Dealer Support February by Intelligent Media Solutions

February 2012 Issue 200

INSPIRING BUSINESS SOLUTIONS FOR DEALERS

DEALER SUPPORT FEBRUARY | ISSUE 200 THE BIG ISSUE | MANAGING PRINT | PAPER PLANES

THE BIG ISSUE 200th edition of Dealer Support MANAGING PRINT Taking on MPS – part 1 PAPER PLANES Paperworld 2012 in review

FROM THE EDITOR

page 56

page 46

All change

“A recent estimate puts workplace conflict at a £4bn cost to UK companies”

Welcome to our 200th issue of Dealer Support magazine, marking almost two decades of supporting independent dealers across the country. We’d like to thank you for your input and support over the years, long may the magazine continue! At Paperworld’s European Office Products Awards, Unipapel CEO Millán Álvarez-Miranda reminded the audience (page 24) that although times of economic unrest breed apprehension and panic, it also throws up new opportunities, in that challenging times cause us to question our working practices and improveas a result. It doesn’t quite redeem the recession as a blessing in disguise, but is a good reminder that change can often be for the better. As we continue with our Brother Futures campaign this month, we invited a number of industry specialists up to Brother’s HQ in Manchester for a roundtable discussion about the future of the industry (page 36). Throughout the campaign we are looking at the bigger picture, to allow dealers to prepare for the shifting landscape of the office supplies marketplace, changing end-user behaviour and the effects of the permeation of technology over the next 10 years, however, the talking point this month has been of more immediate changes a little closer to home... With the recent purchase of Spicers UK by BeCap, one of the lynch pin companies of the industry has made significant changes to its team and proposal. Naturally, there has been a lot of hushed conversation (and some less hushed) about where the wholesaler’s upheaval will lead the supply channel. This brings to the fore how heavily the supply chain relies on this particular cog. This all comes at a time when, as part of our 200th issue, we look back at when the industry was not governed by just two wholesalers. Dana Whitehouse of B.O.S fondly remembers the standout sales reps with character (page 46), when dealers and manufacturers were working closely together. It seems these alliances are tentatively being rebuilt in places, and it will be very interesting to see how this develops.

Nina Rosandic, Editor

MANAGING EDITOR Julia Dennison julia.dennison@intelligentmedia.co.uk

DESIGNER Sarah Chivers sarah.chivers@intelligentmedia.co.uk

EDITOR Nina Rosandic nina.rosandic@intelligentmedia.co.uk

DESIGNER Peter Hope-Parry peter.hope-parry@intelligentmedia.co.uk

FEATURES WRITER Matthew Jane matthew.jane@intelligentmedia.co.uk

PRODUCTION ASSISTANT Sinead Coffey sinead.coffey@intelligentmedia.co.uk

COMMERCIAL DIRECTOR Vicki Baloch vicki.baloch@intelligentmedia.co.uk

SUBSCRIPTIONS MANAGER Natalia Johnston natalia.johnston@intelligentmedia.co.uk

SENIOR ACCOUNT MANAGER – MEDIA SOLUTIONS Matthew Moore matthew.moore@intelligentmedia.co.uk

PUBLISHER david collingbourne david.collingbourne@intelligentmedia.co.uk

intelligent media solutions suite 223, business design centre 52 upper street, london N1 0QH tel: 020 7288 6833 fax: 020 7288 6834 email: info@intelligentmedia.co.uk web: www.dealersupport.co.uk web: www.uspmagazine.com

Annual subscriptions are ABC available at a cost of £68.00 for UK and overseas by surface mail, £90.00 for airmail. Subscription enquiries should be sent to the above address Dealer Support is the leading monthly publication for dealers in the business supplies industry. It provides information on the industry (both in the UK and overseas), information for and about the UK’s independent dealers, as well as information and advice on running a small business. The views expressed in this magazine are not necessarily the views of the publishers. Copyright of all the material published remains with Intelligent Media Solutions Limited. No part of this magazine may be reproduced, copied, stored in an electronic retrieval or transmitted, save with written permission or in accordance with provision of the copyright designs and patent act of 1988. Printed in the UK by Buxton Press www.buxtonpress.co.uk

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Order from your preferred distributor:-

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INSPIRING BUSINESS SOLUTIONS FOR DEALERS

CONTENTS 60

February2012

INDUSTRY 8 NEWS AND VIEWS All the month’s news and views in the office products industry 14 LOOKING BACK: 200 ISSUES As we hit our 200th issue, we take a look at 18 years of Dealer Support 24 PAPER PLANES A rundown of Paperworld 2012 28 FACTORING FIGURES How was Q4 for the office products market? Gfk reports 30 A SAFE BET The BETT show illuminates opportunities in education

CAMPAIGN 33 FUTURE CHANNEL Brother looks into the business supplies crystal ball 36 SHIFTING SANDS Roundtable: What will it mean to be a dealer in 2020? 40 FIRM FOUNDATIONS With 23 years in the trade, Morgan and Morgan MD Michael Morgan explains how looking ahead pays off

44 MONEY MATTERS Finance expert Jonathan Boyers advises on dealer mergers and acquisitions

PEOPLE 46 LIFETIME TRADING BOS’s Dana Whitehouse takes us back to the start

MANAGEMENT 52 GROW YOUR BUSINESS This month: Managed print services – Part 1

56 PRESSURE POINTS Addressing the importance of staff morale 60 IDS LEAGUE: HAT TRICK We speak to three-time IDS Web Dealer winner Paperstone

FINAL WORD 62 STORMY WATERS Canon’s Matthew Searle contemplates where 2011 has left us

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Industry

NEWS

news Actions speak louder than words for Spicers Wholesaler tackles challenges of the New Year head-on In an eventful start to 2012, Spicers has challenged manufacturers to lower their prices and made major changes to its management structure in an attempt to stay ahead of the curve. The wholesaler made a request to manufacturers to reconsider their January 2012 prices on the basis of reductions seen in commodity pricing, during a “robust” meeting that took place several weeks before the Paperworld show in Frankfurt. Spicers CEO, Alan Ball told Dealer Support: “We have asked [the manufacturers] to reflect the fact that commodity pricing has significantly reduced in the last four months.” Responses from manufacturers concerning the request were, according to Ball, “varied, some gave benefit, some are due to come back and some are fighting it.” When asked to justify the requests made by Spicers, Ball explained: “All manufacturers increased prices based on an ‘annual’ review, this is what frustrates me, [they] increase prices when commodities go up but don’t reduce them when commodities go down.” Ball added that over 100 manufacturers had increased their prices from January 2012, “many ahead of inflation, last year there was on average three increases in the year. “We want to allow the dealers to be more competitive in the marketplace against both the contract stationers and the market,” he said. The meeting came within weeks of Spicers announcing that it was disbanding its UKIMT board, and replacing it with a strategic leadership team. This news came against the back-drop of merchandising director John Fenton and supply chain director Vida Barr-Jones’ redundancies. Tom Rodda has been appointed sales and marketing director with Jeanette Bresitz and her team now reporting to him. Mary Curtis, who recently took over as Director of I.T. at Spicers, will continue to report to Sarah Jones. Shirley Irons has been appointed as HR director, and Greg Pritchett takes responsibility for all procurement, catalogue production, pricing and data under the new title of commercial director. Furthermore, David Molyneux now reports to Jones as director of inventory while Mark O’Neill has taken the role of operations director. Ball said: “Spicers has driven change and innovation through the sector in the last twelve months and as the leading wholesaler it is responsible to continually challenge and exceed expectations; particularly under our new ownership. “Communication flow is a fundamental enabler of change and to that end the structure I have implemented gives ownership for each discipline to own and share information across all of our stakeholders. This is a team with a strong balance of OP industry experience and sectors that have seen successful growth and change.”

february 2012 www.dealersupport.co.uk

Red Box employee wins customer service award Kris Colwell, e-Support manager at Red Box, has been crowned Employee of the Year by Redbox’s parent company, Colway, beating three other shortlisted nominees to the title. The award was established eight years ago to reward achievement and promote outstanding performance Colwell commented: “It’s a great honour to win and be recognised amongst my colleagues for the high standards of service myself and my team give to our customers”. Gordon Christiansen, Colway MD, commented: “The Red Box e-Support team, headed by Kris, manage and respond to customers placing orders with us online. Feedback from our recent customer survey consistently highlighted the exceptional customer service provided by Kris and his team, who attain a seven-minute response time to all queries. Having employees like Kris is essential for the future of our business and it’s important we recognise their achievements.

Arrow wins with Robert Horne Robert Horne has given Cheshire-based dealer Arrow Business Systems the accolade of ‘Most Improved Reseller’ and awarded the firm an Apple iPad 2. Robert Horne Group launched a Navigator Paper incentive at the XPD conference last October. Alec Scriven, MD of Arrow Business Systems commented: “I was thrilled to win the Apple iPad 2 just before Christmas. It was a wonderful gift for my family. The competition coincided with me switching my quality paper supply to the Navigator range. As an office supplies and Ricoh copier dealer, the range of papers we supply is very important. Our customers have found it’s not only a quality, cost effective paper but it has also reduced the amount of paper jams. Arrow is now converting customers buying budget papers to purchasing Navigator.”

NEWS

Apogee supporting children with Capital FM

IPad stamp of approval

Michael Portillo and Capital FM’s Roberto launch 2012 partnership between print and digital office supplies dealer Apogee and Help a Capital Child

The two COLOP UK stamp manufacturers asked dealers to identify 30 1980s song titles and artists from a snippet of the lyrics. Quiz winner, Lesley Tranter of the Advantia dealer said: “We really enjoyed doing this quiz. I gathered together a few of my colleagues and found that between us we remembered all the songs. We were transported back to the 80s and were singing in the office for a whole day. I am absolutely thrilled to have won the iPad.”

Apogee Corporation, UK independent supplier of digital office solutions and managed print services, has chosen Help a Capital Child as its Charity of the Year for 2012, having raised over £18,000 for the cause last year. Help a Capital Child attended Apogee’s Expo ‘Action with Vision’ at The Four Seasons Hotel this week, where Michael Portillo and Capital FM presenter, Roberto, launched the partnership. Also involved in the launch was 2008 Olympic Diving finalist and current European cliff diving champion, Blake Aldridge, who is sponsored by Apogee. Apogee’s Rowing Team previously raised more than £18,000 in The Great River Race for the charity in 2011. The delegates at ‘Action with Vision’, attended to learn about emerging technologies and smarter business practices for this age of austerity. They were entertained by both Michael Portillo, who focused on the Power of Partnerships, and by Roberto from Capital FM, who very movingly explained the wonderful work that the Charity does for disadvantaged children throughout the UK. Both Apogee and Capital FM work in the same areas throughout the UK and look forward to helping the children in these regions. Contact fundraising@ apogeecorp.com should you wish to join in Apogee’s fundraising activities or visit www.justgiving.com/apogeecorporation if you would like to make a donation.

“Communication flow is a fundamental enabler of change and to that end the structure I have implemented gives ownership for each discipline to own and share information across all of our stakeholders. This is a team with a strong balance of OP industry experience and sectors that have seen successful growth and change.” Alan Ball, CEO, Spicers, explains the logic behind the creation of the company’s new strategic management team.

Lesley Tranter of Keeley Travis Office Supplies has won an iPad 2 in the William Jones Clifton and Mark C Brown annual dealer quiz.

