OPI October 2014 by OPI

Office Products International ISSUE NO.243

The word in office.

magazine

Hot Topic The omnichannel challenge p26 October 2014

OCTOBER 2014

Big Interview Mike Maggio p20

WWW.OPI.NET

p12 Quantore and EOSA Making the grade p42 make purchasing moves

p32 Fighting spirit in Spain

Contents October 2014

www.opi.net

News

35 Online surge for BTS

6 Round-up

Depot snags group contract; United diversifies; Biella completes integration

ISSA offers jan/san solutions for dealers; IS provides safety service

Category Analysis

12 Analysis

38 Mailroom & Packaging

Quantore and EOSA make purchasing moves; Staples’ high hopes for Apple sales

The mailroom & packaging sector is a good example of how to merge the digital with the traditional world

14 Tribute

The OP industry pays tribute to one of its true legends

42 Education

20 All Mike’d up

Building and nurturing relationships is a key component of success in the education sector

TriMega President Mike Maggio explains how he is tackling several key issues at the dealer group and planning for the future

Features

Regulars

26 The promised land

5 Editor’s comment 46 On the move 47 5 minutes with...

The quest to offer the ultimate shopping experience has become complicated. Who does it well?

Ofipapel – succeeding in the face of adversity

36 Taking the High Road

As the UK OP industry prepares for the Climb of Life, please support us in the fight against cancer

8 Beyond OP

32 Fighing spirit

NPD provides a round-up of this year’s back-to-school season

Ernst Faber

49 Calendar

50 Final word Rick Marlette

“[Our CRM and content management system] combined serve all the channels and platforms we operate in, be that in retail, B2B, Facebook, Twitter, advertising, online marketing, email marketing, prospecting, etc. We can draw from that resource and reach all our customers from this data pool.”... For the full story, turn to page 26 w w w.opi.net | OPI Magazine

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

Features & Production Editor Heike Dieckmann

Editor’s comment

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

News Editor Michelle Sturman +44 (0)20 7841 2942 michelle.sturman@opi.net

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

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

Digital Manager India Pride +44 (0)20 7841 2959 india.pride@opi.net

Events Events Manager Lisa Haywood +44 (0)20 7841 2945 lisa.haywood@opi.net

Production and Finance Operations Manager Nicky Coulson Designer Charlotte Gerhardt +44 (0)20 7841 2943 charlotte.gerhardt@opi.net

Production Assistant Jack Francis +44 (0)20 7841 2950 jack.francis@opi.net

Accountant Dotun Olaniyan +44 (0)20 7841 2956 dotun.olaniyan@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

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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.

An EPIC sequel I’m writing this month’s comment from Florida on the eve of the second Independent Stationers/TriMega joint EPIC show. They set the bar very high last year, but judging by the programme it’s going to be another excellent event this time around. I must say, I’m especially looking forward to the panel session on the opening day with Cody Phipps and Wayne Beacham on the same stage. Look out for a report on EPIC and news from the event in next month’s issue and on opi.net. I took the opportunity while I There were more staff than was here to visit a customers and it made me think store of one of the hard about what the future holds big box retail chains. ‘Big box’ might not be the right word to use anymore, with the store clearly having been downsized from a previous incarnation. The layout was nice enough, featuring an expanded tech area, a copy and print counter and various jan/san products – it was just that there were more staff than customers and it made me think hard about what the future holds for retailers in our industry. Retail is one of the pillars of a true omnichannel strategy, and this month’s Hot Topic (see page 26) takes a close look at this from an OP perspective. Finally, you may be aware that an OPI team is taking part once again in the Climb of Life to raise money for cancer research (see page 36). We all appreciate any support you can give to this worthy cause. Have a great month. Andy Braithwaite, Editor

Office Products International Ltd (OPI), Diamond House, 36-38 Hatton Garden, London EC1N 8EB, UK Tel: +44 (0)20 7841 2950 Fax: +44 (0)20 7841 2951

opi.net/ linkedin

@opinews

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News from opi.net Croxley to stop manufacturing

New Zealand’s largest stationery wholesaler Croxley – a subsidiary of Office Depot – has confirmed it will cease manufacturing at its Avondale factory over the coming months. The company announced on 22 August that it was considering closing its manufacturing arm due to declines in postal use and demand for traditional paper-based products such as envelopes and writing paper. According to Croxley Managing Director David Lilburne, the company’s envelope production will be wound up between now and the end of the year, with its other manufacturing areas to follow in the first half of 2015. Around 100 employees will be made redundant once manufacturing stops completely. Lilburne said the company would move to becoming a dedicated wholesaler, broadening and updating its product range. “This decision is certainly not the end for Croxley. It is a new beginning,” he added.

Staples enhances omnichannel strategy Staples has launched a series of enhancements designed to boost customer interaction and purchasing. The developments include a buy online/store pick-up service, in-store kiosks, a new mobile online payment system and an iPad app. With the aim of delivering a true omnichannel service, the company believes the updates will make it easier for customers to shop however and from wherever they want. Staples EVP of Global E-commerce Faisal Masud added that the company recognised this was “particularly important for businesses that are always on the go and can’t wait for a delivery or delay shopping until they are in front of a desktop”. The new buy online/ pick up in-store feature offers a ‘pick up today’ option, which Staples promises to have ready within two hours. Online users can choose a preferred store location and also have the option to ship products only available online to a store for pick-up.

The Visa Checkout payment system, which was announced in July, is now available on the reseller’s mobile sites, with Staples also rolling out new touchscreen in-store kiosks throughout its US retail locations over the coming months. In its most recent quarterly conference call, Staples revealed that these kiosks already account for about 5% of retail sales. Finally, the company has released its first iPad app featuring access to deals, product availability at the nearest store, quick navigation and the ability to narrow search results by price, category and relevance. For an in-depth look at OP players’ omnichannel approach, see our Hot Topic on page 26.

United Stationers diversifies into auto aftermarket United Stationers’ Supply subsidiary is to buy automotive aftermarket wholesaler Medco and its affiliates. Headquartered in Philadelphia, Medco offers more than 50,000 products from over 350 manufacturers serving the US through nine distribution centres. The agreement includes Medco affiliate G2S which provides a similar offering for the Canadian market. The companies have combined annual sales of $240 million. The deal – worth $130 million with an additional $10 million to be paid over three years based on performance – is a key pillar in the wholesaler’s strategy to move into higher growth and margin channels and categories, according to CEO Cody Phipps. “Both are leaders in the growing automotive aftermarket and will expand our reseller customer base,” he noted. “Additionally, these businesses complement our existing industrial platform with their deep product knowledge and exceptional customer service.” The transaction is expected to close later this year.

OPI Magazine | October 2014

US purchasing group Corporate United has awarded its office supplies and solutions contract to Office Depot. The $100 million-plus contract will see Office Depot supplying Corporate United members with office supplies, furniture, technology, copy and print services. With over 240 corporate members, Corporate United is one of the nation’s largest horizontal indirect purchasing groups. The company said the new agreement would feature web-based pricing for quicker access to savings as well as improvements through intensive contract and supplier relationship management. The award was not a great surprise, given Corporate United’s longstanding relationship with OfficeMax.

Biella completes Germany reorganisation

News n Round-up

Office Depot snags Corporate United contract

European stationery manufacturer Biella has finalised the integration of its Germany-based production units. The merger of Donau-Design and Falken Office Products into Biella Deutschland has been completed and the company will now be known as Biella-Falken. Falken Office Products was acquired from Herlitz in 2012. Biella-Falken will establish its headquarters in Peitz (south-east of Berlin), also the location of its production plant. This year has seen the vendor undertake two strategic acquisitions aimed at making the company the largest folder manufacturer in Europe. The first was buying the private label and no-name folder business from Hamelin; the second the acquisition of the folder business from Carpentier.

Escalade to sell intimus

BIC to sell Sheaffer BIC has announced it is selling its Sheaffer brand to upmarket stationery and accessories company AT Cross. The France-based stationery giant said it was offloading its Sheaffer fine writing unit, which it acquired in 1997, to AT Cross for about $15 million, with the transaction expected to close this month. The Sheaffer deal is the first major acquisition by AT Cross since the company (minus its sunglasses division) was bought by private equity firm Clarion Capital Partners in September 2013.

Escalade is to focus on its Sporting Goods segment and as a result is looking to sell its shredding and information security division, intimus. The company said that after careful consideration of each business unit, it believes its focus on the Sporting Goods segment will “facilitate better deployment of company resources, increased market leadership and greater returns for shareholders”. Intimus Managing Director Reiner Eckhardt told OPI that while the company benefitted from being a member of Escalade, there is now the potential to be aligned with partners that are more closely related to its industry. He said there would be no change in daily operations. Instead, the division is building on the restructuring process that has taken place over the past year. “With both the strategic and operational changes we have made, we are on the right path to establish intimus as a leading global expert in information security,” Eckhardt added. w w w.opi.net | OPI Magazine

News n Beyond OP

ISSA and OPI announce Janitorial Solutions 101 Day OPI has joined forces with ISSA, the worldwide cleaning industry association, to host a one-day special event introducing the essentials of the jan/san industry to those seeking to penetrate this $24 billion sector. The Janitorial Solutions 101 Day on 7 November aims to help resellers from outside the jan/san space expand their customer base or sell deeper into existing accounts. Particular target groups for the day are dealers and distributors in the office supplies, industrial, safety, food service and paper/packaging sectors. The programme features sessions such as ‘10 Trends Shaping the Cleaning Industry’ which will analyse these trends and identify courses of action and ways to capitalise on emerging opportunities. ISSA’s in-house experts will also be available to answer cleaning product sales questions in an informal sales roundtable discussion where attendees set the agenda. Other notable highlights include keynote addresses by boxing legend Sugar Ray Leonard and basketball coach Rick Pitino. The Janitorial Solutions 101 Day will be held during the final day of the ISSA/Interclean North America trade show at the Orange County Convention Center in Orlando, Florida, starting on 4 November. While there is a small charge of $99 to attend this event, dealers will also receive a complimentary one-year membership of ISSA worth $575. For more details on the Janitorial Solutions 101 Day and/or to register, visit www.issa.com/janitorialsolutions101 or email rosie@issa.com

OfficeMax Grand & Toy pilots K-Cup recycling OfficeMax Grand & Toy has launched Canada’s first Keurig K-Cup packs recycling programme. Recognising the need to implement a recycling programme for Keurig K-Cup packs – one of OfficeMax Grand & Toy’s most popular coffee products – the reseller has partnered with TerraCycle to launch a pilot programme in southern Ontario. The recycling system is available in three sizes and when the box is full, customers send it directly to TerraCycle for processing. The cost includes recycling and prepaid shipping labels. If the pilot is successful, the programme will be rolled out nationally. OfficeMax Grand & Toy Sustainability Manager Serguei Tchertok said that the company embraced environmental responsibility across all facets of its business. He added that the programme was launched based on stakeholder feedback that identified waste and recycling as the most important sustainability issues.

Health and safety Serving the office first for IS coffee run Independent Stationers (IS) has partnered with R3 Safety to launch a new safety products distribution service solution for members. Under the Clean Sweep Distribution programme launched in April, the Operation Health and Safety service will give IS members access to over 20,000 items backed by R3’s selling tools and expertise. The solution will be introduced in multiple phases to iron out any wrinkles in the programme, with a full roll-out expected in Q1 2015. IS Director of Merchandising Mike Foster said: “There will be many more vendors brought into this programme to support the market demand the dealers are being asked to service.” 8

OPI Magazine | October 2014

UK-based start-up Pact Coffee has moved into the OP industry with the launch of CoffeeRun. This is a new service supplying offices with freshly roasted coffee. CoffeeRun is a subscription-based service that will deliver any amount of freshly roasted coffee to offices nationwide. The coffee – which isn’t ground until the last possible moment before posting – is changed weekly, giving employees the opportunity to explore different coffee beans from around the world. Pact Coffee founder Stephen Rapoport said: “It is amazing how much having great coffee in the office can make people happy. It’s the kind of perk that people rave to their friends about.”

Staples Advantage, in partnership with Electronic Recyclers International (ERI), has launched a technology recycling programme catering for businesses wishing to recycle old electronics. According to the Environmental Protection Agency, global e-waste is expected to more than double by 2016 to 93.5 million tonnes, compared to 41.4 million tonnes in 2011. Staples’ new programme involves a three-step process: order recycling boxes online from the Staples Advantage website, fill the boxes and ship them back to Staples. Businesses will then receive a certificate of recycling accredited by the e-Stewards Initiative. The cost of the service will range from $15-$500 depending on the size of the box ordered, and will also be integrated into future managed print services contracts. ERI CEO John Shegerian commented: “Staples Advantage is filling a void desperately needed in our industry – a way for companies to easily and securely recycle the mass amounts of e-waste being created annually.”

Bunzl boosts UK presence Distribution and outsourcing group Bunzl has snapped up four more businesses in the UK. The company has acquired Droitwich-based 365 Healthcare, adding to its medical consumables offering. 365 Healthcare posted sales of £10.9 million ($18 million) for the year ended 31 December 2013. Bunzl also bought Cheltenham-based Premiere Products, Leicester-based Guardsman and Wolverhampton-based Lee Brothers. Premiere Products – with annual sales of £6 million – supplies both its own and branded cleaning and hygiene products and serves the facilities management and education sectors, while Guardsman and Lee Brothers sell safety and personal protection equipment and workplace consumables mainly to the construction and engineering sectors. These two companies will add combined revenue of almost £20 million to Bunzl’s top line. So far this year, Bunzl has spent £119 million on acquisitions, including the above four deals. Bunzl CEO Michael Roney said the company would complete more acquisitions before the end of the year.

