Opi november issue 264 b by OPI

twenty five year anniversary

Big Interview

Hervé Milcent, CEO, Lyreco p18

November 2016 Launch of OPI • Reliable pulls out of the UK • Newell buys • Staples buys Quill! • Depot buys Viking • ADR goes bankrupt Sanford on massive estimated multiple of about 25 • • Depot quits AOPD • Esselte buys Leitz • Büro Actuell to Staples prepares for UK openings • Spicers threatens merge with Soennecken • euro buro agrees to BPGI UK manufacturers • New buying group for the UK merger • OPI launches opi.net • Walmart swoops • United Stationers makes key acquisition • on Asda • Buhrmann buys Corporate Express ACCO and Rexel announce merger plans • Staples buys three European retailers • Staples clarifies international intent • Micro Warehouse to be sold • Depot • Staples and Kingfisher: lift-off • sales top $10bn • BOP to acquire Dixons buys PC World • Costco Blue Star? • BCC completes opens in UK • Staples opens BOP tender offer • Hamelin in the UK • Depot signs acquires Bantex • United deal to buy Eastman!!! acquires Azerty Canada • Lyreco expands in UK • Value America: the • Office Mart arrives in bubble has burst • Depot UK • OfficeMax goes arrives as Boise exits corporate! • Staples goes • Guilbert buys BOP’s National!! • Corporate European operations • Express buys Hanson BOP confirms Blue Star Office Products • acquisition • Ahrend OfficeMart to become to merge with Samas • buying Office 1 • BT USA: buy Burhmann plans Ahrend/ mania • Wall Street Samas bid • Nu-Kote loves office products • emerges from Chapter Walmart to open in Hong 11 • USOP to sell its Kong • United/Associated furniture dealership • OPI merger confirmed • launches Top 100 • Final Pentos death knell • BT curtain falls on USOP • goes public • Corporate SPR and Spicers alliance • Express: now #1 • USOP: Staples formalises Lyreco awesome • Guilbert: relationship • Dudley barking mad? • USOP goes into administration adds 53 new deals and • HP strikes deal to buy $775m! • Staples eats Compaq • TriMega/ Depot • Office 1 files for NPA to merge • Guilbert Chapter 11 • Rolodex for sale to be sold? • Depot ditches • Guilbert acquires Bruneau • Viking Australia • Staples signals Staples finally divorces UK partner • European mail order push • Daisytek Newell acquires Rolodex • BIC acquires enters OP market • Depot finally makes Tipp-Ex • BPGI: mega-mega dealer group • a firm offer for Guilbert • Daisytek US seeks John Heath for sale? • Oyez merges with Straker sanctuary in Chapter 11 • Boise Cascade in $1.2 • Newell acquires Rubbermaid • Staples/Depot: off! billion deal for OfficeMax • Buhrmann to sell paper • Huyzer: out! • Waltons acquired! • ADR sues United division to PaperlinX • BPGI and euro buro in $11 billion • USOP announces major restructuring • Guilbert to be marriage • Lyreco to acquire National 1 • IBM sells off acquired? • United buys Azerty • ISA acquires John Heath PC business • Esselte to sell Dymo to Newell Rubbermaid • Lyreco to buy Ahrend OP division • Spicers acquires Timmermans • United Office Products is in administration • Depot swallows up Allied • Office2office acquires Alpha Office • is.group launches $1m court battle • Stationery Box stores sold off • Kingfield Heath and ISA takeover • Lyreco and Corporate Express merger • Staples makes an offer CE can’t refuse • Creation of Pinnacle Affiliates • Time called on ActionEmco • Lyreco goes for the ’Max factor • Introducing the Business Solutions Association • Vasanta on the brink? • Nu-Kote runs into trouble • United acquires MBS Dev • Howard Brown returns with HiTouch • TriMega launches national accounts programme • The big Bong theory • GSA suspends Schedule 75 • Brown swoops for MyOfficeProducts • Unipapel and Spicers sale agreed • 3M acquires Avery’s office and consumer products division • Amazon eyes B2B channel • HP to cut 27,000 jobs • School Specialty files for Chapter 11 • CCL acquires Avery OCP • Gulbergs and Kontorsvaruhuset merge • Depot and ’Max confirm merger • ADVEO buys buro+ • ECi buys Red Cheetah • Euroffice’s power play • Gem Office Products launches • Manutan acquires Ironmongery Direct • Cenveo to acquire National Envelope • EOSA leaving BPGI • Lyreco teams up with WB Mason • RR Donnelley buys Esselte’s North American operations • ADVEO offloads manufacturing arm • ALSO to acquire Alpha • SPR acquires jan/san firm • ACi files for bankruptcy • Vansanta and o2o to merge • Better Capital makes UK market move • HP to split in two • American Purchasing Alliance announced • Amazon launches Amazon Business • United offloads MBS Dev • Staples and Depot in mega merger • RadioShack bankrupt • PaperlinX collapses in Europe • Static Control acquired by Apex • Printus makes OTTO Office move • XPD wound up • Newell confirms Jarden tie-up • Staples and Depot no deal • What next after Brexit vote? • Depot reveals strategic plan

25 YEARS OF KEEPING YOU

CONNECTED

Contents November 2016

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News

98 Driving partner growth with HP Supplies

7 Round-up

HP’s plans for the supplies division and its Qualified Partner Program

Lexmark-Apex deal gets approval; Ronny Van Rossem back in OP; London Stationery Show bought

100 The rise and rise of independents

11 News Analysis

New research reveals that many US-based large dealers are feeling upbeat and confident right now

Investment firm to buy Office Depot Europe; Moleskine in acquisition move

Category Update

Features

81 Printers

The number of OEMs is declining. OPI takes a look at the history – and future – of the print sector

18 A new (Lyreco) world

OPI’s first-ever interview with the Lyreco CEO provides an honest assessment of where the reseller is at nearly two years after Steve Law left. While on the right track, Hervé Milcent points to some necessary changes that need to be made

87 Imaging Supplies

The imaging supplies sector is under pressure for a number of reasons

29 Passing the baton

Succession planning might not be a top priority for OP companies, but it should be. OPI finds out why…

74 Your A-Z guide to Google Analytics

10% 5%

79 The big picture

Industry Achievement award winner Kathy Hoyle talks about the family business, her local community and the franchising concept

Traditional business machines are far from extinct – they are just getting smarter

Regulars

Small dealers (<$1million): Do you have an exit strategy?

Google Analytics is a big topic and it’s not always easy to see how to approach it. Here’s your guide...

twenty five year anniversary

93 Business Machines

5 Comment

35 %

102 The Generation Game Rosemary Czopek

104 5 minutes with...

Steve Hilleard

35%

106 Final word Geoff Betts

SPECIAL ANNIVERSARY FEATURES 35 Reaching the tipping point

Robert Baldrey and Shira Goodman provide an overview and analysis of the business supplies sector past and present

40 The good, the bad and the surprising

Defining moments, challenging times, entertaining anecdotes – read what the people who shaped this industry say

51 Hookups, divorces and buzzwords

Remember the stand-out headlines, top stories and most memorable interviews of the past 25 years? Look no further...

58 Office products – then and now

What office products did people buy in 1991 vs now?

63 The shape of things to come?

What does the office of the future look like? Jim Carroll indulges in some future-gazing twenty five

66 Around y e a rthe a n world n i v e r sin a r25 y years

OPI highlights the biggest stories from around the world

71 OP industry turned upside down

What has most shaped the Australian market over the past two decades or so? The global players are right up there w w w.opi.net | OPI Magazine

Editorial Editor Heike Dieckmann +44 (0)20 7841 2950 heike.dieckmann@opi.net

Deputy Editor Michelle Sturman

Comment

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

News Editor Mark Glover +44 (0)20 7841 2952 mark.glover@opi.net

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

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

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

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

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

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

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

Finance Kelly Hilleard +44 (0)20 7841 2956 kelly.hilleard@opi.net

Publishers CEO Steve Hilleard +44 (0)20 7841 2940 steve.hilleard@opi.net

Director Janet Bell +44 (0)20 7841 2941 janet.bell@opi.net OPI is printed in the UK by

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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.

Rising to the challenge Back in 1973, Roy Wood’s band Wizzard famously sang I Wish It Could Be Christmas Everyday. As the OPI team immersed itself in 263 past issues of this magazine, that tune remained in my head throughout. Why? Well, regular readers of OPI may notice that this is a bumper issue – almost double the size of recent editions – and that’s due entirely to the very generous and humbling support we have received from the industry in the shape of testimonial advertising. I wish it could be our 25th anniversary every day! So thanks to all those companies that have backed this special issue which takes a look back at a quarter century of news and views from what we used to call the office products industry. Indeed, thank you to all advertisers, sponsors and subscribers – past and present – for making this milestone possible and also to the many, many colleagues with whom I’ve had Thank you to all the pleasure of working. advertisers, sponsors and Our industry – whatever we subscribers – past and choose to call it these days – is present – for making this undergoing a sustained period [OPI] milestone possible of change, the speed and extent of which is unprecedented in the memories of the dozens of key executives we interviewed for this issue. While no one knows for sure what the future holds, what is a certainty is that a rapid evolution, perhaps even revolution, in current business models is now a critical priority for the future of this sector. Is the industry ready to face the task ahead? I would argue it is, but not universally. For there will be further carnage and casualties, but also opportunity for those businesses brave enough to rise to the challenge. At OPI, our mission has always been to offer an unbiased, yet analytical, insight into the issues affecting our sector, now and in the future. We also strive to provide platforms, on- and offline, that enable education and collaboration for the benefit of all participants – not that dissimilar from what many of you are doing. So are we up to that challenge? As we say in the media, watch this space…

Steve Hilleard CEO

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 from opi.net

Traditional OP

Facilities Management

Jammin Java provides Marley Coffee update Coffee firm Jammin Java said it is looking at alternative routes to market as its legal dispute with the brand owners of Marley Coffee drags on. Jammin Java CEO Brent Toevs confirmed that if a solution cannot be found over the rights to the Marley Coffee brand, then it will be in “this battle for the long haul if need be”. The firm is in a dispute with former Chairman Rohan Marley and two entities, Hope Road Merchandising (HRM) and Fifty-Six Hope Road Music (56HR). In a letter to shareholders, Toevs confirmed that a trial will take place in March 2017, but added that “the litigation has not resulted in the company being ordered to stop doing business before trial”. While Jammin Java has been encouraging buyers to engage with 56HR about long-term business options, Toevs said that to date 56HR has not cooperated in finding a solution. In the meantime, the firm is developing a range of non-Marley related products under the Jammin Java name and plans to utilise its existing channels with a launch date pencilled in for this month.

London Stationery Show acquired The London Stationery Show, coupled with the National Stationery Week consumer awareness campaign brand and the Stationery Magazine trade publication, have been acquired by Ocean Media Group. Founded by Chris Leonard-Morgan of LMC Media in 2011, the London Stationery Show took place for the sixth time in April this year. Following a short-lived combined stationery and office products format, Leonard-Morgan focused solely on the stationery sector and the show hasn’t looked back since. It has trebled in size over the past six years, attracting a growing number of suppliers every year, including companies from over 40 countries around the world. The 2017 show is on course to continue this upward trajectory with over 85% of stand space already booked.

Lexmark-Apex deal gets clearance The proposed acquisition of print giant Lexmark by a consortium led by Chinese remanufacturing group Apex has been given the green light by the Committee on Foreign Investment in the United States (CFIUS). CFIUS conducted a statutorily-mandated 30-day review into the transaction followed by an additional 45-day investigation. It found that there are no unresolved national security issues associated with the consortium’s proposed acquisition of Lexmark and has given each party clearance to proceed with the deal. Nevertheless, as a precondition to this clearance, CFIUS required that Lexmark and the consortium enter into a National Security Agreement with the Departments of Defense and Homeland Security. The deal remains subject to approval from China’s State Administration of Foreign Exchange (SAFE) and other customary closing conditions, but the parties continue to expect the transaction to close before the end of the year.

Mergers & Acquisitions w w w.opi.net | OPI Magazine

News n Round-up

Mergers & Acquisitions

Ryman acquires London Graphic Centre UK stationery and office supplies retailer Ryman has announced it is acquiring iconic retail brand London Graphic Centre from Core Capital. London Graphic Centre is a leading retailer of materials to the art and design community, particularly in London, and was established in 1973. The transaction includes the flagship store in London’s Covent Garden and the online business of London Graphic Centre, based in the same location. The Covent Garden store, covering 7,000 sq ft (700 sq m) is regarded as a stand-out and iconic destination in the world of arts and graphics, offering unparalleled choice to its customers from the world’s leading suppliers in its key categories. Core Capital backed an MBO in the London Graphic Centre in 2006, and the business subsequently became part of the progressive RED BOX group. RED BOX’s office supply operations merged with OfficeBase last year.

Mergers & Acquisitions

Takkt launches start-up acquisition strategy Germany-based B2B business equipment and supplies reseller Takkt has revealed it created a subsidiary earlier this year to invest in up-and-coming technology-related start-ups. The investment company is called TBG (Takkt Beteiligungsgesellschaft) and has been established to enable Takkt to take strategic stakes – mainly minority ones – in new firms that show strong growth potential. TBG will invest in B2B direct marketing specialists or service specialists working along the value chain of Takkt companies, specifically young companies that are already active in the market and are looking for external partners to finance growth initiatives. For its first investment, TBG has acquired a minority 30% interest – revealed to be a mid-six-figure (euros) sum – in Berlin-based start-up Printmate. Founded in March 2015, Printmate specialises in the digital printing of customised packaging for e-commerce resellers.

OPI Magazine | November 2016

People

Ronny Van Rossem rejoins the OP industry Former Corporate Express and Staples Europe executive Ronny Van Rossem is back in the office products industry after a two-year absence. Van Rossem’s departure from the industry was confirmed in August 2014 after his successful 13-year tenure with Corporate Express and then Staples. He has now rejoined the industry in a senior role at pan-European wholesaler ADVEO. Van Rossem has been appointed as ADVEO’s Chief Product Marketing Officer, reporting directly to CEO Jaime Carbó. He has become a member of the group’s management committee and, as such, will contribute to the design and implementation of the Strategic Plan 2016-2019 and to ADVEO’s transformation project. Van Rossem was recognised for his industry contribution by his peers when he picked up the Professional of the Year award at the 2013 European Office Products Awards.

HP COO defends firmware changes The COO of HP Inc, Jon Flaxman, recently posted a blog on the company’s website to explain the printer firmware changes that have created a lot of noise in the market. Changes in the firmware of a number of HP printers were triggered in September, meaning that printers with cloned or compatible cartridges stopped working and displayed an error message. Flaxman apologised for the way that HP communicated the change and said that HP would improve its communications so that “customers understand our concerns about cloned and counterfeit supplies”. However, he added that HP would continue to use security features that included “authentication methods that may prevent some third-party supplies from working”. HP also received support from channel partners which said that using third-party supplies was a false economy that ended up damaging machines.

IT & EOS w w w.opi.net | OPI Magazine

Germany-based Aurelius hopes to finalise the deal before the end of the year

Office

Depot is to sell its European operations to investment group Aurelius for “a nominal consideration”, it was announced at the end of September. Office Depot operates in 14 countries in Europe, employs around 6,500 people and has annual sales of 2 billion ($2.2 billion). It includes the Viking brand which operates in ten European markets, a contract segment that supplies more than 100,000 business customers, and a retail arm that has approximately 100 stores (in France and Sweden). The office supplies reseller had already said it was looking at “strategic alternatives” for its European unit following a process undertaken by Staples earlier this year – Staples had agreed to sell Office Depot Europe if it was successful in acquiring Office Depot. That, of course, didn’t happen, but contacts had already been made with potential buyers. The acquirer is a German subsidiary of investment firm Aurelius; there is a binding agreement in place and now there are just a few regulatory hurdles to overcome, the main one appearing

to be the completion of negotiations with workers’ representatives in France. Should the deal not go through – which seems unlikely – Depot will pay Aurelius a 5 million break-up fee. The sale is being structured as an equity sale, with Aurelius acquiring the entire European business, including its assets and liabilities, for the “nominal consideration”. However, the UK pension liability is not included and will be transferred to another Office Depot subsidiary.

Given away That basically means that Office Depot has virtually given away its European operations in order to achieve a swift exit. While the purchase price wasn’t disclosed, Aurelius said the size of the deal was “aligned with previous transactions”. Given that Aurelius’ average purchase price for companies is 8 million and the highest it has ever paid is 15 million, there might be a few disgruntled Office Depot shareholders who had been hoping for some cash to be returned to them, especially given the strength of the Viking brand.

Office Depot Europe timeline 1994: Enters the European market through a licensing agreement in Poland, where stores would open the following year. 1995: Signs a joint venture agreement with Carrefour to open stores in France. 1997: Enters the Hungarian market. 1998: Acquires Viking Office Products, greatly expanding its European presence. 1999: Launches first European website www.viking-direct.co.uk; takes 100% control of Office Depot France. 2000: Enters European contract stationery market with the launch of the European Business Services Division (BSD). 2001: Expands BSD into Ireland, the Netherlands and France. 2002: Begins Viking Direct catalogue/direct mail operations in Switzerland, Spain and Portugal; BSD expands into Italy. 2003: Acquires France-based Guilbert from PPR for almost $950 million, doubling the size of its European operations overnight. 2004: Acquires licensee in Hungary; enters Swedish market through strategic alliance with AGE Kontor & Data. 2006: Acquires Papirius in the Czech Republic. 2008: Acquires Swedish partner AGE Data & Kontor. 2011: Acquires Swedish office supplies group Svanströms. 2013: Sells Hungarian business to Central Fund Venture Capital Fund. 2015: Announces strategic partnerships with Austral Trade in Romania and Complete Supplies in Malta. 2016: Staples agrees to sell off Office Depot Europe if its proposed acquisition of Office Depot is successful; investment firm Aurelius acquires Office Depot Europe for a “nominal” sum.

“Office Depot Europe has a capable management team, and we see ourselves as aspiring partners and coaches” w w w.opi.net | OPI Magazine

News n Analysis

Investment firm to buy Depot Europe

News n Analysis

The transaction is expected to close by the end of the year and, until the closing date, Depot has agreed to run its European businesses as normal.

What now for Depot Europe? The big question now is what will Aurelius do with Office Depot Europe? Despite being in transformation and restructuring mode for the past three years or so, the business is barely breaking even and anecdotal evidence points to further deep declines in sales in 2016, partly due to all the uncertainty surrounding the Staples deal and subsequent “strategic alternatives” announcements.

“The business has suffered a bit recently from a lack of focus” Because the deal has not yet closed, Aurelius declined to answer a number of OPI questions about its strategy for Office Depot Europe and whether it planned to operate the business ‘as is’ or would look to sell off components.

All we have to go on at the moment are comments made during a conference call following the acquisition announcement. Aurelius CEO Dirk Markus said there were “significant opportunities to improve and grow” Office Depot Europe. “The business has suffered a bit recently from a lack of focus, [… but it] does have a strong market position and brand name and we see this as a basis for future growth,” he stated. “There are no specific plans for restructuring coming from us,” he continued, adding that Aurelius didn’t plan to manage the business itself. “Office Depot Europe has a capable management team, and we see ourselves as aspiring partners and coaches. […] It is first and mostly the management team that will continue to manage this business and we have great hopes for them.” It will be interesting to see the make-up of the management team when the transaction closes. Since the retirement of Steve Schmidt earlier this year, CFO Jim Grady has been in charge of Office Depot Europe on an interim basis and long-time executive and head of European contract

operations John Moore recently departed. That leaves a number of key management choices to be made, most likely by Aurelius when the transaction closes. What this all means therefore is that, despite the acquisition news, there is still a lot of uncertainty surrounding the future of Office Depot in Europe, and that is not likely to lead to an improvement in the short term.

