wholesalers continue to develop the category by providing extensive sales sheets to help OP dealers grow and mailing services

• Embrace an equipment programme and include many options for the customer. • Take advantage of any vendor and wholesaler education on offer, and attend trade shows to build up essential breakroom sector knowledge. • Review industry magazines and websites for up-to-date information regarding the channel and new, innovative products.

Category Analysis | Breakroom

The breakroom sector continues to see strong growth and there’s still time to get on board if you’re quick

by David Holes

THE

breakroom used to be an overlooked asset in the workplace, but companies are now increasingly recognising that an effective breakroom can play a central role in the office space – a place employees can go for a rest, a snack and a chat with their colleagues. Keeping this space attractive, clean, effectively furnished and well stocked is key to its use and it can be viewed as a distinct perk by employees, earning the company some welcome kudos if it gets the overall experience right. This increased focus on the breakroom space has offered great opportunities for suppliers and resellers in this sector and the key players are reporting some impressive sales figures.

OPI Magazine | May 2016

William Liebregts, Head of Procurement and Marketing at dealer group/wholesaler Quantore in the Netherlands, reports stunning growth: “The breakroom category has been growing 24% year on year for the past five years and we expect this to continue for at least three to five years more.”

of the breakroom sector has resulted in a wider base of resellers coming on board and realising gains. We also continue to refine our offerings to meet the needs of the market, which also contributes to growth.” Research from The NPD Group in the US supports this optimism. Its Office Supplies Industry Analyst Leen

“The breakroom category has been growing 24% year on year for the past five years and we expect this to continue for at least three to five years more” Jeff Bobroff, VP of Merchandising Business and Facility Essentials at Essendant, is similarly confident: “Breakroom continues to be a strong area for us with significant growth, and we’re optimistic about sustaining that. Much of that increase is due to broadening our approach to this category. Educating all of our resellers about the importance and potential

Nsouli reports continued category growth both in-store and online: “Sales of beverage cups, plates, bowls and cutlery are still rising. Small businesses and home office workers are stocking up on tissues and paper towels as well. At office stores, these products are often promoted front-of-store on palettes, and I’ve found that sales staff will even

Breakroom | Category Analysis remind customers at the checkout about promoted items in this category. Tissues and paper towels are important classroom items as well and ones that teachers need to restock throughout the year.”

Opportunities and trends At France-based global reseller Lyreco, breakroom is a fast-growing sector – both in consumables (drinks and snacks) and in the provision of kitchen hardware. “It’s an excellent add-on to our core business and gives us another string to our bow,” says its Group Marketing Executive Pascal Mitchell. “Changes in the way firms are allowing employees more flexibility in the breakroom space has created opportunities for dealers. They can now offer foodstuffs and other products that help businesses organise their kitchen and breakroom areas – such as coffee capsule, milk pod and sugar stick drawer systems. “Businesses can also use the breakroom to influence their employees’ presence in the office. Get it right and there’s no need for them to go off-site to purchase their coffee, tea and snacks and take time out from business activities.” Bobroff agrees: “The role of the breakroom is changing. It’s becoming more of a multipurpose space and a hub for interaction and collaboration. Our offering reflects that and we’re now focusing on flexible furniture such as height-adjustable hospitality tables that can easily adapt to any situation.” Bill Marsh, Sales Director, Office Channel at Reckitt Benckiser, stresses the need for office dealers to play to their existing strengths: “The opportunity is to offer the type of service that they are traditionally so

good at. End users will pay more for smaller quantities, because they don’t have to purchase a whole case. The fact that products can be delivered tomorrow, or even today, is an amazing benefit. Some distributors just haven’t figured this part out yet, but once a user experiences the value that a good dealer can provide, there’s no going back.”

Evolving tastes Bobroff also sees changing workforce habits as factors that need to be considered: “More and more people are snacking multiple times a day, up to four or five times, and turning to snacks as a meal replacement. Busier and more mobile than ever, end consumers want something that’s convenient and tasty – something to grab and go and still feel good about.

