OPI October 2015 US by OPI

The word in office.

magazine

Big Interview

Steve Harrop, Managing Director, Office Friendly p18

October 2015

Top

100 Staples/Depot goes Is the office supplies industry dead? p54 p24 down to the wire p12 What next for BPGI?

Contents October 2015

www.opi.net

News

Preview

6 Round-up

42 OPI European Forum

Industry veterans buy OPMA; IS and Essendant renew RDC deal; Christiansen back in OP

12 News Analysis

Senior executives from across Europe are once again getting together for OPI’s European Forum 2015 to discuss the core issues of today

Features

Category Analysis

Decision time for BPGI at November’s AGM in Portugal

44 Mailing & Packaging

18 Getting friendly

Contrary to predictions, the rise of electronic communications hasn’t hailed the end of traditional mail, with the sector as a whole doing very well indeed

Office Friendly’s Steve Harrop explains how and why his dealer group is changing into a marketing organisation

24 The final countdown

Is the FTC looking for a divestment solution in order to approve the Staples acquisition of Office Depot? OPI investigates…

28 Making waves

Being a true one-stop shop with a local focus is what Sweden’s Kontorsspecial is all about

Reports from the stamping sector are encouraging, but global sales remain patchy

Regulars 5 Editor’s comment 52 5 minutes with... Vicki Giefer

31 Top 100

Who’s made the final cut in our Top 100 list in 2015? Find out about some of this year’s prominent personalities in our expanded profiles

49 Stamping

54 Final word

Ralph Barnett

There has also been some speculation that, in an effort to push through approval for the Depot/’Max merger, the FTC painted a more dramatic picture of the contract business than it possibly should have, glossing over some of the competition issues in the Fortune 100/500 customer group... For the full story, turn to page 24

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

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

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

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

Production and Finance Designer 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 Jairo Paya +44 (0)20 7841 2956 jairo.paya@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.

Merger mania As you read this we could be just a couple of weeks away from the biggest merger in our industry’s history, with the US Federal Trade Commission (FTC) scheduled to announce its decision on the Staples acquisition of Office Depot in mid-October. With all eyes turned on the FTC and speculation mounting as to whether it will approve the deal or not, we take another look at this The ramifications of game-changing transaction this deal for all industry in this month’s Hot Topic stakeholders are huge (page 24). The ramifications of this deal for all industry stakeholders are huge – whether it goes through or not – and these will be looked at in depth at the OPI European Forum taking place in London in early December. That makes it even more imperative to attend this senior level educational and networking event – for more details, turn to page 42. Staples/Depot will also be on the agenda at the EPIC show in Las Vegas this month – look out for news and stories from EPIC on opi.net and in next month’s magazine. An article on opi.net last month in relation to a new book by former Boise Cascade and Corporate Express executive Ralph Barnett has caused a bit of a stir, with the industry veteran saying the office supply industry is “dead” and suggesting that Amazon or Walmart should buy Essendant. Do you agree with Barnett’s views, and with his assessment of the office supply industry on page 54? If you have any strong feelings on this and would like to react, I’d love to hear from you. Andy Braithwaite Editor

Office Products International Ltd (OPI), 2nd Floor, 112 Clerkenwell Road, London, EC1M 5SA, UK Tel: +44 (0)20 7841 2950

@opinews

opi.net/ app w w w.opi.net | OPI Magazine

Staples launches 3D News from opi.net printing platform Large Resellers

Industry veterans acquire OPMA CORE – a newly-created company owned by industry veterans Bob O’Gara, Luke Chapman and Mike Metchikoff – has acquired marketing agency Office Products Marketing and Advertising (OPMA). Over the past 26 years, OPMA has served various stakeholders in the office products industry and will remain headquartered in Grand Rapids, Michigan. Current OPMA President Mike Metchikoff will continue to lead the business. Talking to OPI, Metchikoff said: “We all have the same vision – the industry needs a strong and independent marketing resource in order to help all stakeholders.” He added: “OPMA will remain independent, but we will all look to leverage our relationships in order to continue to develop the business and its ability to offer our services and capabilities to the industry.”

Mergers & Acquisitions

Staples has launched an online 3D printing platform that enables small businesses to upload their own 3D designs. The new platform allows users to submit their own 3D files or select from a curated assortment of models. Designs can be customised by choosing from a wide array of materials as well as adding text, figures and images. Staples said the platform also features a responsive, interactive 3D viewer so users can preview their creation before it’s printed.

People

Christiansen back in OP industry The Business Performance Group (BPG) UK has announced Gordon Christiansen as a non-executive director. BPG said Christiansen will support sales, marketing and business development initiatives. He has an extensive background in both the dealer and manufacturer communities – most recently as CEO of leading London dealer RED BOX – and has spent much of his career immersed in business services and Gordon Christiansen technologies, specialising in online platforms. Commenting on his new role, Christiansen said: “My strengths lie in creating and driving strategy and building motivated and engaged teams. We’re going to have a great Q4, and a really strong start to 2016, with some exciting announcements for both the UK and US office products markets.”

New e-commerce platform for resellers UK e-commerce and digital marketing provider eTailThis has launched a new e-commerce platform for office supplies and IT resellers. The company said the platform is fully customisable and enables resellers to choose their own mix of suppliers and product range from the main wholesalers and distributors in the UK and Ireland, including Spicers, VOW, Exertis and Westcoast, through EDI and Open Range rich product content integration. The system also allows third-party integration with back-office and accountancy systems, and supports multichannel selling on Amazon, eBay and Google Shopping. Reporting and analytics are provided as standard, including full integration with Google Analytics, AdWords and Tag Manager.

Technology Solutions 6

OPI Magazine | October 2015

News ■ Round-up

Essendant and Independent Stationers renew RDC agreement

Wholesaler Essendant and dealer group Independent Stationers (IS) have renewed their agreement for IS’s RDC (Regional Distribution Center) programme. IS introduced the RDC programme in 2004 – to much controversy at the time – but it went through a number of changes and Essendant (formerly United Stationers) has been the exclusive distribution partner since 2009 when it took over from SYNNEX. The aim of the RDC programme is to add value to IS members by providing direct or near-direct pricing while allowing dealers to combine their needs into one order assortment across all programme products and brands. Benefits include lower item minimums than dealers can get if buying each item direct from manufacturers.

Dealer Groups

Wulff names new CEO Topi Ruuska has been named as the new CEO of Scandinavian reseller Wulff Group. In addition to CEO, Ruuska will take up the position of Managing Director of the group’s largest subsidiary Wulff. He replaces current CEO Heikki Vienola who will become Chairman of the board. Ruuska is no stranger to the company – he was Managing Director of its events division between 2011-2014.

Topi Ruuska

People

Coming soon

Don’t forget to look out for this year’s

Green Thinking

supplement

OPI Magazine | October 2015

Traditional OP

DOC issues tariffs against non-US paper imports In its preliminary findings, the US Department of Commerce (DOC) has determined margins against some paper imports from China, Brazil, Portugal, Australia and Indonesia. Tariffs will be imposed on the imports of certain uncoated paper to offset any unfair advantage caused by the alleged ‘dumping’ practices by a number of foreign companies cited in a trade case filed by the United Steelworkers union and four US paper manufacturers. If the final findings – due early 2016 – work in favour of the US paper companies, the tariffs imposed will be as follows: 40.65% for Australia; 33.09%-42.42% for Brazil; 97.48%-193.30% for China; up to 51.75% for Indonesia; and 29.53% for Portugal. Following the announcement, importers of the uncoated paper covered in the petition from the companies concerned will be required to post a bond or deposit cash in an amount equal to the announced margins pending final resolution of the case. The DOC and the US Trade Commission has already issued its preliminary findings in the countervailing duty investigation – part of the same trade case – which found that Chinese and Indonesian paper exporters received countervailable subsidies of up to 131%. Again, cash deposits will be required until the final determination is due around November.

News ■ Analysis

Decision time for BPGI The future of the organisation is likely to be decided at November’s AGM

BPGI’S

annual general meeting in Lisbon, Portugal, at the beginning of November is set to be a key moment in the purchasing organisation’s history. Founded in 1996 as a way for independent dealers – through their dealer groups – to achieve a degree of purchasing-power parity with their big-box rivals, in its heyday the group had about 20 dealer group members around the globe with annual end-user sales of some $12 billion.

decision of the three ANZ groups, but confirmed that it was not something that had come out of the blue since discussions on their continued membership had been ongoing for some time. In fact, the three groups have been operating more independently together within BPGI since Charles Volkman left the purchasing organisation last year as part of a restructuring process. They also have their own separate

“It is our view that any buying group is more than just the buying function” Fast forward to 2015 and – while it’s probably inaccurate and unfair to say the organisation is in disarray – there are important issues that need to be resolved following several years of dwindling membership. The ‘big three’ in North America – Independent Stationers (IS), Novexco and TriMega – have all departed in the past few years, and in August it was announced that the three members in Australia and New Zealand (ANZ) – Office Brands, Office Choice and Office Products Depot (OPD) – had decided to end their BPGI purchasing arrangement.

Europe focus Following the exit of South African dealer group Office National Africa last year, that now leaves Europe as the sole focus for BPGI’s purchasing contracts, and even here there is no member from the continent’s largest office products market, Germany. BPGI CEO Barrie Hayes told OPI that he was “obviously disappointed” by the

OPI Magazine | October 2015

collective bargaining agreement that is authorised by the Australian competition authorities – an agreement that was renewed in 2014 for a further six-year period. Hayes admitted that there was a “certain inevitability” about their decision to leave the purchasing side of BPGI – especially as there has been a growing trend amongst vendors to organise purchasing contracts on a regional as opposed to global basis – but was upbeat about the decision of Office Brands to remain as an affiliate member and the possibility that OPD will do the same. As Office Brands CEO Gavin Ward told OPI: “It is our view that any buying group is more than just the buying function. We have focused on the positive aspects outside of buying and feel there is certainly value in staying with BPGI.” One of these value-added aspects is the potential to pool

Barrie Hayes

resources. Office Brands has been investing in a number of technology-related projects over the past few years and Ward said he is looking forward to presenting these to the BPGI members when they get together in Lisbon, with the possibility of sharing development costs going forward.

Strategic review These types of initiatives are certainly what BPGI needs, but there are bound to be a few other items higher up on the agenda at the AGM. Hayes and the board have been carrying out a strategic review and the results of this will be presented to the membership. It is likely this will cover areas such as the organisational and cost structures of the group, non-purchasing-related initiatives and the overall future direction of the group. Another area that BPGI has been looking at for years is the development of a private label range. This is also still on the agenda, but Hayes admitted that it has been a challenge getting consensus agreement for something that would provide sufficient scale. Ironically, as BPGI tries to come to grips with its issues, ex-Spicers CEO Alan Ball is looking at creating a large reseller/dealer group purchasing organisation with his Global Office Contracts initiative – something which is being supported by former BPGI member, IS – with a meeting scheduled in Miami just days before BPGI’s AGM. Two things to look out for, therefore: what path BPGI members decide to follow and whether another independent dealer purchasing organisation gets off the ground.