Staples sale on track Speaking at a recent summit hosted by investment firm Jefferies, Staples’ VP of Investor Relations confirmed that the sale of its European operations is on track. Chris Powers revealed that the sale of Staples Europe was proceeding according to plan and that the process had not been affected by the recent announcement of the sale of Office Depot’s European operations. Following the confirmation that Office Depot is selling its European business for a “nominal” amount, Jefferies analyst Dan Binder doesn’t believe that Staples will achieve a high sale price either – in fact, he even suggested that Staples might have to pay an acquirer to take the European business off its hands.

Who is buying Office Depot Europe? Aurelius Group is a pan-European asset manager with offices in Munich, London, Stockholm and Madrid. Listed on the Munich stock exchange, Aurelius has bought more than 70 companies over the past 12 years and its current portfolio comprises 25 businesses with annual sales of around 3 billion ($3.3 billion) employing 23,000 people. Its businesses operate in a variety of segments; recent acquisitions include the solid ad graphic board activities of Smurfit Kappa in Europe (now trading as Solidis), and it owns the comfort footwear brand Scholl. Annual revenues of its portfolio companies are between 30-750 million each, so Office Depot is by far its largest acquisition in terms of size. However, as Aurelius points out, it has a lot of experience in handling complex ‘carve-out’ transactions from blue-chip firms such as Deutsche Post, Daimler, Reckitt Benckiser and Thales, so it is not phased by the nature of this particular deal. Aurelius CEO Dirk Markus has a connection with the office supplies industry, having been one of the founders of online trading platform Mercateo in 1999. As such, he has a firm understanding of the importance and potential of e-commerce in the business supplies industry.

Dirk Markus

OPI Magazine | November 2016

news n Analysis

Investors still see value in stationery The stationery market is alive and well, as new entrants offering premium products and the recent acquisition of Moleskine prove

Recent

figures from market intelligence firm GfK put core stationery declines in the UK B2B channel in the low double digits for the first half of 2016. However, while overall sales of traditional stationery products may be suffering from the digitisation of the workplace – although some categories are holding up well and even growing – the stationery market itself is far from dead. According to research and analysis firm Verdict Retail, the UK stationery market is set to rise by £49.1 million – or 2.4% – from £2.06 billion ($2.55 billion) in 2016 to around £2.1 billion by 2021. While this is still an inflation-adjusted decline, the numbers point to a certain resilience in the category driven by the trend of purchasing stationery as gifts, increased product ranges, and design-led products and innovation. Sarah Johns, Associate Analyst at Verdict Retail, noted: “New entrants have made the sector more competitive and innovative than ever before. Low entry barriers have enabled new market entrants to experiment with product design, which has triggered increased interest in stationery, particularly among those aged 16-24. “Increased choice of premium stationery and the availability of extra services such as personalisation mean shoppers are increasingly opting for stationery products as gifts [and] UK retailers are benefitting from shoppers who purchase stationery for a variety of occasions.”

The potential of the stationery category has not gone unnoticed. Ocean Media Group recently acquired the London Stationery Show and the National Stationery Week brand, while Belgian automotive group D’Ieteren – which owns the Autoglass and Carglass windscreen repair franchise – is in the process of acquiring trendy stationery brand Moleskine in a deal that values the Italy-based vendor at more than €500 million ($560 million).

New direction for Moleskine It’s been an interesting ride for Moleskine since private equity firm Syntegra Capital took a majority stake in the firm in 2006. Back then, Moleskine employed around 15 people and had annual sales of less than €20 million.

pillar for his group, but formed part of a clear investment strategy, with other deals already in the pipeline. He said he viewed Moleskine not as a notebook company, but as a lifestyle brand, and that he was attracted by the “entrepreneurial energy” of its people. Miller claimed D’Ieteren would be able to take Moleskine to “the next level” and that there was still “enormous” global potential for the brand. Also, by taking Moleskine out of the hands of private equity, he said that D’Ieteren would allow the Moleskine management team to really build strategies and fully exploit the potential of the company. “We

“Increased choice of premium stationery and the availability of extra services […] mean shoppers are increasingly opting for stationery products as gifts” In 2016, its annual revenue is expected to exceed €150 million, the group employs more than 320 staff and it has been transformed into a globally-recognised brand with its own retail outlets. D’Ieteren finalised its purchase of 41% of Moleskine at the beginning of October and is now launching an unconditional mandatory takeover offer for its remaining shares, a process which should be completed before the end of the year. The €6 billion D’Ieteren group called Moleskine “a great fit”, but it certainly represents a major departure for a company that has been exclusively involved in the transport/automotive sector so far. D’Ieteren CEO Axel Miller said the acquisition didn’t represent a new

are providing them with a long-term strategic sparring partner who can help them add value,” he told analysts in a conference call. Nevertheless, one Moleskine shareholder on the call questioned the “extraordinarily undervalued” price that D’Ieteren is getting Moleskine for. With €2.40 per share, it is paying only slightly above the €2.30 level Moleskine was priced at during its IPO in 2013. What the Moleskine story shows, however, is the value of connecting emotionally with customers, regardless of the product. It could be considered as the ‘Apple of the stationery world’, where price is secondary, and that is something that new entrants such as retailer Smiggle are also aspiring to. w w w.opi.net | OPI Magazine

wenty five year anniversary

Big Interview | Hervé Milcent twenty five year anniversary

A new (Lyreco) world

OPI Magazine | November 2016

OPI’s first-ever interview with Lyreco CEO Hervé Milcent turned out to be a charmingly French affair. It also provided a frank and honest assessment of where the reseller is at nearly two years after Milcent succeeded Steve Law

twenty five year anniversary

Lyreco | Big Interview twe year anni

looking to do the same kind of job but attack it from a very different angle. My expectation was to move from a service provider position to a profit centre competency. When Lyreco first contacted me, my objective was to be able to manage a full service portfolio in the office supplies environment

Interview by Steve Hilleard Edited by Heike Dieckmann

Instead

of coming out all guns blazing with a brand new plan when he first took the reins in January 2015, Lyreco CEO Hervé Milcent has kept a low profile, assessing and learning about the market and working on the reseller’s forward-going strategies. Now that (most of) his ducks are in a row, OPI’s Steve Hilleard travelled to Lyreco’s headquarters in the north of France to find out more about what’s to come from this global giant, where things may have gone wrong and the new world of business supplies. OPI: At last we get a chance to meet, after you’ve been in the job for nearly two years. Let’s start with your career background before you joined Lyreco. Hervé Milcent: I worked for two big organisations. One was La Poste, the French national post office group where I was for ten years, and then I worked for publishing group Bertelsmann for 16 years before I joined Lyreco. In both companies, I was in charge of their B2B divisions, dealing with overall business development and to some extent also the divisions’ transformation plan. At La Poste, I worked in the private segment for a number of subsidiary organisations and my first mission was to launch the Chronopost business, which is now the most successful courier company in Europe. I also worked for a marketing company within La Poste, called MediaPost. In addition, the group asked me to transform and bring back to profitability a very small subsidiary in the B2B segment. Dynapost was not in good shape at the time and it took me three years to bring it back into the black. Like I said, at Bertelsmann I also worked in B2B. My first job was to open the French market for Arvato, Bertelsmann’s outsourcing services provider. After France, I did the same in the Italian and Spanish markets, plus some offshore locations. My last task at Arvato was to launch the CRM solutions worldwide division. Then I joined Lyreco at the end of 2014. OPI: What was it about Lyreco that made you leave Bertelsmann? What attracted you to this industry? HM: Well, for the previous 16 years, I had been working for customers in the CRM and supply chain environment and I was essentially

OPI: When Eric Bigeard left Lyreco, he left behind quite a legacy, both for you and also for Philippe Martinez and Steve Law beforehand. What were your priorities when you came in, given the history of the company and the legacy of Eric, and how do you feel you’ve measured against those priorities? HM: When I decided to join Lyreco, I underestimated the legacy of Eric Bigeard. And still today, it’s very important to keep that legacy alive, because Eric had built this company over the past 25 years in terms of story, in terms of strategy, in terms of the team. I also completely underestimated how important Eric was not just to Lyreco, but to this industry overall. As you know, Eric’s succession has been a bit painful at times over the past six years and I’ve had many conversations with him while I’ve been in charge. He’s always told me two things: first, we need to get back on a growth trajectory because there hasn’t been any growth since 2010. In fact, between 2011 and 2014 Lyreco’s revenues declined by 6%. Second, we need to look at the profile of the company – it’s a commercial business with commercial reps. The model is robust, smart and very strong, but it needs to evolve and be reinvented. That is the main mandate I received from Eric and the shareholders.

“We need to follow the megatrend of the market and that is to be present in front of our customers every minute of the day”

OPI: Quite a big task given the macroeconomic environment following the 2008-2009 period, and then the subsequent process of digitisation which affected sales of core products, ink, toner, paper and so on. It’s also difficult to reinvent a model that has been copied across so many markets. How far are you through that transformation process now? HM: Absolutely, it’s a very big and difficult task. In a nutshell and in my opinion, we had missed some of the megatrends affecting our industry – any industry in fact – since about 2010. This is why I have spent the past 18 months trying to understand what the core expectations of our customers and our environment are. We need to follow the megatrend of the market and that is to be present in front of our customers every minute of the day, not every w w w.opi.net | OPI Magazine

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Big Interview | Hervé Milcent twenty five year anniversary

five weeks or even every week. We need to be there all the time. That trend is a bit at odds with what we’re doing now. Currently, 100% of our sales proposition revolves around face-to-face value and that is good because this proximity and stickiness to customers is one of Lyreco’s core assets – in the past, today and in the future. But we need to embrace the megatrend. That’s not to say we have to kill and reset what we’ve done before, but to evolve and move smoothly from a mono-channel to a cross-channel environment. To do that, we need to achieve two things: to invest in data and be much cleverer in terms of our target audience, product segment, and clustering. Updating and getting right our hugely important database has been absolutely essential and we’ve been working on this for the past year or so. The second point is our category management. We now organise our marketing strategy around four categories: core office products (COP), IT and technology, workplace, and industry/industrial. I want to really focus on these four categories and build up our offering in them with a three-pronged step: transactional, contract and end-to-end solutions. The starting point is the transactional business as that’s our core, our DNA, but we have to build from there to become real solutions providers. OPI: Why do you think you missed those trends several years ago? And the launch of the four product categories you mentioned – it all seems quite overdue. HM: I can’t really comment on what went on in the past. Lyreco, under Eric’s guidance, introduced categories like hygiene and catering about ten years ago and that was a smart move. But in 2016, we are still only generating 14% of our revenues from these two categories (now under the ‘workplace’ umbrella). And this is what I mean when I talk about missing the megatrends. We have an asset here and we know that the stationery business is shrinking, so we have to think out of the box of traditional office products and address exactly the same market, the same lead buyer, the same decision-maker for some more of the overall cake. The second trend I refer to is technology and the opportunities this brings to wholeheartedly embracing a multichannel strategy. Half of the lead buyers today are under the age of 40, meaning they are likely to use mobile devices for ordering, do research

OPI Magazine | November 2016

“Overall, Lyreco needs to change its core model and become a technology company”

on the web, and benchmark and assess every single aspect of their purchasing process. We have to adapt our strategy and be more in line with customer behaviour. Like I said, face-to-face visits continue to be important because that’s our differentiator, but we simply have to be in front of the customer 24 hours a day. Overall, Lyreco needs to change its core model and become a technology company. OPI: One of the ways in which Lyreco has historically achieved growth has been through either expansion into greenfield markets or via acquisition. You haven’t done much of either over the past ten years. Is part of your plan to expand new product categories through acquisition?

twenty five year anniversary

Lyreco | Big Interview twe year anni

HM: Well, we did make an acquisition in Spain in 2011, but overall you’re right. And of course, we want to regain leadership and one way of achieving this is through investment and strategic acquisitions. We are relaunching our external growth strategy and particularly in emerging markets where we’re still following the traditional route to market, acquisitions are on the cards. OPI: Let’s talk about some of your larger competitors here in Europe, Staples and Office Depot. Are you surprised that those two businesses have struggled in Europe, are pulling out and heading back to North America? HM: No, I am not surprised, despite the fact that I’m still not that familiar with the office supplies business. But it was the same in the call centre industry I worked in years ago. We had to face and fight against two big US companies, and then suddenly they decided to leave the European market because they simply didn’t adapt to it. That said, I think Staples and Depot leaving Europe is bad news for our industry. OPI: Why is it bad? HM: Fighting against Depot and Staples mainly in the corporate accounts space over the years has become a war about price and that’s a sign of the commoditisation of our business. We are now moving from a strategic purchasing environment to a non-core environment and this is my point – it’s a challenging situation for our industry in the coming months and years and we must not underestimate it. OPI: Maybe with both businesses potentially being under private equity ownership we might start to see some more rational pricing – these guys are not buying businesses to subsidise them, they’re buying them for profit. HM: Of course they will look at the figures very closely. Nevertheless, as the expectations of the market change, we have to move from a transactional business to an end-to-end solutions business. OPI: But are you not just talking about your own business model rather than about the competition? HM: Maybe. OPI: Do you ever have conversations at Lyreco that, if you can’t be number one or two in any given market, you would consider pulling out?

“We need to have a growth platform and this for Lyreco is the Asia Pacific zone”

HM: I do believe that market leadership is hugely important in the B2B segment and in the services environment that we want to be in. So it’s vital to regain our leadership position everywhere. OPI: So what happened to Lyreco in Canada, for example, could happen elsewhere? HM: No, because except for Eastern Europe, we are number one or two in each European country where we have a presence. Asia Pacific is different anyway because it’s an emerging market so it’s essential that we invest there. Overall, I’m very happy with the footprint we have. We need to have a growth platform and this for Lyreco is the Asia Pacific zone. OPI: You’ve made a pretty long-term and substantial investment both in Asia and Australia. How long will the Lyreco board be prepared to invest in markets that, as yet, haven’t fulfilled their potential? HM: Good question and one I actually raised myself with the board of directors shortly after I started. My recommendation was to reinvest and to really focus our energy on our existing footprint, despite the fact that revenues coming from Hong Kong, for example – where we first opened in 1999 – still don’t exceed 2% of our total. But we need to persevere and also be consistent with our strategy. Greg Liénard has been with Lyreco for many years and has been in charge of Asia Pacific as Managing Director for the last few, but he was pretty much alone in what he did. We need to w w w.opi.net | OPI Magazine

wenty five year anniversary

Big Interview | Hervé Milcent twenty five year anniversary

provide him with the investment in people and the expertise that is required. Profitability in Asia has always been an issue and I’m pleased to say that for the first time this year we’ve reached break-even point for the Thailand market. OPI: You left China. Was that an acceptance that you were never really going to make any money in that market? HM: The train of the traditional approach in China has departed and in my opinion we have to completely change our attitude of how we need to invest in China. OPI: Every conversation I have with every executive inevitably leads to Amazon. What’s your position on Amazon and its likely impact on some of the established markets that you have in the B2B space? HM: Just after I joined Lyreco I asked about Amazon in the office supplies environment and some of my colleagues said: ‘No, don’t worry, Amazon will not be a main competitor of Lyreco because we’re B2B…’ Well, it wasn’t true 18 months ago and it isn’t any more true now. Amazon is a competitor. Does that mean it is or will be a real threat for us? I’m not sure. Amazon will be in the B2B space at some stage, that’s for sure. But on the other hand what I try to push within Lyreco, and I said this before, is to continue to invest in our face-to-face USP and that is something Amazon doesn’t have.

OPI Magazine | November 2016

OPI: Yet? HM: Yet of course, but it would be daft for them to invest in this way. OPI: You said that in the not-to-distant future the customers that your sales people are currently talking to will be millennials and they work and communicate differently. So in future, will that USP of having a sales person visit once a month or once a quarter in fact still be a USP? HM: Maybe not in terms of product, but our customers increasingly expect consultancy, support and new ideas, and this is where the so-called ‘showroom’ or the face-to-face is very important. Our sales reps are basically our virtual stores – available all the time but also very smart in terms of customer knowledge. Apart from Amazon, do not underestimate Alibaba either. They’re coming too. OPI: Let’s move on to Brexit. Were you surprised about the result? Your UK enterprise is still the second largest in the group, isn’t it? What do you think will be the consequence of Brexit for Lyreco? HM: To answer your first question, yes I was surprised. I’m not really happy about the situation because I don’t think it’s good news for our European equilibrium. But we have to respect the decision of the population. As regards Lyreco in the UK, initially after Brexit it was all a real mess, not the business

“Our sales reps are basically our virtual stores – available all the time, but also very smart in terms of customer knowledge”

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Big Interview | Hervé Milcent twenty five year anniversary

as such, but things like trust and confidence in the country. A lot of questions were raised in the aftermath and our management team spent a lot of time reassuring people who are working for Lyreco in the UK about what might happen to them, since many of them aren’t British. It’s really important to reassure and help everybody in these challenging times, because without our people our business is dead. We’re doing ok. August was a good month and we’re growing, so it’s not bad. OPI: But you’re growing because of the failure of some of your larger competitors I would think? HM: A bit, of course. But if I look at 2015 we grew by 1.5% and at the end of August we were up to 3.7%. I don’t think that’s solely the result of our competitors’ troubles. All our segments are growing, from the SOHO markets to the international division, and this is why we cannot say it is just competitors’ troubles. OPI: What’s the situation with big international accounts at Lyreco? Historically, I seem to remember it’s something that you had to be seen to be doing as a large global reseller, but it wasn’t very important in the overall equation. Is that still the case? HM: It was true in the past, but there has been quite a change as a result of globalisation. If you look at our customer portfolio in France, for example, it’s amazing. 80% of the CAC 40 [French stock market index] work with Lyreco. Some of them start in France and then they begin requesting a global solution. I believe this is also part of the megatrends that are happening in the banking sector, the automotive industry and in utilities, for instance. There has certainly been a growth in companies that approach us and want to work with us across two, three or four markets, sometimes even the whole continent. And it’s been a good trend for us. We are talking 7-8% growth this year in the large global enterprise business. But overall – and I can’t stress this enough – Lyreco is a local business and what we’re striving to do is to have the right solutions at a local level. OPI: In terms of your network of partnerships around the world, where are your gaps now?

OPI Magazine | November 2016

HM: First of all, what I received as heritage in terms of model, footprint and partners is nice. The big question mark now is the US. I met Leo Meehan, the CEO of WB Mason, last July in Boston. He is very professional and he knows absolutely everything there’s to know about this industry and I learned a lot. I believe we could do so much more together. And, given the state of the competition right now, we have a real window of opportunity to take advantage, but we have to work together and combine our offering in the US and Europe. OPI: We could go on forever, but we’ve nearly run out of time, so just one final question: what is the succession plan at Lyreco and for the Gaspard family? HM: It’s not really my role to talk about this. OPI: But you expected the question… HM: And what I can tell you is that Mr Gaspard is still fully involved in Lyreco. His only desire is that his group keeps on growing and prospering. He intends to ensure his group’s future is in the best hands, and the proof is that he has recently appointed his daughter Nathalie to the board of directors. OPI: So there’s a real succession plan. That’s a good way to end. Thank you Hervé.

“Mr Gaspard is still fully involved in Lyreco”

twenty five year anniversary

Succession Planning | Hot Topic twe year anni

Succession planning may not be the most important discussion to be had in the top echelons of a company, but it’s certainly right up there – or should be. Is the business supplies sector any good at it? OPI’s Heike Dieckmann finds out…

the THere

are many success stories out there of companies where the baton of leadership has been passed on through the family for generations. Among the well-known ones, just think Fellowes, Smead, Krug & Priester, Eaton Office Supply and Hummel’s Office Plus (see also the case study on page 32), for example. These are highly successful businesses that make it look easy to still be going strongly after many years. But it’s not. It’s a difficult process that not only requires a long, hard look at the personalities in a firm throughout the ranks, but also the company overall and where it’s going strategically.

