4 minute read
EMBRACING DIFFERENCES
In the second part of our feature on overcoming barriers to diversification, dealers explain how and why they diversified their product mix and the benefits this has brought to their business
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here is a debate in the office supplies sector currently as to whether the term ‘office supplies’ is indeed the correct nomenclature. There has been a move away from ‘office products’ over the years as dealers these days often provide so much more to customers than just stationery; now there is talk about whether it should be ‘office supplies’, ‘office equipment’, or something else.
Of course, that there is this debate is down to how effectively many dealers have diversified their product range over recent years; while the past two years have seen many businesses pivot, out of necessity, into new product ranges – especially PPE and sanjan – in order to keep going during periods of lockdown, this process had been going on for many years, as the traditional stationery market has declined with the rise of computer and digital solutions.
So how do dealers diversify successfully? There are various ways it can be done, and it all depends on the type of business we’re talking about.
TAKING IT SLOWLY
For Sarah Laker, who owns Marple Stationery Supplies, diversification has been a gradual process, starting with gifts and gradually expanding the range of complementary products over several years. With this approach has come experience of what works. “In our Marple shop sales of greetings cards have increased 40% over the past couple of years; we haven’t increased the space for them - just been cannier about what and how we buy – refreshing the stock, buying from more suppliers, having more variety,” she says.
“We have also looked at what our card publishers sell – and they all sell coasters, tea towels and soap, which you wouldn’t think to buy in a stationery shop, but we went with it last year in the run-up to Christmas and they sold really well.”
Some diversification has come in response to customer demand. “In the Wilmslow shop we have just put in some toys and sewing sets,” she says. “We did that because we were listening to what our customers wanted. We have a primary school just behind the shop so, twice a day, we have a succession of families walking past. They were coming in looking for lastminute party or birthday presents - we were selling them stationery, but thought there was an opening to sell them more. We have also increased our premium gift stationery and brought in ‘sweary gifts’ – people like a bit of rudeness on a pen or a pad – and they are going really well.”
IMPORTANCE OF RESEARCH
Sarah admits that diversifying did mean leaving her comfort zone of stationery, which was hard, but she took advice and did research before committing to spending on new products. “I didn’t know about toys or crafts, so I spoke to friends who have gift shops and used their knowledge, spoke to suppliers I trust and used trade fairs to source products – I prefer that to online as I can see and feel the products,” she says.
Research was also critical for Andrew Hudson of The Office Works as he was considering further diversifying the business into catering supplies. As his existing suppliers didn’t sell foodstuffs he had to do his own research, although he says that the internet is as good a place as any to do that.
“It is about having the ranges customers want – the product ranges customers want go from healthy snacks through to standard crisps and cereals – which can go beyond what the mainstream wholesalers offer,” he says.
“We have had to find specialist suppliers and, in the past year, we have found more niche wholesale catering companies that operate in particular sectors, such as healthy snacks, and that has made quite a big difference. The cash-and-carry type operations are quite limited.”
The diversification gamble has paid off The Office Works too. “My expectation is the catering side will be bigger than office supplies in five years’ time,” says Andrew.
INVESTMENT
Another way in which businesses can diversify into a new sector is through investment. Spectrum has been gradually ramping-up the digital transformation services side of its business in recent years and, as demand increased significantly during the lockdown, a decision was taken to invest more heavily in that side of the business.
Rob Cavill, managing director of Spectrum, says that the company took a front-foot approach to diversification, recruiting six people into the digital transformation team. “This gears us up for growth,” he says.
While he admits it would have been easier to postpone plans during the pandemic, and look to consolidate the business, it was necessary to capitalise on the opportunities emerging in the sector.
Alongside increased marketing, and a recent rebranding for the company, this investment has positioned the company as not just a copier dealer, but as experts in automation who can assist with digital transformation – and poised for significant growth, Rob says.
These mini case studies show there are many ways that businesses can diversify their product and service range in the sector. They demonstrate that barriers to diversification that are often more perceptual than actual – not knowing a market, the costs or just lacking in confidence – and are certainly not insurmountable. More importantly, the benefits of diversification, especially in terms of increased revenue, far outweigh the risks.
What do you think the new term to refer to the sector should be? Let us know on Twitter @dealersupport