News ■ And finally...

Comment With a decision on Staples’ acquisition of Office Depot expected soon, OPI asked members of the industry whether they think it’s likely to go ahead, and why/why not? Below is a small sample of the anonymous responses. (To read a wider breadth of answers, go to the OP Business Confidence Survey Q3 2015 report on opi.net) “Ultimately yes, but spin-offs of certain activities and/or regions – notably in Canada – will occur.” North American dealer group “I believe it will and I think that is good for the independents. I think that Amazon and Walmart are significant competition – the dynamics of the industry have changed.” North American technology solutions company “No. Staples will have a huge share of large company purchases that Walmart and Amazon are unlikely to ever get – no sales people. All of this can’t be given to just one entity.” North American manufacturers rep group “Yes, although they might need to handle some European markets separately through sell-offs or something similar.” European reseller “Yes. The combined entity in Australia represents only around 11.5%, which is less than Officeworks on its own.” Australasian dealer group

4.5%

Growth of the office coffee market in both 2015 and 2016

126.1 million

Number of wearable devices expected to be shipped in 2019

75%

Percentage of shoppers using mobile devices in-store

$5.2 billion Projected worth of the US LED lighting market in 2015

TWEET CHAT follow us on Twitter @OPInews, @andy_opi, @JackFrancis

@BRittty When you get so excited because your boss said you can buy a binder machine #officelife @DanYellowJello Who knew a new chair would change my life #OfficeLife #HappyButt @TheMelba Went to the breakroom to get my lunch. Then watched as someone else ate it. Huh... #officelife #GuessImEatingOut @HeatonsOffice I think someone in the office is getting ready for the new Star Wars Film :)

SNAP SHOT In honour of the upcoming new release of Star Wars: Episode VII - The Force Awakens, Viking (part of Office Depot in the UK) decided to cover its office walls with characters from the film series. It took a team of four people about five hours to complete, using a total of 3,597 Post-it notes. The final rendition features Darth Vader, a stormtrooper, R2-D2 and Yoda.

“My feeling is that Staples made a bid on Office Depot but does not want to buy it! This deal was a great idea to generate a huge business disruption for Office Depot and weaken it. If the merger does not happen, I don’t think it will be a problem for Staples which, at the end of the day, will take a lot of market share from a more fragile and completely disorganised Office Depot.” European vendor “Yes. I think that the case comes down to how the government defines the market – local or national. I think there is enough evidence that between local and regional supply, other businesses that have jumped into office products distribution, as well as Amazon and other e-tailers, it will be judged to be a local market. Additionally, I do not think the customer base will view this as a threat, and therefore will not push the government to scuttle the deal.” North American vendor “No clue. I can argue both directions. I thought it was interesting that Amazon advocated for the merger – wonder if it wouldn’t be a potential buyer for the OfficeMax contract business if Staples was forced to divest it.” North American wholesaler “Reports from Capitol Hill indicate that Staples/Depot has an army of lobbyists working the political side. The FTC will likely need a pretty bulletproof argument to turn this down. After three meetings with FTC folks, and two data submissions, I get the sense they are trying to find a way to deny the merger. I hope the FTC does indeed rule against the merger. There are arguments centred around the impact on enterprise accounts and others that revolve around the effect on the supply chain which, in turn, will show up in the degradation of programmes made available to independent dealers.” North American reseller

OPI Magazine | October 2015

opi.net poll results Do you think the FTC will allow the Staples/Office Depot deal to go ahead?

Yes, as it stands

20%

Yes, but with conditions 52%

No 28%

Don’t forget to take part in the discussions on the OPI LinkedIn page

Big Interview | Steve Harrop

Getting friendly UK dealer group Office Friendly is in the process of transforming itself into a wider marketing and services organisation, Managing Director Steve Harrop explains to OPI

THE

need to evolve in this fast-changing industry is a theme that seems to constantly crop up in these pages and is something that applies to dealer groups as much as anyone else. One group that has recognised this is the UK’s Office Friendly, run for the past 12 years by the ever-enthusiastic Steve Harrop. Not afraid to try something different or new, Harrop has made significant changes to the Office Friendly business model in recent times as he looks to derive more revenue from marketing services, and not just within the office products space. OPI Editor Andy Braithwaite met up with Harrop to find out more. OPI: Let’s start with how you ended up as Managing Director of Office Friendly. Steve Harrop: It was quite straightforward in a way. When I finished university, I wanted a job in marketing and managed to get a place on the Reed International graduate programme. At that time, Reed’s portfolio included Spicers and after about six months they sent me there as a graduate trainee in marketing, so I had the chance to work with great characters such as Eric Smith and the late Alan McDowell. Pretty soon I moved into sales because there were people in Spicers who probably saw more potential in sales for me, and that went really well. Eventually, after about eight and a half years at Spicers, I got to the point where I wanted to move up the tree, but there was a group of about half a dozen of us who felt blocked from getting to the next level, partly due to the financial situation and partly due to the hierarchical, top-down management structure they had. I was determined to prove myself and so I joined Kingfield. There I had the chance to work for an amazing guy called Alan Hickman, who I considered a mentor; he probably didn’t think he was mentoring me, but I looked up to him and still do. And we went on a rollercoaster at Kingfield, going from £2 million when I joined in 1989 to almost £100 million when we merged with John Heath in 1999. To cut a long story short, about four years after that I wasn’t happy in what I was doing at Kingfield Heath anymore; Alan had left, I felt the company was changing, and I decided that I wanted to leave too. And that’s when the Office Friendly opportunity came up – they were looking for a new managing director and offered me the job.

OPI Magazine | October 2015

Office Friendly | Big Interview OPI: How big was Office Friendly then? SH: We had about 85 members that were doing between £35-£40 million in end-user sales, so not particularly large dealers, except for Commercial. Remember, we were still tied to Kingfield Heath when I took over. There was probably one other supplier – Antalis – but it was all pretty much managed through Kingfield, all the marketing, etc, and the whole focus was just to deliver stuff to Kingfield. OPI: So that changed? SH: We changed the model to become an independent cooperative, but still with the close relationship with Kingfield Heath, which later became VOW of course, and the same corporate identity. On the back of that we then set off and developed a proper business plan with the goal of growing the membership and building relationships with suppliers. One of the first companies I spoke to was Antalis because they were worried that, with my Kingfield background, we’d just switch the business over. I made a – no pun intended – vow to them and said: ‘Look, we’ll support suppliers that support us and we’ll give you 100% backing and grow this business with you.’ And today we are one of Antalis’ biggest customers, so we stood true to that. OPI: Tell us about Office Friendly as it stands today. SH: It’s a totally different

organisation. We have almost 160 members with end-user sales of about £465 million ($718 million) and have something like 120 supplier arrangements in place. Our turnover with VOW has grown five-fold, so we have delivered to them too, and I believe we are the largest customer of Q-Connect products. OPI: But still a member-owned co-op? SH: Absolutely. Everybody has a single share – one share per company – and our retention rate has been exceptionally good: over 97% in the 12 years I have been here. When you have a cooperative, the reality is that not everybody gets involved. We’re lucky that we have a good degree of involvement from a lot of people in the projects we do or the events we hold. A lot of that is down to the boards we have had over the years, including the member-chairman, which is something we have had for the past five years or so. The chairmen I’ve worked with – Elliot Jacobs and now Gordon Profit – have been superb because they dive into stuff, they’re there for me and they’ve been supportive. So it’s not been a conflict of interest; yes, they see things from a dealer’s perspective at all times and sometimes you want them to see the wider, bigger picture, but they get it. OPI: I understand you’ve made some changes in the past couple of years. SH: That’s right. One of the things I feel strongly about in management is to allow individuals to be the individuals they are. You’ve got to work in terms of the rules and the constraints of the organisation, but that doesn’t mean to say that you can’t be flexible. I think one of the problems we had was a lack of demarcation in people’s roles, so sometimes we weren’t achieving our objectives. We had an opportunity about 18 months ago to clearly divide responsibilities into three areas: supplies and finance under Julie Hawley; sales run by Keeley Shepherd; and marketing handled by Katie Metcalfe. The whole brief that we have as a business is be quick to do things, be innovative in what we do, take a risk – albeit a measured risk in most cases – but have a go and let’s see what happens. If you try something and it doesn’t work, fine; you learn from that and do something slightly differently next time. That’s the real ethic that runs through our business. The only time I will take issue is when someone does something that upsets the customer. OPI: How many staff do you have now? SH: We’re up to about 20 in all now. It was an OPI conference about three years ago which w w w.opi.net | OPI Magazine

Big Interview | Steve Harrop really opened my eyes to the need to invest in millennials, and in the past 18 months we’ve recruited 12 people all under 25 with degrees in marketing. The whole idea about this is to use their energy and their enthusiasm, but we haven’t done it willy-nilly; we’ve gone about it in a structured way working with Sheffield Hallam University to recruit talent. OPI: How are you funding all this? SH: By putting projects in place and developing marketing tools that have become effective sources of income. If you look at where we were two years ago, most of our revenues were coming through supplies, catalogues and contributions from the members. That’s changed now, so probably a third of what we do is coming from the marketing tools we have created. OPI: By charging for these services? SH: Yes, and externally as well to non-members and companies outside the office products industry. The whole idea is, if you’ve got some expertise, why narrow your audience by just dealing with a handful of people? So what we can do is generate revenue which can then be put back in the business to the benefit of our members. OPI: What are these services you’re offering outside your membership? SH: All of the tools. If you take marketing, it’s a thoroughly professional service; so we carry out an audit, analyse what clients are currently using, and present them with a solution with costs and the return on investment. We produce full reports on a quarterly basis, and work with clients to actually see what’s working and what isn’t. OPI: So, a greater focus on marketing? SH: About three years ago we realised we needed to change massively – and I think we were ahead of the curve there – and change our focus to essentially be a marketing organisation and be driven by sales and marketing for our members. OPI: How important is the purchasing side, which was why dealer groups were set up in the first place? SH: It’s still a key factor and we will continue to focus on that through the relationships with our suppliers. We have some good, keen pricing that our members get and we’re always looking to improve that, so it’s not off the agenda in any way, shape or form. In fact, one of the commitments we made about three

OPI Magazine | October 2015

“If you’ve got some expertise, why narrow your audience by just dealing with a handful of people?”

years ago was to bring in someone full-time on purchasing and that’s why we recruited Simon Webb. OPI: Let’s look at your relationship with VOW. You’re actually located in the same building, aren’t you? SH: Yes, and that’s one of our USPs. Physically we were born out of VOW and I think mentally we’re attuned to what VOW are doing, but we are most definitely an independent business. We work interdependently with VOW, so we need them and they need our volumes. They also need some of the things that we give back in terms of support and help. Over the years we’ve been pretty good when things have been tough for VOW or Kingfield Heath from a financial or service basis. I remember at one point several years ago going to our members and asking them to make their payments to VOW and we generated about £4 million in revenue for them in two weeks. One of our concerns now is that the owners of EVO or VOW have changed since then, so they won’t be able to look back with any experience or knowledge on what we’ve done. But from our perspective, our members don’t forget that because they’ve been around for all that and they remember the times we’ve helped VOW out of a hole. OPI: What’s the deal with VOW in terms of ordering product from them? SH: Basically, the deal says members have got to spend on their core business and hit a certain level of turnover to enjoy the benefits of some of the annual returns. I can honestly say that without exception for the last 12-13 years, we’ve averaged 93.7% level volumes going through VOW to achieve the results. OPI: We’ve seen other groups such as Superstat and XPD align with Spicers.