New Light Shed on fall of Helix Statements made by Helix’s MD Mike Pell concerning the company’s move into administration are inaccurate and misleading, an industry source has revealed Comments made by the MD of Helix last month concerning the company’s move into administration are incorrect, an industry source has revealed. MD Mike Pell stated that Helix’s move into administration was a result of a transition currently taking place from a family run business to a new administrative structure, but Dealer Support’s industry source has revealed that the manufacturer had gone into administration as a result of a loan being pulled by a finance company, leaving Helix unable to pay its suppliers.The industry source stated that the interview given by Pell “does not reflect the actual reality of the situation” and that the positive spin was “designed only to give a good impression for potential suitors and is timed immediately prior to the [Paperworld] Frankfurt show”. “We are trying to work through this with all parties in a very professional and integral manner to see how we can retain what is a very successful and profitable business,” said Pell in the interview.The industry source said redundancies made last month by the company were done so without redundancy pay or notice, and that some redundancies made previously by Helix had not been paid in full. Helix has been under the ownership of the Lawson family since it was founded as The Universal Woodworking Company in 1887 and David Bennett and Paul Addison of Grant Thornton UK LLP were appointed joint administrators of Helix Ltd and Helix Group on 23 January 2012. Helix declined to comment on the allegations.

www.dealersupport.co.uk february 2012

Industry

NEWS

VOW+ partner event twice as successful With a line up of keynote speakers including the highly successful entrepreneur and Dragon, Hilary Devey, and more than 20 prizes up for grabs in the famous Interactive Zone, it’s no wonder that VOW’s second annual VOW+ partner event saw over twice as many attendees as the previous year. VOW’s exclusive event hosted more than 210 reseller representatives, suppliers, and other professionals within the industry on Friday, 3 February in Solihull. Over 100 of VOW’s partner businesses were represented at the event, nearly doubling the size from the 2011 event. Last year’s successful event laid the groundwork for the 2012 day with the repeat inclusion of VOW and industry speakers as well as keynote speakers from outside the office products industry. It also included the now well-known Interactive Zone and of course, the Networking Dinner in the evening. However this year, VOW introduced its new VOW+ Partner Awards at the dinner recognising some of their its top partner resellers. The one-day event started with presentations from VOW’s own Adrian Butler and Simon Wallis providing updates and future plans on both the company as well as the VOW+ Partner Programme. Following on, John Taylor from M2, VOW’s managed print service partner, discussed opportunities in the MPS category, as well as the service now offered through VOW; additionally Martin Wilde presented his findings from the research he was commissioned by VOW to undertake on the facilities management market. Then keynote speaker Melanie Howard from Future Foundation talked about the importance of thinking long term when business planning. To wrap up the presentations, Dragons’ Den and Pall-Ex CEO Devey took the VOW resellers through her journey of starting up her own now £100m business and the importance of taking advantage of all the opportunities available to aspiring , like those offered through the VOW+ Partner Programme.

After the inspiring finish from Devey, resellers than joined the excitement of the Interactive Zone featuring 24 of the industry’s leading suppliers as well as five of VOW’s service partners showcasing the newest VOW+ services in the Interactive pods found in the VOW Zone. More than a dozen stands featured worthwhile prize giveaways, including an iPhone 4S from Nestlé and Tetley, Champions League Football tickets from Sigel, Franken and Colop, a weekend trip compliments of Jalema, an iPad 2 thanks to HP and a generous gift voucher from Alexandra. Activities on the stands also generated quite the buzz including 3M’s stunning Marilyn Monroe lookalike, Xerox’s classic steel drum duo, Canon’s world famous balloon artist, Fellowes’ Crystal Maze-style money grabber, Exaclair’s Rhodia Roulette table and the most popular, Brother’s F1 simulator, which led them to take away the prize of ‘Best Supplier Stand’ later that evening. Joining Brother in the celebrations with their awards were VOW+ partners, Brack Office Solutions, Prism and Harts Business Solutions, both winning the Partner Excel Award (in different categories) for the highest sales growth from 2010 to 2011. Harts won the 2011 Partner of the Year award for delivering increased growth in its sales, as well as measuring the highest number of VOW+ initiatives supported. Adrian Butler, VOW MD, commented: “We wanted to recognise those VOW+ partners who really put in the extra effort, not just within their own companies to increase their sales but also for the partner who showed their commitment and support to both VOW and the VOW+ programme by taking part in the highest number of VOW+ initiatives. It’s through this partnership that we hope to see continued success for both our business as well as the businesses’ of our partners.” All in all, the event rang successful both in quality and quantity according to resellers, suppliers and VOW hosts.

AVERY REWARDS SET TO BOOST PROFITS IN 2012 Avery has launched its best ever consumer promotion for 2012, designed to help customers increase consumer loyalty and boost their profit margins. Avery Rewards will run throughout 2012 incentivising purchases of Avery products by offering instantly redeemable vouchers that consumers can spend on some of their favourite things. With the promotion including vouchers for New Look, HMV, Boots, Marks and Spencer and even Red Letter Day experiences, the range of rewards on offer is bigger than ever before, appealing to a wide range of consumer interests. Promotional flyers will appear in packs throughout 2012, directing consumers to www.averyrewards.co.uk, where they can instantly redeem their voucher codes or save them up to use on bigger rewards later. Avery will also be running a quarterly prize draw throughout the promotion to ensure continued interest and trial of new products throughout the year. A wide range of Avery products are included in the promotion, including the full range of Avery labels, business cards and even the brand new All-in-One Desktop Organiser range. To see the full list of promotional products visit www.averyrewards.co.uk

To find out how you can make the most of Avery Rewards contact the Avery Trade Helpline on 0800 857 0505.

february 2012 www.dealersupport.co.uk

Taking Business Solutions to New Dimensions Olivetti has been pioneering the launch of its diverse range of products and solutions over the last 2 years, ensuring its sales channels can expand the products and services, they provide, to both existing customers and to other markets they may be unfamiliar with. Now Olivetti has built up one of the largest, and probably most diverse, product portfolios that the business, IT, retail, education, banking and gaming markets have ever seen. Not only does Olivetti’s business product range offer a vast array of colour and black and white A3 and A4 MFPs, and desktop solutions, to suit virtually any type of business printing, copying and document management application, but it has a very successful range of range of 10” to 15” laptops, 10” and 7” Android touch tablet PCs and a range of interactive digital whiteboards that can be used for all manner of education and business training purposes. Olivetti is one of the world’s leading banking equipment suppliers, providing behind the scenes, pass-book printers, readers and scanners in major banks and building societies world-wide, and is also a provider of self-service ATM solutions and display equipment for imparting information to customers waiting in queues. One of the most recent, and most unusual solutions, to be launched, is the new OliTouch, a digital ling cabinet for a company’s documents, to simplify and speed up operations without changing user routines, simply by touching the screen. Documents can be retrieved and managed, immediately, without long and complicated searches through the archive. What is more, users can either save to their own server or save an innite number of documents to the Cloud, and, there is even an option to email documents to Olivetti’s 3rd party postal provider, from the OliTouch system, to print, fold, stuff, frank and send out, to avoid users having to wait in post ofce queues. Olivetti’s ranges are available through their dealer and distributor network only in the UK. There is no direct sales operation. Olivetti provides full sales and technical training and provide dedicated account management, to help all dealers through the transition to sell these products to new markets. If you are interested in any of these Olivetti products or in becoming an authorised Olivetti Dealer, please contact us.

01908 547980 Email: c.gordge@olivetti.com

www.olivetti.com

Industry

NEWS

Nemo celebrates 25 years news in brief... at catalogue launch Ingram micro strikes Suppliers and members gather to hear dealer group’s plans for 2012 The Nemo Marketing and Purchasing Group kicked off its 25th anniversary year by welcoming a record number of suppliers to its 2012 catalogue launch earlier this month. Commercial director Tim Beaumont introduced suppliers and members, gathered in the Goyt Suite of Bredbury Hall Hotel in Stockport, to the Nemo staff and spoke about the dealer group’s growth strategies and plans for 2012. Delegates then made their way to the exhibition, which gave exhibitors a chance to hear the feedback about Nemo’s plans from dealers. Suppliers had good things to say about the event. Claire Reay of Newell Rubbermaid called the event “a favourite among us suppliers”, and felt this year communicated a “clear message” from Nemo on “how they would like 2012 to progress”. Stan Pratley of William Jones Clifton said: “Fantastic catalogue launch presentation – members had come out of Tim’s presentation all fired up and ready to invigorate their own business activities again.” Following the exhibition, Nemo held its now traditional Chinese meal for suppliers as a thank you for their continued support. Beaumont commented: “Despite, a gloomy worldwide economic outlook and the current European financial woes, Nemo has developed strategies for growth, and believe that 2012 will be a landmark year.” Nemo’s annual conference is due to take place on 22 and 23 June at De Vere Carden Park, Chester, where the 25th anniversary celebrations will continue.

ecommerce partnership The technology wholesaler’s partnership with Globalware will give resellers new opportunities in the online channel. Netherlands-based GlobalWare offers a blend of flexible technology and “turnkey” ecommerce solutions, said to “revolutionize” the way people engage with the online market. Ingram Micros’s Terry Tysseland, senior VP operations and supply chain, North America, stated: “We are very pleased that we are now able to offer through this partnership full frontstore ecommerce capabilities to all customers.”

CANON initiative aimed at driving forward business Casio Electronics has launched its new 2012 partner programme for new and existing

Wick Hill appointed as Silver Peak distributor The distributor’s latest partnership allows resellers a chance to optimise client networks while cutting costs IT company Silver Peak has appointed Wick Hill as a value added distributor for the UK and Central Europe to offer the company’s full range of physical and virtual wide area network (WAN) optimisation appliances. Wick Hill believes that the addition of Silver Peak’s data centre class WAN optimisation solutions to its portfolio will enable them to maximise their client’s networks while lowering on-going telecommunications and infrastructure costs. Chairman of Wick Hill Group, Ian Kilpatrick stated: “Continuing growth in data volumes and the need to access data anywhere puts major pressure on the underlying network infrastructure. Adopters of critical IT initiatives such as cloud computing and virtualisation[...] require proper tools to address these challenges cost-effectively. Silver Peak fills this gap.”

value-added resellers (VARs).. The company says the programme will provide Casio’s network of resellers in the UK with a range of benefits to support their sales and marketing activities. The Partner Programme is available directly from Varlink, who recently became UK distributor of Casio. Epos Distributor, a sales division of Varlink will also be distributing Casio’s new Android based Epos system.

closed loop HITS 1BN LANDMARK Banner has announced the production of over 1 billion sheets of 100% recycled Closed Loop paper. Sales of the paper line have grown strongly since the launch of Banner’s innovative Closed Loop document destruction

87,000 The number of trade visitors to the Paperworld Show in Frankfurt

Diary

and paper recycling service.

6 March Society of Old Friends Members Guest Night London

2009 in response to a request from HMRC,

24 April National Stationery Day UK

february 2012 www.dealersupport.co.uk

Closed Loop was originally developed in and Banner is now the sole provider of Closed Loop services under the mandated Government Office Supplies Contract.

InDustry

dealer support

Dealer support: 200 issues in revieW as Dealer Support reaches its 200th issue, we take a look back at the early days and how much the industry has changed since our first issue in october 1993

february 2012 www.dealersupport.co.uk

dealer support

ealer support started its life in late 1993 as a publication aimed at UK office supplies dealers at a time when the sector in the US was experiencing a considerable transformation. The early nineties posed a significant concern to UK dealers as they had to endure the possibility of contract stationers, mail-order companies and superstores coming across the Atlantic and turning the OS market on its head. Dealer Support was devised as a direct response to the predicted upheaval in the office supplies industry and as a form of comfort and (hence the name) support for office supplies dealers within the UK market. Dealer Support caught up with one of the publication’s stalwarts, David Collingbourne, to speak about its origins and what has changed for dealers and Dealer Support in the past two decades. “The climate in the office supplies industry throughout the early nineties was not the most comfortable of situations,” says Collingbourne. “The dealer base had been wiped out in the US either because they had been bought out or they had been kicked out of business.” Collingbourne explains how the huge impact of mail-order, contract stationers and office supplies superstores companies from the USA had seen the dealer population in the US literally decimated, from around 14,000 to 1,200. The news drifting across from America had “dealers in the UK shaking in their boots,” he adds. Collingbourne explains that at the time when Dealer Support was starting out, the half a dozen trade publications in office supplies had little to differentiate themselves from one another and there was no publication specifically aimed at the dealer market. “The trade publications at the time were quite bland and were mostly trying to keep everyone happy, incorporating the whole of

“We exposed the methods of the channel, the way they went to market and their pricing model, and exposed it so that dealers could compete with it effectively”

the office supplies industry, including superstores,” he says. “It was nowhere near incisive enough to appraise dealers of what was coming and how to deal with it – so we came up with the idea of Dealer Support.” Collingbourne recalls how Dealer Support moved from being a dealer-centred magazine of the office supplies industry to a necessary codex alerting dealers of the threat from office supplies’ transnational companies. “One of the things that was interesting at the start is that when we began on the path of being very aggressive and it took about a year or two for people to get it,” he remembers. “People were saying at the time: ‘There are six publications in this industry at the moment, we need you like we need a hole in the head.’ “The difference that we made was that we went from passive support, from just trying to ignore the other channels focusing on dealers,” he says. “But then we took it to the next stage, or maybe a stage beyond that, which was to go to war and expose the methods used by those other channels in a very kind of aggressive proactive support of dealers and to support dealers too.” Collingbourne recalls how Dealer Support had to endure significant pressure from the OS giants from across the pond, being threatened with litigation on two separate occasions. “We didn’t focus on the companies specifically,” he says. “But what we did do is expose the methods of the channel and so we looked at the marketing model and looked at the way they went to market and at their pricing model and basically exposed it so that dealers could compete with it effectively.” Since its beginnings Dealer Support has undergone a great deal of change in order to keep at the cutting edge of the UK office supplies industry. As the industry has stabilised over the years so has Dealer Support changed to the requirements of its readership, incorporating a cutting edge news publications to alert dealers of the changing market to reliable and sound advice on how to operate their business.

www.dealersupport.co.uk february 2012

Industry

dealer support

A blast from the past After 200 issues of Dealer Support we take a look at the way the industry has changed and catch up with some faces from the past

Graeme Chapman Former chairman of Office Friendly and former executive of Acco and Kingfield Heath. Graeme Chapman was awarded an MBE by the Queen in the Millennium Honours list for his charity fundraising. In the early 90s there were up to 20 general stationery wholesalers, including Spicers, John Heath, Neville & Gladstone, Murfax and Kingfield, plus many local companies. Following much consolidation, today there are only two. “Many dealers yearn for more choice, and some industry pundits are still surprised that the American wholesalers haven’t crossed the pond,” says Chapman. Fondest memory: “I’ve had many, but one image that won’t leave me is of being on a sales trip to Saudi Arabia when I was arrested by the Saudi police for taking photos in a sensitive place and accused of being a British spy. I told them that if I was a spy, I would not have a large SLR camera, but a tiny lens hidden in my teeth…so they sent

for a dentist to check me out. After more than 24 hours with the help of my Palestinian translator I was given my freedom back.” When Dealer Support arrived 20 years ago, Chapman found it “raw, entertaining and informative”. “I’m a great fan of trade magazines,” he says. “They not only keep the industry informed but often provide angles and talking points that should be aired and discussed and should at times be controversial. For its first decade Dealer Support witnessed at least two other OP magazines leaving the scene and it was trying to find ‘its own place’. “Much evolution has taken place, under several editors, since then and today I believe it has found its place, the recent re-design has kept it fresh and very readable.”