News n Beyond OP

Staples Advantage offers electronics recycling service

News ■ Analysis

Quantore gets connected Interaction brand appeals to Quantore, while EOSA announces new vendor contracts

GLOBAL

independent dealer purchasing organisation BPGI was dealt a blow in September when it was announced that longstanding member, Netherlands-based wholesaler and dealer group Quantore, was leaving after it had opted to join the Interaction purchasing alliance. Quantore is a H140 million ($190 million) business and was BPGI's second-largest member – behind French member Majuscule – in terms of the value of its BPGI contracts. There are several reasons behind the decision to move, although Quantore Managing Director Arnold Theuws stressed that there was no dissatisfaction with BPGI and he would have been happy to be a member of both groups.

Quantore does have its own private label, but this is only available to its members and Quantore can't use it for its own direct business – Q-Connect solves that problem very nicely indeed. BPGI CEO Barrie Hayes was realistic about Quantore's departure when approached for a comment by OPI. "Quite clearly, it is very disappointing as Quantore had been with BPGI and before that Euro Buro [which merged with BPGI in 2004] for many years,” he said. “At the end of the day, things change and Quantore's strategy is continuing to develop." It looks like being an important few weeks for Hayes. BPGI membership commitment was due at the end of September (after this issue of OPI went to press) and the annual meeting

“Within Interaction, we expect to find more similarities between the other members and ourselves” "As Interaction doesn’t allow multiple group membership, we had to make a choice,” he said. “Within Interaction, we expect to find more similarities between the other members and ourselves, such as a focus on multichannel distribution and warehouse operations.” Quantore's business model has certainly evolved over the past few years as it has transformed from basically a dealer group into a multichannel distribution player along the lines of ADVEO in Europe, Novexco in Canada and, latterly, the main wholesalers in the UK – Vasanta and Spicers – with their recent merger activity. Another attraction of Interaction for Quantore is the 2,500-SKU Q-Connect private label brand. Not only is the Q-Connect name a branding match made in heaven for the Benelux operator, it also serves a growing need in the contract channel for a private label brand that can compete with those of the 'big three' in Europe – Lyreco, Office Depot and Staples.

OPI Magazine | October 2014

in Hong Kong at the end of October will largely determine the way forward for the next few years. The BPGI CEO declined to comment on either the membership or strategy, but you only have to look at the evolving multichannel models of members such as Novexco and Majuscule to see that they could potentially have the same needs – outside BPGI – as Quantore.

EOSA on the up One former BPGI member that has reinvented itself is European reseller alliance EOSA. The organisation recently announced the finalisation of the first phase of a new set of vendor agreements after handing in its BPGI notice in October 2013. Unhappy with the direction that BPGI appeared to be taking, EOSA decided to go it Barrie Hayes and Arnold Theuws alone

and has now established its own vendor contracts in 19 product categories, with six or seven more in the pipeline for the start of 2015.

Category captains EOSA has negotiated contracts according to a net price structure – which it says it prefers over a rebate system – and the award of a contract gives the vendor 'category captain' status (except in the writing instrument category where there are a number of 'preferred' suppliers). It is compulsory for EOSA members to adhere to the agreements and this has already led to some changes – for example, the label category in the stores of Swiss member Office World is now fulfilled by Herma. EOSA General Secretary Heinz Kneubuehl told OPI that non-EOSA vendors would now only be given the "minimal" listing required in each particular market, while the category captains would see marketing and promotional support either Europe-wide or on an individual basis. In return, vendors get sales data from EOSA's resellers. "This is all part of what we call our 'dialogue' with vendors," noted Kneubuehl. "We are now in control of our own negotiations and we are very happy with the direction we have taken under the leadership of Philip Becker." Read more about EOSA's recent developments on opi.net

News ■ Analysis

Crunch time for Staples’ Apple sales Can the iPhone 6 release help reverse negative retail comps?

ALL

the hype surrounding the recent release of the iPhone 6, iPhone 6 Plus and the Apple Watch must have been music to the ears of Staples’ President of North American Stores and Online (NASO) Demos Parneros. Staples struck a deal with Apple at the start of 2014 to sell the technology giant’s hardware in US stores – although this didn’t apply to

The problem is, there hasn’t been a major new product release from Apple in 2014 that has really captured the public’s imagination. Until now, that is. Staples began taking pre-orders for the iPhone 6 on its .com website on 12 September ahead of the official launch on 19 September (the day after this issue of OPI went to press). It then has about six weeks of sales before

Staples needs a reason to entice people into its stores and the latest Apple products will certainly do that the iPhone until a few months later – and has been busy rolling out Apple products to almost 1,000 of its stores.

the end of its third quarter. Will that be enough to swing Staples’ retail sales into positive comp territory?

Depot/Staples merger talk jumping the gun Shares in Office Depot and Staples rose in early September on the back of an analyst’s report outlining the financial benefits of a merger between the two global office supplies resellers. Credit Suisse analyst Gary Balter suggested that a merger between the struggling resellers would help them compete more effectively against giants Amazon and Walmart. The comments caused shares in both companies to spike. According to Balter, together the resellers could save almost $1.5 billion a year, essentially doubling operating income within three years. Combining the two companies would also make sense in terms of streamlining, he argued, with both currently downsizing their retail operations – something that will see the closure of more than 600 office supply stores in the US by the end of next year. Balter also noted that the US competition authorities – the Federal Trade Commission (FTC) – would be less likely to block a merger following the approval last year of the Office Depot/OfficeMax merger. The FTC’s recognition of the fragmented nature of the business supplies industry, both at retail and B2B, could see it give the green light to a Staples/Depot deal should it ever be put forward. Of course, while the numbers may make attractive reading on an analyst’s spreadsheet, there is little likelihood of anything happening in the near term while Depot CEO Roland Smith and his team continue to tackle the integration of OfficeMax. However, with everything pointing to a better-than-anticipated merger between Depot and ‘Max’s US operations, it wouldn’t be unreasonable to think that a deal between Depot and Staples could be on the table by the end of 2015. With secular headwinds – especially at retail – likely to continue, the boards of both companies may be forced to seek a merger as the most effective way to generate shareholder value. Just not quite yet.

Parneros will certainly be hoping so because retail has been posting disappointing results recently. The second quarter – which for Staples is the three months to the end of July – saw retail same-store sales drop 5%, with most of that due to fewer customers coming into the stores. The computer and technology accessories categories were the hardest hit, falling in the double digits. Staples needs a reason to entice people into its stores (see also Hot Topic, page 26) and the latest Apple products will certainly do that – assuming there are no availability issues, something that has been suggested might happen as Apple caters for the anticipated strong demand in the Chinese market. Staples is also one of the retailers that will adopt the new Apple Pay contactless payment system when that is launched this month. Apple Pay has caught the eye with its security features and will be another payment option open to Staples’ retail customers – although it’s initially limited to iPhone 6 and iPhone 6 Plus users, plus iPhone 5 users that have forked out for an Apple Watch. w w w.opi.net | OPI Magazine

Tribute

Industry pays tribute to Jonathan Straker UK stationery legend Jonathan Straker passed away on 1 September 2014, aged 78

Renowned

for fabulous speeches and mentoring some of today’s top UK executives in the industry, Jonathan Straker was a tour-de-force in the OP business world for over 40 years. His stationery roots went back to 1863 when W Straker Stationery was founded. Jonathan himself joined the family business in the 1960s before setting up his own company – Straker Office Supplies – in the mid-1970s. In 1987, after a management buy-in from Hugh Sear and ECI Ventures, Straker Office Supplies became one of the biggest independent dealers in the UK. In 1997, Straker merged with Oyez creating OyezStraker, with the company acquiring over 30 different firms over the years. Jonathan retired from OyezStraker in 2003 after it was sold to Hermes Private Equity for £80 million ($130 million), later becoming the OfficeTeam group. It was the same year he was elected Master of The Worshipful Company of Stationers and Newspaper Makers. He joined the London Livery in 1966 and the Court in 1991, where he stayed until 2011. Jonathan was an avid golfer and a keen supporter of his former rugby club Warlingham. He was a giant of a man in every sense of the word and will be sorely missed by all who knew him.

Hugh Sear, former business partner, OyezStraker I worked with Jonathan for 21 years and between us successfully built a £3 million business into a £200 million one. During the due diligence for the Straker and Oyez merger we laughed that the sixth biggest supplier to the company was Jonathan’s expense account. Jonathan was a larger-than-life individual and I have many, many endearing memories. One of my favourites was after an OPI event when we chartered a plane to Phoenix, Arizona. Walking into a gift store, Jonathan broke the light bulb with his head, which resulted in everyone in the shop hitting the deck thinking it was a gunshot. On the way back – which I luckily was only told about afterwards – Jonathan had somehow persuaded the pilot to let him fly the plane!

Irwin Helford, former CEO, Viking Jonathan was a special person and unusual friend to me. I will never forget him. When I brought my company Viking Direct from the US to the UK, almost every stationer resented our entry and repelled our marketing

OPI Magazine | October 2014

presence. It was understandable as we expanded in the UK quickly and successfully. When taking the stage at a BOSS Federation event, Jonathan spoke up and said Viking was teaching the industry lessons in “fanatical” customer service and marketing skills. He said that as dealers adopted these higher standards, they and their customers would reach new levels of customer loyalty and business success. Obviously, it took great courage for Jonathan to speak out, but he was certainly correct. The levels of service and marketing did improve within the industry and everyone benefited from working harder to satisfy customers. That’s how the free enterprise system works and no one spoke better of it than Jonathan. He and I became good friends over the years and eventually he recommended me for Freeman in The Worshipful Company of Stationers and Newspaper Makers. I was honoured to accept and receive the granting at Stationers’ Hall with Jonathan at my side. Few men, in the UK or America, had the courage, love of office products, competitive spirit and high integrity

as Jonathan. I am proud to know him as a friend.

Eric Bigeard, former CEO, Lyreco Jonathan would for sure not want to generate any sadness... even today! The memory of Jonathan for me is linked to hilarious moments shared with him. His sense of humour and his acute pleasure in cracking jokes were the highlight of many dinner speeches. I knew if Jonathan stood up to give a speech that I was going to have a nice time. No one could compete with him at this! Wherever he is... they are going to have fun around him.

Eric Smith, former CEO, Spicers He was undoubtedly one of the outstanding personalities in the trade during my time. He was a consummate salesman and a charming human being. His sheer size meant that he was always going to be noticed and his enthusiasm for life was infectious. Doing business with him could only be a sociable experience, even if he was screwing your price into the ground! His company golf days were memorable and he once told me that, if things got really tough in the

Jeff Whiteway, CEO, OfficeTeam/ Spicers Jonathan had the unique and wonderful knack of making everybody he met feel comfortable and valued, from the most humble employee to the chairman of a multinational company. Langan’s Brasserie on Stratton Street became akin to a staff canteen at Straker’s. Many a very happy eight-hour lunch flew by with Jonathan hosting and entertaining throughout. Jonathan was a great talker, but also a great listener. I learnt so much from him, but unfortunately it’s impossible to replicate such a personality. He had an amazing business brain, while also understanding the strength of relationships and the importance of fun in business. It would be hard to find a better-liked, respected and

Jonathan was a past Master of the Worshipful Company of Stationers and Newspaper Makers and a former President of both the BOSS Federation and the Society of Old Friends lovable man as Jonathan – he will be very much missed and leaves the office products industry poorer with his passing.

Ron Wotherspoon, former CEO, Progress/ECi Europe Jonathan first came to my attention back in the 1980s when he approached me to supply a Progress system for his business, Straker’s. A large, imposing figure he greeted me in his shop with a warm, beaming

grin and firm handshake, every bit a proud retailer. Typical of his impish humour, he phoned me one day and announced that he no longer needed to buy Progress – he had bought a company that already had it (a small stationer, Marathon, which had an interesting young employee called Jeff Whiteway!). His sense of humour even survived my quote for the additional licence fees! Jonathan and I became firm friends as he drew me into BOSS where he was the Chairman of the Resellers Board. He had a far-sighted idea that the Federation must work with dealer groups rather than compete with them. A controversial measure but nevertheless successful as it drew ten dealer groups into block membership. They all met on a newly created BOSS special interest group chaired by me. Jonathan’s warmth and wit served to bring people together and overcome the inevitable difficulties when competing commercial interests needed to work together. His period as President of BOSS was a perfect illustration of his qualities;

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Tribute

business, his golf day would be the last bit to go. He did a great job as President of BOSS and later as Master of The Worshipful Company of Stationers and Newspaper Makers. It was a pleasure knowing him.

Tribute

his after dinner wit, his charm and his energy made him a popular guest at all trade functions. I shall never forget his presentation at a large international OPI conference in Switzerland when, having dazzled the audience with a tour d’horizon of the industry, Jonathan referred to the numerous slides he had shown with their detailed statistics and declared that he had made them all up! His point was deftly made; our industry is as much about understanding markets and people as numbers. For all his jovial and witty manner, Jonathan was a tough businessman as was illustrated by his long partnership with Hugh Sear as they together created one of our great companies. Jonathan went on to be the Master of The Worshipful Company of Stationers and Newspaper Makers and President of the Society of Old Friends, bringing to both roles his charisma and wit. There will be many people across the industry who have their own memories of this great man. I will miss a warm human being who always had time to listen or offer wise counsel; he taught me the importance of relationships in business. By his example at BOSS, he taught us all how competitors can cooperate; through his commitment to the Stationers Company, he showed us the importance of our collective history and traditions. Like many, I shall always remember him with respect and affection. My life was richer for knowing Jonathan Straker; my thoughts are with his ‘bride’ Jeannie and his family.