Struggling with succession And, of course, there are companies that have seemingly struggled with succession. Take Germany’s Kaut-Bullinger, for example. It’s a long-established business where family members still play an important role and are visible in several positions. But at the helm is now the third Managing Director within a year, with further high-profile staff changes having been announced recently. That does raise eyebrows and begs the question of what has gone slightly awry at Germany’s leading independent OP operator. German manufacturer edding is another company with a strong family history that has encountered

a few hiccups along the way, due to transitory conflicts after one of the founders stepped out of operational leadership in the mid-1990s. Current CEO Per Ledermann, son of co-founder Volker Detlef Ledermann, joined the company’s board in 2005 when his father left for a clean generational break. Today, edding is a young, dynamic global enterprise that, though publicly-listed, is still over 50% family-owned.

“We not only plan to fill the owner’s role, but we groom candidates for all the key management positions” In the US, Fellowes and Smead are good examples of companies that embrace the millennial generation and are acutely aware that, although the top spot is taken, it’s vital to have well-established career paths and succession plans for all employees. Casey Avent was named President of Smead in July, 18 years after his mother Sharon took on the President/ CEO role. “From the start Sharon made it clear that I was to be treated no different to anyone else,” he says. “Over the past 20 years, I’ve worked in our marketing department and as a sales representative in North Texas, led our supply chain team,

managed a team at our division in South Carolina, and ultimately moved back to our HQ to lead our sales and marketing organisation. “Without those experiences I wouldn’t be adequately prepared to be in the position I’m in today.”

Promoting from within Importantly also, he adds, Smead is a company that likes to promote from within. “We value the experience, knowledge and commitment of employees who have excelled in their roles and we don’t believe in the philosophy of cutting the bottom 10% each year. Instead, we provide a culture where employees are given a lot of autonomy and are allowed to try new things. “The industry and our company have changed a lot over the years which provides our employees with challenges and opportunities to shape the company and progress their skills.” Dave Guernsey from large US independent dealer Guernsey agrees that it’s about much more than just the top spot. “We not only plan to fill the owner’s role, but we groom candidates for all the key management positions that will become available in the next 3-7 years. In fact, we will have most of our senior management positions turn over by 2023. He adds: “We begin with identifying young folks that we feel have the right stuff or at least most of it. For what they don’t have, we develop a plan for w w w.opi.net | OPI Magazine

twenty five year anniversary

Succession Planning | Hot Topic twe year anni

5% 10% 5%

Small dealers (<$1million): Do you have an exit strategy?

35 %

35%

Source: MWA

And it’s not hard to work out why it’s so difficult for those small businesses to make succession planning a priority. Says Alex Dunn, Managing Director of UK dealer group Superstat: “It’s hard to see the wood for the trees when you’re running a small business. In the cut and thrust of the average working day, people struggle to set time aside to think strategically and often don’t know where to start. “There is also the deeper issue of relinquishing control and the difficulty of delegating. It’s often due to an understandable reluctance to let go without the confidence that there is a competent structure around to hand over to. This is turn highlights a lack of formal training or development in the company, which again is difficult to put in place when you’re always busy with the day-to-day operations.” But help is at hand. Many dealer groups and industry associations across the globe – Superstat included – have made it part of their remit to help independents find a solution to their succession conundrum, through best practice sharing, connecting like-minded dealers, training on how to approach the subject, etc. Some of the wholesalers also have programmes in place whereby, through expert advice, dealers can get help with their exit strategy. SP Richards’ (SPR) Guided Acquisition Program (GAP) is one of them. As Bryan Wight, SPR’s SVP of Sales and Marketing, explains, GAP is squarely aimed at keeping independent volume in the channel. As such, succession planning revolves predominantly around helping dealers that wish to exit their business find the right acquirer. “What we do,” says Wight, “is work with a potential seller to determine a fair market valuation of their business. Simultaneously, we identify potential acquirers and then work to bring the parties together for the final negotiations. When the transaction is complete, our GAP

No – I have no wish to exit the business for the foreseeable future No – but I do plan to exit the business in more than two years’ time No – but I do plan to exit the business in less than two years Yes – I will be passing the business on to a family member Yes – I plan to sell the business to whoever is interested in buying it Yes – I plan to sell the business to a local dealer Don’t know

getting them ready. In some cases, we ask them to return to school, for example, to add further to their educational credentials. “Or the grooming may involve working in areas of the company that differ from where they are currently. Yet another example would be helping promising folks get some community service experience, as being local and involved in the community is a key value that the local small business offers.”

Small dealer troubles It could be argued that the smallest dealers have the toughest time, first formulating and then implementing a succession plan. Indeed, as data from The Phoenix Report, a recent research study carried out by Martin Wilde Associates (MWA) and OPI, reveals, the smallest dealers in the US are least likely to have an exit strategy in place – 40% for dealers with revenues of less than $1 million (for more on The Phoenix Report, see page 100).

process assists with the integration of the two businesses. “Alternatively,” he adds, “there may be situations where a current owner has key employees or relatives in the business that have been identified as potential successors. GAP plays a similar role in these situations by helping to determine a fair market valuation that facilitates the succession planning.”

Needing help to get out This pressure cooker environment and the persistent demands for dealers – all OP companies in fact – to change and venture down new avenues is what’s leading to this accelerating desire to ‘get out’. TriMega’s EVP Grady Taylor agrees with Wight: “We have many dealers reaching out to us and looking for a successful exit or succession strategy. They’re looking to sell as they see the results of a challenging economy coupled with the flat growth of traditional office products. They know strategically they need to embrace other verticals such as facility products, workwear, etc., in order to grow their business, but some feel they cannot do it alone. The test is finding a partner that can bring long-term value to a relatively dormant channel participant.” All the more important then that there’s a steady feed-through of OP enthusiasts eager and capable of taking over the baton to become the leaders of tomorrow. Dealer groups as well as the wholesalers have created specific committees (YES and NEXT in the case of SPR and TriMega respectively) that welcome the younger generation to the industry and groom them for succession. And that is where the future lies, says Jeremy Bourret, CEO of US dealer Suburban: “Businesses are now beginning to understand that, if they want to succeed, they need neople to drive change. The people that are living that change are millennials. lt’s trending in the right direction – many firms that are leading and growing now are supported and led by by fired-up millennials.” For more on the topic of succession planning, look out for OPI’s new ‘How to…’ guides over the coming months. w w w.opi.net | OPI Magazine

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Hot Topic | Succession Planning twenty five year anniversary

Case study: The family way Business succession is a very long-term endeavour, with plenty of care to be taken with both planning and implementation, says Chip Hummel, Chairman of New York independent dealer Hummel’s Office Plus. At Hummel’s, the overall process took seven years, with Chip’s three children having now run a very tight and successful ship together for the past five years. OPI spoke to the family to find out more about the journey, its challenges and rewards. OPI: Please tell me about the succession process that you started many years ago. Chip Hummel: I will point this out right at the start – we made the decision to go through the entire succession process ourselves, rather than getting outside help from consultants. It’s unusual and not really the recommended way of doing it, but having read many studies on the topic and attended numerous seminars across the country about succession planning, I felt that I knew my three children best and between us we could work it out. We started the process with a SWOT analysis on personal strengths and weaknesses, and on the wider industry’s opportunities and threats. We met weekly during the whole process and spent a tremendous amount of time together dissecting every aspect of the company. We took our stripes off at the door, sat down and really hammered out the strategic direction we were going to go in. We were lucky from a personality and core strengths point of view, because the way it worked out is that each one of my children ended up with a different section of the company in terms of management and responsibilities.

So now Harrison IV is COO, Justin is CEO and Solace is Chief Administrative Officer. OPI: Is there anything specific that has been particularly important in the overall succession journey you’ve had together? Justin Hummel: I will answer this one from my point of view, although it’s not only based on my own experience but also on having had the opportunity to talk to other young professionals in the industry. I firmly believe that succession can’t and won’t happen unless the generation who is handing the business over really puts the people – or person if it’s just one – in a position to succeed, communicating and making sure that everyone knows exactly what path they’re going down. At Hummel’s we were very fortunate that Chip wanted to have these conversations early, wanted to have them often, and really wanted to iron out any obstacles together. CH: It’s also absolutely vital that, when you say you are going to hand over, you do hand over. The day we made the transition, I basically stepped down and my three children took over complete responsibility. I’m here to consult, but that’s it. One of the biggest mistakes some of my contemporaries make is to nominally step down, but then still control. It does not work. OPI: And you obviously did that very successfully. CH: I feel so. We’re five years into it now. I’m very comfortable with the running of the company, very comfortable with the

From left: Solace, Harrison, Justin and Chip Hummel

OPI Magazine | November 2016

management and my children are doing, in my opinion, an excellent job in continuing the tradition of an 80-year-old business. OPI: What are the particular challenges of family succession, as opposed to getting an outside candidate in? CH: Well, when you get somebody from the outside, it’s a simple choice, isn’t it? Do they fit or do they not fit? And you can always let them go. It’s quite different when family members coming together. Solace Hummel: You truly have to leave your ego at the door for the betterment of the company. That, to me, is the biggest challenge of family succession judging by what I heard from other family-owned businesses. You can’t operate if egos get in the way, with one person wanting this and the other wanting that. It may sound like a cliché, but it’s absolutely true: everything comes down to what’s best for our company, what’s best for our employees, what’s best for our community. Harrison Hummel: I would echo that. You have to recognise your own strengths and weaknesses and position yourself in the company completely in line with those. As the oldest of Chip’s children, some people have asked why Justin filled the CEO position instead of me. Quite frankly, it’s because Justin’s strengths make him a better CEO than me. My expertise is not in sales or in marketing. My strengths lie in logistics and distribution. Justin is better positioned than I am for the CEO and I recognise that. If I didn’t, the company would suffer, as would the family, our employees and so on – it’d be a downward spiral. No one going through this process can put their ego ahead of the company’s success.

Hummel’s Office Plus fast facts: Founded: 1934 by Harrison J Hummel Current leadership: Chairman Harrison ‘Chip’ Hummel III; CEO Justin Hummel; COO Harrison IV Hummel; Chief Administrative Officer Solace Hummel Staff: 100 Coverage: New York state, multiple regional contracts Revenues: >$20 million

twenty five year anniversary

State of the Industry Report | Special Anniversary Feature twe year anni

Reaching the tipping point In the 1980s and 1990s, Quill’s Jack Miller used to write his legendary OP state of the industry reports. In honour of Miller and indeed OPI’s 25th anniversary this month, here’s an up-to-date industry analysis by another well-known industry stalwart – Robert Baldrey

feels like only yesterday that I was starting out as an office junior in Spicers’ accounts department in Cambridge in the UK. OPI’s 25th birthday and the increasing number of lines on my face, however, give away the fact that it was actually 34 years ago! Time flies when you’re selling paperclips… I’ve spent most of my career in this industry and have often been asked to comment on trends and predict what is to come. We’ve debated “the future of the industry” at umpteen OPI forums, and will no doubt do the same again at the OPI Global Forum in Chicago this November, where yours truly will be in the chair. It would be tempting to regurgitate in these pages some of the usual stuff about Generation Z in the workforce

and the imminent arrival of 3D printers in every office. And yet, as I reflect on the current state of the industry, this time things really do feel different. Is it possible we are reaching the tipping point that we’ve been anticipating all this time? If we are, what are the likely effects and what are we going to do about it?

Three big changes To my mind, there seem to be three big things driving change in our industry. The first is the digitisation of the office. People are increasingly making notes on tablets – I’ve completely stopped using notebooks and refill pads myself – and are storing documents in the cloud where they are always to hand if you can access the internet.

As a result, if you don’t use paper then you are less likely to print and you don’t need a lever arch file or a cupboard to put it in. This change is driving a relentless decline in traditional office products and printing supplies. We can argue about the rate of decline and there are certainly some countries where digitisation is less advanced, but there is no doubt that it’s real and here to stay. I even heard for the first time recently about a company that had adopted a ‘bring your own’ stationery policy for staff. Be afraid, be very afraid! The second big driver has been facilitated by mobile devices and access to reliable, fast internet connection almost everywhere nowadays. People are increasingly w w w.opi.net | OPI Magazine

twenty five year anniversary

State of the Industry Report | Special Anniversary Feature twe year anni

mobile and are working wherever they happen to be – on trains, in coffee shops, at home... This means that there is more ‘little and often’ consumption of office products, with the office stationery cupboard in terminal decline. It also means that people often simply grab free pens and paper from hotels and law firms (but that’s perhaps another story). The third driver is plainly and simply the rise of the internet and all that it enables. Type ‘office products’ into Google and you’ll be dead before you’ve counted all the pages of people selling the stuff. Consumers are now only a couple of clicks away from the lowest price for any product that they require. And they can look for pictures or detailed specifications of products very quickly. In addition, online-only players like Amazon have set the bar really high for excellent logistics, generally good packaging with well-presented products, and easy returns. Amazon Business in the US, which offers millions of items, trade credit, user procurement tools, etc, has been hugely successful so far and the concept will shortly be rolled out in Europe as well.

Cause and effect If you think about the above, you will quickly see how the changes in our industry can all be linked to them. The decline in traditional office products brought about by digitisation is resulting in overcapacity. Put simply, there are just too many warehouses full of the stuff we sell that are not running anywhere near capacity. We are therefore seeing increased consolidation as players try to achieve synergy benefits from closing facilities and driving more volume through their existing distribution centres. Declining volumes and overcapacity have also driven a race to the bottom on prices and margins, as companies fight to retain business against aggressive competition. This is particularly true with very large end-user customers. Average order size is reducing as mobile end users buy more little and often, with a correspondent deterioration in productivity and an increase in cost to serve.

“I even heard for the first time recently about a company that had adopted a ‘bring your own’ stationery policy for staff. Be afraid, be very afraid” Products are becoming more commoditised, with end users shifting their consumption in the most competitive markets towards cheaper non-branded products. As a result, vendors will increasingly have to focus on the importance of their brands if they are to maintain sales. In addition, the old ‘bid cost less x% on the core range, huge margins on the rest of the basket’ pricing model is fundamentally broken. The internet enables end users to find products from a huge number of sources and be much more aware of the market price for anything. This has led to a number of the contract stationers losing money on larger set-piece contracts as the expected sales of products outside the core basket fails to materialise. A further impact of the ever-growing digitisation is that the circulation numbers of the wholesalers’ catalogues, the bedrock of their funding model with the vendors, is in decline as resellers and end users move to online solutions. Lastly, the traditional distribution chain, with products passing from vendor to wholesaler to reseller to end user, is under threat as more nimble and efficient models powered by the internet are taking hold. All in all, it’s not one of the golden ages for the industry that I’ve worked in for so long.

And yet… We must not forget how robust and entrepreneurial this industry is and how we have successfully managed change in the past. It is possible to do well in the future; we’re just going to have to do things differently… It’s been said many times before, but we need to start talking about business supplies, not office products. Broaden your mind and that of your customer to all the other stuff that they need to run their businesses. We have a highly developed supply chain, which is better in fact at getting products to the end user than a number of adjacent industries. Let’s use our skill to offer a more diverse range to the customer. After all, no one has yet invented the digital toilet roll (i-Wipe anyone?) yet. Also, let’s think about our pricing models and perhaps take inspiration from the airline industry. Maybe a product can be priced very competitively and you can make the return from all the services the customer requires (like priority boarding or putting a bag in the hold in the case of budget airlines). We certainly need to make everyone in the supply chain understand the cost of all those services that were offered free when everyone was making lots more margin. w w w.opi.net | OPI Magazine

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Special Anniversary Feature | State of the Industry Report twenty five year anniversary

If you are a reseller, make sure that you know and love your customers and become the ‘go-to guys’ for everything that they need. Think services as well as products, taking away all those daily problems that get in the way of them doing whatever it is that they do. If you become super reliable or even better, indispensable, the discussion moves away from price. Just ask Amazon... Understand where you fit in the supply chain, what you are good at and concentrate on that and only that. As an industry we need to eliminate all the duplicated cost and effort that might have been sustainable when margins were significantly higher, but not now in the face of the hugely efficient internet players. If you are a vendor, spend your money developing your brand and make sure that the customer really wants your product, not some generic me-too own label stuff that anyone can make and sell. If you are a wholesaler, make sure you have the product in stock for next-day delivery and offer your

The view from across the pond Shira Goodman, newly-appointed permanent CEO of Staples, gives her take on the past few decades years in OP, with arguably the biggest milestone in 1986 even preceding the launch of OPI by five years. From my point of view, there have been four major developments during my time working in the office products industry. The first was the launch of the office superstore concept in 1986, pioneered by Staples and its founder Tom Stemberg. The birth of this channel was followed by years of retail growth. Second was the rise of the catalogue and delivery business which effectively turned the office products sector into a contract Shira Goodman business.

OPI Magazine | November 2016

resellers an efficient delivery service that enables them to focus entirely on the customer. Embrace technology. Your competitors will and you will be left behind if you don’t find ways to be as efficient as possible. But make sure that you know what problem you are trying to solve before you embark on complicated system upgrades.

“We must not forget how robust and entrepreneurial this industry is and how we have successfully managed change in the past. It is possible to do well in the future; we’re just going to have to do things differently…”

In conclusion… I remain very positive about the future of our industry, but we all have to realise that the old ways will not all work anymore. Maybe I’m wrong about the timing of the tipping point, but even so, what harm can it do to start making some of the changes that we know we all have to make in the medium term? We have faced challenges before and can thrive in the future but only if we collaborate, remain open minded, dynamic and willing to embrace positive change while holding on to some of the key principles that have made us successful in the past. Here’s to the next 25 years!

Next, the dot.com era ushered in a whole new way of doing business, with the rise of e-commerce eventually leading to the omnichannel world that we live in now. Staples.com debuted in 1998 and we, and the rest of the industry, have been adding digital properties ever since, including mobile sites, sister brands and social media channels. Finally, over the past ten years we’ve seen the expansion of our product set to include options beyond traditional office supplies. Now, Staples and companies like us are charged with providing business solutions, which include new categories such as technology, print and promotional products, or facilities and breakroom. I’m convinced that some of our biggest challenges have also led to our greatest opportunities. First and foremost, what the customer wants and needs has dramatically changed from the early days of our business. Our first stores included shelves of typewriters and ribbons! Needless to say, we’ve come a long way in the breadth of products customers have come to expect from us. And talking of products, the fact that the world has gone digital has not only presented a challenge for traditional OP categories like ink and

Robert Baldrey

toner and paper, it’s also provided opportunity in the form of greater e-commerce capabilities as well as opening up a whole new product set in technology solutions. Going back to the early days and with the OP superstore concept so new at the time, when we first started, Staples was certainly having trouble getting people to walk into our first store. The general public simply wasn’t familiar with a large warehouse-size store for office supplies. True to the entrepreneurial spirit that helped found our company, we brainstormed ideas to generate foot traffic, ultimately deciding to stand at busy intersections handing out $10 bills and asking people to spend that $10 in store. That $10 became $50 or even $100, and our journey to where we are today had begun. Overall, I have very fond recollections of all the great people I’ve met over the years, specifically our founder Tom Stemberg, our former CEO and one of my mentors, Ron Sargent, and Evan Stern, the former head of National Office Supply, the first contract stationer we acquired. They were all extremely smart people who would have been successful in any field they chose, but luckily for all of us that got to work with them, they chose office products.

wenty five year anniversary

Special Anniversary Feature | Memory Lane twenty five year anniversary

The good, the bad and the surprising…

Just as magazines come and go – with exceptions, of course – so do the people in any one industry. But as the following pages reveal, the OP sector and its personalities, past and present, are something quite special. When OPI asked those personalities about some of the defining, challenging as well as downright entertaining times over the past 25 years, we were overwhelmed by the response, the recall and the kindness of many. Here’s a small selection of their tales (more can be found on opi.net)... Irwin Helford Competing against lower-priced superstores was a huge challenge. Everyone claimed great service, so Viking needed to stand out, calling ours ‘fanatical customer service’. We meant it and did it. We were the first to actually provide same-day delivery at no charge. Tom Stemberg chided me publicly, stating ‘no one needs office products faster than hospitals need plasma’, but today, Amazon leads with same-day delivery in many markets.