Paul Musgrove MD of Nectere and former board member of Integra office solutions and the Dealer Alliance The biggest changes to the industry have occurred in the last five years as technological advancements and increasing environmental demands have changed customer requirements. “Buyers have become more sophisticated and are increasingly aware of how our marketplace operates,” comments Musgrove. “As a result, they are placing much higher demands not just on product prices, which is squeezing margins, but also on reducing soft costs to their business through improved ecommerce, logistics, reporting and customer service from their chosen supplier. This is even more important in today’s current economic climate.” In the past it was much easier to achieve higher margins and get away with poorer quality sales and service and still maintain a relatively healthy business,” says Musgrove. “However, whilst current trends have moved towards more online transactions there will always be a place for personal relationships,” he says. “People do still buy from people, so if you can provide

February 2012 www.dealersupport.co.uk

exceptional service, support and proactive account management there will always be opportunities to develop and to grow in this industry.” Fondest memory: “Being one of four members of [the] National Dealer Association and Instat, who met and formed the first board of Integra. Also, setting up Nectere was necessary to fulfil the evolving requirements of our industry, and has continued to improve the quality of life and business for our partners – very fond memories. “Twenty years ago Dealer Support tended to be more of a news provider rather than a vehicle for reflection on best practice,” recalls Musgrove, who believes that the magazine has evolved significantly. “It provides a great personal insight into the dealer fraternity and that to succeed in this industry excellent personal service continues to be king,” he says. “What is important is that the publication still focuses on the dealer community and not just the office supplies industry, which still sets it apart from other publications.”

InDustry

dealer support

DaviD lanGDoWn MD and co-owner of XPD, former MD of Officepoint and executive member of the BOSS Federation Langdown believes that “for an industry that plodded along for decades, the past 20 years has probably seen the greatest changes in the history of business supplies. The adoption of PCs, which were supposed to signal the dawn of a paperless office simply lead to the development of personal printers and the production of even more paper, plus of course ink and boxes to keep it all in. What a typical ‘stationer’ sold 20 years ago probably accounts for about a third of what they sell now, the balance being made up of EOS, machines, FM and services. “Resellers have become more sophisticated, e-commerce is commonplace and what were exceptional services are now standard,” comments Langdown.

“Differentiation has become harder and commoditisation of just about everything pervades the industry.” What hasn’t changed he says, is that the industry remains a great one in which to work. “It’s a small industry where partnership and cooperation prevail, and where people generally make many friends and few enemies,” he says. “It’s populated by people who care, and who have an entrepreneurial spirit that continues to see SMEs thrive despite competition from all quarters. Even through the deepest recession most of us can remember, there are new start-ups, mergers and acquisitions and great opportunities for the independent dealer channel, which remains robust in spite of everything.”

aleX tatham Commercial director at Westcoast and former MD of Simms international, Alex Tatham has over 17 year’s experience in the IT industry “The IT channel has changed dramatically over the past 20 years but the traditional office supplies channel hasn’t really moved on fast enough,” comments Tatham. “Hence, it is inevitable that the fluid, efficient IT channel is making perhaps the biggest impact on the office supplies business. As everything increasingly digitises, office suppliers that will survive and thrive are increasingly moving to support IT related products. Distribution at high margins can no longer compete with faster nimbler competitors that are prepared to live at

four per cent gross margin and the effects on dealers will be dramatic,” he says. “Dealer Support is a must read every month though. The editorial team’s insight into what is happening and sharing best practice always affects our following month’s activities in sales and marketing. Despite the economic gloom, there is plenty to be positive about in the IT industry and innovation is the cornerstone of growth. I know Dealer Support will continue to show dealers where they can thrive in the years ahead. Congratulations on your 200th issue!”

Geoffrey betts MD of Stewart Superior and former MD of Evermark. Geoffrey Betes also worked as West End Sales manager of EMI music in the 70s “In 1992 I had just learnt how to use a fax, was always looking for a phone box that worked, had never heard of the web and thought a ‘backend programme’ was a medical treatment,” recalls Betts. “The shift since then into IT has been significant for the whole industry, putting pressure on margins as people are using less traditional stationery in the office and replacing it with the Apples, Blackberries and Microsoft.” “Adapt or die. The industry then began to look at what else it could sell and began to offer services to its customer outside of just office supplies, archiving being just one. FM began to attract attention, so much so that coffee quickly entered the top 10 products the industry sold. This process has to, and will, continue. The pace of change in life continues to increase and we need to move with it. The youngsters of today use less paper, for the first time we are seeing a decline in this sector and this trend will continue, there is no clearer message regarding the future.

february 2012 www.dealersupport.co.uk

“Congratulations on your 200th issue! I think Dealer Support has done a tremendous job in keeping the dealer informed and aware of everything that is taking place in our industry. It has offered great support to the industry generally and is many people’s ‘home page’ which is a tremendous achievement in itself.” Fondest memory: There are so many. Just one of the funniest moments was when we had our French agent working on our stand at Frankfurt and had [a] fridge full of beer on the stand. At the first evening’s ‘stock take’ we noticed stocks had diminished considerably, we hadn’t given any out (the industry prefers champagne!) and that we had one very happy French man. This went on all week and we never saw him take one. Genuis! And thanks always to Jayne Dixon who got me home from Cannes minus wallet, credit cards and golf clubs – it’s a long story.”

T! R E

A ER

A DE

WWW.GHNDIRECT.CO.UK

BUY EMGEE PRODUCTS DIRECT AND SAVE MONEY!

G.H.Neville Ltd, the UK family-owned manufacturer of Emgee branded filing products, is proud to announce the launch of its dealer-direct order website, www.ghndirect.co.uk Registering online will enable dealers to purchase Emgee and Keba branded products, previously available through the Spicers catalogue, and take advantage of exclusive special offers such as free delivery on orders over £100 and pallet deals.

Director Dave Neville says: “Emgee is a well-established brand in the UK office products market. Having been established in 1927, for the last 40 years we have supplied dealers via the wholesaler channel but for 2012 we are returning to dealing directly with dealers, as our wholesaler contract has come to an abrupt end. The dealer-direct website gives you the opportunity to continue purchasing Emgee products, and supply your customers with the familiar and reliable filing range. “We are looking forward to this exciting opportunity to work closely with dealers old and new once again. We understand this route will not be suitable for all dealers but if you want to make some serious savings, have a look, you might be pleasantly surprised.” Please be aware that former Emgee catalogue codes will be fulfilled with alternative brand products. Please be careful and inform your customers.

G.H.NEVILLE LIMITED, UNIT 1 ALBONE WAY, BIGGLESWADE, BEDFORDSHIRE, SG18 8BN | TEL: 01767 316437 | GHNDIRECT.CO.UK

Industry

dealer support

Alan Ball MD of Spicers “Looking back and tracking the history as I have, the main change has been the proliferation of new wholesale suppliers but a significant reduction in office products wholesalers,” says Ball. “As a newbie I would say of the past, the industry’s heritage and relationship culture is well worth holding onto. On the opposite side, the past is the past and dealers and wholesalers need to move on quickly to the new demands of consumers. I would say that Dealer Support is a communication channel for the dealer community and it is important it is still around in another 20 years.”

Debbie Nice FM category manager at Vasanta, former marketing director at Office Friendly and head of marketing at Kingfield Heath Nice started her career working for Spicers, where bestselling products used to include Tipp-ex, carbon paper, and typewriter ribbons’ fax rolls hadn’t yet arrived in the range. “We didn’t sell EOS and machines,” she says. “Twenty-six years later we are selling coffee, hi-vis vests, toilet rolls and ladders. The traditional suppliers continue to innovate and come up with improved products.” “Dealer Support is an excellent trade magazine, which has evolved over the years to help dealers embrace new product areas and opportunities. As new suppliers have entered the market, Dealer Support has got them involved with the publication to help keep the dealers informed. Happy 200th Issue, long may it continue.”

October 1993 Dealer Support magazine is founded by Bill Armstrong, Graham Ludaine, with David Collingbourne joining shortly after

January – April 1994 Dealer Support changes its tactics and starts to take a more militant line to inform dealers about the incursion of contract stationers from the US and support dealers in the UK

1994-1995 Dealer Support publishes a series of articles exposing the sales methods and marketing models of mail order companies and large contract stationers

1998 Office Depot merges with Viking

1999 Kingfield acquires John Heath, creating Kingfield Heath. Kingfield’s annual turnover approaches £100m

2000

Ron Wotherspoon

Office Depot enters European contract stationer market

Former MD of Interactive Products and winner of Outstanding Achievement award at the BOSS Federation

2008

“Today’s office supplies market is mature and sophisticated, a highly competitive, less friendly, less intimate place” says Wotherspoon. “The channels are more diverse than ever and the competence of the players is challenged more than ever.” Fondest memory: “I still cringe when I recall inviting David Brown, the then MD of FH Brown of Burnley, a very successful dealer at the time, to be guest speaker at a big Progress conference at Heathrow. He started by saying to the 230 guests: ‘You know Ron Wotherspoon is a difficult man to ignore but if you try, it is well worth the effort!’” He remembers Dealer Support as a “breath of fresh air”, a magazine dedicated to the independent dealer, it gave case studies anecdotes and information without the vested interest of a particular group or wholesaler. “David Collingbourne gave us a real asset that has continued to play a useful role in life of our trade,” he says. DS

TImeline

February 2012 www.dealersupport.co.uk

VOW formed as combined wholesale businesses after management buyout of Kingfield Heath.

june 2008 Amazon launches UK office supplies store

2011 UK market for personal and office stationery estimated at £1.01bn

february 2012 Dealer Support publishes its 200th issue

vendor profile

renz

Rolling with the punches Punching and binding manufacturer Renz has put its office machines specialist out on the road, to give end-users a hands-on taster of what the machines can offer, and to help dealers drive sales

february 2012 www.dealersupport.co.uk

renz

ith budgets tightened and the growth of ecommerce platforms, sales teams are being squeezed in the office supplies industry and low quality products have flooded the channel – to the detriment of the local dealer and also to the end user. Binding and punching specialist Renz has recently made a move to buck the trend and, in order to give independent dealers the best chance of a sale, has employed Paul Simpson, to visit end-users on behalf of dealers for tailored demonstrations and to support business supplies teams in selling a high-quality finishing solution.