Jamie Fellowes, Chairman, Fellowes I did not know Jonathan well, but I recall being coupled with him to give a toast at an OPI banquet. I believe that I represented the manufacturers’ toast and Jonathan the resellers’. As I recall, mercifully I went first and delivered a rather bland, prosaic

brief toast. Not my forte, and I was quite pleased to sit down knowing that this task was over. Then Jonathan took the microphone and launched into a 25-minute monologue, punctuated with hilarious stories, finally building his toast to a marvellous crescendo... I have been thankful ever since of the sequencing of these two toasts!

Richard Thompson, former Managing Director, Officeteam I first met Jonathan more than 40 years ago when he established Bromley Office Supplies and I was working for Dymo; we remained friends and business colleagues ever since. One of the most enjoyable memories was when Jonathan accompanied me on a business trip to Japan to visit Zebra Pen where he charmed and amused all those he met, despite towering over them by almost 18 inches! When Jonathan decided to retire, he and his co-directors at Officeteam asked if I would take his place as Managing Director, which was indeed an honour to follow such a great man. I will always remember Jonathan for his charm and wit, which made him friends all over the world. RIP great man, you will be missed by so many.

Bill Armstrong, former CEO, Spicers

figures who together breathed new life into the UK industry federation BOSS in the 1990s. His remarkable, complementary partnership with Hugh Sear (a formidable combination of engaging people and detached analytical skills) produced a highly successful business – first in Straker’s, followed by OyezStraker and then OfficeTeam. Jonathan was much loved for his leadership, his unfailing courtesy, kindness and for his great sense of humour. He will be greatly missed by all who knew him.

Leon Pride, former VP, Esselte Jonathan was one of the greatest characters in our industry. Over many years through good and difficult times he always remained gracious, calm and loyal, with a welcoming smile. He was just a really nice guy; many will miss him. He also seemed to know more bars in London than anyone I ever knew!

Mark Austen, Managing Director, Office Club Jonathan was a true icon of our industry. He was generous, especially to new entrants to our industry, and was unfailingly courteous and fair in all his dealings. A legend whose passing diminishes us and our industry.

Steve Hilleard, CEO, OPI

A giant of the industry has passed. ‘Big Jon’ was big in all respects: big in stature, in heart, physically and in reputation. He single-handedly reconnected the UK office products industry with its historical roots, in the form of The Worshipful Company of Stationers and Newspaper Makers, by personally introducing a whole generation of industry stalwarts to the Company he loved so much, the Company of which he became Master – a rare honour for what he might say was a ‘humble’ modern day stationer. He also was part of a small group of industry

It is rare for any individual to have such a profound effect on an industry and its participants as Jonathan and sadly we will not see his like ever again. RIP Jonathan, and thanks for everything you did for me, my company and for our industry. We are poorer for your passing but will take comfort in the belief that wherever you now are, there’ll not be a dull moment. There is a full list of tributes on opi.net

Memorial service There will be a memorial service for Past Master Jonathan Straker at St Bride’s Church, Fleet Street, London at 11.30am on 19 November 2014, followed by a reception at Stationers’ Hall. All are welcome; there is no need to RSVP. Letters of condolence may be sent to his widow: Mrs Jeannie Straker, 12 Beech Avenue, South Croydon, Surrey CR2 0NL Jonathan was a staunch supporter of Warlingham Rugby Club

OPI Magazine | October 2014

Loyal customers – do they exist?

An interesting discussion taking place on OPI’s LinkedIn page – instigated by owner of Twist Office Products Wendy Pike – refers to the “extinction of loyal customers” and whether those loyal customers really do exist. Here are some of the comments: Kasie Morley, owner, Jacobs Gardner/Penny Wise Evaluate. Innovate. Repeat. Luckily, we have some extremely loyal customers who actually share competitive information with us to keep us on our game and remain constantly vigilant in finding ways to improve. I’m sure we all wish there were more customers like them! Tom Bersch, President, Veteran Toner Services Today, you are only as good as the last customer order you filled. In consumables there are many places to buy from. Even with a contract in place, other businesses find ways to help a customer break it. Additionally, the cost of exit is a lot less nowadays so you must be ready for anything. My advice has always been fill an order like it was the first one you got. This should also be the attitude of everyone in the company.

News ■ And finally...

Comment

TWEET CHAT

710,134

Number of used ink cartridges Staples Canada collected in Q2 2014

79%

Percentage of B2B marketers that feel social media is the most effective marketing channel

19,665

Number of visitors to this year’s Office Brasil Escolar trade show that took place in São Paulo at the end of August

follow us on Twitter @OPInews, @andy_opi @MStationers Newspaper Society PJ gives Page 3 spread to Stationers’ CW Academy. @Ink_People It’s a challenge! How long can you balance a pencil? The answer: not very long. @PhilJones40 Swift transfer back to hotel, Superman style change into black tie for event with @ RymanStationery @kypros13 @ TheoPaphitis at The Dorchester

SNAP SHOT

Chip Hummel, Chairman, Hummel’s Office Plus There are loyal customers. However, you must work each and every day and treat them like your best and only customer. Loyalty is earned by making them feel special and appreciated. You need to ‘wow’ them. If and when you accomplish this, they will remain loyal to you, working with you on pricing, service and buying expanded product lines that they [previously] bought elsewhere. Never take customers for granted. That’s how you build loyalty. Howard Yares, Director of Operations, Expense Reduction Associates A customer is only loyal as long as you are providing a service that the client thinks is valuable. The phrase ‘client loyalty’ may no longer exist. Maybe the true test of client loyalty only happens when you make a major mistake and the client still stays with you.

opi.net poll results Will the recent Vasanta/o2o and Spicers/OfficeTeam mergers spark similar wholesale developments in other markets?

Yes

20%

36%

Possible No idea 24% 20%

The OP industry has not ignored the global ice bucket challenge phenomenon which has been raising funds for the disease amyotrophic lateral sclerosis (ALS). One challenge that was accepted was by three SP Richards executives – Jim O’Brien, Brian Wright and Phil Welch. Well done to them for being such good sports.

Don’t forget to take part in the discussions on the OPI LinkedIn page w w w.opi.net | OPI Magazine

Big Interview | Mike Maggio

All Mike’d up

New TriMega President Mike Maggio has hit the ground running. But, as he tells OPI’s Andy Braithwaite, he had to…

MIKE

Maggio’s appointment last December as President of US dealer group TriMega was welcomed by many in the industry. Maggio has been closely associated with the independent dealer community for over 30 years and has a unique perspective, having worked in the dealer, wholesaling and manufacturing channels during that time. He joined TriMega at what was seen as an important period in the group’s history: there were merger talks taking place between TriMega and Independent Stationers; major projects such as SmartXpress and Point Nationwide had either been abandoned or were being reviewed; and a significant number of the group’s larger dealers had defected to the Pinnacle group. Maggio has taken the bull by the horns, addressing the key issues facing TriMega while at the same time planning for the future with the development of a new strategic vision for the group. A timely moment, therefore, for OPI to catch up with him. OPI: Mike, the last time we interviewed you was back in your ActionEmco days [see Big Interview, OPI May 2008]. Can you give us a quick rundown of what you did after that up until joining TriMega? Mike Maggio: After we sold ActionEmco, the private equity folks that owned it asked me to go and work at a manufacturing company they owned out in Indiana called Dekko. Dekko’s biggest piece of business was actually in the office furniture space.

OPI Magazine | October 2014

TriMega | Big Interview

“There is a considerable belief that a merger of equals is of value to the channel and to both organisations”

OPI: So you weren’t a million miles away from OP? MM: No. I spent three years out there and then that changed hands when another private equity group came in and I ended up working for Yancey Jones at The Supply Room, and spent two years there. OPI: That was when it acquired Frank Parsons, wasn’t it? MM: Right, when it acquired Parsons and then we acquired Rudolph’s not too long after. So I worked there with him, his sons and the rest of the group for a couple of years before the TriMega job. That’s how I ended up in Chicago. OPI: Was the TriMega job something you had your eye on when you knew it was available? MM: When it became available I reached out to some folks to profess an interest and then from there TriMega had brought in a headhunter, so she reached out to me and we went through the interview process. They were back and forth a little bit, as you know. Ian [Wist, TriMega Chairman] was doing double duty for almost a year and he spent his year in Chicago. OPI: What was the thing that ticked the boxes for you in terms of a career move? MM: If you look at my career, I started on the independent side; I was in wholesale; I did a little bit of manufacturing. But I’ve always had an affinity and a strong sense of purpose when it came to the independent side of the business. At ActionEmco we intentionally cultivated strong relationships with both TriMega and IS which, for as small as we were, was kind of surprising. I believe strongly in the groups, I believe very much in the channel and I think we really add value. So I thought it was an exceptional opportunity for me to really finish out my career doing something that I love. I hope anyway. OPI: When you joined there was all this merger talk between yourselves and IS… MM: In fact, one of the first things the headhunter told me was that it was possible that IS and TriMega could merge in the very near future and that I may be brought in to facilitate the merger and move it forward. And when she asked me what I thought about that, I said I felt very strongly that a merger was the right thing to do. OPI: But that could have meant you moving on after a short time, for example?

MM: Yes, it could have meant that my tenure was very short, but I think it’s an important thing to happen. And long term it still should. OPI: Can you recap why the merger didn’t happen? MM: I really can’t, simply put, as I wasn’t involved in the merger talks. OPI: The board didn’t ask you for your opinion or your advice? MM: When I started in mid-December, we had a couple of things going on right then – primarily this issue of the large members – and so I focused a lot of my attention working with Greg Fish [EVP of Purchasing] and some of the DSC guys to try to figure out where we wanted to go with that. Ian [Wist] had been bogged down with this and asked me to run the group while he focused on the merger. So I really wasn’t close to the conversation at all. I can tell you that the board has recently voted unanimously to sit back down. There is a considerable belief that a merger of equals is of value to the channel and to both organisations – and that’s where we stand today. OPI: Why do you think one merged group would work better than two? MM: There are some interesting synergies between the two organisations that would work really well, I believe. We have a great national accounts platform; they have a great national accounts programme. Many of the key issues that the channel faces – like e-content and search – would be better tackled together rather than individually. We’ve just upgraded our central system to a new system which we think is going to take us well into the future. So I think, overall, a merger benefits all the stakeholders. OPI: So when will the boards sit back down together? MM: I don’t know. OPI: I mean, in the weeks or months ahead? MM: Well, as you know, IS recently had a Chairman transition. I hope that once they get past that change and everybody gets oriented, then the boards will sit down again. OPI: You said the TriMega board is unanimous in wanting to pursue the merger. That infers that the stumbling block was, or is, from the IS side. MM: I would ask you not to infer that; it’s not a fair characterisation. I think that it’s fair to say that the talks broke off because the talks w w w.opi.net | OPI Magazine

Big Interview | Mike Maggio broke off. Going forward, I think everybody learned some valuable lessons and if we do it again, we’ll do it right. OPI: What was your brief from the TriMega board when you joined? MM: There were a number of things they wanted me to do, but most importantly it was about focusing on what we do – which is we’re a buying group so make sure we do that – and then controlling costs and developing a strategic vision for the future. We’ve actually done a lot in the first six months and I’m really proud of how we’ve started to move the ball. OPI: You said “we’re a buying group”. People say buying groups don’t exist anymore and that it’s about dealer marketing groups, but for you is buying still the essence of the group? MM: If you look at our core principles it’s all about buying; it’s all about adding value for our vendors and helping our members with cost of goods. So that is – and has to be – a primary focus. Now, you can expand the hell out of that as you’re aware, but I think the important point is to stay focused and keep it in the context of what we need to be doing. For us right now, it’s about maintaining the core and starting to find those other areas that we need to be operating in. But yes, TriMega is still very much a buying group. OPI: What about the strategic vision? Where are you with that? MM: The strategic vision, our ‘driving force’ if you will, is straightforward: we are a purchasing association. We provide suppliers with a single platform of over 550 independent business products dealers. That platform allows us to concentrate sales and marketing efforts around key suppliers and introduce new products while providing our members with low cost of goods and an exceptional rebate programme. We do all this with a very dedicated staff – fewer than 25 full-time employees – and a low cost structure, enabling us to return all rebates and funds earned to our members. The challenge for us as we move forward is to remain relevant to our members and suppliers. We believe that in order to do that we will need to develop an e-content platform independent of SP Richards and United Stationers, although it will support either one’s stocking mix. That platform will allow members to show product available from key suppliers regardless of wholesale support. As part of developing an e-content platform, our members must have the ability to control

OPI Magazine | October 2014

search. This will enable us to feature the suppliers and the products that are most meaningful to us. We have to develop meaningful POS [point of sale] data that we can share with key suppliers, and we have to provide assistance to suppliers and members alike, in order to successfully navigate the transition from paper to digital marketing. All of this has to be accomplished within our low-cost model and without burdening our members with additional fees or costs. So far, we’ve held a series of strategic discussion meetings internally and recently held our first supplier council meeting, and the plan is to have a full board strategic planning meeting in November at the ECi show. The culmination of all this will be a focused strategy that we can clearly explain to all stakeholders and that executes to the above initiatives. OPI: Will this new vision be a reinvention of TriMega? MM: I don’t think it will be some revelation where we’re going to transform the industry.