Jeff Hewson I joined United Stationers in 1989 and spent six years as its President/COO. During my time I’ve seen the transition of an entrepreneurial, family-business orientated industry into one comprising large corporations and much less camaraderie. I’ve also witnessed the demise of a paper-based business that’s now grown into a technology-led industry. I personally liked it the way it was, but then I am from the dark ages.

Philip Lawson As a trainee at Dudley Stationery, I was asked to help interpret for the VIP visitors from Lyreco, Eric Bigeard and Georges Gaspard, when they came to meet the Brient family. It was immediately apparent that my role as translator was redundant as Eric’s English was far superior to my French. Some said that his English was better than mine too. I will always remember the reaction of my co-directors when I suggested our logistics fleet should be called OfficeTrolley. Other fond recollections include the time at Paperworld in Frankfurt when Jeff Whiteway, Robert Moore and I competed to get silly phrases into our supplier presentations. Then there was the unsuccessful attempt to hide Jonathan Straker’s large, chuckling frame behind a pillar in Tokyo railway station – we were trying to spoof our Japanese host from Zebra Pen into thinking we’d got lost.

OPI Magazine | November 2016

Ron Sargent One surprising phenomenon has been the strength of the independent dealer community. At one point there were over 15,000 independent dealers in the US, but through acquisition and consolidation that number reduced to the point where people thought they would disappear completely. However, we now have a group of about 2,000 very strong independents that are relevant, successful and have remained customer-centric. When I first started at Staples, friends and family would ask me how I could work in such a boring industry where nothing ever happened. In fact, in my 28 years I’ve found it to be the exact opposite. It’s a vibrant industry, touching all of the different elements of the business community, with a pace of change that always keeps things interesting. My prediction is that the next 28 years will be just as exciting.

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Memory Lane | Special Anniversary Feature twe year anni

Mark Leazer

“Now [the internet] is the epicentre of all modern communication and business processes” Phil Jones As you might expect from someone who works for Brother, I believe the launch of plain paper faxes was a golden period for the industry. It was a real breakthrough moment – there was a large installed base, a real reason to trade up, a high average selling price, installation and service contracts, plus plenty of margin and repeat consumable business. Everyone did so well. Clearly, the internet has had a profound effect on the way that business is now done, and living through this transition has been challenging. We’ve seen many significant partners deteriorate and disappear and it’s forced the whole industry to reinvent its value proposition. We underestimated the ramifications of the internet in the 1990s – at first it was just a good way to find information, but now it’s the epicentre of all modern communication and business processes.

Andy Rod When I was younger I thought that the OP superstores would never make it because they were losing so much money. I believed independent dealers would do just fine when these companies ran out of money. But I didn’t understand private equity firms and their patience for building a business. The first OPI issue made me aware that people sold office products in countries other than the US. I then met all kinds of great, funny-sounding people from other countries at that first OPI conference, including all the crazy Australians (I’ve never seen anyone drink like that). I was also lucky to meet my US industry idols who, through OPI, also became my friends.

When I first came into the industry, many of the larger independents had formed AOPD and those dealers were successfully competing for the biggest accounts. As the big boxes in the US began to create their contract divisions by acquiring many of those large independents, the ability to compete in that arena was weakened. Fast forward and many of the dealers that survived then are the large independents of today. Dealers and the dealer groups have adapted and the ability to compete for larger accounts and contracts is making a comeback. It’s nowhere near where it needs to be, but the trajectory is upwards. The most surprising event during my time in OP was that Staples and Office Depot would seek to merge. The number of OP big boxes was already down to two and I never thought it would reduce to just one. In the end I suppose the government was surprised by that too, and decided it shouldn’t happen. The least surprising scenario I recall is that following the ‘sell to us or die threat’, USOP is no longer around and many independent dealers still are.

Lou D’Amaro My first job after graduation in 1965 was with the Carter’s Ink Company. I also spent 25 years at Dennison/Avery Dennison and almost eight years at Esselte. In other words, I’ve been involved in many dramatic changes in the industry – from a market with thousands of dealers controlling distribution and mostly buying from manufacturers, to the growth of the wholesalers and mega-dealers, through to the creation and rapid growth of the superstores and the outsourcing of product from Asia. Then we had the early 1980s when inflation was almost out of control and you had to adjust and be flexible or you wouldn’t survive. Those were exciting times.

Steve Kouroupas Defining moments for me would be Staples buying National Advantage and Office Depot buying Eastman – both representing the move into contract versus just retail. And of course the first attempted acquisition by Staples of Office Depot was a significant point in time. But just as important was Office Depot overpaying for Viking in an attempt to keep up with Staples buying Quill, and then not executing on the acquisition and squandering it all. Major surprises? That the Office Depot purchase by Staples did not go through the second time with the government stepping in to protect big business – Office Depot is now screwed and will slowly implode. The OPI conferences were always superb events. We still go to these events year after year and see how people ‘in the industry’ move from company to company in order to ‘stay in the industry’. That’s testament to something, isn’t it – camaraderie, loyalty, passion or insanity? w w w.opi.net | OPI Magazine

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Special Anniversary Feature | Memory Lane twenty five year anniversary

Peter Damman There were more inspirational leaders and visionaries in the previous decades than there are today. Just think of personalities like Irwin Helford, Dave Fuente, Graham Cundick and Eric Bigeard. These were people with a passion for the business and with an enormous drive to be successful. And they were not afraid to show their human side. I remember the first time Graham Cundick and I went to see Dave Fuente in the US. We didn’t know what to expect. But after that first handshake we knew this was a great guy who not only worked hard, but also knew how to enjoy life. After our meeting we ended up drinking a few beers in our hotel bar and talked about everything besides office products. Same with Helford – it’s difficult not to like him. These heroes of mine always attended OPI events and were easy to approach. Indeed, OPI conferences have been crucial in making contacts at the highest level of this industry – leaders who were normally very difficult to get in touch with. The ‘new’ Partnership event now brings buyers and manufacturers together in a unique environment. I think it’s fair to say that OPI has been bringing industry leaders together in a unique way over the past 25 years – it’s much more than a magazine.

Graeme Chapman In the early days of my career at ACCO, my biggest challenge by far was convincing trade dealers that IT was going to be massive and trying to persuade them to stock and sell computer-associated products. We achieved our goals by selling direct to the consumer at full retail prices and directing the order back through a local dealer. It caused more than raised eyebrows, but it had the desired effect of showing dealers there was a big call for computer products. The rewards for shrewd dealers and ACCO were massive.

“My biggest challenge [...] was convincing trade dealers that IT was going to be massive”

Bob Geens Forever etched in my memory? That’s easy. It was when I was working for ACCO and we took a number of our best customers on a trip to Tenerife. Following a liquid lunch we decided to try go-karting. Unfortunately, I became over-competitive and crashed into one of our customers, leaving him unconscious on the track with the go-kart wrecked. Thankfully he wasn’t seriously injured, but at the time I remember thinking: “How am I going to explain to my bosses that I had nearly killed one of our top customers?”

Rob Vale I admire the smartness of many entrepreneurs who chose to sell their OP businesses at the peak of their value. However, many who acquired these expensive businesses have failed to invest in them for the long term. Simply nailing up a new sign over the door doesn’t add value. Among many amusing recollections, I remember a time in Spain when I had to address a large conference at a gala dinner in a beautiful castle. I wrote my speech themed around the past year and had someone translate it into Spanish for me. However, during my address everyone started laughing uncontrollably. I couldn’t figure out why. Afterwards, the Spanish Managing Director hugged me, with tears rolling down his face and explained that when the word ‘year’ (ano in Spanish) is badly pronounced it can easily sound like another word for part of the body! Guess which one? The joys of working around Europe.

OPI Magazine | November 2016

Dominique Lyone I recall a NOPA conference where a gentleman named Jon Ledecky came forward to the podium. He said we wouldn’t survive in the industry and we were lucky that he had brought his chequebook. He advised us to sell our companies to him on the spot, in order to save us doing it later on. I was very surprised when a few in the audience actually sold their businesses within a month. For me, Ledecky’s speech only further motivated me to succeed and since then my company has grown considerably and continues to grow every year. Another defining moment was when some young men associated with Waltons in South Africa started Macquarie Stationery in Australia. Many local dealers here in Australia had never experienced such intense competition and it forced them to push harder and fight more for their position in the industry.

twenty five year anniversary

Memory Lane | Special Anniversary Feature twe year anni

Harry Gould We were one of the initial suppliers of copy paper to Staples, Walmart, Corporate Express and United Stationers. All four of them over time decided that they could get a lower price if they cut out the middle man, ie Gould Paper Corporation. The person in charge of our OP division at the time would tell the mills, when they were considering bypassing us as their distributor, that “if Staples could talk directly to the trees, they would bypass the mills as well”.

Walter Johnsen Not long ago, I saw Tom Stemberg at a function for donors at Cornell University. He was in fine spirits and we talked about how hard our kids were working. I mentioned his speech in German at a huge OPI dinner at Paperworld in Frankfurt and he smiled. He spoke of his modest beginnings in Austria and was grateful for the opportunities that education had opened to him. Less than six months later, he sadly passed away.

Eric Smith There can have been few more exciting places to be than in the OP industry in the 1980s and 1990s. The mixture of real innovation, exaggeration, hype, vitality and showmanship was fascinating to me, but pretty scary for those who wanted a quiet life. By the time I retired in 2001, much of the froth had blown away and margins with it – retrenchment being the order of the day. Strangely, the independent dealer still exists and some of the aftermath of globalisation is proving to be quite expensive to clear up.

“The aftermath of globalisation is proving to be quite expensive to clear up” Friedrich Becker-Birck Having been a member of OPI’s EOPA jury for ten years I can clearly state that you guys gave us a great communication tool and networking platform that helped many companies in Europe to be both more successful and have a little more fun in our tough daily work. Thanks to all the OPI team. Please continue to improve OPI in the coming years. That’s your challenge!

John Givens Congratulations OPI on 25 years of extraordinary coverage and review. Thank you for providing personalised recognition to the leaders in our industry and celebrating our accomplishments. 25 years from now, in 2041, when we’re selling high-productivity cerebral implants, augmented reality workspace solutions, fully-integrated hyperbaric workstations and biometric-authentication devices, OPI will still be covering the news.

David Langdown When I joined the OP industry I remember thinking that, while it may not be glamorous, people would always need pens and paper, disks and printer ribbons. Whatever happened in the outside world, offices would still need supplies. In a way, they still do, but to a much broader extent. There are some exceptional dealers that have welcomed and even driven the change that is happening, but there are many more that are living on borrowed time. The industry as a whole has reacted far too slowly to the changing world and I fear for the majority of the dealer channel. The wholesalers have spent most of the last decade in turmoil, driven by the short-term needs of their venture capitalist owners and not the long-term needs of their customers. Their policies of buying customers in order to feed their infrastructure, and making poor investments in technology and systems has not worked and in the race to the bottom, it’s questionable if anyone has won. Dealer groups were once recognised for delivering innovation, differentiation, creativity and best practice. Unfortunately, with the creation of the wholesalers’ own groups, they’ve found themselves increasingly unsupported and I think they too face an uncertain future. In the meantime, while the channel has been naval-gazing, Amazon has come along, and by implementing the digital model in which much of the industry still refuses to invest, eaten everyone’s sandwiches. The OP industry is like matter – it cannot be created or destroyed, it can only change. So there will be change and consolidation through acquisition or liquidation, but the winners will take the industry forward in a new way.

w w w.opi.net | OPI Magazine

twenty five year anniversary

Memory Lane | Special Anniversary Feature twe year anni

Doug Ramsdale

John Motley What a wild ride the past 25 years have presented for the OP channel. Whether you are a manufacturer, wholesaler, contract stationer or manufacturer’s rep, no one has escaped the changes that have occurred. OPI has managed to do a brilliant job covering relevant and topical stories over the years, with a style of writing that captures my attention with each publication, whether printed or posted online. I look forward to watching the business continue to evolve. Well done and congratulations to all the team at OPI.

Jack Miller We were fortunate to be in the OP industry during a time when there was still a lot of camaraderie in the business and when people were arguing about whether you should ever sell anything at a discount from list. We [Quill] were the dirty discounter, but the superstores soon surpassed us. Then we matched them and continued to grow and now they are being surpassed by Amazon and others. It’s a shame they aren’t agile enough to compete. My career in the industry was most influenced by the false prophet known as the NOPA Future of the Industry Report. A great and exciting read, it provoked a giddy round of global expansion, acquisitions, investments in technology, IPOs and more, as players self-fulfilled its predictions. Fast forward to today, how many of those global ventures have paid off? How much wealth has been destroyed by inscrutable acquisitions, like Staples’ purchase of Corporate Express? Or one of the worst examples of pearls before swine, Viking in the hands of Office Depot? Looking back, I see a contrast in the industry that still drives decisions today. There are those companies that are driven by the mantra of earnings per share. I believe their success has been limited and the waste of capital and human effort too high a price. On the other side, there are businesses that build from within, and hone their offerings in terms of quality, effectiveness, ethical consistency, and being good to do business with. Those that have made it thus far appear to be thriving.

Jamie Fellowes I would highlight 1991 as a defining year, not least because that’s when OPI started. An argument could be made that the launch of OPI coincided with and played a significant role in accelerating the formation of the global OP market. By providing insights into the key industry resellers around the world, OPI was like someone turning on the lights for manufacturers. It made it easier to understand the markets and its players and that, in turn, made it easier to be successful.

Dave Guernsey The biggest surprise has been how quickly all generations are mastering technology. If there’s to be a day of reckoning for independents I’d say technology could be our undoing. I find it amusing, and satisfying that those who wrote off independent, small business people are largely the ones not with us today. The day may well come where there is no place for us in the OP world, but that day is not today. At the centre of all has been OPI with its fair, balanced, timely and insightful coverage – for that we thank you and your excellent team.

Eric Bigeard My best memories include all the great people I’ve worked with – so many tough times, fun times and rewarding times. Also the manufacturers that were ready to do things differently, bend the rules and remove mountains to make our dreams come true. I have very fond memories of two special guys called Mike Jefferies and Steve Hilleard who did so much to support Lyreco and myself. Remember that very first issue of OPI – a black-and-white eight-page document? And that first OPI conference – fewer than 50 of us, with presentations done using polypropylene slides on overhead projectors. Other notable moments include meeting Jon Ledecky in a shuttle bus to Roissy airport – because that was the only time he had available! And the face of the maitre d’hotel at a restaurant in Paris when ‘the hermit’ Jirka Rysavy and I walked in for dinner – Jirka was asked to change into more suitable business attire! w w w.opi.net | OPI Magazine

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Special Anniversary Feature | Memory Lane twenty five year anniversary

Jonathan Smith

Chris Exner

The defining moments of the past 30 years include the launch of Viking in the UK and Europe in the 1990s, and the charm offensive Irwin Helford made at a BOSSF conference. He had a hostile audience eating out of his hand by the end. Then there was the launch of Staples superstores in the UK, also in the 1990s, and the variety of different formats used to try and make it a success. The ballsy Jon Ledecky telling UK dealers to ‘sell or die’, and the failed global domination of USOP were memorable events. Plus the Dudley Stationery crash – from hero to zero in just a few months. I have many amusing stories from Paperworld but they’re fortunately covered by the Official Secrets Act – what happens in Frankfurt stays in Frankfurt!

One of the defining moments in the office products industry was the focus on innovation, differentiation and creating value, all the way along the distribution chain. This started happening in the early 2000s and Esselte was one of the leading innovators, creating differentiated, value-add products, marketing and services. Essentially, these factors led to sales growth and allowed everyone to make good margins – always a good idea in business. I was fortunate to make many really good friends among customers and competitors, spanning countries and indeed continents. I have always been amazed, given the size of the industry, how friendly it is and how much fun it was, almost like a small, global village.

Soundbites Ronny Van Rossem A defining period for myself, my team and the whole industry was the time in 2007/2008 when we didn’t know whether Corporate Express (CE) would buy Lyreco or whether CE was going to be bought by Staples. That moment still has repercussions today.

Ron Wotherspoon The years between 1970 and 2000 were the most creative and interesting period of my life. The structural and technological foundations of the modern office products trade were established and I was privileged to be in the thick of it.

Sean Starkey What’s surprised me the most during my time in the industry is the level of venture capital interest in what is a challenging vertical market and category. Also, I’m puzzled that some resellers sell on competitor websites and also purchase from them, thereby effectively supporting their competition.

Chris Stott Stationery is fighting back and taking technology head on. Making stationery fun and different has given the younger generation the opportunity to own products that are not only functional but trendy.

Steven Glass I’m heartened by the entrepreneurial spirit and success of independent dealers – they’ve maintained a strong relevance in the marketplace while being entirely self-funded. Mike Stranders The speed at which Amazon has grown to become a major global player has surprised me the most. The rising importance of online sales and marketing has meant a significant shift in terms of strategic marketing planning. Chuck Harstad The speed with which the industry changed and consolidated as a result of the introduction of Staples amazed me. I don’t think anyone realised in advance the profound impact this would have. The Wall Street Journal once described OP as the fastest-changing industry in America. Denis Bonet I’d love to be here in ten years’ time and see the impact of e-commerce killers in our industry. Will e-commerce take the market share mail order enjoyed ten years ago? We can already see which direction some market players are investing in. Let’s see in a decade who had the right vision and took the correct decisions today.

OPI Magazine | November 2016

Bob Jones Despite all the structural changes and acquisitions that happened during my time, with associated immense pressure placed on the manufacturing side of the business, my abiding memory is that our industry retained its great sense of humour, integrity and honesty during what was a very difficult time. For that I will always be grateful. Mike Gentile My greatest surprise is seeing how the big box retailers initially totally minimised the e-commerce boom, amid the decline of traditional retail. Everybody loves progress, but nobody likes change. Andrew Morgan I’m still amazed at the slow adoption rate of mobile over the past 12 months. With the percentages that the e-tailers are reporting, it’s amazing that the independent channel has not adopted it more broadly. I believe it poses more of a threat to the channel than e-commerce did in the late 1990s. John Donaghy For me, the defining moment in the industry would be the entry of the major players – Corporate Express, OfficeMax and Lyreco – into the Australian market. They have remodelled the industry so that no one makes any money – brilliant!

Randy Larrimore I had seen consolidation in other industries, but I was amazed by the speed with which it occurred in the office products industry. Sid Lerman I often wonder whether some manufacturers would have made the same decisions about branded or generic product had they been able to see into the future. The generic alternate product is now the accepted norm. Graham Cundick I remember Jonathan Straker’s hilarious speech at an OPI conference – the daughter’s letter to her parents explaining about running off with the gardener who had got her pregnant... I’ll also never forget when my friend Geoff Betts got into trouble in Cannes (for more, see page 106). Mark Layton I guess my biggest disappointment would have to be the rapid fall and ultimate business failure of Daisytek in 2004, several years after my departure. Sad to see such a great company get run into the ground. Jay Baitler The biggest surprise has been the irrelevance of the superstore today. It’s somewhat refreshing that the most valuable asset of the major players has become their contract segments. Mark Farnham We long predicted the death of paper, but it took longer than expected. I now work in a start-up technology company with 35 people in my HQ. We don’t have a printer outside of our accountant. I don’t actually remember the last document I printed. The paperless office finally happened for me and I find that pretty amazing. Steve Odland I think that the best efforts of our industry are on display each year at the City of Hope event. We competed vigorously in the marketplace but came together to support an important charity. That makes me proud.