Personal touch

As any good dealer knows, and as Renz will agree, shifting boxes is not the job of an independent dealer, it’s about offering a customised service to your account base. Similarly, a space in a catalogue is unlikely to sell a binding machine – a hands-on bit of kit, used in offices the world over, is best sold through a customised face-to-face presentation. “You can’t get away from it, punching and binding can be labour intensive, but if you can get into businesses and show customers how they can make best use of the machines, it becomes a much easier sell,” says Simpson. For those dealers who are unfamiliar with the Renz products and best use, Simpson is keen to step in with expert backing, to support the dealer, build customer confidence in the range, and encourage repeat sales. “The idea is to take all the hassle out for the dealer and the sales reps.” However, Simpson is keen to point out that the presence of the dealer is an added benefit. “I encourage dealers to join me at demonstrations, and strengthen their relations with the customer. However, that’s not always possible, but we are flexible either way.” Renz is focusing on a tailored approach, as Simpson explains: “Everything has become a bit more impersonal with websites and social networking. It’s all about that personal touch.” Tailored knowledge

Having been in the industry for 100 years, the German manufacturer entered the UK market 21 years ago. Renz was quickly labelled as the ‘Rolls Royce of binding’, the company has the largest range of binding and punching solutions and is a specialist in robust, reliable and quality machines. Renz has seen the marketplace changing, whereby companies are very careful about choosing where to spend, as Simpson explains: “The USPs of Renz do not lend themselves to the catalogues – you wouldn’t buy a Ferrari unless you’d taken it for a test drive!” Simpson is out in customer offices securing the deal and making sure that clients have a hassle-free introduction to the Renz. For those dealers who would like to equip their team with specialised knowledge, Simpson can visit dealer

offices for workshop training. “We can offer product training sessions and refresher courses every 6 months or a year, and also update them on any new products we have to offer end-users.” Revenue stream

Since Simpson started going into end-user offices with the Renz machines, the company has seen a marked increase in sales, proving that the formula works, and that dealers are benefiting. “It’s generating more business and more revenue.” Renz offers suppliers a multi-platform approach, to target both existing and new customers and help dealers with marketing support. As Simpson explains: “We have a whole host of marketing solutions dealers can use, from digital media to printed collateral, to case studies and samples, to allow the dealer to communicate the company message.” Also, the sale of a Renz machine opens up an opportunity for repeat business from the sales of the consumables, ensuring continued contact with the customer.

You can’t get away from it, punching and binding can be labour intensive, but if you can get into businesses and show customers how they can make best use of the machines, it becomes a much easier sell

Peace of mind

In a customer service-led marketplace, it’s important for a dealer to be sure that their customers are in safe hands, and that the product is guaranteed to satisfy. Unlike some companies, the focus of Renz is on functionality and reliability of its products, backed up with a two-year warranty, however Simpson is proud to add: “With meticulous German manufacturers, we rarely have any problems.” Simpson and the team at Renz offer end-user product training beyond point of sale, and give customers after sales support at no extra charge. “Sometimes a customer can use the machine wrongly, they then complain thinking its not working and the dealer gets it in the neck. We ensure this doesn’t happen.” DS

Contact details For more information, contact Paul Simpson, office machine sales, Renz 01707 282745 paulsimpson@renz.co.uk

www.dealersupport.co.uk february 2012

Industry

review

Paper Planes Once again, the manufacturers and suppliers of the OP industry made the pilgrimage across the waters to network and showcase their wares at Paperworld, the biggest stationery event in the world. Nina Rosandic took a flight to Frankfurt to see the global industry come to life

staple in the office supplies calendar, the event has seen less and less UK dealers attending the show, but dealers from across the globe were out in full force looking for the latest trends and innovations in the office product industry to compete on an international level, along with OP experts, suppliers and retailers. The four-day exhibition spans the Messe Frankfurt, with three of its eleven stadium-sized halls dedicated to the event. As always, ‘green’ was high on the agenda, with Paperworld’s third Green Day taking place on the Tuesday, with a programme of seminars highlighting sustainable products and procurement. A packed out Remanexpo showcased a maze of remanufactured ink and toner exhibitors, suggesting a heavily congested marketplace, but Armor stood out with its 90th birthday, and reporting 2011 figures that show a turnover increase of eight per cent over the past year. The stands saw a culmination of traditional stationery classics and new technology, with a host of iPad and smartphone accessories, and contemporary desk organisers, such as Helit’s new desk butler, offering a dedicated space for the iPhone. Style and contemporary design appeared to be the most popular focus, with products for the small office / home office (SOHO) becoming a growing trend in-line with changing working practices worlwide, of which Bi-Silque’s premium range of pinboards and whiteboards were a great example. Fellowes’ grand stand was hosted by a global sales team, who showcased ten new shredding models introduced in October last year, of which two have been designed specifically with the SOHO market in mind.. The visitor count seemed to have been down on years past but according to manufacturers, it’s more about networking and meetings. According to Jelse Claes from filing and folder manufacturer KEBA: “If you’re not here, you don’t exist.” Beneath the bright lights of the main hall, the glossy stands and product cases, there was an undercurrent of discontent. With a number of changes happening in the supply chain both at home and abroad, the event offered manufacturers a shared space and a chance to club

February 2012 www.dealersupport.co.uk

together and pool thoughts on the state of the market, and a sense of comraderie seemed to prevail with a common conception of resilience to the new terms put forward by both UK and European wholesalers.

Night life

“Style and contemporary design appeared to be the focus, with SOHO products becoming a growing trend worldwide”

In the evening, various stands came to life across the centre, with an array of live music, cocktails, DJs and food, and a number of private networking parties hosted across the city. The pinnacle of which was the European Office Products Awards show hosted by global office products magazine OPI. Hugh Dennis, british comedian, star of hit series Outnumbered and regular Mock the Week panellist, took to the stage to compere the show and offer the evening’s entertainment. Unipapel CEO Millán Álvarez-Miranda took to the stage for a toast. “I didn’t come up with anything special. But it’s going to come from the heart – that’s the most important thing.” He went on to put a positive spin on tempestuous times. “Sometimes difficult times, or crises, give you the opportunity to look at things differently, [...] to look at the way you work, the way you understand your business. With all the difficulties we have ahead, there is a real opportunity to work together. To invest in research and development, to work on developing new products, combining new technologies with traditional technologies. From a distributor perspective; [we aim] to be more effective, to be more agile, to be more lean, and for the distributors and manufacturers to work together to include the supply chain, to improve our business models and, at the end of the day, [...] to add more value to our customers. “With that I am convinced that the next few years can mean a good change for our industry. A few years ago, we saw the downturn of the economy, we saw businesses, offices, schools saving money, spending less money on office products. My hope is that as the economy rebounds ..., that the first euro goes to office products, and for a fantastic future of the office products business,” concluded Álvarez-Miranda.

The EOS Specialists Advent Data is a distributor of original printer consumables. Our wealth of industry knowledge and experience is what makes us the first choice for thousands of successful dealers.

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Industry

The European Office Products Awards were set off in style by the OPI team. British reseller Just Office, and Ireland based Codex Office Products were among the shortlist for Reseller of the Year, with Romanian IT reseseller Dacris Impex pipping them to the post. Quantore won the dealer group category, with Superstat, Integra and Advantia all in the running.

review

AND THE AWARD GOES TOâ&#x20AC;Ś Best Product of the Year: Core Hamelin: Oxford Range

Corporate Social Responsibility Lyreco

Best Product of the Year: Facilities Management Dyson: Dyson Airblade Hand Dryer

Dealer Group of the Year Quantore

Highly commended SCA: Tork Premium Liquid Soap System

Wholesaler/Distributor of the Year Corwell

Best Product of the Year: Technology Plantronics: Savi W740 Multi Device Wireless Headset System

Regional Reseller of the Year Dacris Impex

Best Product of the Year: Environmental Helit innovative BĂźroprodukte: Greenlogic PET Letter Tray

Reseller of the Year Kaut-Bullinger

New Product Innovation Esselte: Leitz iLam Laminators

Highly commended Amazon

Highly commended Hewlett Packard: TopShot LaserJet M275nw

Vendor of the Year SCA

Marketing Initiative Brother International Europe: 141% Campaign

Global Expansion HSM

Highly commended Fellowes Europe: Professor Ergo Campaign

Professional of the Year Denis Bonnet, European Business Account Director, BIC

Online Initiative Pilot Corporation of Europe: FriXion Ball

Industry Achievement Anderson J Owens, Consumer & Office Category Manager, 3M

February 2012 www.dealersupport.co.uk

Industry

report

Sales figures show signs of growth GfK’s Sarah Wheeler reports on 2011’s Q4 office and IT sales trends

he economic crisis was one of the major causes of the low Q4 2010 period. Sales declined when consumers cut back on their spending in an attempt to save during tough economic conditions. Consumer confidence continued to decline; in December 2010, 48% of consumers believed that economic conditions over the next 12 months would become a little or a lot worse, and in December 2011 this increased to 64%. Despite these growing negative views of the economy in December 2011, IT and office product areas fared well this quarter. One of the growing areas was multifunctional devices (MFD) which experienced a 17% value growth from Q4 2010 to Q4 2011. One reason for this growth in MFD’s was lower average selling prices, for example £79 in Q4 2010 compared to £68 in Q4 2011. With consumers becoming increasingly negative about economic conditions for the next 12 months, they chose to make these purchases in Q4 2011 before the expected downturn in 2012. Adhesive tapes are another product group which fared well in Q4 2011. Brands have been growing the market in the lead up to Christmas, especially in the retail channel. With increasing brand presence the value of the panel market (GfK’s total audited market) has experienced a strong value growth of 12.6%. Utility tape,

february 2012 www.dealersupport.co.uk

which makes up over 50% of the adhesive tapes market, helped cause this with a value growth of 14.7%. Office adhesives also experienced some growing categories in the Q4 2011 period which included glue sticks and adhesive putty. Adhesive putty had a particularly strong value and volume growth in the retail channel; 20.8% and 5.4% respectively. The Christmas period is the key time for adhesive putty with Christmas decorations being put up, helping boost the performance of this category. December is the key driver in retail; comparing December 2010 to December 2011 (bearing in mind most of these sales occur before Christmas day) this growing area experienced strong value growth of 25%. This is a key time for manufacturers to ensure their products have good listings available, to maximise ROI. Despite increasingly pessimistic views regarding economic conditions, Q4 2011 performed well with increasing sales in the lead up to Christmas. It remains to be seen if faltering consumer confidence will have a strong impact on the seasonal and technological products in 2012. The IT and office products sellers must incentivise purchases, including price promotion activity to help sustain the market in a challenging 2012. DS

Sarah Wheeler GfK Account Manager sarah.wheeler@gfk.com www.gfkrt.com/uk 0870 603 8206

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Industry

bett report

Betting on education Changes to the education system and school budgeting have opened the classroom up to dealers as an increasingly lucrative market in which to trade, particularly in the IT and AV product sectors. Dealer Support went along to BETT, the leading ICT education event in the country to find out the latest

s the needs of the office are evolving into an IT and technology-led environment, so too is the classroom. Pens and exercise books are being phased out for purchases of tablets and smartphones, mice and digital pens, and the traditional whiteboard has been replaced with touch-sensitive boards, projector mounts and 3D equipment. With budgets freed up in independent schools, and a transforming classroom environment, the manufacturers are catering to an audience who are looking to invest, particularly in light of Education Secretary Michael Gove’s speech at BETT, which was focused on the future of ITskiled students. “Every day we work in environments which are completely different to those of twenty-five or a hundred years ago. Where once clerks scribbled on card indexes and lived by the Dewey Decimal system, now thousands of office workers roam the world from their desktop,” says Gove. However, a period of change, combined with a lack of strict guidelines in the atomisation of the education system, means a lot of choice, a lot of uncertainty, and a lot trialling – teachers and bursars will be looking for advice on how best to use their ICT budgets, in which the consultative approach of a dealer could help, although it will require a concerted effort to research what is available on the market, which will soon be beyond recognition, offering a sea of new opportunities to resellers. “A teacher still stands in front of the class, talking, testing and questioning. But that model won’t be the same in twenty years’ time. It may well be extinct in ten. Technology is already bringing about a profound transformation in education, in ways ... we haven’t even dreamt of yet,” says Gove.

february 2012 www.dealersupport.co.uk

“Technology is already bringing about a profound transformation in education, in ways that we haven’t even dreamt of yet”

One way dealers may look to ease in school customers to new technology is by leasing equipment. This offers schools the opportunity to get hold of brand new technology without compromising budgets, and may open doors to purchases down the line, as John Botham from D Link explains: “A lot of schools are using leases now. Gone are the days when a vendor marches in, sells something, takes the cash away, and then leaves you to it.” The leading print manufacturers were in attendance in the exhibition hall offering a range of managed print services; a notably popular option for school budget stretching, and one that dealers may utilise to hook in new customers. Among the manufacturer stands were a number of staples of the business supplies market, clearly illustrating product crossover between the needs of both a school and a business. With the likes of Dymo, Fellowes, Brother and Epson in attendance, suppliers that many dealers have relationships with, it seems a foray into education may not be such an alien sell afterall. DS

Added Armour...