So we’ve expanded our selection to include more of those options. “Many people, but millennials especially, are also looking for healthier snacking choices. We’re seeing several trends associated with that. High-protein snacks – plant-based proteins in particular, including nuts, seeds, bars and nut butters (almond, cashew, peanut, etc) – are popular. And people are gravitating towards clean-eating options, snacks with a short list of simple ingredients. A great example would be the new ‘That’s it’ bars that only have two ingredients, both completely natural. ‘Kind’ bars are another good example – nutrient-rich, full of flavour and made with wholesome ingredients. Popped and baked options are also growing along with the health-conscious snacking trend, and low-fat, low-sugar snacks continue to do very well.” However, in the UK this latest US trend isn’t yet as well established w w w.opi.net | OPI Magazine

Breakroom | Category Analysis according to Debbie Nice, Category Head of Facilities Supplies at EVO Group: “Healthy snacks are increasingly popular with the home consumer and we expect this will have an impact on workplaces in the future but, with the exception of speciality teas, we haven’t yet seen this. As a wholesaler we don’t

which could be overwhelming obstacles for individual resellers. But as a wholesaler with a deep understanding of the business, we take that burden off the resellers. Our systems for stocking, shipping and tracking merchandise enable our resellers to sell breakroom with confidence and ease.

“The opportunity is to offer the type of service that [OP dealers] are traditionally so good at” have a chilled delivery fleet so are unable to offer fresh foods, which does restrict the type of products that we can offer right now – we’d love to be able to stock Innocent smoothies, for example.” Away from foods, Marsh also sees immune-enhancement products as another potential sales line: “Products like Airborne help boost the immune system and Mucinex controls cold symptoms so you can continue to function. In the office, you want everyone present and working, but you don’t want them spreading germs that cause sickness and these two products are great additions to the breakroom category.” As alluded to by EVO Group’s Nice, there are of a number of challenges when entering the breakroom sector, but as Bobroff explains, none of them is insurmountable: “When you’re dealing with food, there are a number of difficulties around storage, expiration dates and health and safety regulations

“Also, to help our resellers become specialists in the breakroom category and compete successfully, we offer workshops, off-site seminars, and on-site training sessions with our business development managers.”

Jump on board The breakroom overall remains a sector that offers excellent potential, with growth rates that are outstripping many other categories. But that won’t continue forever, as Marsh summarises: “The breakroom sector is a very important element in the office channel. We definitely see the trend continuing upward for a while longer. But it will have an end and dealers need to jump on this ride right now.” He adds: “In economics it’s known as the ‘perfect competition’ – as dealers make money in this category, more will flock to it, until the margin is ultimately driven out of the model. Get in on it now before it’s too late.”

The Keurig factor Think single-serve coffee and the firm that will most likely spring to mind immediately is Keurig, the original single-serve brewer and coffee-pod manufacturing company. Many OP resellers have been trying to jump on the Keurig bandwagon and in March UK dealer group nectere confirmed its status as a Keurig-authorised distributor (KAD). The group had been looking at expanding into adjacent product categories such as breakroom and was already a distributor of the Starbucks brand – which is linked to its status as a KAD. With the new deal complete, nectere confirmed that its partners will distribute Keurig brewing systems and over 20 varieties of Keurig speciality beverages, including filter coffees, teas and hot chocolate from brands like Starbucks, Twinings and Green Mountain Coffee.

ppove: “The potential market for Musgr es Klum JohannPaul these [Keurig] products is huge”

“The potential market for these products is huge and our partners now have the opportunity to become coffee services suppliers,” says nectere Managing Director Paul Musgrove. “Our partners can now sell Starbucks coffee, which is such a unique selling point for them, and the reception of the machine and pods has been outstanding. We expect the breakroom sector to be at least 10% of our turnover in the next three years. With the market evolving the way it is, we see huge potential for our partners in our agreement with Keurig.” Incidentally, nectere’s announcement broadly coincided with Keurig Green Mountain – formerly listed on the Nasdaq – becoming a private company again following the completion of its acquisition by an investor consortium, led by Luxembourg-based JAB Holding in a $14 billion deal. The JAB-led group says it will allow Keurig to operate as an independent entity. w w w.opi.net | OPI Magazine