Big Interview | Steve Harrop Do you see the logic behind why they did that? SH: Yes, you can see them mirroring what we’ve been doing. The bottom line is that if you split your wholesale businesses, then you split your deal. OPI: Do you think it’s important for the UK market that there are two strong wholesale entities? SH: Well, this is quite controversial because I actually would say that if we could genuinely 100% trust and rely on one wholesaler to give an excellent, 99.99% next-day delivery service at the right price, be focused on the sector, support the independent dealers, let the groups get on with what they’re doing and really enjoy the benefits of being a truly world-class logistics company, you would probably only need one. The problem with our market in the past ten years is there’s never been fair competition; it’s always been a case of one being up and the other being down. Because of that, you’ve had people moving stuff around inefficiently, in my view. So the costs of all that must be millions and millions of pounds worth of lost business, service issues and grief. OPI: If we look at the UK dealer group community as a whole, how healthy do you think it is and how relevant are the groups still in the UK market? SH: I think there’s a real relevance. Some people view the groups as dinosaurs, but I totally disagree – well I would, wouldn’t I? There’s a danger of becoming one if you stick to the old tried and trusted methods that we used to use five, ten years ago, but we’re not. The market’s changing, obviously – we know that – but I think the concept of a group is a good one for independently-minded businesses; there’s real added value from groups provided they do deliver added value. Not all the groups are doing that, in my view; one or two of them probably need to shake themselves up a bit, but that all depends on the members, doesn’t it? OPI: To what extent are you competing with VOW in terms of marketing, etc? SH: In the past, there’s been a lot of reliance on what the wholesalers have done and I think there still is, but I believe – and they won’t like me for saying this – the quality of the marketing that’s coming out of the wholesalers to the trade isn’t particularly positive, which is great for us. One of the things that has maybe made the wholesale marketing a little bit sterile is the

OPI Magazine | October 2015

fact that it’s about bland merchandising. They just take on board what the manufacturers have in terms of offers, free holidays, etc, and they just plaster magazines with these special deals, that’s it. The same advert is going to sit in the VOW mailer, in the Spicers mailer and probably the dealer group mailer, including our own by the way. That’s fine, but you lose that differentiation, so that’s why we’ve created customisable solutions for our dealers. OPI: What do you think of these newer groups or models such as nectere, Office Power, Cadabra and bokz? SH: Well, if there wasn’t a need for them, they wouldn’t exist. People have seen an opportunity, but I have to say that a lot of it seems to be attracting distressed businesses or people looking for a quick exit strategy. I just don’t think there’s any asset value left in a business that hands over all of its functionality to somebody else and just effectively runs the sales. I can see the benefits that these companies provide and I get that one of the biggest issues for a lot of dealers is the back-office system and running a true stockless solution, but all I would say to anyone is to read the contracts very carefully and get a lawyer to read them. OPI: Do you think EVO is treading on your toes with its bokz initiative? SH: No, I want it to succeed to a point: it’s being run by a former staff member of ours and it’s an interesting platform. I think it’s more akin to Office Power than to what either nectere or United [a UK dealer] are trying to do. To be fair, most of the dealers that they’re talking to at the minute are not distressed; they are really making a serious business decision in terms of the direction they want to go in, but it’s still early days on that. OPI: Just to finish up, where do you want to take Office Friendly in the future? SH: Short term, a lot of it is about enhancing the offer that we’re doing on the marketing front and to make sure that we’ve got the tools to do the job, investing in our people so they can actually become much more consultative to the members and help their businesses by really understanding what they’re doing. We do have a longer-term strategic vision called ‘2020’. Perhaps we won’t be called Office Friendly by then, but I think we’ll be an incredibly professional organisation working for and on behalf of a lot of people in different industries and sectors that are maybe at a tangent to where we are today.

“The quality of the marketing that’s coming out of the wholesalers to the trade isn’t particularly positive”

Hot Topic | Staples/Office Depot

The final countdown by Andy Braithwaite andy.braithwaite@opi.net

the end of August, Staples and Office Depot issued a joint press release to announce that they had both certified substantial compliance with the US Federal Trade Commission’s (FTC) second request for information over their proposed merger. This, to all intents and purposes, heralded the move into the home straight of the FTC’s antitrust investigation and it is likely – although still not certain – that a decision will now be made by the middle of this month. Normally, when completion of the second request has been certified, the FTC then has 30 days in which to make its decision on the transaction, failing which the companies would be legally entitled to close the deal.

OPI Magazine | October 2015

The US Federal Trade Commission looks like it is trying to find a solution to approve the Staples acquisition of Office Depot. What choices does it have?

However, in some cases this 30-day ‘waiting period’ can be extended by agreement between the parties and the government “in an effort to resolve any remaining issues without litigation” (according to the FTC’s official procedures), and this is what has happened for Staples and Depot, with a 45-day timing agreement put in place. This timeframe can also be further extended, if necessary. So, what does the extension of the waiting period mean in terms of whether the acquisition will get FTC approval or not? There are probably a couple of ways of looking at it, but, as one financial analyst familiar with how the FTC operates told OPI: “The FTC taking longer is not a good thing.”

“The FTC taking longer is not a good thing”

Staples/Office Depot | Hot Topic

“Lawyers could drive a bus, or even several buses, through [that FTC statement]”

The reason for this is it sends a signal that the Staples/Depot transaction represents far from a clear-cut decision for the FTC and that it needs more time to carry out its investigation. Reports from the US press have referred to subpoenas being sent out to Staples’ and Office Depot’s largest corporate customers. Is that because the FTC is looking to gather more evidence so it can build a case to block the deal? This is something that has been suggested in the mainstream press, but is a scenario which would seem unlikely. For starters, sources OPI has spoken to have said it is already “too late in the day” for the FTC to build a case. Secondly, does the FTC really want to block the acquisition and face the possibility of litigation? The Staples/Depot merger agreement includes a clause that states they have a “vigorous” obligation to defend the transaction in the event of litigation. This would mean the FTC having to come up with a

Coming back to bite? If the FTC decides to file for litigation in the Staples/Depot acquisition, it will more than likely have to defend the arguments it put forward in 2013 when it approved the merger of Office Depot and OfficeMax. Below are some extracts from its statement on the contract market segment: ■ Large customers use a variety of tools to ensure that they receive competitive pricing, such as ordering certain products (like ink and toner) directly from manufacturers and sourcing (or threatening to source) certain categories of office supply products from multiple firms. ■ Non-OSS [office supply superstore] competitors take business from the parties in a substantial number of contracting opportunities. ■ The parties will continue to face strong competition for such customers from […] a host of non-OSS competitors, such as WB Mason. Non-OSS competitors are growing in number and strength and have demonstrated the ability to win large multiregional and national customer contracts. ■ In particular, regional office supply competitors have developed and utilised various strategies to compete successfully for large national accounts, including working with office supply wholesalers and joining cooperatives of independent office supply dealers to create a distribution network capable of meeting the needs of large multiregional and national customers. ■ Potential competitors in adjacent product categories, such as janitorial and industrial products, have existing contractual relationships with large office supply customers and can leverage those relationships to enter the office supply distribution market.

watertight argument to oppose the acquisition just two years after it gave the green light to the Office Depot/OfficeMax merger. As one person told OPI: “Lawyers could drive a bus, or even several buses, through [that FTC statement].” There is even a line of thought suggesting that the FTC’s findings on the contract channel (see box ‘Coming back to bite?’) acted as the catalyst for merger talks between Staples and Depot to take place.

Legal links What is more, OPI has learned that there are strong links between the legal teams representing Staples and Office Depot, and the FTC. Former FTC people – including one senior official involved in the Depot/’Max ruling – are now working for the firms representing Staples and Depot. This is not suggesting for an instant that there is any form of collusion, but it does give the resellers’ legal representatives great insight into how the FTC works and, in particular, how it reached its decision regarding Depot and ‘Max. There has also been some speculation that, in an effort to push through approval for the Depot/’Max merger, the FTC painted a more dramatic picture of the contract business than it possibly should have, glossing over some of the competition issues in the Fortune 100/500 customer group. While the 2013 report is not a legally binding document, the Staples/Depot legal teams will be all over it in the event of litigation and that is probably not somewhere the FTC wants to go. The more likely reason for the additional time request and further contact with major customers is – according to a number of sources – to come up with a divestment solution that is acceptable to all parties. This means the FTC does have issues with the proposed acquisition, in all likelihood the dominant market share that an enlarged Staples would hold with these larger corporate clients. That, of course, leads on to the question of what assets would be divested and to whom. Interestingly, there are rumours circulating that Office Depot has suspended the integration of the former OfficeMax contract business in the build-up to an FTC decision, suggesting that these assets could be part of a solution. Possible takers? WB Mason is a name that has been suggested on more than one occasion, while HiTouch Business Services has also put itself in the frame (see Big Interview, OPI June 2015). There are still question marks as to whether either of these would still have w w w.opi.net | OPI Magazine

Staples/Office Depot | Hot Topic

Facing up to Amazon and Walmart A new book on the “defunct” office supply industry proposes a radical solution for Amazon or Walmart to beat Staples in the B2B space. Former US OP industry executive, and now a consultant and author, Ralph Barnett is bringing out a book this month that looks at how Amazon or Walmart can ‘take over’ the office supply industry and beat Staples at its own game. Barnett’s book assumes that the Staples acquisition of Office Depot – which he regards as “a done deal” – will go through and also herald a new era in the battle for supremacy in the B2B procurement channel. While he controversially argues that the office supply industry is “dead”, he views office supplies as a product group as the “key to the B2B kingdom”. And it’s this key that Amazon or Walmart will need if they are to succeed in the B2B space, something they have respectively been targeting through Amazon Business and Sam’s Club. “Whoever organises, maintains and manages the client procurement process for office supplies owns the gateway to every other product and service utilised by the B2B client,” states Barnett. He continues: “Of equal significance to Amazon or Walmart is the concurrent opportunity that once you own the procurement gateway to every product and service to the B2B client, you also own the gateway to every B2B employee’s personal consumption.” Barnett argues that Staples is acquiring Office Depot, firstly in order to keep the likes of Amazon or Walmart from encroaching on the B2B office supply space (and therefore the wider B2B business products area), and secondly to put itself into a stronger position to “invade” Amazon and Walmart’s “cyber territory of universal products and services”. Once Staples has snapped up Depot, Barnett says that Amazon or Walmart would only be able to beat Staples in the B2B channel by outflanking its distribution advantage and “crushing” it at its “most vulnerable point”, namely sales representation. To achieve the first of these goals, Barnett sensationally suggests that Amazon or Walmart should acquire wholesaler Essendant (formerly United Stationers), “the distribution engine that undergirds the office supply industry”. For more on Barnett’s arguments, check out our recent article on opi.net. For his ‘obituary’ on the office supply industry, see this month’s Final Word on page 54.