The Olympus WS Stereo Audio Recorder Kit, with silicon case included. Protect your important recordings from life's knocks, scrapes and drops with the included silicon case found in special kits. Stylishly designed and easy to use, the new WS range of voice recorders offer crisp and clear sound quality in any environment, perfect for meetings and personal notes. Users can easily adjust the settings for the best possibleaudio; the Low Cut Filter is ideal for situations with lots of background noise, while a Voice Filter setting sifts out high and low frequencies, to emphasise the mid-range human voice. Great for the daily commute, the top end WS-750M and WS-760M can also playback MP3 and WMA music files and offer ultra-high quality PCM (WAV) recordings and playback. Additionally, the WS-760M features an FM tuner with FM recording, a first for Olympus voice recorders.

Look out for the special added value kits: WS-650S Silver (2GB) with free silicon case (SRP £79.99) WS-650S Blue (2GB) with free silicon case (SRP £79.99) WS-750M Grey (4GB) with free silicon case (SRP £99.99) WS-750M Red (4GB) with free silicon case (SRP £99.99)

www.olympus.co.uk

2020 report

february 2012 www.dealersupport.co.uk

2020 report futures campaign

future channel Last month we spoke to Phil Jones about his vision for the OP industry in 2020 and the major changes set to occur over the next decade. He talked about how digitisation and the paperless office would shift the linear structure of the market to a more multichannel model, in line with the societal changes created by the internet, backed up by the latest IDC Digital Universe study, which predicts that overall digital data volume will grow by 50 times by 2020

futures campaign

2020 report

his article will explore these changes in more depth and explain why resellers who bury their head under the sand may face a huge shock in ten years’ time when it comes to cashing in on what they thought would be a high value exit. RESHAPING BUSINESS MODELS – THE SHIFT FROM PRODUCTS TO SERVICES Traditionally the OP industry has excelled at shifting products from A to B with service being key for customers. However, this is now changing. The economic climate means that people are less interested in service and more concerned about price. Team that with the changing working practices and the resulting trend of bring-yourown device that we talked about in last month’s issue and you start to see a real need for change in the industry. Combine this with the peak in the printer market (some models such as A3 inkjet and 3-in-1 multifunction models continue to grow) and you can see why the market is switching to industrialised and managed print services. We’ll also start to see the emergence of a new SeaaS – services as a service. Free delivery, installation and 24 hour service will no longer be the norm, but a premium service offered to long-term customers looking for added value. Resellers will quickly need to get to grips with monetising services that customers have come to expect for free. FUTURE MARKET TRENDS The shift from price to value goes hand in hand with the structural change in the market, creating a number of different sales and distribution options. The following infographic charts some of the pressures and shows how this will change the market in the coming years. Proximity will rule Long gone are the days when proximity meant that you were located close to your customers in the physical sense of the word. The rise of online retailers in Europe offering next day delivery and competitive prices mean that customers no longer opt for their high street reseller. Proximity in 2020 will mean how close you feel at your customers’ time of need – invest in new engagement strategies to make your customers feel close and able to turn to you for support regardless of where you are based. Give us some credit! The credit squeeze which hit the market in 2008/9 had devastating effects. If the industry suffers decline, underwriters may reduce available credit. This could stagnate and block up supply chains. Resellers need to consider how they work through this issue as a critical part of their 2020 strategy – can your business model support your customers taking longer to

february 2012 www.dealersupport.co.uk

The resellers of 2020 will be a very different breed and, in order to be there, resellers of today face some very difficult choices – those who embrace the key trends will be the ones to watch in 2020

2020 report

pay, whilst your available credit shortens? Sixty days’ credit from a trade supplier may well be a thing of the past in 2020, so a credit gap looms on the horizon. E-merge or merge? The wave of consolidation that has dominated the SMB and midmarket landscape over the past 12 months will continue. For some, this will be a simple formalisation of an existing relationship, and a way to enhance a company’s offering to the market. For others, particularly at the smaller end of the market, it may be the only option to maintain business or to stave off the threat of insolvency. Alternatively, resellers may choose to emerge by really focusing on how they put the internet at the heart of their business model. There are already search engine marketing experts in the industry, who are applying their craft to enter the online marketplace and drive conversions to basket, fulfilled by a distributor at the back end. We’ve already seen presumed ‘arch rivals’ realising that they are a far more powerful market presence if they combine their strengths, rather than continuing to compete head to head. Resellers need to consider now what they want their business situation to look like in 2020. Should they be thinking now about merger and acquisition activity to bolster their business proposition? Or do they consider a sale? And at what point? Looking into the IT reseller space, change is already afoot. Move towards a service-led model The shift to include services within a reseller model is already starting to generate revenues, however the channel has to revise its sales strategies completely in order to capitalise on the opportunity. It will not be an easy transition for resellers who are used to selling hardware on a transactional, rather than a contractual basis. But by sticking to a more traditional model, they risk missing out on the opportunity of long-term customer value. A service-led approach supports a more value-based relationship with customers, establishing a level of trust and understanding in supporting customers’ long term aims for their business requirements. Additionally, it provides future contracted income, which adds significant value to any trade valuation of a business. The big opportunity is the ‘ME’ (medium enterprises) of the SME market. These organisations are still looking for options to streamline their print processes and are most likely to welcome a MPS agreement for cost transparency and efficiency. However time is limited as the large, direct MPS vendors see this as their next key addressable market. Resellers have the opportunity to get in there first and, working directly with channel-centric vendors, sell the benefits of a MPS agreement. By doing this they can circle the wagons around their customers and forward contract electronic office supplies revenues for years. To focus attention - It’s predicted that by 2020 half of all pages printed will be on an MPS contract, or “Print as a Service” (PaaS).

This means far more time being invested in a consultative sales approach, but resellers will have to take these changes seriously if they are to sustain long-term, profitable EOS contracts with their customers. By not choosing to change, some of your largest EOS customers may be lost out to competitors selling PaaS contracts. Monetising the cloud Content is the new consumable, with more than 20% of organisations already selectively storing customer-sensitive data in a hybrid cloud environment (according to Gartner’s tech predictions for 2012). Resellers need to look at how to capitalise on midmarket companies that will start to move data into the cloud. The major issue is how the channel can monetise this move to cloud computing, with many of the services being offered either free or by subscription direct with the vendor. Phil Jones, sales and marketing director at Brother UK looks at the challenge ahead for resellers – and the support available “Throughout our one hundred years heritage we’ve seen many transitions within the marketplace, change being a central theme. “The market has to change to thrive and make the most of the available opportunities. But the important question is; does the channel have the expertise, time, commitment and skill to change their sales structure from transactional to a solution sale? It’s like turning the clock back twenty years and relying on a salesperson to build, present and close a business case, yet also be the lowest cost to serve. This will require investment and a change in mindset. “Market conditions over the next decade will force a huge overhaul in business structure, as resellers review their operating costs to survive in a marketplace of declining categories and margins. This causes a massive challenge for resellers, who have their pensions staked on a high value exit. “All the signs are pointing towards reshaping business models to become more flexible and support multichannel selling – a huge change, not only strategically but also attitudinally. The resellers of 2020 will be a very different breed, and in order to be there, resellers of today face some very difficult choices. Those who embrace the key trends will be the ones to watch in 2020. “In my private discussions with our resellers, there is uncertainty about the future and some strong opinions about who will thrive and who may not survive. If you talk to dealers on the acquisition trail, you’ll hear that trade sale prices quoted are too high and based upon the halcyon days of the late 90s, basically unrealistic relative to current market conditions. “This is an excellent industry with some fantastic entrepreneurs within it, they will relish the challenge that 2020 brings by choosing to do new things, invest in new areas, seriously look at their operational costs, differentiate their value and find new routes to market. They will be the 2020 elite, emerging stronger, fitter and more agile and we’ll be there with them.” DS

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roundtable

Shifting sands Will there still be a place for the traditional office supplies dealer, as we know it, in 2020? Last month, Brother and Dealer Support gathered a panel of industry specialists for a roundtable discussion to debate how the independent dealer must evolve in an era of seismic change

THE PANEL MANUFACTURER Phil Jones Sales and marketing director, Brother Rob Bridges Head of reseller sales, Brother UK INDUSTRY CONSULTANCY Julie Collins Marketing director, BP Group DEALER GROUP Steve Harrop MD, Office Friendly Dealer Association INDEPENDENT DEALERS Pete Price Director, Office Essentials Martin Shaw Owner/joint MD, D3 Office Group Martin Reid MD, Egan Reid

february 2012 www.dealersupport.co.uk

roundtable

he business supplies landscape is changing as a result of pressurised margins and economic unrest, changing consumer behaviour, the takeover of technology in the workspace and beyond, and the gradual decline of traditional office products. Representatives from different levels of the supply chain attended Brother’s Manchester HQ to discuss how the marketplace will look in 2020 and what business supplies dealers need to do in order to protect their business and establish a significant role in the future. EVERYBODY SURFING NOW The discussion opened with how the online marketplace is changing the way in which end-users are buying. The consensus among the panel, highlighted by Pete Price, director of Office Essentials, was that there is still a marked difference between B2B and B2C activity, and although dealers are attempting to build their own transactional websites, the initial focus is on offering account customers a means of ordering online, rather than trying to attract one-off purchases from the masses surfing the web. However, the lines between B2B and B2C are blurring, as Jones explains: “Now individuals are being given the capability to opt out of the company laptop scheme, a bit like they do with cars, and are actually being given £50 towards a laptop. Suddenly this single-point discussion we usually have between a dealer and the buyer becomes the dealer and 500 employees, so it’s quite a lot of structural change going on in the way we might do our business, as opposed to the way we have done our business.” Can we adjust to that? Price thinks so: “There are a lot of stationery dealers out there that are dabbling in the B2C market, setting up a separate brand, and I think it’s a case of trying to judge when the time is right to make the move into that market.” The dealers were in agreement that in order to compete with online retailers, there needs to be significant investment of time, money and expertise; outsourced or otherwise, and that it isn’t necessarily the most important focus – for now. However, as Steve Harrop of Office Friendly pointed out, targeting your customers at every level is key for the future. “In every different sector, if you look at the supermarkets and the huge organisations, they’re all multi-channel. One of the lessons that we all need to learn as part of the reseller channel, is that we need to be multi-dimensional. We’ve been saying this for years of course, but in reality, having a coordinated strategy for the smaller businesses is very tough. I think everybody understands it, but it’s about coordinating the costs of money, time and resources, and those last two are critical.” The most damaging effect of the online marketplace on the reseller channel is price transparency, and the evolution of a generation of deal-hungry consumers programmed by a growing trend of ‘coupon mania’. However, as Harrop pointed out, price comparison is by no means a new concept, and that as an industry, it’s something dealers have been contending with for years.

PRICE PRICE PRICE Internet communication means a unique product that comes to market becomes commodotised quicker than ever before. If margins and prices have been squeezed to the point of no return, what then is to happen in the future? Price argued that it isn’t all about price and that quality is still key: “Basically you’ve got to make yourself different, it’s about how you put yourself across to customers. If you look at the success of Apple, that’s not based around price.” The panel was quick to point out that Apple was a special case, to which Price replied: “Well, they’ve made themselves unique haven’t they? Why can’t you make yourself unique? Why can’t I make myself unique? Basically you’ve got to get yourself in front of the customer and you’ve got to be unique, otherwise it comes down to price.” However, the panel agreed that in order to go forward, there needs to be some changes, that the whole supply chain needs to be more disciplined in the way they go to market, and that manufacturers have a part to play in making sure that dealers can have a unique offering. As an industry, dealers have for years been driving a culture of deals, promotions and a focus on cut-price RRPs in order to compete. If there’s little profit coming in, there needs to be little expenditure going out. Jones highlighted the importance of taking cost out of the business in order to cope with falling margins. COST TO SERVE Twenty-four hour delivery fleets, dedicated account managers, field sales teams – are dealers over-servicing their customers? In the future will customers who are used to faceless online communication even care about getting a high-touch service? And are dealers being honest about their true cost to serve? Harrop believes that yes, a customer should be able to get a delivery overnight, but they’ve got to pay for it. “That’s something dealers have always shied away from. Encouraging dealers to put a delivery price on there from day one was virtually impossible. Everybody was saying: ‘Well I deliver, so my strength is service, looking after my local customers, I don’t charge them for that service,’ but I think what we’ve lost sight of is the actual cost of doing all of this.” The dealers on the panel were united in the notion that their delivery teams were key to building customer loyalty and getting repeat business. Martin Shaw of D3 Office Group said: “Our drivers are some of the best ambassadors for our business. That’s why customers stay with you. Yes, it might be a slightly higher cost to serve, but what’s the cost if you take it away? You lose business. It’s a double-edged sword.” Martin Reid of Egan Reid echoed this view, mentioning problems with third party carriers losing him business. The question that was then raised was whether or not this value is fed back in. According to Jones: “The friendly delivery man – let’s say John – has become an important component of the value-added service you’re offering. Now you probably can’t charge for John, there won’t be a line on your

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invoice with John, as an extra two per cent. But fundamentally, there is a value to your proposition there and the question is: How does the industry continue to maintain that over a long period of time? Will people still value John in 2020? Will people still see an intrinsic value in that or will Generation Y just say: ‘The Amazon pick-up point is good enough for me’?” Jones went on to ask: “Why are you offering a standard free delivery to someone ringing up at 7pm demanding a 9 o’clock delivery?” Reid exclaimed that if you don’t offer that service, a customer will go elsewhere and find someone else who will offer it. However, some people need that immediate service, and some people don’t, and the panel recognised a need for segmentation, in order to optimise resources to serve each customer’s needs, as Shaw explained: “I think segmentation is key between different customers. We haven’t done this very well yet but it’s on our mind. We should become better at analysing customers that become prospects, and working out how many times is that customer going to order? Therefore, how frequently are we going to have to deliver? Will they order online? (Which therefore means we don’t need to answer the phone to them.) What sort of service backup are they looking for? That should all effect the price that is being charged out to the customer.”