Category Analysis | Breakroom

Coffee time The importance of a cup of coffee should never be underestimated, according to Lynn Little, Category Business Unit Lead for Standard Ingredients at Nestlé Professional: “People’s expectations have gone through the roof in recent years, with the gap between top-end coffee and what’s available in the supermarket narrowing. Whether out and about or in the office, consumers expect great quality coffee in a moment. With huge advancements in instant coffee in recent years, there is no reason why the office can’t match up to those drinks made by a barista in a coffee shop. For the breakroom category this opens up vast potential. “The emotional importance of breaks in the workplace cannot be underestimated, whether to provide a social connection with colleagues or a welcome pause in the working day for rejuvenation,” she adds. “And a good cup of coffee plays an important role in this. For office workers today, having access to a quality cup of coffee is more than just an expectation, it is a given, and is ingrained into every element of breakroom culture.” Jeff Bobroff, VP of Merchandising Business and Facility Essentials at Essendant, estimates that office coffee services is a $4.5 billion market in the US and growing: “By doing more around installing, servicing and replacing brewers, OP resellers are winning coffee and therefore, winning the breakroom.” He continues: “In the coffee market overall, we’re seeing strong brand loyalties, some of which are influenced by region. Keurig K-Cups continue to be big sellers. Their huge selection of brands, beverages and flavours make them popular in the workplace. And single-cup brewers now make up 20% of the office coffee services market. In fact, the simplicity of single-cup brewers and the incredible assortment they offer now relegate instant coffee to a niche market.”

OPI Magazine | May 2016

e gone through the roof”

Lynn Little: “Expectations hav

In an instant Debbie Nice, Category Head of Facilities Supplies at EVO Group, is seeing a different trend in the UK and Ireland where the market is fairly evenly split between tea and coffee consumption: “There’s a lot more demand for speciality and premium products, but soluble coffee still takes the majority of market share, with a big shift towards premium and micro-grind coffees such as Azera and Millicano. Roast and ground coffee is seeing less growth in smaller offices, probably because the popular ways of making this type of coffee, using filter machines or cafetières, can be messy and time consuming compared with making instant coffee. “We are also seeing a growing interest in pod machines because the products on offer have improved dramatically. Popular brands include Dolce Gusto, Tassimo and Nespresso which are a very convenient option for meeting rooms and boardrooms.” In general, the UK has witnessed huge growth in both domestic and office coffee machines over the past few years. Single-serve machines still represent the largest segment, accounting for 79% of total sales and growing by 14% over the past year, according to research firm GfK. But it’s the bean-to-cup market, with machines that grind beans, froth milk and produce a wide range of coffees from espressos to lattes, that has enjoyed the greatest growth, says Helen Warner, Senior Account Manager at the research firm: “Volume has increased by a huge 23% despite the average price paid for a bean-to-cup machine being around £400 [$570], a huge £340 more than the average

Pascal Mitchell: “The need for quality is key”

single-serve purchase. We expect sales to continue to increase, although if promotional activity continues to drive the market, we expect value to slow.” William Liebregts, Head of Procurement and Marketing at dealer group/wholesaler Quantore in the Netherlands, believes its growth in coffee sales is mostly fuelled by an increase in the demand for beans, but filter coffee is also taking a bigger share at the expense of instant coffee. Tea sales growth is mainly generated by the explosion in the different varieties now available and also the trend for higher quality teas. Pascal Mitchell, Group Marketing Executive at Lyreco, says that its global presence has allowed the company to analyse trends in tastes within the drinks and snacking industry across the planet: “Each country, particularly in Europe, has its own tastes and these are constantly evolving and developing, with pod machines now regularly seen in the office environment. The need for quality is a key part of the offering, therefore having a range of internationally recognised brands is vital. That said, providing local products that fit local tastes is also of paramount importance. Interestingly, the sales of recyclable or compostable coffee cups and lids are also accelerating.”

Special Feature | Content Marketing

Breaking down the buzz Content marketing – the buzzword of buzzwords right now. But does it actually drive business? Independent strategist Bert van Loon offers a roadmap of the business opportunity that content marketing represents

The content marketing roadmap and why it’s important to tick every single box on that roadmap

RemembeR

the last car you ordered? Or holiday you booked? With online technology you have more access to information than ever before. Taking the car as an example, only a few years ago, you would have gone to a car dealer to be informed about new features and automotive technologies. Today, you show up at the showroom armed with all the information – about both the car as well as the dealership – as an equal partner to buy the car you want for a price you’re willing to pay. During your research, you have been influenced by all the content that you came across in your exploration of brands, fuel types, models, options, pricing and dealership reputation. And you probably found that content through active searching in review databases and search engines, and through more passive scanning in magazines and social media. Needless to say, the car brand and dealer that have been able to

OPI Magazine | May 2016

include their message and their content in your exploratory journey will probably have a better chance of influencing your buying decision than the competitor that was invisible during your consideration process.