Customer objection – or lack of it – to the deal is bound to have a strong influence on the FTC’s final decision the clout to compete with Staples, but neither of them is short on ambition or a strong customer-service ethic. WB Mason may also be able to leverage its relationship with Lyreco. Another name that has been bandied about is MRO and facilities supplies reseller Grainger. It certainly has the experience of working with larger, national accounts and already has its own distribution network. Whether it strategically needs or wants to acquire office supplies assets – it sells a lot of office products anyway – is another matter. Whatever the solution – if there is one – a lot will depend on the responses to the FTC’s recent subpoenas. At the end of the day, customer objection – or lack of it – to the deal is bound to have a strong influence on the FTC’s final decision. As it stands, though, OPI believes that signs are pointing to a conditional approval of the acquisition, a view shared by those of you who took part in our recent poll on the topic (see And Finally, page 14). w w w.opi.net | OPI Magazine

Dealer Spotlight | Kontorsspecial

Making waves FOR

over 70 years Kontorsspecial was running on a fairly even keel, but for the past decade or so the increasingly choppy waters in the office supplies sector have called for some fundamental changes in the business. Founded by Per Palm in 1943 in Vetlanda, about 350km south of Sweden’s capital Stockholm, Kontorsspecial started life as a B2B-oriented retail store selling mainly office supplies and business machines. For years, revenues grew steadily year on year, with computer hardware as much a core part of the mix as office supplies: OP and business machines accounted for half each of total sales at the reseller. But as the competition, mostly in the form of the global players – Lyreco, Staples and Office Depot all have a strong presence across Scandinavia – got fiercer, and growing digitisation and changing work patterns resulted in declining demand for traditional office supplies and diminished margins on the hardware side, the need to evolve became more urgent.

Growth through acquisition In 2004, Kontorsspecial began its slow but steady acquisition activity that saw it expand its size and presence in Sweden. Today, the company operates from five locations – all under the Kontorsspecial brand – in the south of the country, within a radius of approximately 100km from its headquarters in Vetlanda. Managing Director Stefan Samuelsson comments: “Our business has changed substantially over the years, largely because of changes in the market. Our revenues today – about SEK140 million ($16.6 million) – are higher than years ago, but not substantially so. The reason for this is that such a large percentage of sales used to come from computers which are – or certainly used to be – quite costly. Today, we sell less hardware, so those revenues have gone down considerably.”

OPI Magazine | October 2015

The OP sector is changing and only those that change with it will continue to be successful – that mantra is as valid in Sweden as it is elsewhere That said, he adds, Kontorsspecial has more than compensated for this loss with the sale of non-core office supplies and by offering IT-based consultancy services. He says: “Office supplies – which includes EOS for us – still make up about 50% of total sales now, but the rest is largely divided between office furniture, jan/san products and services.” In the non-core OP segment, the jan/ san category has been going from strength to strength, adds Samuelsson, but, while it represents a big opportunity with ever growing sales, it’s also a hugely popular adjacent category for many players. “The challenge we have is that there’s no growth in the OP business,” he says. “That’s why everybody is looking at a broader range of products, and so the competition is fierce. We were relatively early into the jan/san game, so have been lucky in the amount of sales we could capture.”

Differentiation That leaves the area of services as a real USP for Kontorsspecial. To be successful in this arena requires considerable – and often long-term – investments. Kontorsspecial’s service offering comprises everything from MPS-related document management solutions and copier maintenance to computer installation and cloud-based IT consultancy. Says Samuelsson: “We have grown quite a bit in the services space in the past few years, pooling our knowledge from the IT side with other parts of the business. It’s working well, but it’s a long-term commitment, with often no immediate returns. It also requires you to get people at various levels in a company involved which can be a real challenge.”

Stefan Samuelsson

“We’re no longer in [the local government contract] space, mainly because of pricing issues”

Kontorsspecial | Dealer Spotlight Kontorsspecial at a glance… Founded: 1943 by Per Palm in Vetlanda, Sweden HQ and logistics: Vetlanda, Sweden Managing Director: Stefan Samuelsson Business model: Mostly B2B – retail, contract, online Revenues: SEK140 million ($16.6 million) Staff: 80 SKUs: 6,000-7,000 Geographical coverage: Five locations in the south of Sweden (Vetlanda, Jönköping, Västervik, Nässjö and Oskarshamn)

RKV at a glance… Founded: 1967 Members: 25 Stores/service centers: 59 Combined revenues: H135 million ($151 million) Chairman: Stefan Samuelsson Managing Director: Stefan Sonesson Geographical coverage: Sweden

Providing a one-stop shop – from a transactional as well as contractual point of view – is certainly where Kontorsspecial is headed. “Vetlanda is a small city and we want to be a big player in our locality, with a broad range of products and services. Offering a comprehensive one-stop shop is certainly a differentiating factor for us,” Samuelsson explains. And that differentiation is much needed in a country – region even – that is seeing increasing consolidation and where the large operators are getting bigger and bigger. As a company that works mainly in the B2B field – 98% of sales come from business customers, split into 75% delivery and 25% retail – it’s indeed the big players, plus local operator Ocay (the combination of Swedish dealers Kontorsvaruhuset and Gullbergs) that make up the vast majority of the competition. Unlike Kontorsspecial, which is chiefly focused on the SME sector, these companies also have a big stake in public sector business and the large corporate world. Kontorsspecial has never been a real contender in the large contract space, but used to be strong with local government contracts. “We’re no longer in that space,” explains Samuelsson, “mainly because of pricing issues. To put it quite carefully, a relatively small company like ours can’t price the way the global players can; having many loss leaders is simply too much of a risk for us.” SMEs, however, represent a sizeable chunk of business that everybody would like a slice of. As such, joining forces with other dealers has become imperative for most operators in order to increase their purchasing power. And that is what RKV, Sweden’s leading dealer group and part of pan-Scandinavian/Baltics group Nordic Office Alliance, can offer.

Through RKV, Kontorsspecial and other independent OP dealers in Sweden continue to have a strong grip on the local market and this will continue to be their main focus. Kontorsspecial has been a member of RKV since 1970 and Samuelsson is currently the group’s Chairman. He points to the importance of maintaining a strong dealer group in order to have the necessary purchasing power to compete. In recent years, that has been quite a challenge given that one of the group’s former large dealers, Kontorsvaruhuset, is now part of Ocay, with several others having been absorbed by the competition as well. The addition at the beginning of this year of NioFem (‘Nine to Five’), which has ten members in 12 locations and revenues of around H25 million ($31 million), has boosted RKV’s combined sales to about H135 million and been of much value both for the group as a whole as well as its individual members.

Becoming more efficient Purchasing power – as well as marketing and web prowess – are essential, but similar to most other developed markets in the business supplies sector, the need to become more cost-efficient is perhaps the most pressing. This applies particularly to the logistics side of things. Most dealers in Sweden – Kontorsspecial included – have their own warehouse and their own delivery fleet. The stockless dealer is rare and the concept of a multichannel and logistics-focused dealer group – as increasingly seen in other markets – non-existent. As Samuelsson concludes: “We have to become more cost-efficient as a company and as an industry as a whole, there’s no doubt. The way we’re operating is too costly and the competition is really tough, so there’ll be more changes in the future, I’m sure.” w w w.opi.net | OPI Magazine

Top 100 | Special Feature

Udo Böttcher Nicolas Doug Potier BUD Borne Michael Roney THEO PAPHITIS MUNDT/ BRUNO PEYROLES MARKJoe Hemani JOHANNES PETER MARTIN LEAZER JOHN WILSON Jean-Yves Sebaoun

SIMON DRAKEFORD

Top

Worawoot Ounjai

Dominique Lyone

JEFF WHITEWAY Tim Beaumont Sergey Bobrikov

100

JAIME CARBÓ CARB

STEVE HARROP

MARK Jan Van Belleghem WARD CRAIG BARTHOLEMEW Daniele Kapel

Robert Baldrey KLAUS JENSEN Hans Schmid Ángel Alverde Losada MIKE MAGGIO RON Johnson SARGENT STEVE KevinGAVIN WELCOME WARD MATYAS Bob Aiken JACKIE ROBB Jennifer Smith Tony Ellison LEO MEEHAN

MARC NIJHOF

to this year’s OPI Top 100, our annual look at the leading influencers from the resellers, wholesalers and dealer groups that are shaping the global B2B business supplies industry. In keeping with the format of the past couple of years, we have continued with a ‘hybrid’ print/ online approach, with a hand-picked selection of executives featuring in the magazine and the full list to be published on the opi.net website during the month of October. As always, it is a challenging task to whittle the list down to just 100 names, especially as our industry expands to include more IT, EOS and facilities supplies. To help us include people from as many organisations as possible, one important change we have made this year is to try and include only one entry per company, particularly if that company is focused largely on one specific geographical market. The few exceptions come in the form of global or multinational firms such as Staples, Office Depot, Lyreco and ADVEO. We want the Top 100 to be a valuable resource for our subscribers. Therefore, we will continually be updating entries online to reflect important personal/company developments as they happen.

PHILIP BECKER

So, who has made it to our ‘hall of fame’ this year? In compiling the list as a whole, there are – let’s be honest – certain positions in certain companies that can be considered as ‘no brainers’. In addition, we included a number of criteria, such as those leaders who have made a significant impact on their local market or industry as a whole, achieved outstanding business results, made or been involved in a major acquisition, been recognised with an important industry award or have recently joined the industry or been promoted. Looking at those criteria even more closely then led us to selecting the 12 entries for the magazine, while at the same time trying to find a balance in terms of geographical spread and gender.