“TriMega is still very much a buying group”

TriMega | Big Interview I’m not that smart, Andy! But I think we’re going to figure out solid, focused initiatives that support the overall strategic vision and provide long-term value to all stakeholders while providing clear direction to the staff. OPI: Let’s turn to the issue, which you inherited, of your larger dealers leaving the group. I think more than 15 of your largest members have moved over to Pinnacle in the past four years, Eaton’s and New England Office Supply being the latest two. That must really be hitting your buying power and group programmes. MM: Absolutely, it has an impact when you look at comparable sales. There were also two really profound changes year over year that have impacted the buy side of the business as well. One was the Xerox sale to Domtar and the other was the HP change. They hit purchase volumes, but in fact neither impacted our rebate volumes. We do return-on-membership reports every year for all of our members and the worst that I’ve seen since I’ve been here was about 20 times return on membership. For some of the larger members it’s 200-300 times return on membership: what they pay in dues versus the rebates they get back. So it’s good; it’s impressive; it’s important. OPI: So why are these large dealers leaving? MM: That’s a good question. I’ve talked to Dave Guernsey [founder of Pinnacle] a lot and I’ve talked to various dealers to try and get an understanding of what the reasons are and, frankly, it seems that for each dealer there’s been a little bit of a difference. Bruce [Eaton’s] answer that he gave to you guys was about technology; Dennis [McCarthy, VP at New England Office Supply] feels strongly that there’s some money being left on the table.

OPI: From speaking to DSC members, what were their main concerns? MM: While a number of issues were raised, there were two key items: using vendor funding for things other than rebates and marketing, ie SmartXpress and Point Nationwide; and the sense that large independent dealers have different requirements and need additional mass to then negotiate as a block with vendors to drive the lowest possible cost of goods. OPI: How critical is it to the sustainability of TriMega as a whole to stop this bleeding of DSC members? MM: TriMega has over 550 members. A loss of any member, large or small, is of concern to me. It is our intention to create an environment that retains and attracts independent dealers to the group, regardless of size or business model.

“We’re going to figure out solid, focused initiatives that […] provide long-term value to all stakeholders”

OPI: So you came up with the Prime concept earlier this year [see ‘TriMega’s Prime Gamble’, OPI April 2014, page 10]. What is that exactly? MM: The idea behind Prime was to create an umbrella entity that would allow groups that contain large independent dealers – such as DSC, DPCG [Direct Purchasing Catalog Group] and Pinnacle – to negotiate as a block but remain members of their respective organisations. It was a joint effort that included DSC members, senior TriMega staff and TriMega board members. OPI: But now the Prime idea has evolved into something different, essentially an AOPD-run umbrella group [see News Analysis, OPI September 2014, page 17)...

OPI: The dealers that left were members of your DSC group. What is that exactly? MM: The DSC is a group within a group with 38 members. Membership is based on direct buy volume requirements along with agreement to provide our top 12 vendors with POS reporting and to feature those vendors over competing vendors in sales and marketing initiatives. The DSC has its own governing body, a board of managers and pays additional fees to cover costs of reporting. All members of the DSC are part of the Contract Forum – which is our top 50 members by direct buy volume – but not all Contract Forum members are part of the DSC. w w w.opi.net | OPI Magazine

Big Interview | Mike Maggio MM: AOPD is already an umbrella organisation that contains members from all key large dealer entities and so was a perfect fit for the idea. While the structure will be developed under AOPD, the Prime concept – and its goals – remain the same.

“The Prime framework […] will allow vendors and large independent dealers to work together to advance the common goal of greater sales and increased market share”

OPI: What benefits do you think this initiative will bring to its members and to the vendor community? MM: I think the Prime framework creates an environment that will allow vendors and large independent dealers to work together to advance the common goal of greater sales and increased market share. The long-term opportunity is significant in that it identifies clearly the strength large independent dealers bring to the table: local relationships, a direct sales force, the ability to focus sales and marketing efforts on specific categories and suppliers. It’s about matching that strength with vendors that understand the independent dealer community and how it is the best long-term partner that can assist them in reaching their sales and market share goals. OPI: What does Pinnacle think of the idea? MM: You’ll have to ask them that. OPI: On the surface, this looks like a Pinnacle alternative or even an anti-Pinnacle bloc. I know you’ll say that was not the idea, but essentially isn’t that how it will work? MM: Not at all. I think it is safe to say that all parties would welcome Pinnacle’s involvement. OPI: How likely is that? MM: Again, you will have to ask Pinnacle. OPI: What is the timetable for getting this thing up and running? MM: As soon as possible. OPI: Let’s talk a bit about your relationship with the two main wholesalers. You’ve got this strategic alliance with SP Richards, haven’t you? MM: Yes, from our perspective it’s been a very productive alliance and we are in discussions about renewal. We are hoping to expand the alliance to include solutions for our members that incorporate e-content and search. The alliance consisted of a Point Nationwide agreement and a purchasing piece. OPI: You mean Business Source? MM: Yes. We treat Business Source as a

OPI Magazine | October 2014

vendor and we jointly negotiate with SPR with the domestic vendors for those products. OPI: How has that worked out? MM: Very well. It’s returned a significant amount of added rebates to the members that take advantage of it. And I think the domestic manufacturers are very pleased with it as well. So we’ve had nothing but good results from it and we’re looking to expand it. OPI: In 2012, Charlie [Cleary, former TriMega President] shared with us that you had about $50 million running through TriMega Business Source sales. MM: And that increased in 2013. It’s done extremely well; it’s something that the wider membership is really taking advantage of. I have also worked very hard at shoring up and improving our relationship with United Stationers. OPI: It needed shoring up? MM: No doubt about it. They have been a good partner over the years and almost two-thirds of our members are United dealers. Early on I wanted them to understand that we will not ignore a vendor that is the primary wholesale partner to approximately 60% of our members. I’ve had good conversations with all of their senior people; we’ve talked about e-content and search, about working together more closely on TriSupply; we’ve even discussed potentially working together on TruChoice. OPI: Has anything concrete come out of those discussions? MM: Not yet, but the good news is that everything is up for consideration and right now we’re having good, substantive conversations about all of it. What I’m telling both wholesalers is that whatever we do, we’re going to concentrate on our members that are their dealers. So, whatever we build with SPR, we’ll go out there and try and get 100% of the TriMega members that are SPR dealers using it; and it’s the same principle with whatever we do with United. OPI: What’s the latest on Point Nationwide? I know Grady [Taylor, EVP Member Services & Managing Director PNW] revamped the whole thing last year [see News Analysis, OPI November 2013, page 14]. What’s the situation now? MM: First, I have to acknowledge the job that Grady has done and is doing with PNW – he’s done a remarkable job of getting that

TriMega | Big Interview organisation focused and he’s accomplished an enormous amount with very little. He is working with a very dedicated, small team to make PNW a success. Right now, we’re in the process of doing a strategic review of Point Nationwide and… OPI: Another one? MM: Yes, because all those months ago when I got here I would have told you that our goal was to shut it down by the end of 2014. But I can tell you that it’s very different right now; we’ve got some nice traction and things are starting to happen. For example, a large US association came to us recently through a member and said that it wanted to talk to us because with just two power channel players it wanted a third choice, and we’re in the middle of an RFQ with them. We’re making our living on government sales, but the real opportunity is on the commercial side and we absolutely need to ramp that up. So Grady and I have been formulating some ideas and will shortly come up with a fairly straightforward game plan on where we’re going with PNW: what kind of investment it’s going to require, where the money is going to come from and how we’re going to achieve our goals. OPI: Why hasn’t it been successful so far? MM: Something I learned when I first started managing was that first you become effective and then you become efficient. Focusing on efficiency first very rarely works. Being efficient means that whatever it was that you were doing, regardless of whether it was right or wrong, you’re just going to do it faster, but if you’re effective you can always figure out a way to make it more efficient. So to me, PNW was a classic example of a really efficient platform and a great model, but we neglected the effectiveness side. We didn’t have the revenue to start with to support the platform. But I am cautiously optimistic that PNW has a future.

“I have also worked very hard at shoring up and improving our relationship with United Stationers”

to join and a free visit to their annual show for members that join this year. The nice thing about ISSA is it’s a true trade association so you’ve got vendors, distributors, resellers and end users, and their training programmes are exceptional – just that alone could be a big value to some of the members. And you’ll continue to see us work on finding other ways to help our members grow their business. Michael [Morris, VP of Marketing] is an exceptional marketer; he’s very creative. OPI: How’s his Torque marketing programme doing? MM: That’s been terrific. It’s unique because it’s a multimedia platform, so instead of throwing a flyer on the web or just sending a flyer and an email, it’s got a video, it’s usually focused on one product, it’s all original copy and content and it’s got Meg, who’s our spokesperson. It’s been very well received and the results have been extremely positive. I think it’s one of the best things we’ve introduced in years; we’ve got to start transitioning away from paper to digital and I think this is one of the things that’s going to lead the way. The vendors are supporting it so that’s a good sign as well. OPI: We’re out of time, Mike. Many thanks for talking to me, good luck with all you’ve got going on and I look forward to catching up with you at EPIC later this month. MM: My pleasure.

OPI: What are some of the other things you’ve been working on? We’ve had quite a few press releases recently announcing various partnerships and initiatives. MM: Yes, we’ve got a lot of good stuff happening which I think all fits in strategically with the things we should be doing for the membership. We’ve got a data agreement with NPD; we’ve announced a partnership with [jan/san trade association] ISSA where they’ve agreed to provide training to our members; they’re offering a reduced membership fee for our members that want w w w.opi.net | OPI Magazine

Hot Topic | Omnichannel

The

promised Omnichannel represents the ultimate shopping experience. It's also a difficult, not to mention costly, concept to get right. Who is leading the way in OP?

by Heike Dieckmann heike.dieckmann@opi.net

NOT

so very long ago, multichannel was the word. Now you increasingly hear another one – omnichannel. What’s the difference? In short, multi means ‘many’, omni means ‘all’, but that doesn’t necessarily explain much. It’s interesting that, in OP terms, multichannel used to imply – and still does in many markets, especially emerging ones – that companies operated in several distribution channels serving different kinds of customers, be that retail, B2B delivery, wholesale or manufacturing in any combination. Now it increasingly means reaching the same customers through any number of platforms, these days with a huge focus on e-commerce, m-commerce and social media. Omnichannel is becoming the natural extension of multichannel and that means not only offering these channels to customers, but seamlessly integrating them in a 24/7 ultimate customer convenience fashion. And that is complicated and costly. In KPMG’s 2014 Retail Outlook Survey, 53% of retail executives surveyed said that the cost and complexity of technology upgrades in an omnichannel adoption were of one of the main challenges they faced. When asked which three channels they have increased spending on this year, 67% cited their company website, 47% physical/permanent

OPI Magazine | October 2014

land

stores and 46% social media platforms as the most important areas. And arguably it is the retailers that are at the forefront of the omnichannel trend, with players such as Walmart and Starbucks (see also ‘Who does it well?’, page 31) frequently mentioned in best-in-class lists. Overall in omnichannel terms, parts of Asia – Japan, South Korea (see also ‘The rise of the virtual store’, page 28), Taiwan and China spring to mind – lead the way, followed by the US and the UK in hot pursuit. Continental Europe, Australia and the rest of the world are very much lagging behind. But as ever, it’s the exceptions – in OP and otherwise – that prove the rule. Interestingly for example, 35% of online shoppers in the UK already use click & collect services, compared to only 13% in the US and 5% in Germany, according to Planet Retail. That figure, the research company says, will more than double within the next three years, with 76% of online shoppers in the UK self-collecting by 2017.

Omnichannel trailblazers Predictably, two of the biggest names in OP – Staples and Office Depot – are also the trailblazers with their omnichannel efforts, at least in the US, where Staples is ostensibly pipping Depot to the post with its initiatives. Both players launched their omnichannel campaigns last year, with Staples opening its first two omnichannel stores in June 2013. Staples recently announced further enhancements to its offering (see also News Round-up, page 6). From in-store touchscreen

“The ease of ordering on the web has led to [retail] leakage over the years”

Omnichannel | Hot Topic kiosks and reserve online/pick up in-store facilities to its brand new mobile payment system and iPad app, all these features are designed to boost customer interaction and increase conversion rates. Says Faisal Masud, EVP of Global E-commerce at Staples: “Our kiosks have gone through multiple iterations of the software that powers them and they seem to be doing really well for us. Every store has a kiosk already, but we’re rolling out more and more of the newer touchscreen ones now. These touchscreen kiosks are not like our standard website, but more a store look-and-feel site which is geared towards the customer coming in and with their fingertips deciding what they want to buy. It’s also a support tool for our associates, enabling them to find items that are either out of stock or not available at that store, to be fulfilled direct to the customer for free. He adds: “We can’t talk revenues, but we’re seeing significant double-digit growth in the business usage of the kiosks and also in their transactional activities. We see the kiosks as a stop-gap towards a future where we will have handheld devices, but at this point customers like having this anchor in the store where

The answer is a resounding ‘no’ it appears. All these features are simply something that customers increasingly want and come to expect, but it’s unlikely to substantially draw new customers to stores. What it might do, however, is improve conversion rates because of the convenience offered. And that, in turn, improves store performance. But, says Arno Alberty, Managing Director of presentation products firm Medium in Germany, perhaps there’s a different type of retail concept on the horizon. “I don’t believe in the future of 400+ Media Markt and Saturn stores [in Germany]. Consumer electronic products as well as commodity office products will increasingly be bought online I’m sure of that. The traditional model of the department store is also disappearing in my opinion. But what I can see happening is that these retail spaces could become marketplaces, strong shop-within-a-shop concepts within these department store buildings right in the city centres. I think the future of retail is to have more showrooms

Arno Alberty

“We see the kiosks as a stop-gap towards a future where we will have handheld devices” they know they can always go to get stuff done. We’re fairly open to any permutation of the kiosk and basically want to do whatever our customers appreciate the most. Office Depot declined OPI’s request for an update on its omnichannel efforts, but where Staples is arguably already in a stronger position is in the fact that it has historically focused much more on the SMB customer than Depot which has had more of a focus on the large corporate client. And it is that hard core SMB customer that still uses the OP superstore for convenience, says Jefferies & Company’s Managing Director Dan Binder. But, he adds, “the ease of ordering on the web has led to leakage over the years and with everything so focused on margins, that gets amplified even more in a shrinking industry”.