Explaining the ‘why’ All this demonstrates how the increased access to information for both consumers and professional buyers is essential in their buying process. One of the key outcomes of a Harvard Business Review study in 2012 which surveyed 1,400 B2B companies was that 60% of the buying

process is performed by the buyer without any contact with a supplier. If you ever wondered what role all your content efforts play in your sales process, this should either reassure you or serve as a severe wake-up call. There is another reason why making content one of the biggest priorities of your marketing and sales efforts is so important: technology doesn’t only allow customers to be better informed than ever before, it also enables them to shut off unwanted communication. In the television industry ‘prime time’ TV is rapidly being replaced by ‘my time’ TV. All the tools and

Content Marketing | Special Feature channels available now enable people to decide when, where and how they allow content to enter their lives. Combined with the increased use of ad blockers online, it becomes harder and harder to create visibility for your advertising message. This is where content becomes your next weapon of choice. People love to be entertained and informed, but only if the information is relevant, valuable and credible. Until fairly recently, this was the realm of publishers, but with the rise of social media, mobile internet and affordable publishing technologies, it has become accessible for practically every company. Brands effectively become their own publishers now and they can – and should – shift the focus of their marketing efforts from broadcasting sales messages to creating valuable content to earn the attention and trust of their audiences as the foundation of future and recurrent sales.

Define content marketing With the ‘why’ out of the way, we can focus on the ‘what’ and ‘how’. The Content Marketing Institute (CMI) in the US has developed a huge amount of resources to better understand what content marketing is and how it can be developed in your business. CMI’s definition of what content marketing is, in my opinion, makes for a good starting point: Content marketing is a strategic marketing approach, focused on creating and distributing valuable, relevant and consistent content to attract and retain a clearly-defined audience and, ultimately, to drive profitable customer action. This definition contains many important insights. First of all, content marketing is a strategy, not a tactic. Secondly, we view customers as audiences before, during and after they buy from us. Thirdly, the content should be valuable and relevant for the audience to earn attention while being consistent at the same time to become a carrier for your brand recognition. This, essentially, is a more detailed version of the simple ‘brands become publishers’ tagline.

While advertising is typically a campaign-based approach, with a clearly defined end, content marketing is much more of a continuous process where you gradually build valuable communication assets in terms of a content library and audiences. It comes in many shapes and forms. Text obviously is a very important form, but video and graphics or other visuals are gaining importance rapidly as the creative tools and skills needed become more accessible. If we look at media types, digital definitely deserves a prima donna role: it’s easily created and published, its appreciation and visibility can be measured to perfection, and it can be reshared by people in their own networks. At the same time, however, print increasingly becomes a premium media form with high impact once in the hands of your audience. Finally, the third main type completing the media tripod is live marketing, also known as in-person marketing or face-to-face marketing. It’s interactive, high impact and has the highest attention capture possible, but it’s also laborious to develop, less scalable and costlier on a per capita basis. Once you have thoroughly processed the mind shift needed to start thinking and planning as a publisher, the next question should be where to start. The first priority is to understand the needs, motivations, expectations and problems of your audiences. This will help you to map the buyer journey for your various audience types. It’s the single most important prerequisite to be able to develop and distribute content. It will offer you the recipe with the ingredients needed to earn the audience’s attention and appreciation. The other element is to define your goals in terms of branding, building customer relationships and driving

customer action, and then develop them further into specific and measurable objectives. This will enable you to develop your strategy with priorities in terms of audiences and channels. Once married with your brand promise you can develop your content concept and are ready to become a brand publisher.

Manage your expectations Armed with the basic information, you are hopefully now ready to go. It’s important, however, to manage your expectations. Building audiences with your content is a relatively slow process. It takes a long time to create success, but at the end you will hopefully have built an audience asset that will be valuable for a long time if maintained properly.