Christa Furter

Sid Lerman

Alanna Nielsen WAYNE BEACHAM SEAN MACEY Alper Kisa JIM Sean Fleming JIM RYAN HEBERT RICHARD Dave Guernsey ROLAND SMITH SCHARMANN Vitaly Balabanov Michael Brown Steve Schmidt Females to the fore As we are all aware, this is a pretty male-dominated industry, so we’re delighted to be able to have two outstanding female executives in this year’s print edition: Jennifer Smith of US dealer Innovative Office Solutions who continues to take the company from strength to strength in the Minnesota area following the acquisition of S&T Office Products; and Jackie Robb, who has revamped the Staples business in the important Greater China region following a few challenging years.

MIKE JOE YORIO GENTILE José Mario Britto Paulo Garcia PATRICIA BARBER

RADOSTIN KIRILOV Carlos/Rafael Benavides Robert de Montigny

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Special Feature | Top 100

AFTER

stepping in as interim CEO of US wholesaler Essendant in May following the sudden departure of former incumbent Cody Phipps, Bob Aiken got the job on a permanent basis at the end of July. He is also continuing in his role as Essendant board member, a position he resumed in February of this year, having previously served as a company director from December 2010 to May 2014. Those years on the board will have given Aiken a thorough understanding of the workings as well as the priorities of what was formerly United Stationers. He also brings to the table years of leadership experience in a variety of strategic, merchandising and operations roles. Most recently, he was CEO of Feeding America, a leading hunger-relief organisation in the US, while between 2004 and 2010 he served in a number of senior positions at distributor US Foodservice culminating in the President/CEO role. At Essendant, Aiken’s task will be to continue to convert the wholesaler into the “fastest and most convenient solution for workplace essentials”. This year has been a year of investments for the wholesaler and includes its new corporate identity, product expansion as well as operational improvements. One of the fruits of these investments is the implementation of a common operating platform that is currently CEO seeing office and facilities products being combined under one umbrella. ESSENDANT

Bob

Aiken AFTER

the fanfare of last year’s merger of Vasanta and office2office and the creation of the EVO Group, 2015 has been a year of integrating and consolidating while at the same time keeping a close eye on service and customers in the group’s various businesses. As planned, the Supplies Team and Banner businesses came together this summer under the Banner name with a fresh and vibrant rebrand. On the wholesale side, VOW Ireland deserves particular mention with strong sales performances – specifically a 19% increase in the two years to the end of last year – and a “concerted effort” to meet the needs of the Irish market. What has perhaps not quite gone to plan is the development of bokz, the reseller programme launched at the beginning of 2014 that was hailed as being ‘new and unique’ in the UK OP industry. EVO Group CEO Robert Baldrey admits that bokz has been somewhat slowed by the merger, but remains very much part of the group’s ongoing strategy. Baldrey – well known on the UK as well as the international OP conference circuit – continues to see more of the ongoing trend of industry consolidation across the supply chain as well as the potential arrival of Amazon Business in the UK. As such, he believes resellers will need to CEO change, evolve and adjust their operating EVO GROUP model in order to tackle these challenges.

Robert

Baldrey

OPI Magazine | October 2015

Top 100 | Special Feature

NEW

ADVEO CEO Jaime Carbó has only been in the job a few weeks, officially joining the European wholesaler on 31 August following the June dismissal of former incumbent Millán Álvarez-Miranda. Carbó comes to the business supplies industry from Spanish olive oil manufacturer Deoleo where he led an organisational and financial restructuring during his four years at the firm. He will need those turnaround skills at ADVEO. Its operations in Spain continue to register sales declines of more than 30% following the poorly-executed implementation of a new technology platform, triggering a steep decline in overall company profits so far this year. The new CEO has been given a clear set of priorities from the board of directors: get Spain back on track, ensure that best practices are shared across ADVEO’s different markets and consolidate the company’s business model. He will also be responsible for implementing a new strategic plan which will be revealed later this year. Whatever that plan contains, ADVEO’s board is adamant that any future strategy must be carried out using a fully-integrated technology platform, so a pan-European rollout of the new system is set to take place on Carbó’s watch – something that will no doubt CEO set nerves jangling in Madrid and around the rest of Europe. ADVEO

Jaime

Carbó WHEN

we talk about business transformation in the office supplies industry, Japan’s ASKUL is a prime example of a company that has taken the bull by the horns. Three years ago it entered into a strategic business alliance with Yahoo Japan – which now has a 42% stake in ASKUL – that has allowed it to invest massively in e-commerce and logistics initiatives. The alliance led to the creation of a B2C e-commerce platform called LOHACO, and this has been growing exponentially to achieve sales of about ¥20 billion ($170 million) in the most recent financial year, although it is still not profitable. Nevertheless, it is the B2B space which still accounts for the lion’s share of ASKUL’s annual sales of almost ¥280 billion. B2B sales were up 6% in the 12 months to 20 May 2015 – boosted by strong growth in categories such as MRO, safety, hygiene and medical supplies – and the Yahoo Japan partnership has enabled CEO Shoichiro Iwata to continue to invest in the enhanced digital and distribution capabilities that are the backbone of the B2B strategy. Plans for the coming year include the opening of two new distribution centres, working closely with leading manufacturers to service their own direct sales programmes CEO and further expansion of the B2B and LOHACO platforms. ASKUL

Shoichiro

Iwata

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Top 100 | Special Feature

would not be an understatement to say that Hervé Milcent has been keeping a low profile since he took over from Steve Law as CEO of Lyreco at the beginning of this year. Law’s planned departure gave the reseller plenty of time to select the right candidate and the CEO recruitment process actually started in 2013 as Lyreco looked to learn from the lessons of Philippe Martinez’s short-lived reign. French national Milcent joined Lyreco after 15 years at Bertelsmann-owned Arvato, a B2B service provider in the field of digital marketing and financial, CRM, print and IT solutions. His roles included that of Global President of the D1.1 billion ($1.5 billion) CRM division where he was responsible for overseeing the development and operation of customer clubs and loyalty programmes, along with other personalised incentive schemes. In keeping with the ‘Lyreco way’ of doing things, Milcent’s arrival has not heralded a revolution at the reseller. Rather, he has been tasked with building on the strong platform left by Law as the company continues to expand its product lines, develop further digital capabilities and target SMB companies. The departure of Dave Walmsley earlier this year has allowed Milcent to take a more hands-on role, with the new CEO currently also CEO handling the Englishman’s former Group Commercial LYRECO Director responsibilities. It will be interesting to see how Lyreco reacts to the Staples/ Office Depot merger – if approved – with potential opportunities for market share gains in Europe and Australia.

Hervé

Milcent

THIS

month marks the beginning of the transition period that sees Mark Leazer take over from Bud Mundt as Executive Director of AOPD. The official handover will be in January 2016. Both men have been heavily involved in the dealer network for many years, Mundt having joined the organisation in 2004 and becoming Executive Director in early 2005. Leazer, meanwhile, with a 30-year career at independent dealer FSIoffice that is now coming to an end as a result of his new role, had already taken the AOPD reins on an interim and part-time basis between 2001 and 2004 before Mundt was appointed. With Mundt the industry loses a much-liked OP veteran who has spent 45 years in various distribution channels. He is expected to still be available as a consultant and on an advisory basis. Leazer’s list of priorities – following a smooth transition – is clear and the immediate focus will be on the first joint annual meeting next March of AOPD, Direct Purchasing Catalog Group and TriMega’s Dealer Supplier Collaborative members. Growing market share in both national and regional accounts remains another priority. The pending FTC decision on the Staples/Office Depot EXECUTIVE merger will no doubt have a fundamental impact on how this growth might accelerate. AOPD

Bud

Mundt

Mark

Leazer

DIRECTORS

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Special Feature | Top 100

President of Staples’ operations in Greater China, Jackie Robb is responsible for the global reseller’s subsidiaries in both mainland China and Taiwan. Since she took on the role in January 2013, moving from Staples Australia, Robb has led a turnaround in both countries, with Taiwan returning to profitability earlier this year and China close to breaking even. In the $15 billion Chinese OP market, Robb has revamped the leadership team, overseen the implementation of SAP, expanded the product mix beyond office supplies and closed all the company’s retail stores as Staples focuses on e-commerce growth in the B2B sector. Geographic coverage has also been extended to all of China and a range of Staples China-branded products has been developed to suit local needs. Robb says Staples China is well placed to ride the current e-procurement wave as many large companies build online platforms to streamline their procurement activities and provide better transparency and control of their large purchasing needs. Plans for the next year include making supply chain improvements and setting up a Staples China Process Excellence School to train and develop local staff. In the smaller and more mature Taiwanese market, one key focus will be to leverage PRESIDENT Staples’ expertise in providing e-procurement solutions. STAPLES GREATER CHINA

Jackie

Robb AS

you read this, Ron Sargent could be just days away from completing the biggest merger in OP history, with the US antitrust body, the Federal Trade Commission (FTC), set to announce its findings on the proposed acquisition of Office Depot in mid-October. If the deal is approved, it will create a $30 billion retail, B2B and e-commerce giant. If not, then it will be a different story; but whatever the FTC decides, Sargent has already laid out his roadmap for the future of Staples with his transformational ‘beyond office supplies’ strategy. This has led to an overhaul of the sales structure in the $8 billion North American Commercial division as hundreds of category specialists have been drafted in to bring expertise and drive growth in areas such as jan/san, breakroom, copy and print, promotional products and furniture. About half of Staples’ total sales now come from non-core office products. Sargent sees online as a key battleground and huge investments have been made to improve Staples’ digital capabilities. More than one million SKUs are now available from the recently-updated Staples.com website. Retail continues to be an issue, and Staples is in the process of a 225 store-closure programme in North America. However, the store network remains a key component of Staples’ omnichannel model, with in-store kiosks now CEO accounting for 5% of retail sales and services STAPLES such as click & collect growing in popularity.

Ron

Sargent 36

OPI Magazine | October 2015

Special Feature | Top 100

FOR

a company as press-shy as Printus, the German online and catalogue operator has been in the spotlight a fair amount this year. Having – privately – celebrated his 70th birthday in the spring, company owner and President Hans Schmid is still going strong at the helm, and in July rumours of Printus’ acquisition of fellow B2B player OTTO Office were confirmed. By then, it was a done deal already – approved by the competition authorities and with everything put in place for a smooth, business-as-usual future. That was certainly the message from Printus’ HQ. With H700 million ($786 million) in sales, 1,300 staff, a B2B and B2C focus (though heavily biased towards B2B), and a cornucopia of different brands and web shops, Printus is now an even more formidable player and a clear market leader in the online and catalogue sector of the German business supplies space. What becomes of OTTO Office – well-run and profitable in its own right, but just not the right fit anymore for former parent Otto Group – will be interesting to follow in terms of brand focus, existing facilities, staff, and so on. The original management is still in place – Managing Director Uwe Orgas was one of the founding members of OTTO Office back in 1994 – so there’s plenty of experience to continue to run this successful ship.