Growth in store traffic? Does the growing focus on directing customers to retail outlets and offering more store-based convenience – click & collect or order in store/ delivery to the home/office – have any impact on store footfall? This, after all, is what so many retailers – and the OP superstores particularly so – are struggling with.

to show new product developments and to combine that with multifunctional and interactive displays. That will then result in end users making more impulse purchases.” That sentiment tallies precisely with what Kaut-Bullinger in its retail stores in the south of Germany is planning to do and is one of the core strategic directions that new Retail Managing Director Christin Lüdemann will be driving when she starts her role in October. Group Managing Director Johannes Peter Martin explains: “About 80-85% of the products we sell are commodity products. As such, we don’t have many impulse buyers. So we have to change the type of products that we stock and sell, and we also have to display and market them in a different way – more in in terms of ‘product themes’ and with a real lifestyle focus.” That said, Kaut-Bullinger is a company that has already done a lot of work in making customers’ shopping experiences better and, according to Alberty, is the only operator – certainly in OP terms – that can justly be described as an omnichannel operator. He says: “Kaut-Bullinger covers all the distribution channels and has, importantly

w w w.opi.net | OPI Magazine

Hot Topic | Omnichannel

ea d i l

ls versus re

tai

79%

32%

regard in-store stock level information as critical for their purchase decision...

...but only about a third of retailers offer this information today

50%

36%

want to collect orders in store...

...but less than half of retailers offer in-store pick-up

41%

55%

expect orders to be ready for pick-up within one hour...

...but only slightly more than half of retailers fulfill that expectation

ties

OPI Magazine | October 2014

But, as has been proven in several other industries, although Germany may not be the fastest out of the starting blocks, it has phenomenal staying power, often coupled with financial success, once firmly established. Kaut-Bullinger too is – or perhaps was – a very traditional family business, brought into the 21st century by the foresight of its current leadership team. Martin himself can attest to the long journey the company has undertaken on the road to becoming a true omnichannel operator. He says: “We started three years ago, in the widest possible sense, to work on our omnichannel concept when we began the development of our CRM platform. This is now a very powerful tool for us where all the information from all the various business units of Kaut-Bullinger is consolidated and accessible. At the same time, we installed a new content management system, a huge database with all the relevant information about all the products we sell. “These two resources combined serve all the channels and platforms we operate in, be that in retail, B2B, Facebook, Twitter, advertising, online marketing, email marketing, prospecting, etc. We can draw from that resource and reach all our customers from this data pool.”

ali

Slowly, steadily

these days, an excellent online business. But it also has sales reps, telesales, conducts massive marketing campaigns across the regions, and it does all that in a coordinated and measured way. This, in my opinion, is a real omnichannel business.” And in a market that is woefully ‘underdeveloped’ in that way, that puts the company streets ahead of most of its competitors, even marginal ones. Alberty refers again to Media Markt – part of the mighty Metro Group and hailed as ‘Europe’s number one’ consumer electronics retailer – as one company that hasn’t quite got it right and started the omnichannel journey far too late. “Media Markt in my mind is still at the beginning of a coordinated multichannel offering, let alone an omnichannel approach,” he comments. “It missed the opportunity to create a powerful online shop for more than ten years, started far too late and is now competing with other big online competitors. “It’s the same in the grocery industry; it’s still traditional – you go to the store and buy

According to Goldman Sachs, there will be as much mobile commerce in 2018 as there was e-commerce last year. In dollar terms, that’s an anticipated m-commerce market of approximately $630 billion. Combining that jaw-dropping figure with the growing quest for a true, integrated omnichannel experience is what some of the world’s biggest retailers are trialling right now. Grocery giant Tesco is one of them. Its largest operations outside its home market of the UK are in South Korea, where it has over 400 stores, 198 franchise stores and serves over six million customers a week. But traditional retail is suffering here as much as it is in so many other markets, partly due to the government’s clampdown on restricted Sunday trading hours. So where better to start the concept of the virtual store than in plugged-in South Korea given that the possession of smartphones in the country already reached 70% in 2013? Homeplus – Tesco’s South Korean brand name – as long ago as 2011 started creating virtual stores in the capital Seoul’s subways by allowing people, using the Homeplus app, to scan QR codes printed on a poster to add items to their shopping baskets. These are then delivered directly to customers’ homes – the same day if orders are placed before 1pm. Having been hailed as a big success in the South Korean market, Tesco brought the concept back home and trialled the virtual store at London Gatwick Airport in the summer of 2012. However, the pilot was short-lived and was also not extended to any other locations, according to a Tesco spokesperson. Whether it was ultimately unsuccessful is uncertain – after the fanfare of the launch, it definitely went rather quiet. But what is certain is that Tesco – and many other players across industries – are wising up to the fact that omnichannel is the only way to go. After that, you win some and you lose some.

your groceries. Yes, there are some online shops selling food, but so far they’re not really successful. So overall the Germans are a bit behind with the development of an omnichannel strategy – in any sector.”

Source: www.accenture.com

The rise of the virtual store

Omnichannel | Hot Topic But it’s just the beginning and there remains much to be done, says Martin, with features such as iPhone payment options and click & collect still to be rolled out over the next couple of years. What’s important is that the concept gets the highest level buy-in and is driven all the way through the company. In Australia too, the concept of omnichannel is somewhat in its infancy

Australian dealers with a balanced mix of retail and online – Officeworks is in a good position that bodes well for the future. And Managing Director Mark Ward is confident in the company’s position: “We were early movers online, with a transactional online store dating back to 2000. We pride ourselves on delivering a seamless customer experience across

“Our every channel focus means just what it says – we don’t prioritise any one channel over another” and – perhaps unusually so – the OP space or, more to the point, the sector’s predominant retailer Officeworks, is doing a good job. Andrew Penfold, owner of Penfold Research, says: “Customers seem to increasingly value and are using store visits and online interchangeably. Apart from Officeworks, however, there is as yet a lack of substantial retailers with a wide-ranging online offering. Officeworks manages to take share because it does things well on multiple fronts.” With its ‘every channel’ strategy and competition that is unlikely to replicate its offering – Staples and OfficeMax don’t have a retail presence and there are no significant

channels – online, in-store, on mobile devices, even via fax and phone. Our every channel focus means just what it says – we don’t prioritise any one channel over another. In fact, we are completely agnostic about how, where or when customers choose to shop with us, so long as they choose Officeworks.”

w w w.opi.net | OPI Magazine

Omnichannel | Hot Topic “The customer is given this endless opportunity to purchase from our huge range”

Faisal Masud

The endless aisle Another facet to the omnichannel discussion is the so-called endless aisle phenomenon. It’s the curious result of a development that started happening when online shopping began in earnest about ten years ago, exacerbated by the financial crisis in 2008 that marked the beginning of a long protracted fall in retail sales by square foot. This measure of retailers’ productivity and its economic realities resulted in the downsizing of many retailers’ store footprint – OP superstores included – while, ironically, at the same time prompting them to offer more and more products, in an attempt to become a one-stop-shop and make up for declining sales in traditional categories. Staples has become the undisputed OP winner in the endless aisle battle, offering 100,000 products in its kiosks alone. How much incremental business it’s deriving from the non-traditional SKUs it’s now offering online is debatable, but Masud is confident that there’s market share to be had. He says: “I was working in a store recently in Seattle and had customers coming up and saying ‘hey, do you have this item?’ And there were occasions when the answer was ‘no, we don’t sell that particular variation of that item; however, we can find it online and have it shipped to you for free’. Literally, customers were transacting right there, saying ‘oh great, I don’t have to go somewhere else; I’ll just get it done now’. So yes, there’s definite share to be had. Can I quantify that for you? Probably not right now, but clearly the customer is given this endless opportunity to purchase from our huge range.” There’s no doubt that the concept of omnichannel is very important today. And it’s not that the OP industry is doing a bad job, but most companies are still very much on an upward curve, in a type of hybrid state as it were. But those retailers that are not jumping on board soon will almost certainly get left behind on that curve. So making omnichannel a priority now would seem the prudent thing to do – because it’s what today’s customer wants.

Who does it well? There’s much talk about the ‘omnichannel experience’ and why retailers should embrace the concept. But who is actually doing it well, rather than merely paying lip service? Whether a retailer is just starting out on the path of omnichannel retailing or simply looking for ways to refine its existing strategy, these three examples give an idea of how to do it right: US houseware, furniture and accessories chain Crate & Barrel (C&B) recognises that shoppers switch from web to smartphone to tablet when conducting research and completing purchases, so when customers are signed in, the C&B app saves their shopping cart so they can access their information across multiple devices and browsers. C&B also provides a seamless experience to shoppers using its wedding and gift registry. People can still create and monitor their registries online and in the store, but to make things more convenient, the C&B app lets them manage their registry right from their phone too. Using the app, shoppers can create and edit their registry, scan barcodes in the stores to add items, and see purchases made in real time. UK fashion retailer Oasis has an e-commerce site, a mobile app and several bricks-and-mortar locations and fuses those channels to give people an all-round shopping experience. Oasis arms its in-store associates with iPads to give shoppers on-the-spot information on product availability. And if an item isn’t in stock, staff can use their iPads to place online orders for the customer. A similar service is made available for online shoppers. If an item is sold out online, customers can use Oasis’ ‘Seek & Send’ service where the retailer searches its stores for the product and ships it to the shopper. Oasis also provides convenient (and free) options when it comes to returning items. Aside from letting people ship their items back or return them by heading to any Oasis branch, the retailer offers easy returns through the Collect+ service that lets shoppers return purchases through a network over 5,500 drop-off points in local stores. The Starbucks rewards app is frequently mentioned in ‘top’ lists of omnichannel efforts and for good reason: the coffee company does an excellent job in providing a seamless user experience across all channels. Customers have the option of checking and reloading their Starbucks card balance through their phone, the Starbucks website, or when they’re at the store. Any balance or profile changes are also updated in real-time, across all channels, letting users stay in-the-know no matter where they are or what device they’re using. Plus, any earned rewards are automatically reflected in the account without any action on the user’s part. When it comes to payments, people can either pay with their physical rewards card or using their phone, and the balance will automatically be updated online and in the app. Source: www.multichannelmerchant.com w w w.opi.net | OPI Magazine

Dealer Spotlight | Ofipapel

Fighting spirit Business supplies dealer Ofipapel made it through the tough Spanish economic crisis by relying on traditional values, its employees and creating value for customers through constant innovation

by Michelle Sturman michelle.sturman@opi.net

THE

Spanish economy is finally on the mend according to recent statistics, although it’s a fragile recovery that should see GDP grow by around 1.5-2% over this year and next. This is good news for all Spanish businesses, but particularly so for small-to-medium sized businesses that managed to weather the financial storm. One of those fortunate companies to hang on in there is business supplies dealer Ofipapel. Headquartered in Madrid, Ofipapel has maintained a customer-centric business model which, coupled with investments in technology and logistics, allowed the company to continuously evolve, even during the recession. The customer-focused principle is in the blood of owner and Managing Director Jesús Sanabria, who gained his experience from the family-run bookstore before the presence of large shopping centres forced it to compete by adding stationery products and office consumables.

The bookstore held on for another five years before, in 2000, Sanabria took the decision to close it and use his business supplies knowledge to create a new business. Ofipapel was the evolutionary creation born from the traditional friendly neighbourhood bookstore. Sanabria says that Ofipapel’s fundamental inspiration is not only based on the same customer service ethic that defined the bookstore, but is also determined by its staff. In a country where unemployment is running at 25% and emigration is prevalent as Spaniards seek employment abroad, Ofipapel – which has 20 employees – managed to preserve this figure during the recession. Sanabria says that maintaining revenues from its loyal clientele during difficult times was predominantly due to his staff. He adds that staff were always informed of developments within the company and updated about its business plans. “We prioritised the knowledge and talent of our staff and offered them job security during the difficult economic times,” he explains.

Handling the competition

Jesús Sanabria

OPI Magazine | October 2014

But it hasn’t been easy to emerge from the recession relatively unscathed, especially as the eurozone crisis walloped Spain first as well as the hardest. Sanabria says that Ofipapel had to effectively deal with a break in the evolution of the business during the hard times that affected revenues and also ultimately damaged its bottom line. “Three years ago, at the height of the crisis, several

Ofipapel Fact Box Founded: 2000 Headquarters: Madrid, Spain Owner/Managing Director: Jesús Sanabria Sales: €4 million ($5.3 million) Staff: 20 Wholesaler: ADVEO Business model: B2B Geographical coverage: Spain and Portugal

Ofipapel | Dealer Spotlight large clients – many of which had been around for generations – closed their businesses, leaving their often significant debts with us,” he says. Being saddled with unpaid invoices were not the only problems that beset Ofipapel. The company’s main competitors, including some of the large international resellers, would operate short bursts of aggressive pricing. This, Sanabria explains, did a lot of damage to the SMB sector. The double whammy of aggressive pricing and a generally depressed trading environment forced Ofipapel to reduce its profit margins to stay competitive. A third factor that added to the woes was the Spanish market following the global trend of declining traditional office products sales. “A significant change to the business is not only the decreasing use of writing paper, but also technology practices which have reduced the amount of alternative paper sources such as copy pages. This has required us to be constantly alert to new changes and innovations,” admits Sanabria.