Bert van Loon is an independent strategist who grew up in B2B publishing, experiencing first-hand the industry’s transition from ‘print only’ to digital and cross-media. During recent years he has been delivering modern marketing communication strategies using his vast experience to help companies build an audience, start a dialogue and turn eyeballs into business leads. For further information, visit www.bertvanloon.com. In the next issue of OPI, we’ll take a close look at how far the OP industry has come in terms of jumping on the content marketing bandwagon.

w w w.opi.net | OPI Magazine

State of the Industry Report | Research

Silver Linings Predictions last year that the ‘core’ office products market would decline by about 3-5% proved to be a conservative estimate. But there are plenty of silver linings that make up for this shortfall in performance, as OPI and MWA found out for their third State of the OP Industry report

WITH

the third edition of The View from the Top: The State of the OP Industry 2015-16 hot off the press, OP market researchers Martin Wilde Associates (MWA) and OPI found that the ‘core’ OP market appears to be performing even worse than anticipated last year. In the first few months of 2015, MWA & OPI’s second annual survey of senior OP industry executives in Europe, North America and Australia found that only 12% expected the ‘core’ OP market value to increase in 2015, while as many as 63% of respondents expected it to decrease over the year, with the vast majority of these (44%) believing that the decline would be as much as 3-5%.

A year on and the most recent study on the state of our industry established that core OP market performance in 2015 was reported by senior executives to have been slightly worse than those gloomy expectations. As Fig 1 shows, the value of the core OP market was believed by 72% of respondents to have declined in 2015, while only 17% felt that market value had increased during the year. The latest The State of the OP Industry 2015-16 report investigates senior executives’ perceptions of OP market trends in seven markets: the US, Canada, Benelux, France, Germany, the UK and Australia. Broadly speaking, the research found

34% 31%

Fig 1: Change in core OP market value 2014-2015

17%

• • • • • • • • • • • •

Digitisation Less demand for core OP items Poor economy Price deflation More millennials in the workforce Shift to managed print services More unemployment Fewer white collar jobs Decline of oil industry (in Canada) Currency fluctuations Customer mergers Customer destocking

Overall sales on the up

However, the overall picture beyond core OP looks much rosier. Most respondents, for example, believed that their own companies had bucked the negative market trend in 2015, and reported that sales had outperformed the core OP market, with the majority (62%) claiming that their revenues had in fact increased in 2015, with the largest share (21%) posting growth rates of 1-2% and 17% stating that they had achieved sales increases of over 10% during the year. Like last year, the category that was by far the most widely-reported as growing in 2015 was facilities management (FM) supplies (76% of all respondents), with a significant share (41%) also mentioning growth in office furniture as many world economies have improved and capital investment activity returns.

’t Do n

-1 0%

-5 % ea se cr De

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by De cr

ed re as

12%

ed an g Un

ch De c

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Source: MWA

10%

that similar downward trends were evident in all of these markets, for a number of different reasons:

w w w.opi.net | OPI Magazine

Research | State of the Industry Report

5% 27%

7% 12%

15%

27%

Fig 2: Respondents by region UK USA France Germany

■ ■ ■ ■

■ Benelux ■ Canada ■ Australia

Source: MWA

Some tech categories (tablets/ iPads, smartphones and accessories) were also quoted to have grown in 2015. However, virtually none of the traditional paper-based OP categories were reported as seeing noteworthy increases last year: indeed, it was these categories that were most often cited as being in decline in 2015, particularly envelopes, filing supplies and office paper. Overall, the two distribution channels that were by far the

“As many as 34% of distributors reported that their net profits had increased in 2015, while only 24% claimed that there had been a decrease”

most widely reported to have won market share in 2015 were – once again – Amazon and the internet-only OP resellers. That said, it is clear that there has not been a universal flight away from bricks-and-mortar channels, since the mass market retailers (and even the OP superstores in some countries) also seemed to have grown significantly. Of the traditional OP channels, it was – also once more – the independent OP dealers that were regarded as having taken share in 2015, although the same group was also slightly more widely-reported as having lost share last year. In fact, it was some of the traditional OP channels that appeared to have lost the most share in 2015, particularly the contract stationers, office products superstores and mail order businesses, as well as the OP wholesalers. Other key trends identified by respondents included the following: • A third of distributor respondents reported that their average gross margins had increased in 2015, while only 27% claimed that they had decreased. This is an improvement on the previous survey, in which nearly 50% said gross margins had declined. • In general, as many as 34% of distributors reported that their net profits had increased in 2015, while only 24% claimed that there had been a decrease. Again, this is a better picture than the last survey presented, in which 30% of distributors reported a decrease in net profits in 2014. • There is a steadily increasing share of own label products, although this varies by country. Overall, the share of own label among the distributor respondents was 16.5% in 2015 on (unweighted) average; among manufacturers it was 18.8%.