2015

Smith

OPI Magazine | October 2015

Schmid PRINTUS PRESIDENT

has been a year of both organic and acquisition growth for US dealer Innovative Office Solutions. Co-founded by current CEO Jennifer Smith in 2001, her vision at the time was to make working professionals more productive. Since then, Smith’s entrepreneurial spirit has helped expand Innovative to touch on every area of office life and become a single-source office solutions company. Part of large dealer group network Pinnacle Affiliates, Innovative is now one of the fastest-growing independents in the business supplies sector in the US. Factoring in the acquisition of S&T Office Products at the beginning of 2015, the company is hoping to reach revenues of $100 million by year end. But, as Smith says, along with that growth comes the need for change. “Most of our challenges around change relate to scalability – how to grow without losing touch with what is most important. To accomplish this, we worked hard to develop and implement processes for efficiencies while maintaining our company culture.” As is the case for so many companies in this generally declining sector, opportunities for category expansion have been huge for Innovative and contribute a considerable percentage of total sales. For 2016, Smith and the team are actively exploring additional technology-focused categories. Smith’s progressive thinking extends beyond her own business. As a leader and a woman working in business, she is very active as a mentor with the Women Venture CEO Organization and as a member of the steering committee for the Women’s Business Enterprise SOLUTIONS National Council.

Jennifer INNOVATIVE OFFICE

Hans

Top 100 | Special Feature

LEADING

Australian reseller Officeworks continues to go from strength to strength under the stewardship of Mark Ward, who has now been at the helm for the best part of eight years. The company has just come off what was described as its “best ever” year by owner Wesfarmers as sales increased almost 9% to A$1.7 billion (US$1.2 billion) and EBITDA jumped more than 12% to A$139 million. Officeworks’ success – in what has been a challenging Australian market – is in no small part due to Ward’s ‘every channel’ strategy that has seen major investments in stores, digital commerce and B2B sales teams over the past few years as the reseller focuses on three key customer segments: small businesses, the home office and education. Ward brought in merchandising executive David Haydon a couple of years ago and this has led to an overhaul of Officeworks’ product ranges, with new categories such as health, safety, facilities and retail supplies, and revamped furniture, education and fashion stationery sections. Further recent initiatives at retail level include a new parcel delivery service and a 3D ‘experience centre’ at a store in Melbourne, although Ward admits that 3D printing is unlikely to make a big impact in the top line any time soon. Key focus areas in the 2016 financial year will include continued merchandising, innovation and expansion, and further development of the Officeworks teams.

Mark

Ward

MANAGING DIRECTOR OFFICEWORKS

with fellow UK operator EVO Group, it’s been a year of getting its house in order at SPOT, the combination of wholesaler Spicers and contract stationer OfficeTeam. It could be argued that Jeff Whiteway, SPOT’s Group CEO, had a rather more daunting task on his hands, but the results so far are encouraging and Whiteway is confident that the challenge of returning an ailing business back to a real driving force in the industry has been accomplished already. He refers to the achievement of moving Spicers from a significant lossmaking business – the wholesaler ran at an operating loss of almost £40 million ($62 million) in the 16 months to August 2014 – into a yet-again profitable player in 2015. Service levels, he adds, have reached four-year highs, with scope and expectation to improve much further. As far as OfficeTeam is concerned, the contract stationer is back to private equity – rather than bank – ownership which led to a reduction in the OfficeTeam Group’s total debt from £42 million to £9 million at the end of 2014 There’s plenty more work to be done, all hopefully with the help of a more cohesive and motivated team that is able to manage any channel conflict concerns and has a customer-focusedout look. Offering a larger depth of stock is one of the key points on the agenda for 2016, as is better support to the dealer community GROUP CEO in terms of logistical/commercial proposals, SPOT sales support and training.

Jeff

Whiteway w w w.opi.net | OPI Magazine

Special Feature | Top 100

Top

100 Americas

Sean Fleming CEO | DM/Supplies Network

Sid Lerman President | Weeks Lerman

Ron Sargent CEO | Staples

Paulo Garcia Managing Director | Kalunga

Sean Macey President | Basics Office Products

Steve Schmidt President – International | Office Depot

CEO | SP Richards

Mike Gentile CEO | Independent Stationers

Mike Maggio President | TriMega Purchasing Association

Jennifer Smith CEO | Innovative Office Solutions

José Mario Britto Managing Director | Inforshop

Dave Guernsey CEO | Guernsey

Steve Matyas President | Staples Canada

Roland Smith CEO | Office Depot

Michael Brown CEO | HiTouch Business Services

Jim Hebert CEO | Office Partners

Leo Meehan CEO | WB Mason

Prentis Wilson VP | Amazon Business

Robert de Montigny CEO | Novexco

Kevin Johnson CEO | Warehouse Direct

Bud Mundt/Mark Leazer Executive Directors | AOPD

Joe Yorio CEO | School Specialty

Tony Ellison CEO | Shoplet.com

Radostin Kirilov Managing Director | Office 1 Superstore

Jim Ryan CEO | Grainger

Europe

Martins Cakste CEO | Officeday

Claude Ackermann Managing Director | Offix/BPGI

Jaime Carbó CEO | ADVEO

Ingo Dewitz Managing Director | Büroring Simon Drakeford CEO | Euroffice Group Dr Benedikt Erdmann Chairman | Soennecken Laszlo Feher Managing Director | Corwell

Carlos/Rafael Benavides Managing Directors | Comercial del Sur

 Steve Harrop Managing Director | Office Friendly

Siobhan O’Connor Managing Director | Codex

Mats-Ola Schulze CEO | Ocay

Barrie Hayes CEO | BPGI

Theo Paphitis Chairman | Ryman

Jean-Yves Sebaoun COO | ADVEO

José Luis Hernández President | Carlin

Bruno Peyroles CEO | Bureau Vallée

Stefan Sonesson CEO | RKV

Danièle Kapel-Marcovici CEO | RAJA Group

Nicolas Potier Managing Director | JM Bruneau

Miroslaw Szydlowski Managing Director | PBS Polska

Alper Kisa Vice General Manager | Akoffice

Laurent Proy Managing Director | Majuscule

Arnold Theuws Managing Director | Quantore

Andrey Kudryashev Development Director | Pragmatic Express

Sergey Raskolov CEO | Merlion (Bureaucrat)

Igor Trifonov CEO | Samson

Hervé Milcent CEO | Lyreco Johannes Peter Martin Group Managing Director | Kaut-Bullinger

Ferdinando Rese President | Errebian

Jan Van Belleghem Managing Director | Interaction Thomas Veit Managing Director | soft-carrier

Michael Roney CEO | Bunzl

Christa Furter CEO | iba

Aidan McDonough Managing Director | Integra Office Solutions

Topi Ruuska CEO | Wulff Group

Francesco Villa General Manager | Gruppo Buffetti

Laurent Bertrand Managing Director | Fiducial Office Solutions

George Gerardos CEO | Plaisio Computers

Paul Musgrove Managing Director | nectere

Richard Scharmann CEO | PBS Holding

Jeff Whiteway Group CEO | SPOT

Sergey Bobrikov General Director | Komus

Gert Gerber CEO | Office Supplies Denmark

Marc Nijhof Managing Director | Alpha International

Hans Schmid President | Printus

John Wilson President | Staples Europe

Udo Böttcher Managing Director | Büromarkt Böttcher

Xavier Guichard CEO | Manutan

Șerban Oarză CEO | RTC Proffice

Dieter Schmidt Managing Director | Plate

Felix Zimmermann CEO | Takkt

Asia/Australasia Charles Agee Managing Director | OfficeMax Australasia

Dominique Lyone CEO | Complete Office Supplies

Doug Borne Interim CEO | Office Products Depot

Jay Mutschler President | Staples Australia/New Zealand

Shoichiro Iwata CEO | ASKUL

Brad O’Brien CEO | Office Choice

Gregory Lienard Managing Director | Lyreco Asia Pacific

Pejman Okhovat CEO | Warehouse Stationery

OPI Magazine | October 2015

Middle East/Africa Bandar Al Musallam CEO | Hoshan Pan Gulf Dave Crichton Interim Managing Director | Waltons Wihan Oosthuizen CEO | Office National Africa

Event Preview | OPI European Forum 2015

Getting to the core NEVER

has the business supplies sector been in more of a state of flux than right now. And while Amazon, Staples and Office Depot might be making the headlines, the nitty-gritty issues that companies are facing today go much deeper than price wars and merger talks. So it’s fitting that senior executives from around Europe will once again gather at the invitation-only OPI European Forum to hear about and discuss the challenges and opportunities in our industry. This year the event – to be held from 7-9 December at the Hilton London Tower Bridge Hotel – returns once again to London, UK, where it was first launched back in 2009. Not only is London easy and convenient to get to from all corners of Europe, the Hilton London Tower Bridge Hotel is also just a stone’s throw from the historic Tower of London and the picture-perfect Tower Bridge where, incidentally, the group gala dinner will be held on 8 December. Aside from plenty of networking – cited by past attendees as one of the core benefits and must-haves of the event – organiser and OPI Director Janet Bell and her team have put together a programme that addresses the issues that are unique to and prevalent in the European market.

Voice of experience This year’s forum will be chaired and moderated by Robert Baldrey, Group CEO of UK-based EVO Group. Baldrey, of course, has plenty of experience of many of the themes discussed during the two days of in-depth keynotes, presentations, panel

OPI Magazine | October 2015

European Forum 2015

Discussing the core issues of today is what the 2015 OPI European Forum is all about

“Anyone wanting to debate the challenges ahead and indeed grow their business should not miss this event”

discussions and roundtables. They include the challenges of selling facilities management products and the topics of data analytics, pricing models/dynamics, and workplace transformation. From well-known industry figures – look out for ADVEO’s Jean-Yves Sebaoun in a one-to-one Big Interview with OPI’s CEO Steve Hilleard – to specific experts in the field, these and more issues will be examined. And once again, all discussions will take place observing Chatham House rules, meaning a uniquely confidential environment. As Bell says: “The OPI forums provide a unique setting where industry executives can take time out from their busy schedules to discuss the bigger issues and the key strategic challenges. “All attendees will benefit not only from the informative presentations and discussions, but also from the opportunity to network privately with their peers. Anyone wanting to debate the challenges ahead and indeed grow their business should not miss this event.”