Will people still see intrinsic value in John the delivery man in 2020 or will Generation Y just say: “The Amazon pickup point is good enough for me”?

COMPETING When talking about branching out, OP dealers have plenty of competition from all sides. The question, put forward by Jones, is whether or not they can upskill, evolve and compete in order to not lose out to the service companies, the IT resellers, the contract stationers, the online retailers or the supermarkets, who are all elbowing their way into the same marketplace. Harrop is more than confident that dealers, with years of experience of servicing the corporate world, are capable of fending off the competition. Simply put, he said: Phil Jones “This is not a dodo industry.” Jones pushed home the fact that branching out into new markets and meeting new competition is essential for the future. ”The long term outlook for office products is not a positive one in terms of market size, digitisation, working practice, the paperless office, they are all contributing. Paper consumption is going down in the western world, what’s next? Is it staplers, is it punch pockets?”

MEETING NEEDS Jones highlighted that the future will be governed by the smartphone and that the challenge will be finding a way to grab and communicate to your customer through the small screen. However, the panel was agreed that the OP dealer is unlikely to be able to compete in an already saturated online market, vying for the attention of web surfers. Instead, they must set themselves aside as something unique – something more. The panel agreed on maximising what dealers are good at, and that is offering a tailored service, and becoming the much-talked-about one-stop-shop for customers, or taking control of facilities management. There is no limit to what a business supplier can provide. As Julia Collins of the BP Group put it, it should be a case of approaching a customer and saying: “If you took this building, turned it upside down and shook it, everything that falls out, I’ll take care of.” Collins believes a dealer must become indispensable, and work in partnership with clients. “It really is about understanding your customer, understanding what makes them tick and if it is a B2B environment, then the solution aspects of an independent cannot be beaten, because it’s about taking the hassle away, taking the headache away and allowing that organisation to do what they’re good at – to focus on their core proposition and manage, develop and deliver their own business, so you become a silent partner to their business.” Reid agreed that he has always seen his relationship with clients as stakeholders in their business: “If they’re doing well, I’m doing well.” Jones suggested it goes a step further than Collins’ analogy, to include the things you can’t ‘see’ or that don’t ‘drop out’, such as IT networking and infrastructure and solution-led services. Reid suggested looking into offering training courses, for example, on health and safety, and Harrop mentioned offering sustainability accreditations. Collins suggests looking to service provision companies to see how they market themselves and carry out their business. The future of the public sector for example, is likely to be employing outsourced services more and more, and this is where the office supplies dealer can step in. Harrop says: “If a customer came in and said: ‘I want a complete revamp of this boardroom, some of the OP

We’ll be providing things we wouldn’t dream about now and becoming true facilities providers Pete Price

february 2012 www.dealersupport.co.uk February

roundtable

We are not in a dodo industry. We’ve got potential and I think 2020 will have a very active and fascinating OP industry Steve Harrop

independent dealers, like yourselves, could come in and do the whole lot, the ceiling, the lighting etc. Not only that, but you could then supply the jan-san, the PPE, supply the guys that go out in the field with mobile deliveries for what they need, and so on – I don’t think there’s anything we can’t sell, if it’s in a business context.” Traditionally, office supplies was led by transactional behaviour, but in order to hold on to an increasingly fickle customer base, it is key to get clients to engage with contractual behaviour. Collins recommends dealers look at approaching customers with partnership agreements, as it gives the chance for the customer to feel in control, to which Harrop agrees. Shaw says this is something that needs to be approached with caution, and something his company has shied away from, due to opening the company up to monthly or annual review and encouraging customers to put you up for comparison. FUTURE PRINT Managed print services (MPS) is the leading contractual solution that everyone is talking about, and one that Jones is warning dealers about. “You’ll have heard me say in the press, the manufacturers are heading down the pipeline for you guys, they’re looking to get your biggest EOS customers straight onto a click plan – you’ve lost that customer.” However, there has so far been a lack of take up, that signifies two things: dealers are waiting to see how it rolls out before they get the confidence to invest in such an offering, and they simply do not have the collateral to put into it. However, Jones insists the prize is huge. Some dealers are happier to miss out rather than risk investing time and money, but Jones asks: “If you lost three of your top 10 EOS customers next year, what would be the impact on your business?” He goes on to say: “If you’re supplying a large company, you’re not going to be able to match the manufacturer proposition, so you might have to say goodbye to that. But in the middle battleground, in the 10-50 employees range, you’ve got a better chance than anybody. But you might be looking at a £150k overhead, for a three year return, and most people don’t have that. But the guys with the strong balance sheets, they’ll do something about it. Lower in the food chain, they’re going to really struggle.”

Shaw says it’s a matter of confidence, knowing that you are going into your top customers knowing what you’re talking about and confident that the manufacturers have given you the right information. This idea of confidence is something that Harrop also touched on, asking: “Do you think sometimes we’re lacking in confidence as a channel? Rather than actually shouting about what we’re really good at, the fact that we are good at what we do?” This begs the question as to whether or not ‘office supplies dealers’ should label themselves with a new tag, in order to be taken as more than just a supplier, but as a business solutions specialist. This was echoed by Reid who believes dealers can take on the internet. “We are a font of knowledge. It shouldn’t be ask Google or ask Jeeves, it should be ask your dealer,” he says.

Businesses will get stronger if they have partnerships with unique suppliers and services Martin Reid

MISSION: SURVIVAL As the wholesalers go through changes, Jones stresses the importance of dealers assessing their reliance on the supply chain, and also how much they rely on credit for the future. Many dealers count on 30-day terms for cashflow, and if these were to be tightened by the wholesalers, some would find it hard to cope. This subject drove the issue of streamlining and operational efficiency to the fore, of which distributors such as Westcoast and Computer 2000 are great examples of logistics companies working on fractional operating costs. Reid sees a collaboration of the two wholesalers down the line, but Harrop maintains that, as far as he is aware, the wholesalers know that the foundations of their success are built upon the success of the independent dealer and are unlikely to carry a sting in their tale. Things aren’t all bad for the independent dealer, in fact, Harrop sees it as an exciting time of change and of great opportunity. He was quick to point out that business is infact booming for some independents and will continue to do so for those forward thinkers who continue to be proactive and prepare for the future. Jones agreed: “There are superstars there, but like any bell curve, there’s the median, there’s the superstars, and there’s the huge underperformers, and I think that for 2020 some are naturally going to start dropping off, and I think the count of independents that exist in the industry will be smaller. It’s not a race that everyone is in - and those who don’t evolve, optimise cost management, move into new markets and employ SAAS will get left behind. However, as a result of that, there will be more ability to buy, the opportunity of folding people into your company, and getting the benefit of acquisitions. However, there will be a smaller pie to go at.” DS

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february 2012 www.dealersupport.co.uk

DEALER REVISITED

Back in 1989, brothers Michael and Phylip Morgan began selling office IT equipment from a room in their parents’ farm in Landeilo, Wales. Fast forward to 2012, and Morgan and Morgan is a multi-arm office solutions company housed in a purpose-built state-of-the art centre in Cross Hands. MD Michael Morgan charts the changes and explains why he is confident for the future

or today’s independent dealers, forward thinking is pivotal to secure business success for tomorrow. Twenty-three years ago, brothers phylip and michael morgan could see an opportunity in the IT sector of the office supplies market. Arguably ahead of their time, the twist came as they quickly found that the demand for traditional office products and furniture was greater than that of the buzz of IT. “We started off with the technology and then the supplies took over, which is bizarre,” says michael morgan. “We started selling processors and pCs, and what we found was that we were going in and people were saying: ‘I want that, but I want a desk, a chair, and a pack of paper to go with it’ and in essence, the supplies side took off quicker than what the pC side did, because of the price of it. printers were £400 to £600 back then, and a typewriter was around £299, so they were still buying typewriters and going down that road.” The brothers showed a proactive and savvy knack for cutting out the competition early on by taking advantage of the popularity of paper at the time to hook their growing customer base. “What we did was pick the phone up and sold paper at cost, which nobody else was doing, and in essence we cleared up the paper market just to get customers,” says michael. “Incidentally, we were selling it at £1.90 a ream. I think the sales pitch was: ‘We’re from m&m, we’re selling copier paper at £1.90 a ream, how much do you want?’”

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DEALER REVISITED

Hitting all platforms

Servicing solutions

This tenacity and aggressive sales approach has been an intrinsic aspect of the company over the years, and today Michael makes the most of every channel of communication to bring in new customers. “Everyone will tell you differently, but I don’t think you can have one solution for marketing, it’s definitely a combination. We still knock on doors, we still do blind telephone calls, we still do service calls, and we use referrals. We have emails, we use Twitter, and Facebook. We go to networking events and exhibitions – there’s no one simple solution, you’ve got to use them all.” The company has a well-developed ecommerce site, but according to Michael, they are not necessarily looking to compete with online retailers. “It’s something we haven’t put big focus into, because most companies in our neck of the woods don’t generally surf the internet for products. We do lose a lot of one-man-bands to the internet, but whilst they are very important, do I want to travel 60 miles to deliver one toner cartridge that I’m making next to nothing on? Commercially, I’d rather not have the business at that level.” However, Michael is well aware that for the future, the company needs to be prepared to fit the needs of the online buyer. “Generation X or generation Y are coming up now and then it will change. When the 18 and 19 year olds come up to become the buyers in ten years’ time, then yes, we see that we’ve got to change,” he says. When it comes to technology impacting the industry, Michael recognises the smartphone as a key factor, not only in terms of the consumers, but in the way dealers themselves operate. “I think the challenge for the systems houses in the office products market is to get their systems working on the iPhone, for a system that dealers can use. The system houses really need to adapt.” Beyond that Michael sees a time when customers will be doing all their ordering on their phones as second nature. At the end of the day, for Michael, it’s about making sure he caters to each different customer and their requirements, as he sums up: “I don’t care how people want to buy – phone, fax, email, online, any old how – I’ve just got to make it easy for them to buy.”

Michael and his brother have developed the business beyond simply getting products out of the door and into a customer’s office at an agreed time. “When we started, it was just about buying it and selling it. I think the whole market is going down a value-add or a solution sell route and its something that we have done for ten years.” The two recognised early on the importance of adding value for customers with a service-led approach, and by catering to as many of their customers’ needs as possible, they are able to win as much business as possible with every account. “We dealt with a local charity and we looked at the three-storey building they had – we were able to do the IT side, we did all the structure cabling, then we were able to do all the furniture and interior side of it. We then put the servers and telephone systems in; we were also able to tie them up on the IT for a service contract; we resell broadband – so we were tying up that side of it and also providing them the stationery supplies going forward. If you can get it at the beginning you can supply all the way through and continue to supply thereafter,” says Michael. He adds that customers are still looking for good all-round service: “If you’re selling envelopes or paper, then delivering it to the photocopier, or if you’re selling a PC, then pulling it out of the box and configuring it for the customer, it has a value and people are prepared to pay for that service.”