Expanding categories

“We prioritised the knowledge and talent of our staff and offered them job security...”

A fruitful relationship with its wholesale partner ADVEO has enabled Ofipapel to continuously evolve through the ability to expand its catalogue of products into new categories such as jan/san, breakroom, MRO and safety. “Our business has always been built on offering a comprehensive service to our customers. The growth opportunities in areas such as facilities management are part of this and we want to be leaders here,” says Sanabria. This expansion into different product categories allows Ofipapel to supply customers with the full gamut of business supplies. For the jan/san category, products cover the full range, from air fresheners and cleaning products to toilet rolls, bin liners and hand sanitisers.

CSR conscious One of the founding principles of Ofipapel is its commitment to the environment and corporate social responsibility. The company supplies FSC-certified paper and in total offers over 1,200 products that are environmentally friendly, a number that is increasing every year. On the CSR front, Ofipapel collaborates with the Special Employment Centre on the purchase of goods. This is achieved under the Alternative Measures section in the Social Integration for Disabled People Act. “This social responsibility helps improve the quality of life of people with disabilities and their families as well as adding value to our business,” says Sanabria.

MRO and safety products meanwhile include trolleys and ladders along with safety and security products, including goggles, first aid kits, safes and key fobs. The company has also branched out into breakroom, offering the ubiquitous cutlery, coffee and tea. But, ensuring that every order can be fulfilled, it further provides related and adjacent products such as brewing machines. The addition of all these new categories means that Ofipapel currently offers over 40,000 products in total, keeping around 3,000 strategic and fast-moving products in stock for fast distribution nationwide. Sanabria explains that the increase in categories as well as lines has allowed the company to stay ahead of the curve. Negotiating commercial agreements with international brands for the exclusive distribution of their products in the Spanish market also helps Ofipapel grow its market share and offset the fall in traditional paper-based office products.

Keeping it together In terms of customer base, Ofipapel has a B2B model serving predominantly medium-sized businesses across Spain. With the ability to offer such a broad range of products, the company boasts clients such as Banco Popular, logistics firm Logista and pharmaceutical distribution company Cofares. Ofipapel also supplies public institutions such as the National Library, Cervantes Institute and government departments including the Ministry of Health and the Ministry of Industry. Moving forward as Spain’s economy begins its long road to recovery, Ofipapel has recently invested extra resources in its finance department to better monitor and control payments. Sanabria’s short and medium-term goals are to grow Ofipapel’s product diversification and pump money into the marketing department to improve its visibility in the market. w w w.opi.net | OPI Magazine

Back-to-School | Feature

Online

surge for BTS According

to data from research firm NPD, online sales during the start of the 2014 back-to-school (BTS) season in the US increased by more than 20% as consumers increasingly turn to the web for their school and college supplies purchases. NPD's Weekly Retail Tracking Service showed that for the seven weeks to 23 August, online BTS sales rose by 22% versus the same period last year. It's certainly an eye-opening number, but then online sales are growing from an extremely small base – at $153 million for the period covered, e-commerce represents just 6% of total BTS spend, while bricks-and-mortar retail stores (excluding food and drug chains) account for a whopping 88% of the total. Parents and students still clearly prefer a trip – or several – to physical stores at this time of the year. Nevertheless, online is definitely gaining share, with a one point shift in sales away from bricks-and-mortar stores to the e-commerce channel, says NPD. Overall, NPD points to a healthy BTS season for traditional office

Sales breakdown and growth in 2014 BTS season

Online sales jump, but retail is still the dominant force in the US BTS market opi.net poll results

Source: The Integer Group

What are your expectations for the 2014 back-to-school season in supply categories the northern hemisphere? this year. Total Better than Worse than Same as sales in that last year last year last year seven-week period to 23 August (excluding the food and drug channels) were up "Back-to-school shopping within about 2% versus last year and in the office supplies industry and three of the channels that NPD beyond continues to evolve with tracks – bricks-and-mortar, grocery the prevalence of products and and e-commerce – there were volume promotions in the online channel," increases. notes Leen Nsouli, Office Supplies Category Use of school lists Specialist The research firm points to the at the research importance of school lists, with firm. about 75% of consumers using some "Understanding form of list while they shop. NPD the dynamics also tracks the content of school lists behind BTS through its School List Database and shopping says that writing instruments show behaviours, up on almost every list. influencers Other writing products such as and purchase correctors and markers are also selections common items, showing up on about is critical to 60% of tracked lists. Depending on the effectively category, teachers may also highlight competing in a brand preference or specify this market," she numbers of items to be purchased. concludes.

62%

19%

Writing Instruments Back-to-school buying intentions $649 million The second annual back-to-school buying intentions study conducted by +5% Filing & File TrendSource has determined the main drivers behind BTS purchases. Storage Shoppers will use all manner of outlets to purchase, from department stores to office supplies dealers and online retailers, with 87% of those $292 million surveyed planning to visit big box stores for school supplies. Overall, +5% Presentation 91% of respondents indicated they would be shopping for school Colouring & Reference supplies, with 71% stating they would spend $100 or less on this & Art product category. Crayola, Mead and BIC were the brands most top $464 million of mind. $149 million -1% Dated Over half (55%) of respondents planned to spend $300 and above 0% Products in the computers/electronics category, with 33% seeking HP products $71 million followed by 27% wanting to purchase Apple devices. Source: NPD +2%

w w w.opi.net | OPI Magazine

Event Preview | Climb of Life

Taking the High Road

OPI joins the UK industry in raising funds to support cancer research across the globe

IT’S

nearly that time of year again when members of the UK office products industry will gather in the Lake District for the Climb of Life (COL) to battle the elements in the name of cancer research. Teams from across all distribution channels in our sector will work together to climb some of the highest peaks in cold winter conditions. It may not be fun, but it will be worthwhile. Since COL founder Graeme Chapman starting fundraising 27 years ago, over £1.1 million ($1.7 million) has been raised for a number of causes. In the last seven years, all monies have gone towards the Institute of Cancer Research (ICR), raising a total of £482,000.

Aiming high This year’s climb, again completely dedicated to the ICR, will as before be based in Grasmere in the Lake District and take place on Friday, 7 November. The conditions at this time of year are usually wet, cold and windy with a high risk of snow, so it will be a battle against the elements as well as cancer. Undeterred, the teams of walkers will aim to cover all the major peaks in the Lake District in just one day, so there will be some very tired bodies at the end of it. OPI is one of the teams – made up of Steve and Kelly Hilleard, Janet Bell, India Pride and Heike Dieckmann – scaling those Michelle Richards – who mountains. With tragically lost her battle the help of all their with cancer in August colleagues at OPI,

OPI Magazine | October 2014

they are hoping to beat last year’s donations worth £19,000. The total raised in 2013 between all the teams taking part in the Climb of Life was £80,000, another record everybody supporting this event would love to smash this year. As for all the teams involved, cancer research is an area very close to the heart of everybody at OPI, as most of us have somehow been touched by this illness. Very sadly, this year again a former OPI employee, Michelle Richards, lost her battle with cancer at the very young age of 34. So much more research, commitment and work is needed to make these sad stories a thing of the past. The ICR is one the leading laboratories in the world and works closely with other major international organisations to ensure the best results are obtained worldwide. The institute has been behind many significant breakthroughs in cancer treatment and we sincerely hope that our efforts will enable it to continue this important work. Your support is essential for this and we are asking you and your organisation to please support this initiative. Any sponsorship you can give will help the millions of people – often including friends and family – suffering from cancer today, and hopefully one day the ICR and similar research organisations will find a cure.

It will be a battle against the elements as well as cancer

Please sponsor OPI Donations can be made at www.opi.net/ COL2014

Category Analysis | Mailroom & Packaging

First past the post by David Holes

THE

mailroom of today is very different to that seen just a decade ago. Mail has evolved with new technologies helping to bridge the gap between the physical and digital worlds, while also providing more information and control for mailers, and more value and convenience for the end user. Mailing technology is compressing delivery times and allowing an

Postal services are undergoing a mini revolution and the workplace mailroom is transforming as technological enhancements and changes in the way we communicate sweep the sector “Destination tracking will let mailers know when mail will be opened,” says Davidson. “They can then coordinate this with a follow-up email or phone call at exactly the right time or staff their call centres to handle a spike associated with a direct mail piece that will hit on a certain date.” Origin-tracking technology for incoming mail also lets businesses

“Innovative solutions, such as inflatable wrapping systems, are [...] on the rise” unprecedented level of customer targeting. As Ian Davidson, President Global Mailing Solutions Europe at Pitney Bowes, explains: “Today’s mail is intelligent. The United States Post Service (USPS) is driving the use of smart barcodes of every piece of mail or package. Mailers electronically transmit key information to the USPS before it’s dropped off to qualify for the best rates. “In the UK, meanwhile, Royal Mail invested £70 million ($113 million) in automation to make mail work smarter and bring the future of mail to their customers through Mailmark, the intelligent bar code, which offers web-based reporting from an online analytics dashboard.” Embedded within these barcodes is data on who is doing the mailing and where it’s going, for example. Barcodes are scanned as the mail is processed through key tracking points and fed back to the mailer. These tools help companies extract key business intelligence from the raw data.

OPI Magazine | October 2014

know when mail is on the way back, who is sending in a response to an offer or who is making a payment. “These valuable insights will help improve business performance,” adds Davidson. “Mailers can compare targeted in-home dates to actual dates, do a better job of anticipating cash flow by tracking remittances and they can effectively handle any client delivery question, resulting in a better customer experience.”

Parcel force It’s no surprise that the huge boom in online shopping has led to a strong demand for packaging, labelling and mailroom essentials. “We’re seeing a shift towards mailroom products associated with the physical movement of goods,” reports Fiona Mills, Marketing Director at Avery UK. “There has been a strong rise in entrepreneurial activity with an increase in start-up businesses, many of which trade online through eBay or Etsy. This has created

demand for reliable, cost-effective mailroom supplies which help create a professional appearance. Avery’s Labels for Parcels & Packages are very popular for this reason – they are tough, durable and suitable for all types of parcel, yet can be customised with logos and company details using free online software and templates.” Debbie Nice, Category Head, Facilities Supplies at UK wholesaler VOW, reports a growing sector too, with much of the rise due to internet trading and an increase in parcel traffic: “Padded bags and bubble envelopes continue to be big sellers, but we are also seeing an increase in sales for waterproof packaging and polythene envelopes, probably due to the upsurge in products being sent by carrier for home delivery – the main consumer demand is for a product that offers excellent protection at the best price. Innovative solutions, such as

Mailroom & Packaging | Category Analysis

Avery’s Labels for Parcels & Packages inflatable wrapping systems, are also on the rise – they offer improved protection, but minimise the required storage space at the distributor so are increasingly popular.” Indeed, Sealed Air, which specialises in these protective packaging solutions, has experienced strong growth of 15-20% year on year in its mailroom product range since 2012. Phil Jones, its Sales and Marketing Manager for Office Products Europe, says: “The Interactive Media in Retail Group, the UK’s e-commerce industry body, says online shopping is growing by about 16% a year at the moment. While offices are cutting back on traditional postal communication, they are expanding their product postings. All the major OP players have identified mailing and shipping products as an area of growth and have diversified their product ranges to include protective postal packaging solutions.” He adds that its longstanding relationships with OP wholesalers across Europe meant Sealed Air was well

positioned to benefit from this shift towards postal solutions. “Quick and simple packaging solutions, such as our Mail Lite Mailers, are crucial for efficiencies in an office environment.” Kate Simpson, Communications Manager at Totalpost in the UK, flags up some more interesting new developments in the mailroom sector: “Increasingly, we are being asked to provide mailroom X-ray screening devices to enable staff to screen incoming mail before it

directly to the recipients, enabling the customer to get a mail run out very quickly.” Stamping and marking devices are crucial elements of the mailroom product line-up and again, specialist Austrian manufacturer COLOP is reporting strong global business here. It’s expanded production by opening new facilities in the Czech Republic and is seeing increasing demand for its antibacterial products as health and hygiene

“Increasingly, we’re being asked to provide mailroom X-ray screening devices” is opened to ensure there are no undetected threats.” She adds: “Concerns around sustainability have also led us to launched Mailmatch – a software addition to a letter printer which identifies scenarios when two different departments within a business are sending out separate letters to the same recipient, enabling letters to be merged into one envelope and saving on postage. We’ve also launched a hybrid mail service, whereby customers supply the letter and mailing database and we then print, collate and send the items out

plays an increasingly important role in all areas of the office. Franz Ratzenburger, Head of International Sales and Marketing, stresses that “COLOP products with built-in Microban protection should be used to prevent cross-contamination whenever a stamp is used by lots of people, such as in the mailroom”.

Persuasive letters Despite the shift towards parcels and packages there’s still a clear demand for traditional postal communications too, with many situations – signed contracts, legal and formal letters, for example – still requiring a hard copy of documents. Interestingly, Avery’s study in conjunction with London University also found that recipients of a letter feel more important and valued. Mills explains: “Consumers perceive a letter as something special. The average office worker receives 80 emails a day and they often go unread or are deleted. Only 15% of those who took part in our study carefully check emails, whereas 85% would read a letter far more carefully and found letters far more persuasive. Crucially, they were 40% more likely to respond positively to business propositions.” w w w.opi.net | OPI Magazine

Category Analysis | Mailroom & Packaging Pitney Bowes’ Davidson see a blurring of the line between mailing and shipping: “High-value mailings, from bills and statements to financial and medical records, can be tracked and managed just like parcels.” Direct mail is a good example of a medium that’s bridging the gap between the physical world and cyberspace. In the UK, according to the Direct Marketing Association’s report From letterbox to inbox, the top three actions consumers take after receiving a direct mail from a brand they are interested in are: 44% visit the brand’s website, 34% search online for more information about a product and 26% keep the mailing for future reference. Davidson also sees tangible marketing mail helping to drive web traffic and adding to the explosive growth of e-commerce. This in turn drives record volumes of packages around the world reinforcing the benefits of sending out more marketing material – a kind of virtuous postal circle encompassing both the real and online worlds. He adds: “Businesses can now take a truly multichannel approach combining an array of communication techniques to build customer relationships through email, mobile apps and QR codes, together with more traditional catalogues and mail shots. This makes it easier to conduct more effective marketing campaigns and reach prospects around the world.”