In these turbulent and ever-changing times, senior industry executives need a reliable yardstick against which to assess their own performances, perceptions and strategies. The State of the OP Industry 2015-16 report is intended to provide this essential objective viewpoint. This must-have, authoritative annual sourcebook for the OP industry is available now for only US$1,200 (£750). To order your copy, go to www.opi.net/SOI2016.

OPI Magazine | May 2016

There’s more… The State of the OP Industry 2015-16 study is based mainly on insights and data collected from 59 senior industry executives in a broad selection of major OP companies across the various channels in the aforementioned countries (see also Fig 2 and Fig 3). It includes the 2015 financial performance of 15 major OP distributors in the US, Europe and Australia, as well as an analysis of the key industry events during the year. Most importantly, it also features the predictions of the 59 key CEOs for the OP industry in 2016, including – for each country: • Core OP market size and growth • Estimated sales growth and profitability • Growing/declining product sectors • New product categories being developed in 2016 • Growing/declining channels • The prospects for Amazon becoming a significant B2B player in the OP market • The effect on the OP industry if the Staples/Office Depot merger goes ahead – or not • Future trends for other key issues, including own label share, the share of online sales and of sales in FM supplies.

Fig 3: Respondents by activity ■ Product manufacturer/vendor/paper mill/OEM ■ Distributor/reseller ■ Other Source: MWA

37%

61%

Your OPI

Where are they now? Allan Crump

“I would be a dinosaur in today’s marketplace”

AllAn

Crump is a well-known personality in the UK OP industry and his CV goes back many years – OPI’s 25 years in business are a comparative short-term blip. And while his focus has been primarily on the independent channel through his involvement in dealer groups as well as his own dealership Alpha Office – sold to office2office in 2006 – Crump was also heavily involved in the industry as a whole, predominantly through his work at industry association BOSS Federation. OPI tracked him down on a path less well-trodden in OP terms – in the beautiful city of Marrakech in Morocco where he now runs a small hotel. What’s your claim to fame in OP terms? As Chairman of the BOSS Federation Standards Committee I was able to be material in driving the standardisation of product. With different units being used by individual manufacturers and suppliers, the industry was incurring huge errors, in terms of cost and other ways.

“[The OP industry] is price-driven and without sufficient marketing and sales skills. It also undervalues relationship skills, which in my opinion are essential in any good customer/ supplier partnership” Our aim was to enable the separate back office systems to talk to each other. Let’s just say that it was not easy bringing the various aspects, not to mention personalities, of the industry together in that endeavour. My company Alpha Office was also the founding member of NDA, a dealer cooperative that aimed to create combined strength in areas such as purchasing, marketing, publishing and business practices. NDA later merged with Instat to become what’s now the Integra Office Solutions group. Many dealers still don’t get it in my opinion. I am a communist capitalist at heart and believe in groupage. What links do you still retain with people in OP? There is a good social network via The Society of Old Friends and The Stationers Livery Company, for example. I also maintain good contact with friends and trends through social media. And, of course, I read OPI’s daily newsletter every day here in Marrakech. Seriously, I really do.