2000s

twenty five year anniversary

OP Moments | Special Anniversary Feature twe year anni

Hookups, divorces, buzzwords

2010s OVER

the past 25 years, OPI has worked hard to ensure it’s always been at the forefront of breaking news, industry analysis and emerging trends. In the following pages, after spending many hours trawling

OPI takes a [very long] trip down memory lane with a look back at the biggest and best headlines, interviews and trends of the past 263 issues... through each and every issue – yes, all 263 – are just some of the stories, people and buzzwords that have shaped, and continue to shape, this ever-evolving sector. This is by no means an exhaustive list – that would have necessitated

1990s Newell acquires Rubbermaid

doubling the issue size – but a snapshot that demonstrates the dynamic nature of what many now call the business supplies industry. Here’s to another 25 years of bringing you all the information you need to keep the industry running.

OPI launches BT goes public

EDLP DEALER ROLLUP CONSUMERISATION

EDI GLOBALISATION

USOP adds 53 new deals and $775m!

ACCO and Rexel announce merger

CONSOLIDATION

IPO STOCKLESS MOBILE OFFICE PRIVATE LABEL

SUPERSTORES

Tom Stemberg – Staples

Jirka Rysavy – Cor porate Express

The biggest OP stor y never told… that he was responsible for

ssed OPI CEO Steve Hilleard has recently confe cky and Blue Star’s Eric Watson. Lede Jon ’s USOP the relationship between ﬁrst OPI conference in Palm Springs Hilleard explains that it all started at the for the start of the pre-event golf late in 1995. Both Ledecky and Watson were them together on a golf buggy and tournament, so he introduced and seated as they say, is history. sent them on their merry way. The rest, w w w.opi.net | OPI Magazine

2010s

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Special Anniversary Feature | OP Moments twenty five year anniversary

1990s

2000s

Staples/ Depot:

Off!

Depot

signs deal to buy Eastman!!!

Eric Bigeard - Lyreco

E-COMMERCE

POWER CHANNEL

CENTRALISATION

Janhein Pieterse – Buhrmann

2010 BOP s

Value America: the bubble has burst

Y2K

confirms Blue Star acquisition

Final curtain falls on USOP

s e Bois1990

INTERNET

AMAZON

Irwin Helf ord – Vik ing

P y – USO k c e d e Jon L

Guilbert buys BOP’s European operations

ISA acquires John Heath

Cascade in $1.2 billion deal for OfficeMax

GREEN MULTICHANNEL

FACILITIES

MOBILE

Buhrmann buys Corporate Express Depot buys Viking Staples buys Quill!

OPI launches opi.net 52

OPI Magazine | November 2016

Ron Sargent – Sta ples

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CategoryAnniversary Special Update | OPFeature Moments | OP Moments twenty five year anniversary

HP strikes deal to buy Compaq ta on the brink? TriMega/NPA to merge Vasan

2000s Depot swallows up Allied

ChrscisadeMOfillficike ePrnoduc–ts

2010s

Boise Ca

Spicers Steve Odland – Office Depot RFID acquires 1990 s s n a m r e Timm

E-MARKETING

MILLENNIALS

E-TAILING

RECESSION

Time called on ActionEmco

Lyreco and Corporate Express merger 54

OPI Magazine | November 2016

Dudley goes into administration

Depot sales top $10bn

Daisytek US seeks sanctuary in Chapter 11

P Richards S – m a h c a e B Wayne

twenty five year anniversary

OP Moments | Special Anniversary Feature twe year anni

2010s Depot and ’Max confirm merger

1990s

Amazon eyes B2B channel

E-CONTENT DE-GLOBALISATION

3D PRINTING INTERNET OF THINGS

ECi buys Red Cheetah

CO-WORKING

eworks ic f f O – d r a W k r Ma

SOCIAL MEDIA

MPS DIGITAL

OMNICHANNEL

BREXIT

Robert Baldrey – V asanta

BUSINESS SUPPLIES

MOBILE WORKER

Staples and Depot no deal Howard Brown returns with HiTouch

Better Capital makes UK move

Cody Phipps – United Stationers

ALSO to acquire Alpha

Amazon launches Amazon Business w w w.opi.net | OPI Magazine

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Special Anniversary Feature | Top Office Products twenty five year anniversary

Office products – then and now

A huge amount has changed in our industry over the past 25 years in terms of channel make-up, competition, supply chain, margins – the list goes on. But what of the products that consumers actually want from their OP resellers? OPI takes a look at the products that were popular back in 1991 and those that top the shopping list today. Plus there are some surprising perennials that have stood the test of time...

aves h t s u M 1 9 19

Telephone answering machine

The cassette-based answering machine was an office essential in its day if you didn’t want to miss that all-important message. It’s been long-since replaced by solid-state recorders built into phones or company voicemail systems.

BIC Cristal pen

Floppy disk The original ‘floppy’ floppy disk had already disappeared by 1991 and been replaced by the smaller, more robust 3.5” hard-cased version. By 2007 computers were rarely manufactured with floppy disk drives anymore and the format became obsolete.

Products that have stood the test of time 58

OPI Magazine | November 2016

Ashtray A symbol of society’s hugely altered attitude to smoking. The desk or meeting room ashtray was a popular OP seller at the time, but sweeping company and legislative changes to smoking in the workplace have seen its demise. Outdoor ashtrays still sell though.

The BIC Cristal pen was ubiquitous in the 1990s and is said to be the bestselling pen of all time. But a proliferation of competitor products means it’s not quite so omnipresent today. Interestingly, products sold since 1991 have incorporated a hole in the cap to reduce the risk of suffocation if swallowed.

Post-it® Note/self-stick note The iconic Post-it® Note is renowned for being an invention launched on the back of a failed attempt to produce a powerful adhesive – the ‘low-tack’ results were ideal for a reusable sticky note. 3M’s patent ran out years ago, but the self-stick note has proved ever-popular.

twenty five year anniversary

Top Office Products | Special Anniversary Feature twe year anni

Desk calculator A surprising choice here perhaps. But although we all have calculator apps on our laptops, smartphones and tablets, the desk calculator is still Amazon’s third bestselling office product.

lers l e S p o T 6 1 20

Notebook Are handwritten notes a thing of the past, being replaced by text typed directly onto tablets, for example? Not quite. The bound paper notebook remains a popular OP purchase for those who haven’t yet made the digital switch completely.

Coffee

Coffee drinking has undergone an explosion in popularity over the past 25 years. It’s the most popular drink worldwide with around two billion cups consumed every day. Once the preserve of specialist suppliers, it’s now in nearly every OP resellers’ catalogue.

Printer cartridge Despite reports of declining sales, printer supplies still top the list for many resellers. Replacement cartridges for printers simply didn’t exist in 1991, while most of us now buy them on a regular basis for home or office use.

Correction fluid ct back produ elling -s p er for o ll t estse was a b r a e l p of the il a t P d it’s s ictions n d a e r 1 P ck 9 . in 19 ted ba today ch-tou sellers u e r m y e r r n ma e we rathe ss offic e been to hav paperle r a e p ut ap then, b rated. e g exag

Paper

A surprising survivor from the 1990s. Correction fluid was popular back when we were all handwriting reports, but still sells in large volumes today, perhaps showing that we still make plenty of mistakes that need covering up.

w w w.opi.net | OPI Magazine

EOPA

With all the nominations for the European Office Products Awards now in, make sure you don’t miss next year’s grand finale awards ceremony Company Awards

WITHIN

our constantly evolving industry, the European Office Products Awards (EOPA) have stood the challenging test of time – next year’s EOPA awards ceremony will reward outstanding achievements in our sector for the 16th time. And work is well underway to make it another memorable occasion. Nominations for the best products in a range of categories, plus of course the company as well as the sought-after individual awards are in, and an independent panel of industry executives is getting ready for a day of heated discussions and debate

in Geneva, Switzerland, in early December to decide the winners. Held for the fourth time at the Hotel Okura in Amsterdam as part of OPI’s well-established Partnership event, the EOPA dinner is now the only occasion in the OP calendar when senior executives from Europe’s leading vendors and resellers can meet in one room. For tickets for this unique evening of celebration and networking, email awards@opi.net or alternatively visit www.opi.net/eopa2017. Please note that bookings for the EOPA are open to anyone, not just attendees of OPI Partnership.

Presentation Dinner

Winners of the 16th annual European Office Products Awards will be announced at a glittering industry dinner on 8 March 2017 at the Hotel Okura, Amsterdam

• Dealer Group of the Year • Vendor of the Year • Reseller of the Year: Revenues under €100 million NEW Revenues over €100 million NEW • Wholesaler of the Year • Marketing Initiative • Product Video NEW

Product Awards • Product Development of the Year NEW • Business Product of the Year NEW • Product Design NEW • Innovation of the Year

Individual Awards • Young Executive NEW • Professional of the Year • Industry Achievement

Book Now

To book your seats at this unmissable networking event or for more details, visit www.opi.net/eopa2017 or email awards@opi.net

twenty five year anniversary

The Future | Special Anniversary Feature twe year anni

The shape of things to come? When

trying to imagine the workplace of the future, a good start is to look back at the cartoon show The Jetsons, which was first aired in the US in 1962 and purported to show what the world would look like in 2062 – 100 years on. Watch The Jetsons today and it would seem most of its predictions have actually come true: autonomous, self-driving cars (although their vehicles could fly); video calling apps such as Skype or FaceTime (George Jetson used to communicate with his boss at Spacely Sprockets like this). He also views his news and other information on a flat screen TV – let’s say, using a version of our internet. In addition, Rosie the robot maid scurries about doing all kinds of things for the people that are a part of her ‘life’. Taking note of science fiction, back-to-the-future scenarios, and even cartoons such as The Jetsons can provide glimpses into what the

workplace might look like in the coming decades. But let’s think in more practical terms, by aligning the office of the future to the careers and workforce that will be our reality. In 1997, I coined the phrase ‘nomadic workers’ while writing Surviving the Information Age, and made the following predictions: • The number of full-time jobs will begin to dramatically shrink. Yet, we are only seeing the tip of the iceberg in the change of the relationship between employer and employee as the nomadic worker becomes the dominant form of corporate resource. • Companies will hire the best talent, regardless of where that person might be. A new form of career competitiveness will emerge with extreme rivalry for this group of nomadic workers – highly skilled individuals who call the shots.

“Nomadic workers have different attitudes towards life and work, and reject many of the currently accepted ‘norms’ of the corporate environment”

What’s the future of the office workplace? People love trying to figure out that question. Futurist Jim Carroll is one of them… • Where people work from won’t matter – a trend that has implications for the future of both rural and urban economies. • Lifestyle choice will come to dominate career decisions. Nomadic workers have different attitudes towards life and work, and reject many of the currently accepted ‘norms’ of the corporate environment. Their attitudes will revolutionise the world of work. • Office walls won’t determine the shape of tomorrow’s company – the reach of its computerised knowledge network, and its ability to tap into the skills and capabilities of nomadic workers, wherever they might be, will define it. I was pretty much bang on with those trends – certainly much of it has already become true. More people work from home than ever before (in my case, I’ve had a home office for 25 years; my kids grew up in a world in which their parents have always worked at home). A global war for the best talent means that there is an entire economy of highly-skilled nomadic workers. And in my own case, I joke that I w w w.opi.net | OPI Magazine

wenty five year anniversary

Special Anniversary Feature | The Future twenty five year anniversary

work really hard to not have to go and get a job – instead, I hire out my future-forecasting skills to organisations worldwide. Those trends will continue to play out in the future. But what else will happen? In my view, there are three key trends that will define the future of the office and the workplace: the rapid emergence of new careers, the continued rapid evolution of technology, and the impact of the next generation.

1. Future vocations First, consider what is happening with skills, jobs and careers. Last year, I was the opening keynote speaker for the global WorldSkills challenge in São Paolo, Brazil, and spoke about the fact that we are now witnessing the rapid emergence of all kinds of new careers. I’m talking about vocations such as robotic pharmaceutical therapy monitors, water footprint analysts, vertical farming infrastructure managers, drone helicopter insurance crop risk managers, and – not forgetting – manure managers! The key point here is that many of these new careers involve the processing of information which can be done from anywhere. An insurance risk manager that relies on drone technology doesn’t have to be on location, they can simply do their work from wherever they are. The result of this is an even greater dispersion of highly skilled jobs around the world. Organisations in the future will continue to hollow out, hiring skills and talent on an as-needed, short-term contract rather than permanent basis. Centralised offices will become smaller, with a core group focused on strategic goals that simply link to needed talent as and when required.

2. Connecting the workplace The second trend is the Internet of Things (IoT) which will provide some of the most fascinating changes in the workplace and office of the future. What is it really all about? Simply put, every device that is a part of our daily lives is going to become connected and we will be aware of its status and its location.

OPI Magazine | November 2016

“It’s quite likely that self-driving cars will result in mobile offices on wheels” I often joke on stage that this could get a bit out of hand: I might get on my weighing scales one day, and it will send an email to my fridge, blocking access for the day because I’m not living up to the terms of my wellness contract. The IoT will lead to some of the The Jetsons-type forecasts of the past. It’s quite likely that self-driving cars will result in mobile offices on wheels – the car does the navigation, so we’ll have more time to get some work done on the way to the office. Massive hyperconnectivity will keep employees aware of where fellow workers are, when office supplies are running low, or will link them to a specific location on a manufacturing assembly line that requires instant maintenance. We will live and work in a world that is hyper-aware of the status of everything around us and that will lead to some fascinating workplace changes that I don’t think we can even yet comprehend.

3. The virtual workforce It is perhaps the third trend that will have the most profound impact. Consider this fact: 10-15 years from now, most baby boomers will have retired or will be set to soon retire. This technology-adverse generation grew up with mainframes, COBOL and MS-DOS, and as a result, never really adapted to a workplace of videoconferencing, video whiteboards and other methods of collaboration. Conversely, my sons, aged 21 and 23, grew up with the Xbox and PlayStation, Skype and text messages. This generation will soon take over the workforce, and most certainly take advantage of every opportunity to continue to virtualise the world of work. They will use Google Glass-type devices to

embed live video into their everyday work routine. Virtual reality will become common enabling them to live and work in a world of massive augmented reality. They will be able to teleport their minds to far-flung locations where their virtual avatar will participate, interact and collaborate with others. They are going to live in a world of technology acceleration unlike anything we have known, and rather than battling it as older generations have so often done, they will embrace it with open arms and open minds. Does this all mean that the traditional office of today – a meeting place where individuals gather to share efforts on projects, ideas and opportunities – will disappear? I don’t think so. I believe that we are social creatures, and we crave opportunities for interaction. It will just be a very different form of interaction. Brace yourself. The future will be here faster than you think. Jim Carroll is one of the world’s leading futurists, trends and innovation experts, with a client list that includes NASA, The Walt Disney Company, Johnson & Johnson and the Swiss Innovation Forum. Follow him on Twitter @jimcarroll or visit www.jimcarroll.com.

Jim Carroll

wenty five year anniversary

Special Anniversary Feature | Globe Watch twenty five year anniversary

Around the world

in 25 years

OPI looks back at some of the biggest OP stories from around the world. Globalisation across all channels and the rise of the superstores feature strongly

canada Boise ventures north... January 1996 Contract stationer Boise Cascade Office Products acquires Canada’s largest OP dealer Grand & Toy. Novexco buys Lyreco Canada March 2014 Dealer group Novexco emerges as the country’s third-largest contract stationer after it acquires the assets of Lyreco’s Canadian subsidary.

puerto rico Corporate Express enters Puerto Rico May 2005 Corporate Express makes its entrance into the Puerto Rican market through an exclusive agreement with local reseller Double S Stationary [sic].

mexico OfficeMax goes international! October 1996 OfficeMax’s long-awaited international foray kicks off with the opening of its first location outside of the US, opening a TriMax Super Center in Mexico City. Depot confirms Mexico sale July/August 2013 Office Depot sells its 50% stake in Mexico to joint venture partner Gigante for around $690 million.

OPI Magazine | November 2016

brazil colombia Office Depot opens in Colombia September 1993 Office Depot strikes a licensing deal with Centros Del Futuro to develop and operate a chain of stores in the country.

Walmart acquires in Brazil March 2004 Walmart acquires the Bompreco supermarket chain from Dutch retail group Ahold. The $300 million swoop is expected to make Walmart the third-biggest store group in the country.

wenty five year anniversary

Special Anniversary Feature | Globe Watch twenty five year anniversary

sweden Lyreco enters Sweden April 1997 Lyreco announces the acquisition of SKr620 million ($80 million) Swedish dealer Dorab, the largest and most successful in the country.

germany Office World exits Germany May 2003 Office World starts its withdrawal from the German market after being worn down by aggressive price battles and a harsh business climate.

france Depot expands BSD into France November 2001 Office Depot expands its European Business Services Division into France. President of European Operations Rolf van Kaldekerken says that with the addition of a contract sales operation, Depot will be able to leverage its strong brand and operational infrastructure in the country.

italy CE says buongiorno! August 1996 Corporate Express announces its entry into the Italian market via the acquisition of two of Italy’s premier dealers, Asite and Karto Italian, both based in Milan. Spicers Italia opens doors January 2005 Spicers’ Italian operation opens its doors for business with Francesco Villa at the helm.

greece Plaisio sets stock market record May 1999 The Greek reseller rocks the Athens Stock Exchange with an IPO oversubscribed by a record 393 times!

south africa Superstores take off in South Africa May 1993 Makro, an international cash ‘n’ carry warehouse operator, opens a second MakrOffice superstore in the country’s capital, Pretoria. The company says it believes in the potential of a one-stop discount approach to office supply purchasing.

OPI Magazine | November 2016

israel Office Depot opens in Israel September 1993 Office Depot signs an agreement with the Koffler family of Canada, owners of Super Pharm (Israel), and with Jack Fishman and Zach Fishbein, to operate stores in the country under licence.

twenty five year anniversary

Globe Watch | Special Anniversary Feature twe year anni

russia Esselte opens in Russia May 1993 Esselte announces the opening of a sales and marketing office in Moscow.

japan Bigeard confirms Japan opening July 2001 Lyreco openes for business in its 17th country – Japan. The subsidiary starts with 25 employees. Depot sells Japan business February 2011 Office Depot ends its direct operations in the country after agreeing to sell its Japanese delivery business to local discount liquor store retailer and wholesaler Kakuyasu.

china Depot takes first steps in China July 2006 Office Depot is reported to have made its first strategic move into the Chinese market with the acquisition of a stake in online e-procurement company AsiaEC.com.

thailand Office Centre opens in Thailand November 1995 Office Centre, the Dutch superstore chain owned by Makro, opens its first store in Thailand.

australia Viking opens up down under September 1993 Viking arrives in Australia. According to UK executive Graham Cundick, the country’s manufacturers welcomed the mail order operator with open arms, mainly because they saw Viking as a more cost-effective channel of distribution. Officeworks opens first superstore May/June 1994 Officeworks, the OP superstore operation developed as part of local retailer Coles Myer’s investment strategy, opens its first outlet in the Melbourne suburb of Richmond. Officeworks in Viking swoop… January 2003 Coles Myer’s Officeworks agrees to purchase Viking Australia from Office Depot in a deal estimated to be worth A$50 million ($27 million in currency value at the time). End of the road for WC Penfold? April 2004 Voluntary administrators are appointed at WC Penfold following the suspension of the company’s shares.

w w w.opi.net | OPI Magazine

twenty five year anniversary

Letter from Oz | Special Anniversary Feature twe year anni

OP researcher and analyst Andrew Penfold takes a look at the Australian market. What shaped and influenced it over the past 25 years, who are (and have been) the winners and losers, and why the giant online operators haven’t made quite the splash they have elsewhere?