Mail unchained International postal services are undergoing significant change at the moment, with privatisation, increased competition or the loosening of regulatory chains forcing many to swiftly adapt. In the UK, Royal Mail moved from state ownership into privatised hands in October 2013 and is fighting its corner in a competitive market. Its first ever TV advertising campaign has tried to emphasise its claim that online shoppers trust

OPI Magazine | October 2014

Staples: post-traumatic stress One experiment designed to shake up postal services in the US hasn’t gone quite according to plan. A pilot programme to host USPS counter services staffed by Staples employees in 82 of the chain’s stores began last November, but has now been brought to an abrupt halt. The scheme, which was due to expand to 1,300 stores, allowed Staples to offer around 80% of the services provided by a post office. However, it drew heavy criticism from postal unions which claimed it amounted to back-door privatisation of a basic government function. Dan Binder Says Dan Binder, Managing Director at Jefferies & Company: “To my knowledge the 82 pilot stores were producing great results, but several unions are represented within the USPS and when you start turning Staples stores into mini post offices, naturally the unions get upset. I think ultimately they were able to enlist the teachers’ unions to side with them, and I believe Staples didn’t want them creating a lot of noise, especially just prior to the back-to-school season. It’s unfortunate because it probably would have done well with the roll-out, but Staples didn’t know how damaging it would have been to have teachers’ unions lining up against them.” Instead, Staples will now become an approved shipper for the postal service. Under this new arrangement, the stores can also offer services for other mail providers, such as UPS and Fedex. The programme is available in more than 6,000 US retail outlets and is part of the USPS retail ‘Expanded Access Program’ to provide convenient access to the most commonly requested postal products and services. Postal services are offered side-by-side with competitor products so customers can choose the best option for their needs. Royal Mail more than rival services to deliver their parcels safely. Half-year figures show parcels accounting for 51% of total group revenue, highlighting how important the mailroom/packaging industry has become. And like their private-sector rivals, national postal services around the world are working hard to enhance their service offering. Services in Canada, Italy and Sweden have implemented variable-rate structures that offer discounts for business mailers using meters. In the States, the USPS is investing billions of dollars in new systems and equipment, from hand-held scanners and mobile delivery devices to sortation equipment and a new fleet of delivery vehicles. Manufacturers that wouldn’t traditionally have been seen as players in this area are now teaming up with established providers to enter the mailroom sector. In 2013 HSM of America won a major contract

to supply shredders to leading mailing solutions firm Neopost USA. Neopost now offers a range of HSM shredders as part of its Office Security portfolio aimed at a diverse range of end users, from small businesses to large corporations and government departments. The partnership also includes HSM's ProfiPack shredder which converts unwanted cardboard boxes into packaging material. Todd Lipson, HSM’s VP of Sales & Marketing, says: “This is a unique space that we have recently entered. The opportunity to align HSM products to complement standard mailroom solutions has proven to be successful. It has allowed the end consumers to easily implement a secure document destruction process while using their mailroom solutions – something of increasing importance as security breaches and identity theft becomes more and more visible. We see continued growth with these types of partnerships that previously lay outside of our normal channels.” Technology is changing how businesses do business and shipping and mailing solutions are playing a crucial part in this transformation.

Category Analysis | Education

Getting an

g r ade

As the decline in traditional OP continues unabated, a move into the education sector may seem a good move, but is it? OPI finds out... by Michelle Sturman michelle.sturman@opi.net

UNDOUBTEDLY,

the education market, which includes the lucrative back-to-school (BTS) shopping frenzy, shines like a beacon of hope for those in the OP world. For many dealers offering traditional stationery products, the education sector nicely overlaps with existing business and the BTS season alone is worth billions. Even as the consensus points to a market that is emerging from the recession, entering the sector is not as simple as throwing stationery products through the Principal’s door, especially as most contracts are still government-based. Dedicated educational supplies reseller School Specialty knows only too well what is involved. “Awards are made on the basis of the ability to provide the entire basket of products requested, pricing and quality of service. This solution-based set of products is a key differentiator and schools are looking for one company or a small number of companies to provide the products as it makes procurement easier and cheaper,” says School Specialty Distribution President Pat Collins.

OPI Magazine | October 2014

Finding opportunities Between gaining access to government tenders and the big boxes making it difficult to compete during the BTS season, it may seem as if there isn’t much room to manoeuvre, but there are opportunities. One of the biggest of those currently in the US, according to Jim McGarry, CEO of trade association EDmarket, is the change in the buying patterns of school districts whereby cooperative agreements such as US Communities are becoming more commonplace. US dealer group Independent Stationers (IS) was awarded the US Communities Educational Supplies

finalising their autumn 2014 purchasing decisions, whereas this was just the start of our sales cycle.”

Building relationships The advantage of such a long purchasing cycle, however, is that it provides the chance to build and secure relationships within the education sector, which is a vital aspect of gaining access to the market. “What is different for this commodity is that it really is about building relationships and going back and forth maybe half a dozen

“The ability to keep up with supply and demand […] and be nimble enough to switch procurement and distribution systems […] is vital in this industry” contract late last year, signing a supply agreement with specialist wholesaler Educators’ Resource and a partnership agreement with EDmarket. However, as IS found out, the education supplies purchasing cycle is long. IS VP of National Accounts Kevin France explains: “By the time we hammered out all the T&Cs and put together our implementation and dealer training plan in Q1 2014, the majority of schools were already

times until trust and recognition is established and the answer becomes 'yes'. Office products dealers are generally not accustomed to this type of continual sales approach,” says France. Australian dealer group Office Choice also sees relationships as key to winning government contracts, as getting past the gatekeepers when prospecting for new business and convincing them to change suppliers are huge challenges.

Education | Category Analysis

This year’s EDexpo in Dallas, Texas “The Australian education sector is heavily based on relationships. Many of our dealers have become preferred suppliers to the education channel as a result of our strong ability to forge long-term relationships with our customers,” says Cameron Osbourne, National Marketing Manager of Office Choice.

Wholesale support Meanwhile, in the UK, an effort is underway to establish a specialist educational supplies wholesale offer through sales agency Nick Cash Agencies. The idea materialised as the company realised dealers were unable to compete in the education market as they couldn’t carry the massive amounts of stock required by some wholesalers. Working with education supplies partner Make Learn and Play (MLP), the pair now offers a wholesale and marketing solution for dealers. MLP Trade Sales Director of Educational Marketing and Wholesale Solutions Nick Cash says that it is critical dealers understand that finding the right person responsible for buying takes detective work and is not the same position in every school. “Resellers must also realise that they need to use their current and local contacts, promote their local service ability compared to a national company, and not use a catalogue as just a mailer,” he advises. Supplying the education markets in the US and Canada, School Specialty works in close collaboration with its customers throughout the year to understand both the existing and emerging product needs as well as their budgets. “In addition, we routinely work with customers to understand and support any needs they may have for a specific initiative or grant, which may have unique

product or logistic requirements,” notes Collins. A fundamental aspect of a close working relationship is ensuring that the BTS season runs smoothly for educational establishments. “The ability to keep up with supply and demand all year round and be nimble enough to switch procurement and distribution systems on a whim is vital in this industry,” Collins explains. One way of extending value during the BTS season is to work with schools to provide supplies lists. Australian reseller Officeworks, for example, works directly with schools to upload specific lists online which parents can then access with delivery selected for their own convenience – pick up in-store, at school or home delivery. Alternatively, parents can send a specific list online or drop it into the store and pick up the order later. “We are proud of our back-to-school list service and the variety of options we offer,” says Officeworks Managing Director Mark Ward. While resellers may find increased trade for stationery during the BTS season, typical

OP dealers often don’t carry the full assortment that is required to outfit an entire classroom or school. Capturing the education market also means competing against a wide range of retailers, including petrol stations and supermarkets. To offset competition, Officeworks has been focusing on innovation in product, categories and services. “We have a team of education specialists that provides tailored services such as multiple ordering options and preferential pricing. We also find there is a strong take-up by schools and teachers of our in-store services such as the print and copy centre, which is popular for school banners and photo books, for example,” says Ward. Innovation is key in any category, but perhaps more so in the education sector. Products such as Smart Wall Paint and Wizard Wall are making inroads into this market by understanding the changing requirements of the classroom,

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Education | Category Analysis many of them due to technological advancements. According to an Economist Intelligence Unit study, 90% of education leaders believe that technology has made them more imaginative and creative at work. Essex-based Thorpe Hall School in the UK, for example, has created a WoW (Writing is on the Wall) prototype room with all four walls painted with Smart Wall Paint, which transforms any smooth surface into a whiteboard. The room includes projectors with Apple TV and iPad mirroring, moveable modular tables, dimmable track lighting, sound systems and beanbags. The walls have become a writing resource. Wizard Wall, on the other hand, is a repositionable whiteboard made from cling film. Wizard Wall CEO Mike Fogarty says that an increased interest in these products from teachers is important for business as they not only exert influence over the billions officially spent on education products, but also purchase these items through their own personal income every year. He also points out that while students become more tech savvy and more technology products are being developed for the market, they are still visual learners.

Collins uses the term ‘21st century classroom’ and agrees that while the use of technology is accelerating in classrooms, it is also creating different opportunities. He refers to libraries becoming media or student collaboration centres, which necessitates a change in furniture. And while the use of tablets may impact on the sale of books or other paper-based products, it opens up a new market for products ranging from smaller technology accessories to interactive whiteboards. “We’ve

encoding and the ability to process information more deeply. This kind of research may eventually lead to educational facilities reducing the amount of gadgets used in the learning environment, but in the meantime, the technological march seems relentless. “Technological developments in the way lessons are taught and the way students learn have diversified what products are sold and, in many cases, reduced sales of traditional learning

“Pen and paper will not be defunct anytime soon” certainly observed changing habits, particularly at the more senior end of the education market. We have simply adapted our offer and done a lot of work on our product portfolio in networks and cabling for students studying at home, for example,” says Officeworks' Ward.

Not all about tech Traditional school supplies such as notepads, pens and presentation products are still in demand from schools and higher learning facilities. ExaClair Marketing Manager Kevin Wharton refers to a recent report, The Pen is Mightier than the Keyboard, written by psychological science researchers from Princeton and the University of California, which found that students retain less information when using laptops to take notes than by hand. The researchers argue that writing notes by hand leads to better memory

BTS survey highlights tech focus Ebates.com has released the results of its 2014 back-to-school survey. The school shopping lists reveal students will be equipped with headphones, smartphones and laptops this year. Almost two thirds of parents (67%) and the majority of teens (82%) state that tech products are must-haves. For parents, finding the right laptop is the most important tech decision for BTS shopping, with 33% saying they plan to buy one this year. Teens, however, are opting for lifestyle gadgets, with 52% of US teens wanting headphones and 43% looking for a smartphone. While technology products are high on the list, traditional stationery supplies such as notebooks, folders, pens and pencils still top the list for 87% of parents and 68% of teens.

products, but the educational sector still has many opportunities for traditional OP dealers. Pen and paper will not be defunct anytime soon,” says Wharton. This has led vendors such as Zebra Pen to look closely at the education sector to try and find ways to deal with the threat of technology against its core product offering. “The educational market is a new focus for us. As a writing instrument manufacturer, the alignment to current and future users must begin within schools. As such, we are working to identify how our products fit into their world as a necessary tool and how they can complement the technology being used today,” says Ken Newman, Director of Marketing at Zebra Pen. EDmarket’s McGarry adds that while the digitisation of content has significantly impacted how schools purchase and use tools in lessons, a backlash has begun and there are now requests to partner physical products with digital content. “This is opening up new opportunities for the dealer community to participate in the digital revolution,” he says. Beyond the standard educational product lines are options to become one-stop shops through supplying jan/san, breakroom and other category products. “A change in procurement is leading to buyers looking for everything from one supplier. This creates opportunities for dealers that adapt through stocking a wider range products, such as tea, coffee and kitchen roll for the staffroom, for example,” concludes Wharton. w w w.opi.net | OPI Magazine

Your OPI

On the move

OP personnel changes from around the globe We would love to hear from you. Email editorial@opi.net, Tweet us @OPInews or you can write to us at OPI, Diamond House, 36-38 Hatton Garden, London, EC1N 8EB, UK

North America

Jeff Smith – head of activist shareholder Starboard – has resigned from Office Depot’s board of directors. Smith joined the board in August 2013 and will remain an Office Depot shareholder for the foreseeable future. Mark Sutton has been promoted to CEO of International Paper (IP), effective 1 November. Sutton, who is IP’s Mark Sutton current COO, will take over from retiring CEO John Faraci. Faraci has been CEO since 2003 and led the transformation of IP that began in 2005 when the company started selling off various businesses to focus on packaging and paper. Faraci will remain Chairman until 31 December and serve as a special advisor until 28 February 2015. Jan/san association ISSA has announced new members of its 2015 board of directors. Led by incoming ISSA President Alan Tomblin of Procter & Gamble Professional, the following are new to the board: VP/President Elect: David Sikes, Sikes Paper; Executive Officer: Ken Bodie, Kelsan; Manufacturer Director: Mark Jackmore, Rubbermaid Commercial Products; Distributor Director West: Nick Spallone, Tahoe Supply and BSC Director: Taylor Bruce, IH Services. Audio equipment vendor AmpliVox has hired Tom Werner as its new Director of Operations. Werner takes over the day-to-day duties from VP of Operations Jim Bungard who recently retired. He will

OPI Magazine | October 2014

assume responsibility for forecasting, production planning and purchasing for the company, while Bungard will take a part-time Senior Advisor role within the company, at least until the end of the year.