OPI Magazine | May 2016

What, in your opinion, most defined your time in the industry? The advent of computerisation and great back office systems like Progress which took huge cost out of the supply chain. Alpha was years ahead of its time primarily due to a great IT team that wrote its own software. This enabled us to create systems that companies like Amazon have only recently started to achieve. With vision and a gifted team, it was easy. Anything you miss? Not at all, I would be a dinosaur in today’s marketplace. Any things you should have done and didn’t, or vice versa? How much time have you got…? What’s your view of the current OP industry? It’s price-driven and without sufficient marketing and sales skills. It also undervalues relationship skills, which in my opinion are essential in any good customer/ supplier partnership. What do you do now – and why? I own and run a very small historic riad, a boutique hotel in the centre of Marrakech Medina, the old walled city. I retired at 68 and could not face waking up every morning without a goal and a purpose. I saw many of my peers retire and age exponentially. What I do now is exceptionally hard work, but it’s also huge fun. Does it compare to OP at all? It compares to the OP industry of old where people were important. I live in a neighbourhood where everybody is friendly and looks out for each other. Any lessons that you learned all those years ago at Alpha Office and Integra that prepared you well for what you do now? I ran a flat management company where managers had a degree of autonomy to run their departments as they wished – as long as they complied with company objectives – and regularly met with their peers so ensuring continuity and no disruption to other departments. In other words, I tried to delegate. What could the OP industry learn from the hospitality sector? Focus on profit, not just price; care about people and, where possible, empower them; multitask. Above all: smile more!

Also incorporating OPI’s 25th anniversary party

Sunday 13 November - Tuesday 15 November

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The Sofitel Chicago Water Tower, Chicago, IL Book now at www.opi.net/gf2016

Absolutely the best event of all the previous Global Forums. Content was right on, engaging and timely. Networking great. Attendees great. Venue great. Only downside was the writer’s cramp from all the notes I took

Programme A comprehensive programme featuring high-quality speakers and a professional moderator will stimulate thought and debate. There will also be plenty of networking opportunities, allowing you to spend quality time with fellow business products leaders, and dealers, from all over the world.

Dave Guernsey, CEO, Guernsey

Past Forum attendees

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3M, ACCO, Acme United, Avery, BPGI, Brother, Buffetti, Clover Technologies, Colop, Complete Office Supplies, Corwell, CPD, DC Mayorista, Domtar, ECi, EOSA, Esselte, Essendant, EO Group, EVO Group, Fellowes, FSIoffice, Ghent, Gould Paper, Guernsey, Highlands, HiTouch Business Services, HP, HSM, iba, IBM, Independent Stationers, Integra, Interaction, ISSA, Lyreco, Midwest Resource Group, Miller’s Office Products, Novexco, Office 1 Superstore, Office Brands, Office Choice, Office Depot, Office Friendly, Officeworks, PBS Holding, PEG, Pilot Pen, Pinnacle Associates, Plaisio, PrintFleet, Printus, Pukka Pads, Really Useful Products, Scandinavian Office, Shoplet, Smead, Source Office & Technology, Spicers, SP Richards, Staples, Superstat, Supplies Network, JM Smucker, TriMega, Victor Technology, Warehouse Direct, WW Grainger, Waltons, Wist Office Products, Xerox, Zebra Pen

Your OPI

5 minutes with... Dennis Albers, European Category Director, ADVEO Group International

Try to love what you do. Work is a very big time investment, especially if you don’t like it

Describe what you do in less than 20 words. I manage certain product categories on a central level, working with various countries to achieve the commercial category objectives of ADVEO Group.

If you could invite two famous people for dinner, who would they be and why would you invite them? An evening with comedians Kevin Hart and Ricky Gervais would be a very good laugh I imagine.

The worst job you’ve ever had. For some strange reason I thought it was a good idea to take a summer job in an abattoir. It was a very hot summer and it was the first and last time I did that.

Your favourite movie. The Shawshank Redemption.. Great movie with fantastic actors.

Your best piece of advice to a colleague. Try to love what you do. Work is a very big time investment, especially if you don’t like it. Any interesting hobbies? I love ice hockey. I now only play occasional ‘friendly’ games against other old-timers, but I do love the speed and the physical aspect of the game.

The most influential company in the OP industry. Amazon – this company is changing the landscape and is both an opportunity as well as a threat for many players in this industry.

Things that make you angry. Narrow-minded people annoy me greatly. Also people who can’t drive. If you had to sing at a karaoke, which song would you choose and why? The last time I did karaoke at an annual company event it didn’t end well. Any annoying habits? It’s not really a habit, but I often like to think for other people and that’s definitely not always appreciated. My sarcasm is also not always well received. What type of TV programme do you find irritating? I don’t get reality TV. How would you like to be remembered? As a great father to my two boys.