THE

past two decades or so have seen the formerly local, fragmented and relatively inefficient stationery market in Australia evolve into a business supplies industry that is consolidated, efficient and dominated by global players. And while there are still a few of the same people working in the industry, virtually all the businesses from the early 1990s are either gone or have vastly changed. Back in 1992 – when my own OP journey began, incidentally – the Australian stationery market had no global dealers and retailers. Local operators were very comfortable, with little idea of what was about to hit them. Within two years, between 1993 and 1995, four US majors entered the market. They were: Viking Office Products (mail order), Corporate Express (now Staples), USOP/Blue Star (a commercial dealer and an opportunistic acquirer) and Boise Cascade (which bought Pedersons and is now OfficeMax).

Concerted acquisition rush Essentially, it was a concerted acquisition rush by these players to stake a presence in Australia. All in all, it was an exciting time and some established operators happily left the industry with healthy payouts.

To add even more interest, Australian superstore chain Officeworks was established in 1994 – funded by local supermarket chain Coles. As any industry pundit with even the remotest knowledge of the Australian market will know, Officeworks proceeded to ultimately become the biggest success story as the industry evolved over the next two decades. The effect of the US-based globals entering Australia was intensified competition, lower prices and raised efficiency of distribution (although there were multiple instances of system/IT failures and sales losses in the overall process). Effectively and on the plus side, it’s the end customers that have been the winners of all this. That said, many retailers and independent dealers were impacted adversely, with former retail stalwart WC Penfold Stationers first struggling to survive and eventually being broken up and sold off. In addition, independent OP dealers, newsagents and Australian Post outlets saw their market share eroded. There was also cannibalisation among the global players – with the four aforementioned ones eventually folding into two operators today – Staples and OfficeMax. Arguably, Australia was never a big enough market to host all these players.

Product mix changes As in most developed markets, the product mix on offer has broadly shifted from being paper-based and office-centric to a much more diverse mix of business needs, spanning kitchens, washrooms, warehouse/industrial facilities, marketing departments and outdoor environments. For example, some of the bestsellers in 1997 included fax rolls, copy paper, bubblejet cartridges, plastic film (for overhead projector transparencies) and 3.5” floppy disks. Today toner cartridges and copy paper still dominate most operators’ sales profiles.

Andrew Penfold

w w w.opi.net | OPI Magazine

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Special Anniversary Feature | Letter from Oz twenty five year anniversary

However, they are also likely to be accompanied by coffee, office chairs, paper towels and external electronic storage drives (for more on ‘Office products – then and now’, turn to our special feature on page 58). The entry of the global operators, combined with the natural maturing of the industry, has seen persistent consolidation across the Australian market. There are now fewer, but larger operators with wider ranges. While these players are mostly well run and highly professional, the consolidation trend has also meant less specialisation and differentiation – resulting in a general blandness in the current product range. In my view certainly, the Australian market lacks variation via specialised and personalised versions of products that appeal to individual preferences. This is a by-product of larger operators pursuing volume to make their business model work – and has resulted in a yet-unfulfilled appetite amongst customers for more personalisation, design and style in product ranges.

Superstore success As mentioned above, and similar to what happened in the 1980s in the US, the biggest dealer/reseller change has been first the emergence and then the success of the superstore concept. Officeworks – the only Australian superstore chain – has gone from an idea and zero sales in 1994 to by far the largest market operator today. And unlike in other countries where superstores have peaked and are now in decline, Officeworks continues to grow strongly. It’s well managed and the most effective operator in the market, in terms of developing new ranges, exceeding customer expectations and generally growing sales. Of course, it helps that Officeworks has never had a direct competitor to deal with and in some sense it’s perhaps a bit surprising that a second superstore chain has never become established. Instead, Officeworks’ success has been at the expense of traditional convenience retailers such as newsagents and Australia Post outlets, OP dealers and to some extent even the major commercial dealers.

OPI Magazine | November 2016

“Unlike in other countries where superstores have peaked and are now in decline, Officeworks continues to grow strongly”

Supplier consolidation The manufacturing industry too has seen persistent consolidation, with a steady stream of mergers/acquisitions and closures over the years. Major suppliers from the past that are no longer independently operating include: Commonwealth Paper, UniStat, Esselte, Spicers & Collins Stationery, Geoff Penney, Gillette, Marbig Rexel, Australian Envelopes, Jasco (office products), Imation and Pelikan Artline. On the other hand, some of the most enduring – and in some cases still thriving – vendors are 3M, ACCO, Avery, Faber-Castell, Bantex, Canon, Cumberland Stationery and Staedtler. Predictably and looking at the mostly global brands above, local manufacturing has now almost completely been replaced by imports. The only remaining local manufacturer of note is Australian Paper which still supplies broadly half the copy paper market. Overall, local manufacturing has gone from supplying over half – around 60% – of office products demand 20 years ago to around 5-10% today. One topic that I haven’t mentioned so far that has been dominating headlines in other parts of the world is the increasing importance of online players. For good reason. It’s hard not to imagine that online aggregators like Amazon or Alibaba will become established here at some point. But by the same token, Australia has always been protected from global trends by its sheer lack of size and also its

relative remoteness. The country is a small opportunity for global players and often overlooked because there are greater gains to be had in other geographies.

Where to from here? Further consolidation is assured, creating fewer but larger operators offering very wide integrated ranges of products and services. However, this also creates opportunities for small, differentiated specialist players to fill the gaps left by the future giants. It further implies a competitive wasteland for medium-sized companies that will find it increasingly difficult to compete with large players while at the same time lacking the flexibility/adaptability of a small and nimble operator. If there’s one thing that’s certain it’s the fact that the office products – or business supplies – market of today will have little resemblance to what it will look like in a decade. It would be nice to know what big new thing will drive the next phase of market development – drones/robots, 3D printing, Internet of Things, wellness? Most likely, however, it will come from an unforeseen direction. Andrew Penfold is the owner of Sydney-based Penfold Research which provides operators in the OP and related sectors with information to assist with planning, decision-making and strategy development. Email andrew@penfoldresearch.com.au or visit www.penfoldresearch.com.au.

wenty five year anniversary

How To... | Google Analytics twenty five year anniversary

Your A-Z guide to Google Analytics

Google Analytics (GA) is a big topic and there are millions of possible ways to look at them. But GA don’t have to be difficult or confusing. Andy Crestodina breaks it all down into an easy A-Z format in the first of OPI’s brand new ‘How to...’ series of articles

THe

most accomplished content marketers – all the rage today – don’t just write. They read. And they don’t just read words. They read the numbers captured in Google Analytics and make data-informed decisions to perpetually improve their marketing. Here’s what to look out for...

Acquisition

Behaviour

Conversion

What are visitors doing? Behaviour analytics show you the pages visited, time spent on them, and how visitors move through your website.

Dashboards

You can easily set up dashboards to quickly review a variety of reports on a single page. Customise them as you like and set up automatic email notifications.

Funnels

Set up a series of pages as goal markets to see how far visitors made it through a process. Funnels are useful for optimising multi-step processes such as e-commerce checkout.

Hits

‘Hits’ is the technical term for an interaction that sends data to analytics. Page tracking is the most common. Event tracking is also a hit.

JavaScript

JavaScript is the code that makes Google Analytics work. Make sure the JavaScript is on every page so it can ‘talk’ to the cookies on your visitors’ computers.

OPI Magazine | November 2016

Where do your visitors come from? Your acquisition reports reveal the search engines, social media, referring websites and campaigns that generated traffic.

Are your visitors taking action? These reports indicate the site’s performance against its goals, including subscribers, leads and sales.

Event tracking

You can track actions, even when visitors don’t go to a new page. With some quick programming, you can track clicks in videos, tables on pages, and time spent in specific areas.

Goals

Define goals in Google Analytics to create important conversion metrics. It’s easy – and powerful – to create thank you pages to track conversion rates.

In-page analytics

An imperfect, but interesting report, in-page analytics show the percentage of visitors who clicked on links or buttons on specific pages.

Key performance indicators (KPIs) Professionals measure more than leads and sales. They measure each action that leads to success. Define your KPIs and keep close tabs on them regularly.

wenty five year anniversary

How To... | Google Analytics twenty five year anniversary

Landing pages

The homepage is only one entry point. Your landing page report shows you where visitors begin, whatever the traffic source might be.

Mobile

You’ll want to know how many visitors are using mobile devices. Many brands must evolve their strategies to accommodate the growth of mobile access.

Notes

Overview

Pages

Queries

Make notes in analytics by adding annotations to your timeline to indicate when marketing events happened (eg email sends, site updates, etc) and analyse the effects.

The ‘All Pages’ report inside Behaviour reveals metrics per individual URLs. Examining page views, time on page, and more, will help you determine the performance of your content.

Each section of Google Analytics offers an overview report, which presents high-level data to enable basic, but quick health checks.

A key report for SEO, Queries (in Acquisition > Search Engine Optimisation) shows keyword rankings, impressions, clicks and clickthrough rates.

“Reports don’t affect your marketing outcomes. Actions do. Commit to take action on your reports or your analytics efforts will amount to zero” Referrals

Referrals (also found under Acquisition) reveal your traffic sources. The analytics here enable you to assess the quantity and quality of visitors from other websites.

Time on page

Time on page is the best measurement of engagement. You can assess which content is and isn’t ‘sticky’ to apply to your customer experience analyses.

Views

The five ways to see the data of any report. Toggle the buttons in the top right to see data (the default), percentage, performance, comparison and pivot views.

Exclude bots and spiders

Go to View Settings in your Admin section and check the ‘Bot Filtering’ box. This will make your data more accurate by excluding traffic from robots like GoogleBot.

Zero

Reports don’t affect your marketing outcomes. Actions do. Commit to take action on your reports or your analytics efforts will amount to zero.

OPI Magazine | November 2016

Secondary dimension

This feature enables you to add data from one report into another as a second column, giving you the ability to cross-reference relevant metrics.

User flow

You can track actions, even when visitors don’t go to a new page. Wth some quick programming, you can track clicks in videos, tabs on pages, and time spent in specific areas.

Web property ID

Your web property ID is a tracking code that identifies your website with a seven-digit account number followed by the two-digit property number. It looks like this: UA-0000000-01.

Yourself

You want to exclude your own onsite behaviour and internal traffic from your office. Simply create a filter in the Admin section and add the IP address of your network.

Andy Crestodina is co-founder and Strategic Director of Orbit Media Studios, a US-based company dedicated to web design and development. To read Crestodina’s original blog, visit: www.orbitmedia.com/blog/content-marketers-guide-togoogle-analytics.

twenty five year anniversary

Industry Achievement | Feature twe year anni

The

big picture

Long-established and family-oriented, Hoyle Office Solutions is a pillar of its local community. But it’s also looking at the bigger picture and making great strides in venturing down new avenues

KATHY

Hoyle was this year’s winner of the Industry Achievement award, part of the North American Office Products Awards (NAOPA) that were being held during SP Richards’ Advantage Business Conference in Washington DC in July. Hoyle is President/CEO of Hoyle Office Solutions, a woman-owned business enterprise in Arden, North Carolina. OPI’s CEO Steve Hilleard caught up with Hoyle at her offices to talk – in addition to the NAOPA award – about her company, the challenges it faces today and the plans she has for its future. OPI: Please tell me about the beginnings of Hoyle and how/ when you became involved? Kathy Hoyle: My father started the business in 1945. Known as the Asheville Typewriter Company,

Kathy Hoyle with

her father James

W ‘Red’ Hoyle

it originally just sold Remington typewriters, but he decided to expand into office supplies too. It’s always been a family business. My mother did bookkeeping and my three brothers looked after warehousing, delivery, purchasing and sales. I first helped my Mom with the books, but then gradually learned every other facet of the business. OPI: How does the company fit into your local community? KH: Well, we’re something of an icon in the local area, having been there for over 70 years. Many customers like to use the phrase ‘Loyal to Hoyle’ because they’ve been with us for so long. We’re just a small company, but I wanted to expand, which is why I decided to join the Regency franchise group. We needed a better web store, a wider variety of products and more competitive pricing – all possible when you’re part of a bigger group. OPI: What has the Regency affiliation brought to the firm? KH: We only went live with Regency in April, so we’re still learning. But our customers love the new web store and Regency offers a lot of different tools including vertical marketing and extras that we can add to our portfolio, such as print promo, apparel and managed print services.

OPI: And you couldn’t get those services from any of the traditional dealer groups? KH: Not for the value I get from Regency. Building the new website was extremely expensive and Regency offered that as part of the package along with the people to support us. It’s this support that’s so vital, and they have many ‘subject matter experts’ who are always on hand to advise. OPI: More broadly speaking, what are the challenges facing small, independents in the US today? KH: You need the resources to play the big game and compete with the online giants like Amazon. You must have a web store that offers what people want and reflects what the business is all about. At the same time we retain that local touch for our customers, servicing them with our own people and delivery drivers – everything still has a personal feel, but includes all the amenities that a large players such as Amazon would offer. OPI: There’s a split camp when the subject of Amazon comes up. One is fearful given its rapid growth in the OP category. The other says it’s not competition because it’s going after a different customer. Which camp are you in? KH: In the first one, definitely, especially as a result of the millennials – that’s how they shop. We needed to have something to offer this generation, that’s why I decided to take the company to the next level. I’m now extremely optimistic because I feel I have a partner that’s enabled me to do this. I’m no longer doggy-paddling along, alone in the water – I’ve now got a big life jacket around me as I swim forward. OPI: Let’s finish up with the Office Products Women in Leadership (OPWIL) group. You were fairly instrumental in the establishment of that organisation. KH: Yes, Krista Moore and I started OPWIL in 2009. Since then we’ve grown and provided a lot of information and mentoring to women, giving them a platform where they can be heard. That’s important in a male-dominated industry such as ours. w w w.opi.net | OPI Magazine

twenty five year anniversary

Printers | Category Update twe year anni

The office and home printers of today are descended from many generations of forerunners. OPI takes a look at their history before peering into the future

OPI

has regularly reported on the imaging supplies sector (see ‘Under pressure’ on page 87 for this year’s category update), but has rarely looked at the hardware this industry feeds – the printers themselves that consume its ink and toner. As part of this issue’s 25th anniversary celebrations, we take a look back over the history of the printer, highlighting some of the major milestones and technical leaps that have led to the machines of today.

Evolution The development of printers has very much mirrored the evolution of the computer industry. Back in the 1970s, both computing and printing were ‘centralised’ processes. Huge mainframe computers sat in their own rooms and, likewise, the office print room was its own entity into which your print requests were fed. The printing process was a ‘batch’ event, with print runs conducted offline at set intervals, and the output on large fanfold paper featuring sprocket holes along each edge (see main image). You would carefully tear these off and pull the pages apart along perforated lines to produce a reference document that you would then use over the coming weeks. The history of the printer is in some ways the move away from this centralised, sporadic process towards a distributed event that nowadays occurs on demand throughout an office building or, indeed, at home or wherever you happen to be. This move began back in 1981, when IBM released the first personal computer – the original PC. Computing

no longer needed to be a centralised activity, but could be performed alone at your work desk, and the need for a more localised, on-demand print service became obvious. These first printers were ‘ribbon-based’ impact devices that essentially built on typewriter technology – either the quicker dot-matrix type or the slower, but higher-quality daisy-wheel variety. Each relied on a metal printhead striking an ink-soaked ribbon to apply characters onto the paper. They were noisy, but affordable and continued to be the most common type used with personal or home computers right up until the 1990s.

printer and a product from which all modern laser printers are directly descended. But it didn’t become mass-market until 1984 when HP introduced its LaserJet printer based on the Xerox technology and running at speeds of eight pages per minute. However, retail costs of around $3,500 put it out of the reach of consumers and even made it an expensive purchase for a business. HP LaserJet

Laser leads The birth of the laser printer can be pinpointed to 1977, when Xerox released the 9700 Electronic Printing System, the first xerographic laser w w w.opi.net | OPI Magazine

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Category Update | Printers twenty five year anniversary

That said, explains InfoTrends Director John Shane, this desktop device really kicked off the office printer market. “Prior to this nobody would have considered you could go to a store and put a laser printer in your shopping trolley,” he adds. “Laser printers were also much quieter than impact printers, making them more suitable for office environments.” This move away from ribbon-based products to the far higher-quality, drum-printing process on A4 cut-paper started a trend. Others jumped on board, with companies such as Apple and Brother following suit a year or two later, launching their own devices and driving down cost. Today, a home colour laser printer can be had for under $200. Laser printing has become the technology of choice in most businesses and the machines have now morphed into the multifunction device (MFD) that includes scanner, copier and fax machine capabilities. The US installed base of laser printers was just 30,960 in 1984, but that number grew to 12.6 million in 1994, 22.1 million in 2004, and 28.7 million in 2014.

Inkjets play catch-up The first inkjets appeared in 1976, but technical problems around controlling the ink flow and printhead clogging meant that they didn’t become a consumer item until the late 1980s, with the release of the HP DeskJet. Quality was not as good as that achieved by laser printers and they were slower, but their ‘drop-on-demand’ system that sprayed the ink onto the page only where needed meant that an affordable, reliable solution was possible. And, of course, inkjet printer prices have tumbled since their introduction. The HP DeskJet was originally priced at a staggering

The Nokia 9210i

“I believe that lasers and inkjets will happily coexist alongside each other” $1,000 in 1988, but costs rapidly came down to $365 by 1993. A colour-printing upgrade was offered in 1994 and inkjets became the most common consumer printer by the late 1990s, allowing people to print in colour at home. But laser maintained its grip on the business market, where its higher speed and quality were paramount. In 1984, the installed base of inkjet device in the US was just 62,250; that number grew steadily over time – 12.9 million in 1994, 95 million in 2004 and a huge 120.8 million in 2014. OPI spoke to Terry Caulfield, General Manager at Brother UK, about the laser versus inkjet debate and whether one would eventually dominate the market. “It’s horses for courses,” he says. “For pure mono quality laser is unbeatable when printing on basic uncoated paper. Inkjets just can’t compete, particularly when printing on both sides of the paper where you’re likely to get ink bleed-through from one side to the other. “That said, for printing colour photos and images on coated, glossy paper inkjets win the day. That’s why you’ll find the majority of businesses mainly using lasers for their everyday business needs, but the art and

US installed base of laser printers 30,960 – 1984 82

12.6 mILLIon – 1994

OPI Magazine | November 2016

22.1 mILLIon – 2004

28.7 mILLIon – 2014

design departments will typically be using inkjets where image quality is paramount. I believe that lasers and inkjets will happily coexist alongside each other for that reason, with no one format achieving dominance.”

Disruptive mobiles The personal digital assistant (PDA) first arrived on the scene with the Psion Organiser in 1984. But we had to wait until the mid 1990s before PDAs such as the IBM Simon and the Nokia 9000 Communicator acquired full mobile phone functionality – they would be considered the first smartphones. At first, of course, nobody recognised the need to print from a mobile device and it wasn’t until 2002 with the launch of the O2 XDA cellular PDA that things began to change. It was released with a software development kit (SDK) which meant that third-party developers could launch compatible devices. Brother seized this opportunity and the world’s first mobile printer was born. Known as the MW145, it was a small thermal device that printed on A7 cut paper, later followed by a larger A6 variant, the MW260. Even in 2007/2008, with the launch of the Apple iPhone and HTC Dream Android equivalent, the potential of mobile printing was not envisaged – neither phone had print capability. It wasn’t until 2010 with the launch of Apple Airprint and Google’s Cloudprint that mobile printing really began to become mainstream. Today, portable printers such as Brother’s PocketJet series are commonplace.