I don’t care how people want to buy – phone, fax, email, online, any old how, I’ve just got to make it easy for them to buy

Time for tech

Michael looks positively towards the changes that are in store for the industry: “We’re in a market that has a massive future with so many different avenues that we can go down, but particularly on the IT side.” The company shifted the focus back to IT eight years into trading, and also has IT engineers working inhouse, unlike many dealers who may find it more difficult to compete with IT resellers. According to Michael, dealers he comes across often say: “I don’t sell computers.” To which his response is: “Whether they are sellers of furniture, stationery, or whatever, at the end of the day all we are is a distribution model. We buy stuff in, we put money on top of it and we sell it on. That’s all we do. Everyone’s doing IT now, selling memory sticks and mobile drives from the catalogue. It’s only when you start getting into networks and servers that that becomes a little more of a problem.” The company is ahead on the latest solution-sell buzz subject, managed print services, and has been operating its own MPS offering for six years. “It’s a big market and dealers need to get in there quick as IT resellers are scooping it all up.” The whole sale

Right from the start the company has held as much stock as cash flow will allow, to maintain as much control as possible. Morgan has purposefully shied away from becoming reliant on the wholesalers. In light of recent changes with the wholesalers, Michael says: “It’s the dealers’ own fault that we are where we are. I’m a stock-in dealer, but there’s loads of dealers out there who have been challenged and convinced by the wholesalers to go stockless. To go back to stock-in is much harder for them and they are in the grasp of two wholesalers. We started with six, seven, eight wholesalers, and now we’ve only got two. I do think that

february 2012 www.dealersupport.co.uk

DEALER REVISITED

the channel has suffered in that we don’t have the same variety as we used to have.” All together now

Having joined the Nemo Group back in 1993, Michael became chairman in 2010, and having left the day-today running of the company five years ago, brother Phylip now heads up the IT buying group Network Group. Being at the forefront of such groups, they know the benefits of networking with fellow dealers. “What I feel sets these groups apart is not just the value of purchasing and marketing, but that we still have regular members meetings,” says Michael. “We have five members meetings every year. People say: ‘Well I haven’t got the time to do that,’ but at the end of the day, there is a strength that comes in being able to share your problems and opportunities – being able to see how they do it, and compare it to how I do it. I like talking to people in the same trade, even in the same locality – you never know what’s around the corner. There are plenty of dealers that are happy to put the boot in when someone’s down but morally we should be helping each other. The enemy is not my local competitor, it’s the nationals. I challenge everyone to pick up the phone at least and have these conversations, to fight off the big guys and the e-tailers.” Cost effective

When it comes to keeping a healthy balance sheet, Michael has been focused on keeping costs down. Back in 2002, the company was renting an industrial unit and retail units and decided to consolidate everything into one purpose-built building. “Before the recession we’d actually done a lot of the pain, we’ve had to drive costs down and cut back,” says Michael. “It’s state-of-the-art in the sense of heating and insulation, it’s energy efficient. We always do keep lean and mean.” Morgan also credits careful choices of back office systems over the years to taking cost out of the business. “Back when we started, it was manual delivery notes and Sage, and the orders were being put through by fax, and then Spicerlink, which was free of charge at that point thanks to being in the Nemo Group. We then went on to use the Legerdemain back office system, and then ECi’s Vision.” In terms of how this translates, Michael sees online orders as particularly cost-effective. “With internet orders, they drop into the back office system and the first time you have to touch it is when you’re doing a purchase order, or when it’s printing a delivery note. That’s how things have changed.” Final thought

Ambition is key for those dealers who want to stay on top, and this certainly isn’t something Morgan is lacking. “We like to see ourselves as king of the castle in the South West. Growth is key to becoming that complete solutions provider for the customer. We want to be the biggest business supplies, IT and furniture reseller in Wales.” But Michael isn’t looking to elbow anyone out on the way to the top of the castle, and maintains that dealers should work together to keep the independents at the fore of business supplies: “There’s a trend of customers going back to local suppliers and I think as an industry we need to bang that drum, and together we need to move our customers away from the Lyrecos and the Depots of this world.” DS

Timeline

1989 The sales pitch was: “We’re from M&M, we’re selling copier paper at £1.90 a ream, how much do you want?”

Phylip and Michael Morgan, two farmer’s sons, start their own IT company, after recognising a need to diversify. It was initially called Meibion Maes Y Castell, and was run from their parents’ farm in Llandeilo, but after less than a year they had to move to a shop in Ammanford due the demand for office supplies, as well as IT products and services.

1992

Michael and Phyl are both awarded the Dinefwr Young Businessman of the Year Award.

1993

The brothers’ keen business sense and knowledge of the growing IT market leads to further expansion, and a second shop is opened in Carmarthen.

1999

Morgan and Morgan Office and Computer Supplies continues to thrive at the two sites and develops a strong B2B service offering total business solutions to companies in South and West Wales. This leads to a re-branding to Morgan and Morgan Business and Technology.

2002

Due to further expansion demands, the company moves to its purpose-built headquarters in Cross Hands Business Park.

TODAY

From just two brothers on a farm in 1989, Morgan and Morgan now employs 18 local people and supplies a wealth of businesses along the M4 corridor and beyond.

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Q&A

Financing the future Resellers need to consider now what they want their business situation to look like in 2020. Should they be thinking about merger and acquisition activity to bolster their business proposition? Or do they consider a sale? And at what point? Looking into the IT reseller space, change is already afoot. Jonathan Boyers , head of corporate finance for the North at business advisory firm KPMG shares his thoughts

What are the drivers for growth in the print and IT reseller markets at present? Mid-market resellers have almost entirely moved away from pure kit sales and are increasingly providing complementary, service-led propositions to build margin. These are focused on supplying efficiency and convenience to clients, and require value-added resellers (VARs) to diversify at pace to remain competitive. Key themes in the print channel in particular include mobile and managed services, with a number of major industry vendors extending their propositions in these areas. For their reseller partners, this provides a new layer of services which they can adapt and apply their own unique offerings to. How are business valuations holding up in the present economic climate? The downturn inevitably resulted in the value of reseller businesses declining, in line with changes in corporate and market performance. This led buyer and acquirer pricing expectations to become disjointed, with many shareholders opting to delay processes until they could realise what they believed to be the true value of their firms. However, in-line with the gradual improvement in UK mid-market M&A activity, the reseller market has seen volumes and values hold up reasonably well in 2011. The worth of a business rests, to some extent, on its strategic value to an acquirer and not necessarily the sum of its parts. It is buyersâ&#x20AC;&#x2122; urgent requirements that are driving valuations in the space, placing great importance on the informed targeting of potential acquirers. What are the most likely exit routes for reseller business owners? There is currently limited interest in the reseller market from private equity, given the restricted near-term growth potential of the majority of firms. The most probable exit routes for mid-market VARs are to larger trade resellers or vendors, which can achieve significant value generation through synergies realised in acquisitions. These may stem from technology, the transfer and upgrade of client contracts, extending geographical reach or market diversification.

The most probable exit routes for mid-market VARs are to larger trade resellers or vendors, which can achieve significant value generation through synergies realised in acquisitions

february 2012 www.dealersupport.co.uk

What advice would you give to shareholders looking to sell their reseller businesses? Provided a VAR has a robust growth track record and strong exposure to expanding markets, the shareholders must identify corporates with a coherent rationale to acquire the business â&#x20AC;&#x201C; those to which the company presents the most strategic value. They should then engage advisers to open tentative conversations with these prospects, in order to gauge early interest. This allows shareholders to build a realistic list of potential suitors without damaging future growth prospects with a full scale marketing process that could, should it fail, damage future exit opportunities. The company can then begin weighing up the most realistic opportunities, accurately identify whether the time is right for exit and how the business should be valued. It should then consider whether to launch a formal process. DS

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PEOPLE

DEALER INTERVIEW BOS

Back when Dana Whitehouse began in the office products industry in 1981, BOS was yet to own a computer and the company made a killing from typewriter ribbons and TippEx. Today, the company makes 90% of its sales from paper and print consumables and is working on a new website to reach the internet generation. MD Whitehouse takes Nina Rosandic back through the companyâ&#x20AC;&#x2122;s golden years

o r t e R e p s r e

e v i t c

FEBRUARY 2012 www.dealersupport.co.uk

DEALER INTERVIEW BOS

ad an 18-year-old Whitehouse been asked where he would be in 30 years, he probably wouldn’t have seen himself sat behind the desk of his father-in-law-to-be’s office supplies company, after a lifetime in the trade. Back in 1981, Whitehouse had sparky ambitions to become an electrician. “I started back when it was a fledgling company, and was pretty much run on a shoe-string. I was at a bit of a loose end; I was 18 and I couldn’t find anything I really enjoyed doing. I wanted to be an electrician and I was training for that, but then the course collapsed while I was doing it, so I gave it up and drifted from job to job and [my girlfriend] Gill said: ‘My dad’s looking for someone’, so I thought I’d give it a go. It was never something I wanted to do, I never wanted to work in an office, but I was thrown in at the deep end. We had a little Coronation Street-style house on Amwell Street, I think it was converted from a fishmongers.” The company was set up by Whitehouse’s father-in-law Jim Summer back in 1979. What began as a partnership quickly disintegrated when Summer’s partner proved himself to be somewhat of a spendthrift. Summer retired 10 years ago, yet has retained ownership of BOS, which was named after its former Buntingford location. The company swiftly moved into Hoddesdon by 1980, and has been based there ever since. According to Whitehouse, he entered the industry head first. “It was like a crash course, really. There was no one else there, so I obviously made loads of mistakes along the way but I enjoyed the responsibility. Jim was out on the road, so most of the time it was just me and Doreen, a lady who used to come in and type our invoices for us in the morning, and Jim would come back in the afternoon. We had a little old boy, Bob, who did our driving for us, but he wasn’t in every day.” Time for talk One of the biggest changes that the industry has seen is the evolution of a next-day delivery service, which was never the case back in the ‘80s, as Whitehouse explains: “It was really odd, there wasn’t the same pressure as there is now. People would wait two or three days. People didn’t necessarily expect to get everything next day, every day, that’s something that was contrived by the wholesalers really.” However, not even the wholesalers offered a next-day delivery service back then. Whitehouse reminisces how they would decide upon which of the pool of wholesalers to source from, depending on when they were likely to be able to deliver to the warehouse. “We had a little hand-written chart on the wall, so we’d say: ‘Right, they deliver on a Monday and a Wednesday, they deliver on a Thursday and a Friday’, and that was how we decided who we ordered from. There wasn’t a ‘preferred wholesaler’ as such, it was: ‘Who is coming tomorrow?’, and the next day we could get it out to our customer. “Currently, the wholesalers key-drop to us at some ridiculous time in the morning, so we walk in in the morning and the pallets are in our warehouse, whereas in those days they turned up as and when during the day, often late afternoon. The logistics weren’t the same as they are now and in most cases it didn’t seem to be necessary.” Having been selfsufficient in the past, with a warehouse full of stock, the company now only holds a maximum of £4,000 - £5,000 of core products onsite, and relies heavily on wholesalers for orders and logistics. “The wholesalers were offering a better and better service and we got to a point when we had to question: Why are we keeping stock? A lot of dealers have gone down a road whereby we’ve become more and more dependent on them. It initially worked very well, we were giving customers good service – which I now think is over-service. Now the wholesalers are cutting back and streamlining and we are not always getting the same service. We can fight off the competition but if we’re not getting goods to customers on time, at the right price, it’s a major problem for us.” Charting the changes Flicking through the pages of an old catalogue, there is more than a passing difference to the modern wholesaler catalogues. “One thing

www.dealersupport.co.uk FEBRUARY 2012

PEOPLE

DEALER INTERVIEW BOS

you’ll notice is that there are no product codes – we always used to ring the wholesaler and read out what we wanted –‘I want some hole punches, a box of ring binders, a few boxes of TippEx...’ – and one way or another it all used to get to us ok,” says Whitehouse. Many product lines, such as typewriter ribbons, have become near extinct, however, one of the biggest differences that occurs to Whitehouse is illustrated by the single page dedicated to the three-strong range of copier paper. “Most people didn’t have a copier, although that exploded fairly soon after I started. I remember the first copier we had that was eight pages a minute, which at the time seemed amazing. They spoke about the approaching ‘paperless office’ back in the 80s, but the opposite has happened, we’re now shifting boxes of paper all day every day!” The company did not get its first computers until the early 90s. “The back office system we use now would have seemed like science fiction back then. There was a platform called Presstel Link that one of the wholesalers offered back then that looked like Teletext. It would show you stock numbers in a live environment and I think you could order off of it too.” However, the company was put off by the cost of a dedicated phone line. “We would handwrite delivery notes and at the end of the month, we’d collate all the delivery notes, which would be priced manually, and then Jeannie would have to type up all the invoices on the typewriter and send them out. The amount of labour was quite intensive. Looking back, you wonder how we managed, especially with our handwriting, I wonder if our customers even read them? I don’t really remember too many problems with mistakes, it just seemed to work.” It’s all about the money Whitehouse recalls how price was never the main objective in the early days, it was always service and product range. “People would just ring up and ask for what they wanted, they would never ask the price, they would trust us to give them a good deal – but there weren’t the methods to compare everything with a fine tooth comb like the internet.” That all changed when Viking came to the UK and Whitehouse remembers his first customer complaint involving a Viking price comparison. “A customer needed a filing cabinet and he needed it delivered at a certain time, and never asked for a price. He then rang up disgusted, saying that he had seen it in Viking for £10 less. I just said: ‘Right, well, would they have delivered it when you want?’, to which he said: ‘No, fair enough.’ The most harm made by Viking was that, for the first time, it made people aware of prices on a national scale. We had to change the way we worked to cope with the Viking threat.” Whitehouse cites that as the catalyst for what has since sadly become a price-led industry. However, the company has noticed that the trade is coming back round full circle on the service side, and that people are looking for the service that they can’t get from the corporates. But there is no hiding from the fact that the corporates have taken a lot of business from independents. “Lyreco has always been a thorn in our side, particularly getting big contracts. We used to supply to BT, British Group, Belling Cookers, British Aerospace. Nowadays they wouldn’t give us a look in – as someone once told me: ‘Corporations deal with corporations’. The bigger companies are fooled by people like Lyreco going in with a slick presentation and slick website… It’s very sad. A lot of our customers have gone over to the big guys, who are now setting their sights lower and lower and attacking our customer base. That has become a real problem. We get a lot of feedback from customers who tell us when they’ve had a visit from them and resisted their aggressive sales approach.”