The most memorable travel experience you’ve had while in the OP industry. Being in a plane that tried to land (and then pulled up again) four times due to heavy side winds was not fantastic and certainly memorable. What do you think will be the biggest issue affecting the OP industry over the next five years? There are two actually: the first is the ongoing consolidation in the entire OP value chain; the second the challenge that some companies have in staying relevant for end customers and providing enough differentiation. Your favourite office product. I have a bit of a thing for shredders. What do you like best about the OP industry? Definitely the people and the characters I’ve met over the past decade. It’s still a people business.

Your favourite holiday destination. I love islands and palm trees and we like going to Mallorca as a family. My German colleagues always tease me that there are more Germans than Spaniards though.

Your OPI

Final word Your industry, your opinions Free enterprise at work ALL

businesses are founded based on a discovery, invention or a way to do something better. Historically, most businesses were only concerned with the singular goal of trying to make a profit. That has changed somewhat. Today, we need to not only make a profit, but also accept the responsibility to improve the human condition and the effects our actions are having on the environment. When Joe and Scott Ford founded Westrock Coffee, it was based on the belief that trade not aid could make a fundamental difference in the lives of thousands. But how could the desire to help others be transformed into a profitable, thriving business? This seemed especially difficult in an industry that has operated in the same manner for the past 500 years. The coffee supply chain has been encumbered with multiple layers of traders, roasters and distributors. The average coffee bean is estimated to pass through as many as 15 hands before it reaches the cup in front of you. But the coffee farmer has enjoyed very little of the financial reward in the entire chain, and at many of the origin regions hardly anything was done to protect the environment causing even more human despair.

Elizabeth McLaughlin, EVP of Sales & Marketing, Westrock Coffee

Every element of our supply chain, from the raw material producers – in the case of Westrock Coffee it is farmers – to our reseller partners needs to understand the investment to do the right thing. It must be viewed as an opportunity to ensure growth and profitability. In the long run the challenge we are creating is to continually promote new ways to do things better than they have been done in the past. The tools are there. Evolution or revolution, businesses that do the right thing and not just talk about it will thrive.

Doing the hard work I recently read a book on creation, invention and discovery called How to Fly a Horse. In the forward, it stated that there is one constant behind each and every invention and advancement. There was no magic formula, divine intervention or sheer genius. It’s just hard work. All the great things that have been done are the result of doing the heavy lifting that comes with doing the right thing. Westrock Coffee and many other companies have taken up the challenge of helping the poorest of the poor and protecting the environment, while at the same time embracing free enterprise. We have literally changed the lives of over 80,000 farmers and introduced sustainable farming methods. Over the past six years, the economic impact in Rwanda alone has put over $100 million dollars into the pockets of these smallholder coffee farmers. These farmers have substantially invested the funds into education and nutritional advances for their children. Our investment and the results we have achieved can be measured in more than profits. But there is a lot more to do. For each of our businesses, the consumer will determine the ultimate success or failure. That is what free enterprise is all about. It is imperative each one of us ensures within our supply chains that all links are part of achieving the complete goal. It not only feels good, but it is profitable.

“Instead of backing away from the fundamental reason we are in business – profitability – we should be embracing the need for it”

Capitalism: driver of change? Many people want to leave their jobs behind and embark on social and environmental challenges outside of the corporate world. To me, the real challenge is to transform business into making the betterment of mankind and the environment, core goals, right alongside profitability. But we do not often think of capitalism as a great driver of change for mankind. In reality, however, that is exactly what is behind many of the significant advances in every major area of our lives. The majority of people reading this are working for a company that is involved in a for-profit business. So instead of backing away from the fundamental reason we are in business – profitability – we should be embracing the need for it. The essence of free enterprise needs to be established as the driver for people to achieve a better life and for our environment to be left in a better shape for our children. Social and environmental issues are increasingly moving from the ideological to reality and it is forcing us all to reinvent our business models. Social accountability cannot be something we pursue only when questioned.

OPI Magazine | May 2016

Want the Final Word? Email editorial@opi.net

IN THE NEXT ISSUE • Big Interview with Jaime Carbó, CEO, ADVEO • Content marketing: who’s taking the bait in OP? • ABC 2016: what’s in store at SP Richards’ annual event?