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Category Update | Printers twenty five year anniversary

Consolidation among oEms has been intense, with numbers halving over the past 30 years

1980S 1990S 2000S 2010S 2016

32 30 23 19 16

Consolidation within the printer industry has been intense. In the 1980s there were 32 OEM printer manufacturers. Successive decades have seen that number decline so much that today only 16 remain – a reduction of 50% (see above). And consolidation is still continuing apace, most recently with the news of HP’s acquisition of Samsung’s printer business. HP said the rationale behind this move is disruption of the $55 billion copier industry by combining Samsung’s A3 multifunction printer (MFP) technology with HP’s own PageWide inkjet devices. We’ve also seen Lexmark disappear from the scene earlier this year, acquired – and recently approved in the US – by imaging supplies group Apex. Samsung had occupied the budget end of the market and its disappearance leaves a gap which the new Apex/Lexmark entity may well look to fill. If the consolidation trend continues at this pace we may see just a handful of big players in the printer market in years to come.

US installed base of inkjet devices 62,250 – 1984 84

12.9 mILLIon – 1994

OPI Magazine | November 2016

95 mILLIon – 2004

120.8 mILLIon – 2014

No one can accurately predict the future, but we asked Brother’s Caulfield to peer into his crystal ball and speculate on what the next five to ten years may hold. “Mobile printing will hit new heights,” he says. “Studies show that by 2018 75% of the workforce will be mobile, either working in multiple offices or on the move as they travel between locations. It’s the next step in the ongoing decentralisation of the print process. We’re already seeing printing ‘hot-spots’ popping up in urban areas – you drop in, print out what you need, pay for what you’ve used and move on – these sites will continue to expand. “Portable printers will also be increasingly commonplace and take on multifunction scanning and copying abilities, mirroring the large, business MFDs we see today. Mobile printing is without doubt the future and you have to worry how any company that’s solely focused on office-based printers will fare if they don’t invest in this trend.” Nearly 40 years on from the launch of that first Xerox laser printer, the industry has gone through tumultuous changes. Despite wild predictions that printing may one day become extinct, at the moment this seems wide of the mark with a recent Infotrends study showing that young people like paper and printing just as much as the older generation. The future of the printer seems secure for now.

Consolidation continues

Future-gazing

ile printe

Pull-printing requires the person that’s sent a job to the print queue to ‘log-in’ at the printer, normally with a NFC-enabled ID card, before the job is pulled from the queue and printed out. This has the double benefit of allowing the employee to print out the job at any printer throughout the work’s premises, but has also been shown to reduce print output by 20%, as uncollected jobs are never actually committed to paper.

eld mob

In parallel with hardware improvements and technological shifts, there have been a number of changes in the service side of the business. Managed print is perhaps the biggest one to take hold over the last decade. This type of model can result in cost savings for the customer while guaranteeing a certain level of revenue and account stickiness for the vendor. In its most stripped-down form as a basic print service (BPS), a service provider will just provide the hardware, renewables and any maintenance required for a company’s print needs and the business will be billed on a pay-per-print basis. But latterly, the full managed print service (MPS) includes a series of management tools that allow a company to monitor what and where printing is occurring – and by whom – so that it can fully analyse print activity with a view to reducing costs. Additionally, in the past few years we’ve seen managed print moving into the consumer/SOHO space through initiatives such as HP’s Instant Ink and Epson’s EcoTank services, whereby customers commit to a monthly plan based on their expected print output and the service company takes care of the rest. ‘Pull-printing’ is another interesting development that’s taken hold over the past decade. It was based on studies that showed a considerable amount of printed output within an office was never collected and just left to lie in a pile beside printers.

Brother’ s handh

The service element

twenty five year anniversary

Imaging Supplies | Category Update twe year anni

With printing in decline, plus a host of other challenges, the imaging supplies sector remains under threat and could well crack for those not in the right place at the right time

The

triple threat of declining print volumes, margin erosion and battles against counterfeit products continues to dog the imaging supplies (IS) industry, but success in this sector is still a possibility say category experts, provided the correct strategy is followed. It’s true that printer sales are in decline and consequently fewer supplies are needed, says Jerry Gigliotti, Industry Consultant and IS-sector veteran: “That trend will continue, but it’s still a very big market. For dealers that remain focused on it, the upside is huge and they will continue to grow. The ones that do not will see their business transition over to those that do.” “It’s still a billion-dollar market,” reports Sandra Dadinger, Marketing and Product Manager at German printer supplies manufacturer KMP. “Yes, the general conditions in the

market are changing with a lot of new competitors – often pushing low-quality products – having a big impact on price pressure. But companies with high-quality products at attractive prices will still be the most successful. “As a company you have to act cleverly, keep an eye on industry trends and provide products that fit. The market will face new challenges, but this also creates opportunities.”

Market movements HP’s acquisition of Samsung’s printer business is indicative of the way the market is shifting, with a trend away from mono A4 and towards A3 colour printing. “This is an area with huge growth potential,” maintains Stuart Bleese, Technology Category Manager at UK wholesaler VOW. “Purchasing trends show a migration across to more effective inkjet ranges – a

significant change to the previous laser printer dominance within businesses. The newer inkjet printers are not only more economical than their laser counterparts, but also deliver better print quality and speed than older models.” HP’s PageWide printing is also shaking up the market by offering all the efficiency benefits associated with inkjets while using environmentallyfriendly technology akin to laser printers. “It’s the biggest development in the past decade,” states Bleese. “Quality is on a par with laser-printed documents and this new genre offers additional growth opportunities.” Consolidation is ramping up across all sides of the businesses, with Apex Technology being the first aftermarket manufacturer to purchase an OEM with its recently approved acquisition of Lexmark. “Traditionally, the supply of consumables has contributed w w w.opi.net | OPI Magazine

wenty five year anniversary

Category Update | Imaging Supplies twenty five year anniversary

significantly to printer manufacturers’ profitability,” says Gigliotti, “but this acquisition shows that the line between the OEM and aftermarket is now blurring.”

Paper-light vs paperless Industry commentators are divided on how rapidly print will decline, but the reality is that most offices and workplaces are still only paper-light as opposed to truly paperless. “There’s a pervasive belief that paper is more secure because it is tangible,” reveals Elise McFarlane, Marketing Managing at MPS provider PrintFleet. “It’s particularly prevalent in those industries that deal with large amounts of confidential material or require original or signed copies of documents. In these paper-intensive verticals, the shift to a paperless environment will be very long term and as such, they continue to represent significant opportunities.” In fact, the paperless office is nothing more than a Utopian dream, according to Bleese. “Business environments operate with too many documents for a paperless office to practically work. Yes, we’re seeing less paper used, with mobile technology resulting in documents not being printed as frequently, but printed reference documents still have their rightful place in most offices. Their touch and feel cannot be underestimated.” “The only sector that has dropped off substantially is home printing,” explains Sophie Lansac, Marketing Director at France-based remanufacturer Armor Group. “Mobile device use means we print less and less – recipes are read directly from tablets, travel bookings are in digital format, etc. In the home, this is a trend that affects the sale of consumables and that’s set to continue.” There’s no doubt that managed print services (MPS) are becoming increasingly popular as more businesses move from a transactional to a contractual purchasing model for their printing needs.

OPI Magazine | November 2016

But McFarlane sees a bigger picture emerging as companies look to encompass all their managed services in a one-stop shop: “A business might have contracts with many different service providers managing print, IT, telecommunications and more,” she says. “Aside from the sheer inconvenience of this, the cost is potentially higher when paying for these services individually rather than paying for them as part of a package. In response to this, we now see these IT and telecoms managed service providers (MSPs), for example, looking to add managed print into their existing offerings in order to become the solution of choice. “While this may seem to put MPS providers at odds with MSPs, there is actually an opportunity to partner and leverage each other’s expertise in their respective fields.” Another prevalent trend arising from the MPS sector is automation. Technology shifts such as the Internet of Things and predictive analysis are enabling the introduction of just-in-time supply deliveries and fully-automated re-ordering. As McFarlane explains: “Previously, OEMs and remanufacturers were alone in the supplies game, reaching out directly to many customers. But, as automation becomes a reality, businesses are now partnering with solutions providers and working alongside distributors to enable a seamless end-to-end automated process for their customers.” Gigliotti sees another notable shift in this market: “An OEM’s objective is to control the whole print environment. By placing its hardware with contracts that cover supplies and maintenance, the aftermarket is prevented from competing. But successful MPS dealers are now thriving on replacing OEM supplies with remanufactured equivalents, lowering user costs and providing far greater margin than they’d get selling the OEM product.” Armor Group is one company that’s exploiting this. “MPS is now gaining traction, not only in large companies but also in SMEs,”

says Lansac. “Previously OEMs had a substantial advantage as they could lock the end users in for many years and hence prevent competitors taking their business. However, our solution is to supply high-quality remanufactured products to our partners for the printing services they manage.”

Compatible complications HP hit the headlines recently following a firmware update to its inkjet printers that prevented some non-original cartridges from functioning. This attempt by HP to protect its intellectual property is just the latest round in the ongoing fight between OEMs and the aftermarket suppliers, but has left consumers frustrated. HP originally said its printers would continue to work with refilled or remanufactured cartridges fitted with an original HP security chip. It later apologised and issued a further update that removed all restrictions. But Vincent van Dijk, Secretary General of the European Toner and Inkjet Remanufacturers’ Association (ETIRA) comments: “This is the

twenty five year anniversary

Imaging Supplies | Category Update twe year anni

second time this year that overnight firmware updates have locked out cartridges which functioned perfectly well the day before. The overall image of our industry is definitively affected by these problems. ETIRA sees this as yet another example of the anti-remanufacturing practices of printer manufacturers, just like unfair patents.” Gigliotti agrees: “Users just want a hassle-free experience, yet the development of chipped printer consumables can mean they’re unable to use a printer just because an alternative supplier was used. This is having an

comply with it. But illegal clones and counterfeits, mainly from China, produced at a lower cost are now readily available in the marketplace.” “The fight against counterfeits is hard,” admits Dadinger. “The fact that they’re lower quality isn’t immediately obvious when you first use them and only shows up later. If customers are looking for compatible printer supplies, they should stick with trusted brands. If distributors and end-users want additional information we recommend the Guide to the Clones produced by ETIRA.”

Tougher times ahead The imaging supplies industry is undoubtedly a tough category to be in. We may be a long way from the paperless office, but print volumes and margins are declining. The perennial war between OEMs and both legitimate remanufacturers

“The fight against counterfeits is hard. [...] If customers are looking for compatible printer supplies, they should stick with trusted brands” adverse effect on the user’s experience, with many products now being returned to suppliers due to this issue. It’s a real threat to the aftermarket business.” And this type of tactic is becoming increasingly commonplace, according to Breese: “Manufacturers are adding countermeasures to fight against counterfeiting, with ‘regionality’ – embedded chips that only enable cartridge use in certain regions of the world – being used to combat cloned cartridges.” “It’s a difficult issue,” says Gigliotti. “OEMs have protected their intellectual property by developing complex patents on their products and the aftermarket has continually tried to work around their patents and provide the user with an alternative to high-cost supplies. There are legitimate suppliers that have worked hard to understand the law and develop products that

and illegal counterfeiters seem to constantly reach new heights, which some ultimately see as an existential danger to a whole sector. As Gigliotti summarises: “The industry has always been a competitive one, but it’s going to become more so. With aggressive consolidation and partnerships, and OEMs creatively trying to hold and grow market share with controlling technology and patented intellectual property means they are truly in the ‘box seat’. “Meanwhile, the aftermarket is being dominated by fewer larger players and is now ripe for change. The dealers that ‘get it’ by understanding the upside margin available with remanufactured supplies and are fully invested in this $25 billion market, can put price pressure on the dominating suppliers, leveraged by a strong, low-cost, global competition. There’s never a dull moment in the imaging supplies business.”

Ongoing battle OPI spoke to Allen Westerfield, President of the Imaging Supplies Coalition (ISC), a non-profit trade association for OEMs of consumable imaging supplies and equipment, about its ongoing battle against illegal operators in this sector. OPI: Can you give us an update on the ISC’s activities and any notable successes achieved in the past year? Allen Westerfield: Patent infringement involving some third-party new builds is a growing concern. However, there’s been major success in the enforcement of US ITC 337 General Exclusion orders in regard to patent infringement. These orders prohibit the importation into the US of any product that infringes the subject patents. Through training and information exchange with the OEMs, the US Customs and Border Protection agency has significantly increased the amount of seizures of infringing product, with numbers in the first nine months of 2016 already exceeding the 2015 full year number. OPI: What’s the ISC’s main counterfeiting battleground today? AW: An area of increasing worry is the sale of counterfeit and infringing products on the internet. It’s a problem that’s getting worse as internet commerce grows and we need to take action. It’s a difficult and complex issue, but online platforms must be strongly encouraged or legally required to have a transparent, viable programme to protect consumers and free enterprise through cooperation with rights owners. OPI: What more can be done to mitigate the effects of this illegal trade? AW: At the end of the day, there would be no counterfeit goods if there were no demand, with price being one of the root causes. However, many consumers are unaware of the societal issues and personal dangers that are caused by counterfeit goods and there needs to be a comprehensive education programme driven by brand owners, resellers, internet platforms and governments to educate them on these issues. The changing of attitudes is difficult, but the protection of intellectual property rights concerns important concepts that must be defended.

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twenty five year anniversary

Business Machines | Category Update twe year anni

Out with the old, in with the ‘smart’ machine Traditional business machines are far from extinct – many of them are just getting smarter

the technological winds of change blow through the workplace, the traditional business machines of the past are under threat and conventional wisdom would suggest that this is an increasingly tough sector in which to operate. But those embracing the digital revolution will thrive, say the experts in this category.

Evolving machines “Traditional business machines, such as scanners and printers, aren’t in decline,” reveals Claire Robinson, Director of Epson UK. “On the contrary, what’s actually happening is these devices are evolving and integrating ever more advanced features. Modern machines don’t just solely perform their primary function, but come with smartphone compatibility and advanced user interfaces. They also facilitate real-time editing of documents and are as popular as ever.” “Reacting to the changes the digital office is bringing to the industry is a key objective,” reports Jason Savage,

Senior Product Marketing Manager of Business Machines at ACCO Brands Europe. “We’re constantly innovating our business machines so they remain relevant to the modern workplace and aren’t stuck in the past.” One area where market development is very strong and the future outlook good is in the sub-category of labelling and lamination products. Says Simon McLoughlin, Traditional Category Director at EVO Group: “There’s untapped potential and product developments are driving consumer demand. 2017 will be no exception.” Sales of laminators, for example, are predicted to grow, driven partially by a desire to print office signage with a professional look in-house. Additionally, the food sector’s use of laminators for creating menus and notices is also increasingly a factor, with the rise in online trading seeing a corresponding lift in the sale of label printers to give mailed items a professional finish. “Lamination remains a growth market in this category,” states Savage. “While key verticals include

healthcare, education and retail, laminated materials have many potential applications so the machines are valuable assets to any type of business, big or small. We estimate that over 1.5 billion documents are laminated in Europe every year.”

Integrated and connected Connectivity is a common theme mentioned by many industry insiders that OPI spoke to. The modern business machine doesn’t just sit alone in the corner anymore, it’s a connected device that’s fully integrated into a company’s systems. “The printed page retains its importance,” says Robinson, “and employees want a seamless connection between the physical and virtual worlds. They expect to be able to pick up a printed document and upload it to the company’s network instantly. As such, document management systems that enable physical documents to be scanned and shared are in demand. “Additionally, the increase in mobile working means office equipment w w w.opi.net | OPI Magazine

twenty five year anniversary

Business Machines | Category Update twe year anni

must be fully compatible with smartphone and tablets. Employees are no longer fixed at their desks and move around in less-structured, more open office spaces. Business machines are responding by adding

The public sector is also now beginning to embrace document management solutions, with the UK Ministry of Justice, for example, rolling out its criminal justice system efficiency programme. As

“While key verticals include healthcare, education and retail, laminated materials have many potential applications so the machines are valuable assets to any type of business, big or small” accessible digital portals, meaning documents can be seen and edited on multiple platforms.” McLoughlin agrees: “Scanning technology is becoming even more advanced with machines that now scan and automatically file documents. This integrates with modern work methods where anyone can access any information from any place, thanks to technologies such as the cloud.”

Success in a niche market One sub-segment of the overall business machines category is point-of-sale systems, essentially equipment such as cash registers or credit/debit card readers used in a retail environment by businesses dealing directly with consumers conducting cash or card payments. MMF Industries is a leading manufacturer in this field and has recently made a splash in the business supplies industry by winning the People’s Choice award, one of the categories of the North American Office Products Awards, which are held annually as part of SP Richards’ Advantage Business Conference (see also NAOPA Event Review, September OPI, page 42). OPI caught up with its Senior Product Development and Marketing Manager, Ivelisse Gomez, to talk about the business machines it supplies and developments in this sector. People’s Choice winner: PayVue Illuminated Cash Drawer

Robinson explains: “We anticipate this will lead to increased demand for sophisticated systems in courtrooms, with technology leading the shift away from physical document-led procedures towards intelligent scanning solutions.”

In a bind One part of the business machines sector that isn’t faring particularly well and where the outlook is far

OPI: How has the POS market developed over recent years? Ivelisse Gomez: It’s seen significant technological shifts, partly to prevent security breaches within payment systems, but also to incorporate the flexibility provided by wireless mobile devices. The decline of traditional cash payments has long been predicted. However, to date that just hasn’t happened. That being said, the industry has had to evolve to handle the simple payment apps that have replaced costlier software solutions and their constant upgrades have driven new hardware implementations. OPI: Where do the future growth opportunities lie? IG: There are opportunities in every vertical where a POS station is needed: cash drawers, tablet or card payment terminal mounts, cash boxes, and other lockable security solutions for protecting valuables. The challenge is to keep up with the technology involved with products that require wireless communication and the continuous revisions needed to ensure software compatibility. OPI: Which of your products have attracted the most demand recently? IG: Upgrades to outdated POS hardware continue to fuel demand for high-end cash

from rosy is the binding machines category. The general view is that they are now becoming outmoded as people are printing less, and with presentations bound for meetings increasingly viewed on tablets rather than as hard copies. That said, it’s not all doom and gloom. As Savage explains: “While there has been some slowdown in the binding sub-category, we’re still finding that there is an opportunity in key verticals such as the financial and legal sectors, where the quality and finish of all printed documents is crucial.” Germany’s binder manufacturer RENZ is also hopeful about the prospects. “The importance of paper will remain,” states Sales Director Thomas Reinhard. “The need for a top-quality, well-bound brochure will always exist. However, we need to constantly improve the design and technology we use and launch innovative new products to maintain our success.”

drawers. For example, the patent-pending PayVue Illuminated Cash Drawer is designed for use in low-light environments to improve transaction accuracy, speed and customer service. This has been very popular as well as the Steelmaster 1060GT with its separate lockable compartment for discreetly storing high-denomination bills under the cash tray. OPI: What’s your main focus as regards product development? IG: Security and cash Ivelisse Gomez handling are still the main areas we’re focusing on for product development. Perhaps surprisingly, growing credit card fraud in the US is leading to an increased use of cash. This has resulted in new opportunities for products that can provide higher levels of security both for cash storage and for those mounting solutions that protect critical POS assets.

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wenty five year anniversary

Category Update | Business Machines twenty five year anniversary

Future focus The future of the sector appears to be fairly secure, with an overall consensus that the office equipment we have today will still exist in years to come, albeit in an enhanced and technologically-superior form. But Robinson also predicts that a whole new genre will take centre stage over the next decade: “Augmented reality (AR) headsets and smart glasses are the business machines of the future,” she says. “AR is a revolutionary force that’s set to have a major impact in the workplace. Coupled with smart glasses and headsets, it will make office spaces more collaborative and digitally-led than ever before.