For more information about the 2015 OPI European Forum, visit www.opi.net/ef2015. If you are interested in receiving an invitation to attend, please email OPI’s CEO Steve Hilleard on steve.hilleard@opi.net

Category Analysis | Mailroom & Packaging

Keeping

you posted The rise of electronic communications was supposed to kill off the conventional letter, but reports from the mailroom sector suggest they can happily co-exist

When

labelling specialist Avery commissioned a survey into the public’s attitude to letters and conventional post earlier this year, the results were surprising. Despite talk in the industry of the decline in this category, it found that seven out of ten people preferred to receive formal or business communications as a traditional letter and around half preferred sales information sent to them as a physical brochure in the post. As Fiona Mills, Avery’s UK Marketing Director, says: “We expected people to say that they wanted to receive personal and celebratory messages like birthday greetings by post rather than digitally, but these findings showed us that there are times when postal communication can be more impactful and better at delivering the right message in business too.” When asked to describe how they felt when receiving something in the post, the most popular words that respondents used were “happy”, “special”, “loved” and “surprised”. “It seems that the decline in conventional mail has actually placed a new importance on letters,” says Mills. “The email revolution means consumers now value a letter, treating it differently to an email and perceiving it as something more special.”

Post-haste This backlash against email oversaturation is translating into results for mailroom and packaging specialists. At Totalpost, Managing Director David Hymers says that sales in this sector are still increasing fast, with a 50% upsurge across all its products in the last year: “There’s been a general move away

OPI Magazine | October 2015

from continually sending e-shots and emails. Concerns around privacy and the appearance of electronic communications have driven the revival of ‘normal’ mailings somewhat.” He adds that the Direct Marketing Association is also reporting that post is on the increase, with figures in line with Totalpost’s own findings: “Of particular interest to us is the greetings card sub-sector, which is massive and now harnessing e-technology to win orders and using inserting/mailing machines to despatch them via standard mail.” Leen Nsouli, Office Supplies Industry Analyst at The NPD Group in the US, confirms that physical store sales of mailing and shipping products have been growing since 2014 and have shown a further 3% increase in the first half of this year: “Mailing and shipping products play an important role throughout the year for consumers and the SOHO customer. In some cases, office supply retailers are now offering shipping services to consumers right from the store, and this is a convenience factor that can play an important role in capturing sales in the SOHO sector. “Although the online channel is improving on the ‘need it now’ service through same-day

Mailroom & Packaging | Category Analysis delivery options, the physical store is still the consumer’s primary preference. Online sales of mailing and shipping products declined in the first of the year, where packing products experienced a 5% decrease in average price, an inverse to the overall pricing trend online which showed an increase in average selling price of 6%.” Mail remains a vital channel for business according to Mark Shearer, EVP and President of SMB Solutions at Pitney Bowes. In fact, he says “it’s becoming an ever more essential driver of global commerce as more businesses connect physical mail to digital technology to boost its value and enhance its effectiveness”. “Contrary to what some may think,” he add, “getting mission-critical transactional documents, like bills and statements or goods, from A to B is becoming increasingly complex with the myriad of technologies that are now available.”

Package up Nsouli says that the increased usage of social media combined with the availability and ease of access to marketplace websites means that consumers are finding more ways to create, build, share and sell their own ideas. Mills agrees: “While there’s no doubt that the online shopping boom is responsible for fuelling much of the demand for mailroom and packaging products, it’s not just big businesses that are causing this. “There’s been a huge increase in hobby businesses and start-ups selling via sites like eBay, Amazon, Etsy and, here in the UK, Folksy. What’s interesting is the different needs these businesses have when it

comes to mailroom and shipping products. It’s definitely something the industry needs to react to – this could be through having lower order quantities or offering more affordable, flexible solutions. “It’s about recognising that these people have a huge amount of pride in the items they’re shipping, but that very often they are operating on a much smaller scale. These sellers care a great deal about how their

this unprecedented expansion of the European e-commerce sector. According to the Centre for Retail Research, sales are expected to grow to £156 billion ($245 billion) in 2015 (+18.4%), reaching £185 billion ($291 billion) in 2016. Shearer concurs, saying that Pitney Bowes continues to see double-digit growth in shipping in most major markets: “It’s fuelled by online shopping which has increased the

“Concerns around privacy and the appearance of electronic communications have driven the revival of ‘normal’ mailings somewhat” products are delivered and they want their package and its contents to be well received. This means there is a real opportunity for the industry to offer cost-effective mailroom solutions to help them with their shipping needs.” Debbie Nice, Facilities Supplies Category Head at UK wholesaler VOW, also reports that parcel traffic has replaced some of the letter traffic over the past few years and she continues to see steady growth in this sector. “People are looking for an effective product at the right price, so we are constantly on the lookout for improvements in our range,” she notes. “Packaging is a diverse market with large end users mainly buying direct from manufacturers. Our market is mainly with the small-to-mediumsized end user who hasn’t got the room to store a lot of products. Packaging is a very bulky area.” Lester Barratt, European Director of Strategic Markets and Accounts at protective packaging company Sealed Air, points to

demand for reliable and real-time tracking and delivery information.” As Barratt points out: “In Europe, most operations will benefit from reducing the volume of their postal product or package. Generally, shipping costs will reduce with weight and size optimisation. This is a field Sealed Air is very active in due to our commitment to provide the maximum protection with the minimum packaging. Optimisation in these key areas contribute to reduced shipping, handling, packing and labour costs, with lower environmental impact in the shipping cycle.”

Sustainability link Avery’s Mills picks up on this environmental theme: “Sustainability and CSR are increasingly important and affect the role that mailroom and packaging products play. Earlier this year we asked businesses to send us their eco-friendly working ideas for a crowdsourced guide. The response we got was phenomenal and really shows how important sustainability in the workplace is, affecting all aspects, including the mailroom. It’s never been more important to offer product solutions that not only fulfil a customer’s mailing needs, but also meet their CSR objectives.” The surge in the number of parcels and packages being sent around the world has also been highly beneficial to those companies manufacturing and selling spin-off products. Acme United in Europe is a prime example. w w w.opi.net | OPI Magazine

Category Analysis | Mailroom & Packaging

Managing Director Georg Bettin explains: “As a supplier of cutters and scissors [see product above] – the tools needed to open boxes – we have seen a huge increase in demand due primarily to the increased number of parcels caused by online sales. People need good quality, reliable devices to open their boxes and deal with the strips or adhesives that bind them together. “We also sell letter openers and had expected this to be a declining market. But, contrary to the stories we hear about the reduction in conventional mail and envelope use, this is not what we have found and sales are stable. Sometimes it’s best not to question the reason and just accept what the data tells you.”

Changing times Technology is changing the way businesses do business, no doubt. And significant shifts in technology, mobility and information are creating new opportunities and new challenges. In the UK, two new services from Royal Mail epitomise the postal revolution. The postal service has extended access to its Sameday collection and delivery service in response to growing demand from SMEs, marketplace sellers and consumers who want guaranteed delivery for urgent items. The Sameday website now allows anyone to book courier services online on a pay-as-you-go basis, anytime day or night, 365 days a year. Bookings are guaranteed for same-day delivery to almost anywhere in the UK and 98% are collected from the sender

OPI Magazine | October 2015

within one hour. Royal Mail has also enhanced its online postage and labelling service Click & Drop with the launch of international delivery services and multi-label creation. Online sellers can now buy postage and create labels for up to five items at once. Click & Drop also offers international services to 200 countries worldwide. Again, this is in direct response to reports that two-thirds of SMEs plan to increase their international sales in 2015, with 24% of e-tailers

complex regulations governing disclosures, legal notifications and other matters. These pressing challenges make document integrity a critical concern. To ensure documents are handled properly, content is accurate, and the right communications get to the right recipients, companies need to examine their entire approach to document output.” Barratt believes the changes in the SME landscape, with moves towards paperless offices, online invoices and employee payslips, have created a dramatic change in the traditional operation of mailroom activities. However, he adds: “Mailrooms are still a hive of activity, sending samples, small parcels and postal

“Sustainability and CSR are increasingly important and affect the role that mailroom and packaging products play” planning to start using online marketplaces to achieve this. Nick Landon, Managing Director of Royal Mail Parcels, says: “These new features open up a world of delivery at the click of a mouse and ensure that SMEs can spend more time selling and less time managing their distribution.” Pitney Bowes’ Shearer is seeing a new paradigm emerge, particularly in this SME space: “The convergence of shipping and mailing workflows, and the merging of digital and physical processes means businesses now view shipping and mailing as one process – sending. They simply want to send stuff, including parcels, statements, letters, etc, and are searching for a unified solution that addresses the current challenges they face in their end-to-end sending workflow. “In addition, businesses face growing pressure around compliance and client data security. They need an easy and cost-effective platform that ensures both the privacy of their customer information and compliance with increasingly

products through the traditional postal services and courier networks. “E-commerce is fuelling the growth of our traditional postal range of products, and we see significant growth with SMEs now capitalising on the international opportunities due to technology advancements that are allowing more global transactions and reach. All of this relates back to a simple need for packaging and postal products.” As Shearer summarises: “We live in a connected and borderless world of commerce. New technology is helping to bridge physical and digital mail, and the explosive growth in e-commerce is driving record volumes of packages around the world. “Yet businesses are grappling with the new complexities. Cloud technology and mobile computing are helping shape the future of our industry and it’s our job to develop innovative new solutions that will help our clients overcome these difficulties and meet their changing needs for mailing and shipping.”

Marking & Stamping | Category Analysis

Reports from the stamping sector are encouraging, but global sales remain patchy and geopolitical headwinds present a challenge

“The industry trend for vendor consolidation in the component channel and the falling number of independent stamp makers are indications of a market in decline”

When

OPI spoke to the leading players in the stamping sector, ‘steady as she goes’ is a phrase that seems to sum up their collective impression of the current state of this segment. But it’s far from a uniform picture, with strong geographical variances and the dark shadow of global politics casting its malign influence over the prospects of many troubled regions.