Europe

UK office supplies service provider nectere has announced Sharon Renshaw as its new Business Sharon Development Renshaw Manager. Renshaw, who spent ten years as Business Development Manager at dealer group Office Friendly, succeeds industry veteran Edward Cheshire, who recently retired after 30 years in the OP industry. With almost 20 years’ experience in OP, Renshaw arrives at nectere from Office Club, after a brief spell at VOW. UK dealer group Office Club has appointed Mark Allan as its B2B Business Development Mark Allan Manager to further develop its online activity. With a wealth of knowledge on internet trends and online trading, Allan will be able to pass on his experience to Office Club members to expand their B2B activity. Christophe Capony has been hired as the new CEO for France-based BPO provider LMS Group. Capony moves to LMS Group after spending Christophe 11 years at Katun, Capony

North America United Stationers has named Paul Barrett as COO Industrial. Barrett was most recently President of National and Strategic Accounts as well as of the company’s Lagasse jan/san business. The appointment came after the resignation of United’s Industrial President Larry Davis, who left at the beginning of September. the last two as General Manager for Northern Europe. Reporting directly to Katun’s CEO, Capony managed several European subsidiaries for the company, including Austria, France, Germany, the UK and Scandinavia. UK dealer group Nemo has expanded its team with the addition of Online Marketing Executive Kayleigh Kayleigh Clarke and John Clarke Luxton as Senior Business Development Manager. Clarke has been brought on board to push Nemo’s online marketing services such as email marketing, John Luxton lead generation, e-commerce and video-on-demand. Luxton gained his OP industry credentials working with companies including Lyreco and VOW. European paper group Stora Enso has made changes to its leadership after dividing its Printing and Living division into two separate entities. Kati ter Horst, currently Head of Kati ter Horst Sales for Printing and Reading, has been appointed EVP, Head of the Printing and Reading division. Jari Suominen Jari Suominen will continue

Paul Barrett to lead the Building and Living business, but now as EVP of the separate division. Both Horst and Suominen will join the company’s Group Leadership Team. UK paper and board manufacturer Tullis Russell has named Niall MacDonald as Managing Director. MacDonald joins the company from Oki, where he spent the past 13 years as Managing Director of Oki UK. In his new role, he will take charge of Tullis Russell’s Markinch mill in Niall MacDonald Scotland. United Stationers’ VP of Technology Solutions and President of its MBS Dev software unit Paul Hesser has left the wholesaler. Hesser joined United in August 2011 as COO of MBS Dev and assumed the role of President after Dave Bent left last year.

Rest of the World

Martin Hartcher has been appointed as Chairman of Australian newsagent wholesaler GNS. Martin Hartcher Hartcher will take over from interim Chairman Allan Wilbers, working with the current board of directors in supporting CEO Alex Stewart and the management team to achieve the company’s future business and strategic plans.

Your OPI

5 minutes with... Ernst Faber, CEO, COLOP

“I enjoy being outdoors and pushing myself to the limit”

Describe what you do in one sentence. My job is to define goals and strategies for the company and to take care that they are met in order to secure its future and further growth. Your first full-time job. I started work as a project manager for Fronius, a company producing welding equipment based in Upper Austria. Your favourite office product. Stamps of course – especially self-inking stamps from COLOP. If you weren’t doing your present job, what job would you like to be doing? I would like to be a mountain guide, because I enjoy being outdoors and pushing myself to the limit. The industry figure you most admire. Karl Skopek – my cousin and the founder of COLOP. From the beginning of our cooperation we’ve worked very closely together and built up the company from nothing. I’ve learnt a lot from him.

What do you think will be the biggest single factor/ issue affecting the OP industry over the next five years? The new user generation – the digital natives – who grew up with mobile phones, notebooks, tablets and so on will have a different usage of office materials and another way of communication. The OP industry will have to face this change in customer behaviour. What sports team do you support? And why? COLOP and myself support the judo club in Wels which I represent as President. Your favourite holiday destination. There is not just one. My wife and I love to travel, especially in Asia, visiting places such as Bali, Cambodia and Vietnam. If you had to sing at a karaoke next weekend, which song would you choose and why? New York, New York by Frank Sinatra – I just love that song.

Your greatest strength. To stay calm and serene in hectic or difficult situations. The most memorable travel experience you’ve had while in the OP industry. On the day of 9/11 I sat in a plane in South Africa – ready to take off. Suddenly, the doors were closed and no one was allowed to get out. The crew told us that we couldn’t start because something had happened. We did not receive any further information so everybody became very nervous. That was a really strange experience. Your favourite event on the OP circuit and why. Without question – the OPI events! Every year I’m there to get important information about trends and to exchange views and opinions. The biggest change that has taken place in the industry since your career began. The internet has changed the speed of information and communication. It also has a big influence as a fast-growing marketplace.

Have you ever done anything dangerous or daring? One time I went skiing on the Großglockner, the highest mountain in Austria. You have to be well trained because of potential avalanches. www.opi.net | OPI Magazine

Please sponsor us 7 November 2014

The Climb of Life This year OPI is again raising money for the Institute of Cancer Research (ICR) by climbing some of the UK’s highest peaks in freezing winter conditions. Organised by former Office Friendly Director Graeme Chapman for the 27th year (and the 8th year for this excellent international cause), the money we raise will help the ICR’s world-leading scientists work tirelessly to make progress in the ongoing fight against cancer. The ICR is one of the world’s most influential cancer research institutes, with more than 800 scientists in Europe and the US. It leads the way in isolating cancer-related genes and discovering new targeted cancer drugs, and has taken more drugs into clinical trials in the last decade than any other organisation in the world.

Tragically, one in three of us will develop cancer in our lifetime.

Please sponsor us www.opi.net/COL2014 For US donations visit: www.firstgiving.com/fundraiser/OPIClimbofLife/2014 For all other donations visit: www.justgiving.com/ClimbofLife2014 Or contact: india.pride@opi.net, +44 (0)20 7841 2959

Your OPI

Calendar Key dates in your industry If we are missing an event, please let us know. Contact editorial@opi.net Do you have an event that you would like to promote in the OPI Calendar? Please contact Chris Turness for further information about having an extended entry and pricing. Email: chris.turness@opi.net Web: www.opi.net/calendar

OCT 06-08 Pinnacle Annual Meeting and Vendor Forum 2014 Rosemont (IL), USA OCT 07 Advantia 2014 Conference Kenilworth, UK OCT 08 Howard Wolf Golf Classic Wheaton (IL), USA OCT 09 Spirit of Life Gala Chicago (IL), USA OCT 10-11 OFDA Main Conference 2014 Sutton Coldfield, UK OCT 10-12 Office Brands EXPO Sheraton & Westin Denarau Island, Fiji OCT 20-22 Transform Europe 2014 Prague, Czech Republic OCT 21-25 ORGATEC 2014 Cologne, Germany

OCT 22 BOSS Awards Birmingham, UK OCT 22-25 BSA & IOPFDA Annual Meetings San Diego (CA), USA OCT 29-31 EDspaces Tampa (FL), USA NOV 04-07 ISSA/Interclean Orlando (FL), USA NOV 10-12 ECi Connect Conference Las Vegas (NV), USA NOV 10-12 Marketplace 2014 Miami (FL), USA NOV 11-15 Office Partnersâ&#x20AC;&#x2122; Grand Ole Gathering 2014 Nashville (TN), USA NOV 20 Integra Conference Nottingham, UK NOV 26-28 Big Buyer 2014 Bologna, Italy DEC 03-05 ADVEO World Munich, Germany

2015 JAN 12-15 Hong Kong International Stationery Fair Hong Kong, China

JAN 21-24 Bett 2015 London, UK JAN 25-26 Paper Show 2015 Leuven, Belgium JAN 31-FEB 03 Paperworld 2015 Frankfurt, Germany FEB 16-19 United Stationers & Lagasse: CORE Live Nashville (TN), USA FEB 22-24 EDexpo Atlanta (GA), USA FEB 25-27 ISSA/Interclean Latin America Mexico City, Mexico

MAR 03-05 OPI Partnership 2015 Hotel Okura, Amsterdam, the Netherlands

Contact: Steve Hilleard Email: steve.hilleard@ opi.net Web: www.opi. net/partnership2015 Assisting European vendor and reseller companies in building long-term strategic relationships.

MAR 02-04 Paperworld Middle East 2015 Dubai, UAE MAR 08-13 AOPD & DPCG 2015 Annual Meeting Huntington Beach (CA), USA MAR 16-20 CeBIT 2015 Hanover, Germany MAR 19-21 Education Show 2015 Birmingham, UK APR 22-24 ISSA/Interclean Central & Eastern Europe Warsaw, Poland

APR 28-29 London Stationery Show 2015

Business Design Centre, London, UK

Contact: Chris LeonardMorgan Email: clm@ firstevents.com Tel: +44 20 8462 0721; Web: www. stationeryshow.co.uk The only UK exhibition dedicated to stationery products, writing instruments and accessories for the home, school and office. Organiser of National Stationery Week.

MAR 04 European Office Products Awards 2015

MAY 17-19 OPI Global Forum 2015

Nominations and entries are now being accepted. Visit www.opi.net/ EOPA2015 for further information.

Web: www.opi.net/GF2015 An invitation-only forum for CEOs and senior executives from the business supplies and associated sectors.

Hotel Okura, Amsterdam, the Netherlands

Sofitel Chicago Water Tower, Chicago (IL), USA

w w w.opi.net | OPI Magazine

Your OPI

Final word Your industry, your opinions Rick Marlette, Co-owner, OPSoftware

Beyond broken YOU’VE

likely heard about Staples’ New York State contract last year when it bid one penny on around 200 of the top office supply items used by the state. Some think this is a great deal for the state while others are laughing at Staples having to deliver on these ridiculous promises, but I see a procurement system that is broken beyond any hope of correction. There are products and services that can benefit from centralised purchasing agencies. High-cost and complex items, intricate configurations or difficult installations are a few such examples, but run-of-the-mill office supplies are none of these and don’t require special purchasing skills. What has happened in many organisations is that centralised purchasing departments have hijacked these everyday items to bolster their own existence. The more dollars that are under their control, the more power these agencies have. This is a typical pattern that causes bureaucracy to spiral out of control. But it is not just bureaucracy that is the problem; it’s the cost that gets added to the process. Many state OP contracts include an ‘administrative fee’ of up to 5% to cover the added cost these agencies generate. This fee is paid by the vendor. When you ask the purchasing agency about these fees, it claims that none of the fees are passed along to the state, and that it’s all free money from the vendor.

The minute a loss-leader contract is signed, a team of skilled individuals commences work on the task of making sure you can’t take advantage of these low-priced items without also paying for them many times over by buying the high-priced items. If you start to win the game, then actions will be taken. Actions like those outlined here. So what happens when users cannot get the contracted items? They purchase off contract and pay dearly for them. The contractor knows that once they get a user off contract, they stay off contract and the high cost of the low price quickly starts to add up. In order to honestly evaluate these loss-leader contracts, you have to take into consideration every item that was purchased off contract that could have been purchased on contract: what price was paid for the off-contract item versus the price of the on-contract item, and add in those additional costs. Then you need to check websites that have to compete for business every day. A good place to start is with the loss-leader vendor’s own consumer website. You may find half of the items purchased under contract are being sold to the general public for 15% less than the contracted price. Every time I have done this method of evaluating a loss-leader contract, it consistently works out that the organisation would be better off paying the full price for everything rather than getting some items cheap and overpaying on everything else. The OP industry, like many others, has changed drastically with the internet, but this archaic bidding on a core list of items remains stubbornly entrenched in many organisations. Who does this process really serve? It’s time to take a long, hard look at this system of purchasing common supplies. The process has become so corrupted and rife with abuse to deem it beyond broken.

“Handing out million-dollar prebate cheques buys you a lot of ‘looking the other way’”

Playing by the rules? The process used to work until the national chains showed up. If you were a local business and you wanted to do business with your state, you had to play by the rules. The state wielded tremendous power over your business, with or without a state contract, and to intentionally do the state wrong meant certain doom for your business. The reverse is true when it comes to the chains. Handing out million-dollar prebate cheques buys you a lot of ‘looking the other way’. And if that doesn’t work, there are always the lawyers and the threat of a lawsuit. I only need to think back to the issues in Georgia a few years back – and now we’re down to just two national chains, that leaves the door wide open for things like we’re seeing in New York. With the New York contract, Staples revealed how all the loss-leader contracts work. A few items are priced cheap – absurdly so in the case of New York – with the intention of making it up elsewhere.

OPI Magazine | October 2014

Want the final word? Email editorial@opi.net or write to OPI, Diamond House, 36-38 Hatton Garden, London, EC1N 8EB, UK

IN THE NEXT ISSUE • Big Interview with OTTO Ofﬁce’s Uwe Orgas • Hot Topic: the future of manufacturing rep groups • All the action from EPIC

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