“These technologies allow users to see virtual information in their field of vision, enabling them to make more informed decisions. Imagine if traders could see share prices in real time in their field of vision while on a business trip, or if engineers could visualise their designs in 3D instantaneously – the benefits would be enormous.” Whether this is science fiction or future reality, it’s probably time we talked about office technology products rather than just business machines.

“Augmented reality [...] headsets and smart glasses are the business machines of the future” Money machines Security firm Safescan produces business machines for somewhat of a niche market – money handling systems designed to detect counterfeit coins and notes. OPI spoke to Paul Collins, the company’s General Manager of the UK & Ireland, about some big changes happening to banknotes in Europe and the opportunities he sees for this specific niche. OPI: What’s the main driver behind your business today? Paul Collins: Most organisations that handle and process money are increasingly looking to simplify the whole process. And it’s not just the larger organisations where this is a focus. Today, many SMEs that handle money see the need to be more efficient and accurate when counting their cash. That’s where firms like Safescan can help. OPI: So what’s happening in this sector right now? PC: Well, it’s a myth that we are moving towards a cashless society, with both currency issuers here in the UK – The Bank of England and The Royal Mint – producing more coins and more banknotes than ever before. Most recently, the new £5 polymer banknote issued in September is cleaner, more secure, and more durable than the paper £5 banknote

OPI Magazine | November 2016

we had before. This is a trend that will continue as the Bank of England continues to roll-out polymer banknotes with a new £10 in June-July 2017 and a new £20 note in 2020. Polymer banknotes provide enhanced counterfeit resilience and improve the quality of banknotes in circulation. In addition, The Royal Mint will issue a new 12-sided £1 coin in March 2017. We have never had this much change – no pun intended – to our currency since decimalisation in 1971. OPI: What about other European countries – what’s happening there? PC: It’s similarly busy. New €5, €10 and €20 notes have been introduced over the past three years and a new €50 note will be issued in April 2017. In Switzerland, a new CHF50 note was launched in April this year, and going forward there’s a new banknote planned for introduction every year covering all seven denominations. Poland and Sweden have also introduced new notes with updated anti-counterfeiting measures. OPI: What are the consequences of these developments? PC: They will have a huge impact on all of us, as customers paying for the goods we buy, using parking meters, withdrawing cash from ATMs and paying through self-service

check-out terminals. All existing machines will need to be updated or replaced. OPI: Do you see this as an opportunity for the OP industry? PC: Yes, it represents a huge opportunity for OP dealers to further engage with their customers. They know they can get all their standard office products from them, but would not necessarily think about buying money processing and handling products through them too. If the OP dealer community reacts now following the launch of the £5 polymer note, for example, dealers can develop a relationship and a reputation as suppliers of cash handling and money processing products that will stand them in good stead for all the planned forthcoming currency changes. Paul Collins

wenty five year anniversary

Sponsored Profile | HP Inc. twenty five year anniversary

Driving partner growth

with HP Supplies

OPI: What drew you to transition from the Hardware business to run the Supplies business? Jon Wayne: The launch of HP Inc. created an exciting opportunity to help grow an integral part of HP’s business. The new role has given me an opportunity to learn a new part of the HP business with a seasoned team of HP supplies experts spanning SMB, retail and end-user communities. OPI: How have you tried to shape and influence your organization since taking the lead? JW: I’m a huge proponent of the channel as a core part of our long-term growth strategy, and I love that HP has such a strong channel heritage from which to build. Our channel partners have long been at the center of HP’s long-term growth strategy, and as such we continue to be laser-focused on making decisions that set our partners up for success. I have so much respect for our partner community and truly value their feedback and input to help inform the development of our channel strategy and programs.

OPI caught up with new VP of Americas Supplies Sales for HP Inc. Jon Wayne, to find out about the future plans for the supplies division and the Qualified Partner Program 98

OPI Magazine | November 2016

Jon

Wayne is a 22-year veteran of HP serving across all the company’s core business units. Currently, he is VP of Americas Supplies Sales for HP Inc. In this role, Wayne is responsible for the go-to-market channel strategy and overall performance of the US Supplies business. Previously, he held the role of VP for US Distribution.

OPI: What is the current state of the Qualified Partner Program? JW: The feedback on the HP Qualified Partner Program has been overwhelmingly positive from the partner community. Qualified has enabled us to significantly improve our customer experience and strengthen the HP brand; a good example of this is the consistent online shopping experience content we have been able to deliver through the wholesaler and independent reseller communities. The Qualified Program has also enabled HP to stabilize the partner base that leads with original HP

twenty five year anniversary

HP Inc. | Sponsored Profile

twen year anni

ink and toner and considers it a significant and core part of their overall portfolio. OPI: What’s coming up for Supplies in 2017? JW: Supplies market stabilization is a key focus and a constant theme for the HP leadership team. Our goal is to maximize OEM opportunities in the channel with our partner base to drive share gain across all market segments. We spend a lot of time listening to our partners, and we want to focus on developing the right programs for them to be successful with our mutual customers. OPI: Please tell me about your participation in City of Hope (CoH). JW: I wanted to continue HP’s strong tradition of giving and support for City of Hope, and the

“Our channel partners have long been at the center of HP’s long-term growth strategy, and as such we continue to be laser-focused on making decisions that set our partners up for success” number of events that HP and the OP industry supports. HP’s commitment to serving our communities is stronger than ever. We have several senior leaders at HP who are passionate about CoH, and we are excited to continue our tradition of supporting the amazing work being driven by CoH’s research. Stephanie Dismore, VP and General Manager of Americas Channels at HP Inc. recently joined the National Business Products Council for City of Hope, while Pete Klauck, Director of Supplies Distribution at HP Inc. is heavily involved in many CoH

fundraising events. I’m proud to work together with HP leaders who are so committed to supporting such a great cause. OPI: I believe you took part in the Bike for Hope. How was that? JW: I did, and I was so humbled to be part of the Bike for Hope team with several technology industry friends, riding 500 miles in five days. It was an incredible experience to generate more awareness – and raise funds for CoH in a non-traditional environment. We also had a great time during the event.

w w w.opi.net | OPI Magazine

wenty five year anniversary

Research | The Phoenix Report twenty five year anniversary

The rise and rise of

independents There’s been plenty of doom and gloom about the state of the dealer community over the years. But for a good part of it this has been unfounded, as a new MWA and OPI report reveals

The

independent dealer channel in the US is very much alive and kicking – that’s one of the key findings of a new report by Martin Wilde Associates (MWA) and OPI called The Phoenix Report: Is The Dealer Channel Rising Again? Based on extensive online interviews with senior executives at 200 independent OP dealers in the US, as well as telephone interviews with the prominent dealer groups and wholesalers in the country, the report provides vital insights into the current size and state of the independent dealer channel. It also reveals whether dealers are growing and profitable, what their product and sales channel focus is and how they are buying, selling and stocking product. So is the dealer channel really resurging at this moment and, if so, how is that being achieved?

Rise of the mega dealers The survey found that while the rationalisation of the US dealer base – which has been ongoing since the 1980s – is continuing, there are still a significant number of dealers in place, some of a very substantial size. Furthermore, it is clear that the vast

US dealer revenue trends (2014-15) Increased by more than 10%

majority of these US dealers (66%) saw an increase in overall revenues in 2015, with 22% claiming increases of over 10% (see below). One of the reasons for these kinds of increases being achieved and the persistent shrinkage of the overall dealer base is the trend of large dealers acquiring smaller ones. Indeed, such is the confidence at present that 44% of dealers are looking to acquire another company – usually another dealer – while the majority not only expects sales to increase further in 2016 but also has no intention of exiting the business, or the sector, in the foreseeable future. Better still, it’s not just revenues that are on the up, dealers are also profitable which is by no means a foregone conclusion. MWA’s survey found that – at 27% on average – dealer margins are still respectable at present and are more widely reported by these dealers to have increased than decreased in 2015, with a variety of strategies being used to improve them.

3% 3%

11%

22%

11%

Increased by 5-10% Increased by up to 4% No change 9%

21%

Source: MWA

Decreased by up to 4% Decreased by 5-10% Decreased by more than 10% Don’t know 3%

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23%

This ongoing growth in dealer sales is also being achieved through the successful extension of product ranges into new adjacent categories and services. It is encouraging that, on average, 16% of sales are now generated by jan/san and breakroom products, for example.

Core OP sales down On the other hand, one of the main reasons for any shrinkage in dealers’ revenues in 2015 was through a decline in demand for core OP. This is fundamentally nothing new, but it serves as an unmistakable wake-up call for the whole channel, particularly since the survey also found that for a large number of dealers core traditional OP still accounted for almost all of their revenues. Other areas and topics covered in The Phoenix Report include the product sources used by dealers and how these are changing; dealer perceptions – and usage – of key wholesalers and dealer groups; and dealers’ exit and acquisition strategies (for more on this topic, see ‘Passing the baton’ on page 29). The report is an invaluable guide to help OP vendors, wholesalers and dealer groups assess the current and future health of the independent dealer channel, thereby enabling them to optimise their own marketing, product and service strategies. The Phoenix Report is available in two volumes. By the time this issue of OPI goes to press, both the US and the UK version will be available for the price of $2,600 and £1,600 respectively. To order your copy, go to www.opi.net/phoenix.

wenty five year anniversary

Your OPI twenty five year anniversary

The generation game Gorilla Stationers President Rosemary Czopek looks at how new technology helps independent dealers

PeoPle

often ask me where I see the office products industry going in the next two years. Certainly no one has a crystal ball, but there are changes happening which will result in increasing pressure to perform. In the current environment, customers expect unprecedented levels of service. For example, I recently experienced a situation where an independent dealership was ordering 6,800 cartons of soda for his customers from Sam’s Club. This dealership explained that it was also ordering trailers of water from Sam’s Club. This begs the question: is the magic sauce being a stocking dealer or a non-stocking dealer? A critical question is whether or not it is beneficial to be aligned with a specific wholesaler. Some of my contemporaries often source items from Amazon as a default third wholesaler when they cannot find a product. These adaptations in doing business point to one thing – dealers committed to fulfilling customers’ needs will always have the magic sauce recipe. Rosemary Czopek

Another concept to consider is social crowding and what it means for an independent dealer. Now more than ever, there is an opportunity to use social crowding to obtain single-need talent for specific projects and tasks.

“Dealerships committed to fulfilling customers’ needs will always have the magic sauce recipe” There is now incredible access to graphic designers, web designers, and other special services that were once hard to find. With the click of a button, we can employ things like Upwork, a global freelancing platform. UberRUSH is now even allowing for application program interfaces (APIs) to be integrated directly into Shopify sites, enabling on-demand deliveries. This means there is the capability for deliveries within hours without using a ‘normal’ courier. Naturally, many customers are shifting more towards an online experience and this includes pushing for ratings and reviews before buying items. But don’t be mistaken into thinking that millennials are the only generation that looks to Google, Yelp, or Facebook to find more information about a company or product. Think about how many times you have been to a retailer to review a product before ultimately buying online!

Managing customer expectations There is now more price transparency than ever on commodity items which means dealers have to be very competitive to retain their customers. They also have to proactively manage customers’ expectations – they expect quick service and to find everything they need in one place. In light of

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these demands, dealers will continue to leverage relationships with buying groups and wholesalers to help bring that extra value to customers. Today, adding worth means that dealers have an online store that focuses on personal attention to set themselves apart from the competition – making things easy for clients is a vital aspect of customer service. One dealer, for example, uses the tagline ‘Yes we can’, illustrating the point that there isn’t anything an independent dealer will not do to satisfy a customer. Utilisation of technology in the workspace for efficiency remains key. Integrated CRM modules that track inbound calls, file share programs that do not require servers to be based in an office, web-based ERP systems and APIs that allow everything to be integrated with the click of a button are becoming the new standard.

Making it happen Technology is also helping to reformat the workplace environment. When I started my office products dealership, I thought it would be the same as any other office – employees would punch in at 8am and leave at 5pm. What I have found is that our young, millennial staff want flexibility. This means allowing them to work from home with adaptable hours and benchmarks on completion. The bottom line is that with the use of the right technology and a focus on the customer, now is a great time to be an independent in the business supplies industry. There are just so many resources at our fingertips that make it much easier to be more efficient and scale up in order to meet customer needs. Are you a young executive and have a view for our Generation Game section? Email us at editorial@opi.net

wenty five year anniversary

Your OPI twenty five year anniversary

5 minutes with...

My family tells me I’m like Victor Meldrew from One Foot in the Grave. But I don’t believe it…

Steve Hilleard CEO, OPI

Describe what you do in less than 20 words. I attempt to provide leadership to the talented and committed team at OPI.

What would you like to be doing in five years’ time? Still playing a meaningful role in the business products industry, but hopefully living somewhere warmer. London’s weather sucks!

Your first full-time job. Trainee chartered accountant. I quickly realised that I wanted to be like my clients – entrepreneurial and rich. I’m halfway there.

Your favourite movie. Serendipity Serendipity. But while I am a great believer in fate, I also believe that everything does happen for a reason, although sometimes that reason is stupidity or bad decision-making.

The best moment in your career. There have been two. Meeting the Queen at Buckingham Palace after OPI was recognised with an Export Achievement Award in 1998, and accepting a City of Hope ‘Shining Star’ award in 2007. The worst moment in your career. The most embarrassing would be dropping that solid glass ‘Shining Star’ award on stage in front of 900 executives – I hadn’t realised it was not attached to its plinth! But the worst moment was having to wind up one of my first enterprises, making 30 colleagues redundant just weeks before Christmas. The worst job you’ve ever had. As an emergency measure I worked at the main distribution centre of a UK national electrical goods retailer, loading huge TVs onto enormous trucks by hand, to maximise the cubic space in the run up to the aforementioned Christmas. Definitely the worst job was being introduced on day one to my supervisor – who just happened to be one of the staff I had essentially fired two weeks earlier. A humbling experience that has stayed with me.

Best way to spend the weekend. Entertaining family and friends in the garden, with lots of great food off the barbecue, washed down with plenty of fizz and Bordeaux. Your biggest achievement. Managing to keep OPI going for 25 years! If there’s one industry that has been hammered harder than office products, it’s the media business. Your first car. An MG Maestro EFi. It was both my company car and also used to deliver office products on busy days. It was a piece of crap but damn quick. Things that make you angry. People who lack spatial awareness.

Have you got a claim to fame? A limousine transporting President Brezhnev out of the Kremlin ran over my foot in Red Square in February 1980. It was so cold I didn’t feel a thing.

If the world had a President – who would you vote for? I’ve no idea, but it wouldn’t be Donald Trump or Hillary Clinton. The most memorable travel experience you’ve had while in the OP industry. Travelling to the second OPI conference in Palm Beach in 1996, I opted to take a detour via Paris to avoid getting led astray on a direct flight by the many party-loving UK executives also travelling to the event. Imagine my horror when I found myself sat between Graham Cundick and Leon Pride, not just for the ten-hour flight but also the six-hour delay on the tarmac at Charles de Gaulle. I never thought the subsequent hangover would pass. If you could change one thing about yourself, what would it be? My birth date. 1965 is such a long time ago! Your childhood ambitions. To work in Fighter Control for the Royal Air Force. My ambition certainly wasn’t to be an accountant, office products dealer or a publisher, but all have provided an interesting career. The best concert you have ever been to. The best was my first – Queen in London during their Crazy Tour of 1979. Freddie Mercury was such a marvellous musician, but his dress sense was appalling, even marginally worse than mine in the 1970s.

What do you like best about the OP industry? The people. Boring answer I know, but true. And least? Best I don’t answer that one explicitly because we’ve avoided any libel action for 25 years. But he knows who he is. Which character from film or TV do you think most resembles you? My family tells me I’m like Victor Meldrew from One Foot in the Grave. But I don’t believe it… Your favourite holiday destination. Being British, anywhere warm and sunny will usually do, but I have fond memories of many family vacations in Latchi, Cyprus.

What sports teams do you support? Manchester United (average crowd 75,276) and Hitchin Town (about 400). The latter is considerably cheaper to follow but often just as entertaining, certainly in recent seasons.

ll Club

Hitchin Town Footba

wenty five year anniversary

Your OPI twenty five year anniversary

Final word Your industry, your opinions The ride of a lifetime WELL,

what a 25 years it's been! Those wonderful early days of OPI conferences when it was such a vibrant exciting industry to be part of. Some OPI readers may remember that I dressed up as Elvis at The Phoenician in Scottsdale, Arizona, to give out awards. Every hotel seemed better than the previous one. And then there were the parties on the beach (and elsewhere!) in Cannes, France. I lost my wallet one night in a night club, had the worst hangover the following day and left my golf clubs in the lobby of the hotel as I left. I managed to get a ride to the airport with someone before I realised that I had no money and no clubs. Once on the plane I slept until a stewardess woke me up and told me to get off. Happy days!

“[I will never forget] Jon Ledecky running down the conference hall saying he had bought five companies before breakfast. The sad and tragic subsequent demise of so many great businesses and lifetimes of hard work and effort was the result of that Ledecky period in our industry” Keeping pace with Graham Cundick at the bar, wondering whether the company's cash flow could sustain Stewart Barton Taylor's penchant for vintage Armagnac, staying up at the Marriott's Champions bar during Paperworld in Frankfurt in case a customer I was trying to see came back in the early hours – these are lasting and treasured memories. We opened our stand at Paperworld at 10am each morning, as we did most of our business between 2-3am most mornings and just couldn't make the 9am start each day. The Germans on the stand opposite used to switch the lights on for us and were totally bewildered by our marketing strategy. I have very fond memories of playing the guitar and piano in bars all around the world, with a good part of the industry singing along. I met so many amazing people and loved every last minute of it. And by and large I was watching my business grow. But I will also never forget UK high street stationer WH Smith buying all the customers I had spent the past ten

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By Geoff Betts Managing Director Stewart Superior

years acquiring in what felt like an afternoon. Or Jon Ledecky running down the conference hall saying he had bought five companies before breakfast. The sad and tragic subsequent demise of so many great businesses and lifetimes of hard work and effort was the result of that Ledecky period in our industry. Then there was Jirka Rysavy speaking at an OPI conference and saying that Corporate Express had 750 vendors and he had given his staff four years to reduce that to 250. We weren't even one of the 750 – and we still made it. One of the highlights of my time in the industry has been Stewart Superior becoming a European vendor to Office Depot, Staples, Lyreco and ADVEO and celebrating our 20th year in the business. My own personal favourite and the proudest moment of the past 25 years has been winning the BOSS Outstanding Achievement award in 2013 for services to the OP industry. And now being Chairman of the BOSS Federation. I don’t think anybody could have predicted the past 25 years, especially thinking even further back to the seemingly unstoppable march of the big OP superstores. Who would have thought that we would watch the industry change and the initially so wonderfully exciting retail model of the likes of Staples, OfficeMax and Office Depot struggle and growth in the sector almost disappearing? Or paper giants like Robert Horne vanishing. And whoever would have predicted Amazon growing into the colossus that it is today? Trying to sustain and maintain a company throughout this period and remain relevant and in demand has been no mean feat. And always trying to 'best guess' tomorrow. Like I said in the October issue of OPI, for the first time ever in my business career, there are times when I struggle to see where the sector is going. Congratulations to all at OPI. It has been at the centre of everything that has happened in the industry these past 25 years; it's helped create businesses, sell businesses, it's educated and it's connected. I have loved and enjoyed being a small part of that journey. Thank you. Want the Final Word? Email editorial@opi.net

IN THE NEXT ISSUE • Big Interview with Radostin Kirilov, Managing Director, Ofﬁce 1 Superstore International • Hot Topic: Alibaba and its progress • An in-depth look at the Facilities sector