An uneven landscape As Franz Ratzenberger, Head of International Sales & Marketing at Austrian stamp specialist Colop, explains: “The stamp market as a whole seems to be quite stable, but it’s not homogenous. Overall we’re winning market share, but some markets are at completely different phases of maturity compared to others. “Despite difficult market conditions, we’re seeing increased sales in countries such as Germany, France and the UK and we’re making excellent progress in the US where there is great potential. The Central and South American markets are also doing very well.” Taiwan-based Shiny Stamp is also noticing regional disparities. Deputy Executive Manager Jimmy Chen says: “We’re enjoying steady growth and achieved an overall 14% increase in sales during 2014, but the individual rates of increase from customers in different parts of the world vary

enormously. The emerging countries are forging ahead and we’re fortunate to have clients and agents all over the globe that can tap into this.” Meanwhile, Roland Rier, CEO at Trodat in Austria, reports that the 2014 financial year ended with record sales of nearly F170 million ($192 million) – an increase of 9.6% – and this sustained growth trend has continued in 2015. He explains that Trodat’s focus is currently on the rapidly-growing Asian markets, especially China and India, where demand for stamps is very strong. Due to a recent acquisition the US is also back on its radar, although that market is challenging. Rier adds: “Every market in the world has its own very specific requirements concerning ink, stamp size, applications, etc. The key to success is to develop products that adequately meet those individual needs.” At Cosco Industries, Tom Price, Product Manager for Marking Devices, says: “On the whole, our business has remained stable, but the industry trend for vendor consolidation in the component channel and the falling number of independent stamp makers are indications of a market in decline. Recognising this has allowed us to focus our efforts on streamlining our product offering and organisation to strengthen our long-term market position.” However, global realpolitik is having a negative effect on many traditionally strong stamp markets. Conflicts, political uncertainties and international sanctions have weakened demand in countries such as Syria, Israel, Iran and Iraq. And the ongoing Ukrainian civil war and subsequent Russian intervention have battered local currencies and stifled sales. As Ratzenberger explains: “Understandably, economic reports from w w w.opi.net | OPI Magazine

Category Analysis | Stamping these regions have not been particularly positive. They were once key areas for the stamp industry, but local businesses must now set completely different priorities and resolve other problems first.” Chen agrees, but also sees a possible opportunity emerging: “Social and political instability is a huge problem that has a direct influence on sales in a given region. It’s hard not to be affected, but when the local situation changes sales may improve too. Take Cuba as an example – the recent political accord with the US means new market opportunities are presenting themselves and Shiny needs to put itself in a good position there to reap the potential benefits when they arise.”

The need remains Stamps still fulfil a vital need in business. As Price explains, a product that can authenticate a document or print text and codes onto boxes and packaging will always be needed: “While we also provide stamping materials that service the craft market, most of our success and focus is still on the business marking segment. This includes both industrial and general business applications, document authentication and the SME sector. We see the stationery market as a great segment for future growth opportunities.” At German stamp manufacturer Reiner, Marketing Manager Annette Zandomeni says that ‘Stamps save time’ is a slogan the company coined many years ago: “This is what stamping is all about – saving time and money during office work. Despite the gradual decline of the market during the past decades, this slogan still holds true. Metal stamps form a remarkably high percentage of the Reiner portfolio and that’s no surprise as there is no faster or more reliable way of printing information onto paper. “As the traditional demand for numbering machines and robust metal daters has declined, specific market niches such as post office or customs applications have remained stable or even increased, with new laws, regulations or standards acting as constant sales drivers.” Away from the traditional side of the business, Reiner has developed its jetStamp range of handheld inkjet printers designed for the modern office. They can link to computers, scanners and printers via USB and bluetooth interfaces, and include graphic capabilities. As Zandomeni explains: “Most importantly, they’re quick to use and save time. Many companies use them to print barcodes onto incoming mail that can be scanned afterwards

OPI Magazine | October 2015

into a document management system, or to mark and identity other documents, envelopes, or packages – there is a wide variety of office applications. They can also be used with special inks, allowing for stamping onto plastic and metal surfaces.” However, Price is more cautious about consumer enthusiasm for new tech: “Due to the nature of some stamping applications, advances in technology are not always fully embraced because of the additional costs involved. For example, some electronic handheld stamps and marking devices have been launched which have produced inconsistent quality for the cost. Hopefully, attitudes will change over time as innovation takes hold.” Chen agrees: “Though technology does bring added convenience and changes the way stamping and marking products are used, we still find that people rely heavily on old-fashioned techniques for authenticating documents.” As far as trends are concerned, Rier points to a move towards more colour at Trodat recently: “As a global player we see different

“Advances in technology are not always fully embraced due to the additional costs involved” colour preferences in individual countries, with our neon colour range being very successful in Latin American and Europe. Customers are also asking for lightweight, smaller products and new applications, such as a QR code stamp, for example.” Colop successfully launched its New Printer in 20, 30 and 40 sizes last year in Austria. It has recently followed this up by extending its range of models to include 10, 50 and 60 versions. “This was important for us”, says Ratzenberger, “because we’re now able to offer the entire printer range. We expect the large 50 and 60 stamps to be particularly successful as they offer a huge image window which is ripe for customisation. In contrast, the Printer 10 is characterised by its tiny size and can be used as a keyring. “Our Printer series allows us to meet the needs of a more selective customer base in this increasingly competitive market.” Despite the challenges, it appears that the stamping sector continues to hold its own and come up with innovative solutions that can help drive the category forward.

Your OPI

5 minutes with... Vicki Giefer, Director of Marketing, Innovative Office Solutions

Describe what you do in less than 20 words. Marketing services for a newly combined woman-owned independent dealer – S&T Office Products is now Innovative Office Solutions. Your first full-time job. While studying at college I was a cashier at Target. If you weren’t doing your present job, what job would you like to be doing? I’d be a sommelier. Your best piece of advice to someone who has just joined the OP industry. There are lots of layers to this industry – listen and learn. Your biggest achievement. My three daughters, who are all great businesswomen. The most memorable travel experience you’ve had while in the OP industry. Sitting for 13 hours in the airport to go to Nashville for the United Stationers CORE Live 2015 conference. The ice storms were horrific. Being from Minnesota, we’ve seen it all, but that was truly amazing.

“I’m relatively new to the industry – only ten years!”

What do you like least about the OP industry? Constant change… The biggest change that has taken place in the industry since your career began. I’m relatively new to the industry – only ten years! If you think about that timeframe, it’s been amazing – in particular, the consolidation among manufacturers and the power channel players. Your first car. A mint green 1968 Mustang Fastback (lots of rust). Your ideal night out. A nice dinner with friends – great wine, great friends. How could you go wrong? What sports team do you support and why? Pittsburgh Steelers as they have a lot of heart. It’s also where my husband is from. If you could change one thing about yourself, what would it be? It is what it is; no changing for this girl. Maybe the crease in my brow?

What do you think has been the best innovation in the OP industry in the past two years? The category expansion into facility supplies – it’s really brilliant. Your favourite office product. I love executive notebooks. The 6x9 size with a spiral bind works best for me. What do you think will be the biggest issues affecting the OP industry over the next five years? Obviously the potential merger of Staples with Office Depot. Narrowing the competition will necessitate inclusion of the progressive independent dealer in larger opportunities – it’s very exciting. What do you like best about the OP industry? Constant change…

OPI Magazine | October 2015

Any interesting hobbies or collections. I love to race cars.

Your OPI

Final word Your industry, your opinions Consultant & Author, Ralph Barnett

RIP the office products industry, c 1900-2015 THE

office products industry, after fighting a largely self-inflicted downhill battle, finally succumbed to a congenital defect, price deficit disorder (PDD), on 4 February 2015 when Staples announced the acquisition of Office Depot and, simultaneously, its departure from the industry for greener categories ‘beyond office supplies’. At birth, over one hundred years ago, the industry occupied a few dusty facings on an obscure stationery shelf in the general store. At Stage I PDD, manufacturers inseminated the industry with a potentially fatal flaw: discount from list. They created the price at which stationers should sell their products and sold them to stationers based on a discount from their artificial assertion. Initially, they instructed stationers to “buy in larger volume to qualify for lower prices in order to make more money”; thus implanting the destructive form of PDD: buy direct at any cost. At Stage II, stationers – primarily mom and pops – sprang up to serve the growing needs of the industrial economy. Stationers sold products at list price, which produced healthy profits. The opportunistic disease lay dormant. At Stage III, wholesalers emerged as an interface between manufacturer and stationer to improve service, albeit at a price mark-up. Stationers sold most products at list, but inaugurated promotions at discounted prices to entice customers to “buy in larger volume to qualify for lower prices in order to save more money”. Sales increased, gross margin persisted but profits slowed. The disorder stirred. At Stage IV, the post-war economic boom propelled many mom and pops to the rank of large retail stationer. Increased purchasing power allowed them to gleefully bypass the wholesalers’ price ‘penalty’ and buy direct. The malaise manifested itself. At Stage V, wholesalers, not to be left behind, touted price breaks on carton quantities to persuade stationers to “buy in larger volume to qualify for lower prices in order to make more money”. Ironically, wholesalers’ emphasis on price encouraged stationers to bypass them again and buy direct from the manufacturers at even lower prices. Submitting to the siren’s song, stationers trained customers to save more by buying more which, in turn, qualified stationers to buy direct at deeper discounts to make more money. The stealthy ailment advanced. At Stage VI, larger stationers proposed lower prices at ‘cost plus’ in a scheme to imply a customer commitment on ‘contract’ prices. Emergence of the contract stationer

portended the beginning of the end as the industry sleepwalked towards a slow, agonising death-spiral of growing sales, waning gross margin and perilously low profitability. The malady metastasised. At Stage VII, enter the superstores. The strategy of these larger-than-life reiterations was to outcompete traditional stationers by bringing contract prices to the retail consumer. Retail consumers devoured bargains hitherto unavailable and made superstores overnight sensations. Conversely, plummeting sales and profits forced thousands of traditional dealers into bankruptcy and countless others to the brink or early retirement. Deterioration of the industry multiplied exponentially. At Stage VIII, business customers flocked to the superstores in droves. Superstores developed distribution capabilities to serve these accounts and inadvertently embarked on the next era in the industry, that of the ‘super channel’. Five players ascended to super channel status: Staples, Office Depot, OfficeMax, Boise Cascade Office Products and Corporate Express (CXP). The sickness accelerated at breakneck speed and unleashed a virulent strain: unprofitable sales growth. At Stage IX, CXP became the poster child for exaggerating the industry’s PDD defect by expertly employing spreadsheets to lower prices on thousands of products for tens of thousands of customers. Acquiring customers with the industry’s lowest prices, CXP required constant cash infusions and three mergers to extend its life until finally swallowed by Staples for, ironically, its contract expertise. The illness entered its final phase. At Stage X, after the herd had thinned to four, then three, then two, Staples administered the industry’s last rites by acquiring Office Depot. The industry’s remains can be viewed at their final resting place near the bottom of a lengthy dropdown box on the website of the great general store in the sky, Amazon.com.

“Manufacturers inseminated the industry with a potentially fatal flaw: discount from list”

OPI Magazine | October 2015

Want the Final Word? Email editorial@opi.net

IN THE NEXT ISSUE • Big Interview with Ángel Alverde Losada, CEO of Ofﬁce Depot de Mexico • Show report and feedback from EPIC 2015