Out with the old: BOS’ original catalogue

FEBRUARY 2012 www.dealersupport.co.uk

All work and no play As workforces and budgets have been streamlined in the office supplies industry and beyond, the result appears to be a lot more work for a lot less return. Aside from the fact that he remembers margins of 40, 50 and 60%, Whitehouse looks back fondly on happy times: “It used to be a lot more fun, yes we’re all a bit thin on the ground for staff, and we’re all a lot busier, but there used to be a lot more time, and fun, and enjoyment. We used to have such a laugh! The process was less stressful I think, and we had bodies, rather than computers, so there was a lot more

Keeley Travis is powered by...

DEALER INTERVIEW B.O.S

DEALER BOOKMARK

Bottom left: Dana Whitehouse and the original BOS team (right)

ost The m de a harm m at, as th w g n i k by Vi first time, for the e people it mad of prices aware tional a on a n scale

Paul Travis Sales director Keeley Travis Manchester

SPECIALITY

We are ISO9001 and ISO14001 accredited and are committed to making ordering business supplies a simple process for customers and offering a friendly but professional service. As an Advantia member we now offer true next day, desktop delivery nationwide though the Truline Logistics network.

ammunition for laughs.” For BOS, the relationships with manufacturer reps also played a key part in the office entertainment. “All the reps used to come in, show us the products, give us the marketing material – and they were such characters!” But Whitehouse wasn’t necessarily always a fan of the reps. “Some were good, some bad, and there were some I hated – we used to hide under the table! There was one who stunk and he used to make Columbo look smart, then he used to insist on standing in your personal space until you confirmed an order, which I think might have been part of his sales tricks!” The team at BOS was not short of practical jokes. “There was a lady from Pentel, she was lovely, we used to put tape on her car door locks, and we put a fake parking ticket on her car,” muses Whitehouse. “We also had a fake hand we used to bring in. We used to take this one guy’s hub caps off his car, and once we put his bike on the roof.” Whitehouse is quick to point out that the mischievious behaviour was not to the detriment of business. “We had fun, but work used to get done. Now, the rapport has

gone, and without the relationship with the manufacturers, we’ve lost the differentiation, everything is the same.” Safety in numbers BOS belongs to Office Club and Whitehouse sees the emergence of dealer groups as a positive development in the company’s history and trade in general. “Obviously they weren’t around in the 80s – that innovation has been very helpful to us. We’ve found that Office Club have really upped their game to help out dealers. We did an exhibition at our local council and Office Club did our stand, and really stepped up to help out – they are really earning their keep. We were with Dealer Network; a good group, a little group, in which we were quite a big fish, but they didn’t have the personnel like Office Club and Mark Allan, who has been brilliant helping me to design our website. They’re a brilliant shoulder to lean on.” It’s no wonder that Whitehouse is appreciative of support in somewhat uncertain times. However, having weathered 30 years in the industry, he’s well equipped to see the business through many more. DS

I started as a “foot soldier” knocking the doors at Office Depot in 2001 and was then promoted to senior sales executive. In 2004 I decided to put my business degree into action with my fellow student and friend, John Keeley, and Keeley Travis was born.

WINNING MOMENT

Breaking through the £1m turnover mark in our fourth year of trading. Roll on £2m!

CATCHPHRASE

It’s our service that sets us apart!

WORD FOR THE WISE

Vison is an excellent back office system that truly understands the needs and demands of each individual dealer. Vision has evolved with our business and each release brings with it more useful tools thus enhancing our productivity and efficiency.

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management

grow your business

Printing money As managed print service solutions enter a new gear, Bryony Taylor looks at what this market can offer to dealers. In part one of this two-part series, she questions whether the commitment required from dealers pays off in revenue

february 2012 www.dealersupport.co.uk

grow your business

he prolonged economic downturn has made many SMEs fear purchasing new printers, copiers or scanners due to the large outlay. So instead, customers have begun opting for managed print services (MPS). For dealers, this offers conflicting opportunities and challenges. Just as customers are asking: ‘Is it worth the cost?’, dealers doubt whether the revenue increase will make up for the cost and time it would take to research supply partners and set up the service. As both major wholesalers launch their own reseller MPS programmes within the year, the trend of managed print looks set to continue to grow. How should dealers get involved then? And is the commitment worth the return in revenue? Up until 2010, more companies with 500-plus employees adopted MPS compared to SMEs. “The MPS penetration rate among UK and European enterprises of 500-plus employees is currently 20%,” says Phil Jones, sales and marketing director, Brother UK. “We recently carried out some research with Quocirca, which revealed that two-thirds of these businesses were either using or planning to use MPS, showing that it is clearly a market with huge potential for growth. It is a natural fit for dealers looking to protect their customer base, improve their forward contracted revenues and improve margins.” However, as the recession bites and all money belts tighten, another trend has also been noted, with growing numbers of SMEs overcoming their doubts about the challenge of MPS and embracing the cost benefits. IDC recently forecast that increasing demand for MPS would result in the European market growing to €4bn by 2014. Other predictions for the UK MPS market alone are set at around £5bn in the next few years. If that’s true, it’s time to reconsider getting involved. “We believe that the total EMEA market for contractual business is growing by 11% year-on-year,” says Dave Tracey, channel MPS sales consultant, Imaging and Printing Group at Hewlett-Packard. HP’s EMEA channel contractual business grew by 26% in 2011, over two times the market growth rate, and added 27,000 new contracts to HP’s business. “HP believes that contractual business will continue to grow and our recent acquisitions of Printelligent and Hiflex both support this.” According to the Gartner 2011 report, MPS can save a company between 10% and 30% of their total print costs,

www.dealersupport.co.uk february 2012

management

grow your business

and by improving paper-based processes could save even more. Lured by these statistics, many a new customer has turned to MPS during the downturn to reduce their printing costs. But can dealers really turn a profit on MPS and also maintain their high levels of customer service? MPS requires more planning than traditional printer and copier purchasing, so it is important that both buyers and dealers readjust their time frames to take this into account. “For dealers to get involved in MPS at a basic level they will need to carry out a gap analysis of their current offering,” says Stewart Dudding, global accounts manager at Kyocera Mita. “A market-leading approach is to use ITIL as a framework and see which of the five stages – or which processes within each stage – cannot currently be delivered ‘in house’. It is those processes a dealer should then consider investing in, either through additional resources, infrastructure or training, or by engaging with third party subcontractors and/or the MPS teams within the leading manufacturers.” “For me, the major factor to decide on is what kind or organisation you are comfortable partnering with,” explains Alex Dunn, sales director of Superstat, who last month united with Brother to offer members of his dealer group an MPS solution. “Ideally you will probably want to get behind one offering or another and give it a fair crack of the whip. We’re talking about fairly lengthy agreements so you need to be happy you’ll get the right back-up and match up how your chosen partner operates with your own individual values as independent dealers.” While MPS contracts aren’t always overly complex, they do require a degree of specialised knowledge and experience, adds Tracey. “At its core, an MPS proposition includes the provision of hardware – existing or new, supplied on a purchased or leased basis the supply of all consumables required to operate the devices and a services wrap to cover the support of the solution – whether this be hardware only, or also including software. The key differentiator is the ‘managed’ element.” He continues, explaining that partners should think about the value added services they can offer such as management information reporting, fleet optimisation, workflow process improvement or the addition of software solutions. So, if you’re a dealer thinking about branching out into MPS and the above just scared you a little, would the decision be worth it? “As a traditional reseller I had looked at MPS several times, before selecting Samsung as my preferred supplier,” says Darren Bush, MD of Tandem Solutions, Lincolnshire. As a member of Network Group, which rolled out its MPS programme for resellers in May 2011, Bush launched his MPS offering in September and appointed an MPS sales director. They are one of 13 new members of staff he hired to focus on this side of his business, which currently adds around £165k per month to his turnover, with good margins. “We estimate to add £3m onto our turnover over the next 12 months, and expect to install in excess of 1,200 machines,” he adds. Network Group themselves estimate that they will turnover some £4m in MPS business this year alone. “MPS is a widely misused term and can mean many things to many people,” explains Sarah Sweet, Ricoh’s indirect channel marketing manager. “To run MPS properly you will need technical support, logistics, a billing department and field service,” she explains, adding some systems are easier to set up than others and can lead to an eight per cent rebate on printing for dealers. “The rebate paid to the dealer is a guaranteed return and locks in the revenue stream for the period of the

february 2012 www.dealersupport.co.uk

contract,” Sweet says. “The number of dealers offering MPS traditionally has been small due to their lack of understanding of the concepts and drivers for this market. However, as dealers’ understanding and confidence grows, we are seeing an increasing number of our printers being sold under this programme. Currently it is about five per cent and growing.” Overall ROI is hard to put a figure on according to Rob Brown, business manager for MPS at OKI, as it varies by account. Although, he adds, that those with their own engineer provision stand to make the most profit. “Of course some dealers may have had a bad experience,” he explains, “but the reality is that with the correct understanding or what needs to be delivered and the resources and systems to manage billing, consumables supply and service, then dealers will make money and more importantly secure and retain business for a minimum of three years.” Others talk of an achievable 20% margin on consumables on guaranteed business. “Under an MPS agreement, all consumable usage is re-charged to the customer by the leasing company, with the dealer whose customer it is, enjoying the profit from those sales,” explains Jones. “It effectively circles the wagons around your customers and stops predatory attacks from the other suppliers trying to undercut your prices on a pure transactional basis. Additionally it provides future contracted income, which adds significant value to any trade valuation of a business.” “Offering true MPS means managing a client’s document imaging,” adds Dudding. “This should include everything from helping them keep to certain budgets, to assisting them with educating their staff in best practice. There is no ‘one size fits all’ managed service, so dealers need to be flexible and creative in order to win MPS deals.” Brown agrees, adding that the reality is that MPS is about ensuring that the end-user has all the functionality they require to manage their printing. “The customer really doesn’t care what the speed or model actually is, they simply need to know a device will print, copy, scan, email and fax to suit their needs,” he says. Although some dealers have had success by cobbling together constituent MPSs to part offer the service, using a complete offering as provided by a large partner makes the process smoother and easier for everyone involved. “More importantly though,” says Dunn, “several dealers have been on the receiving end and lost business due to MPS. So it’s time to get involved or risk losing more and more.” Something of a rallying cry, even if the figures haven’t yet washed away all skepticism. DS

While MPS contracts aren’t always overly complex, they do require a degree of specialised knowledge and experience

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management

advice

As many businesses rough it through a period of austerity, it may be easy to overlook the consequences of a rise in discontent among staff. A brave face may be shown when pay freezes are announced and where job security can’t be guaranteed, but Jackie Keddy and Clive Johnson explain why, as a manager, you must recognise when mounting pressure may be moving your team toward breaking point

Calm

C OAC H

demoralised workforce is clearly bad news from anyone’s perspective, not just due to the hundreds of hours of effort that may be lost to sickness, increasing mistakes being made and falling productivity – a dip in mood can’t but help make itself known to customers too. When pressures mount, tempers also have a habit of rising, with disagreements between colleagues being the inevitable result. Unproductive conflict is one of the costliest hidden contagions for businesses, with a recent estimate by cedR putting the annual cost to UK companies at more than £4bn. it therefore makes sense to put measures in place to stem a possible tide of discontent before it starts to cause real harm. But keeping spirits high when times are tough is easier said than done. One powerful approach that we’ve seen have a dramatic impact is when managers start to coach – not just the type of coaching that involves regular, dedicated ‘one-to-ones’ between a manager and each member of staff in turn (something that is rarely possible when time is at a premium), but using coaching is an everyday management style.

february 2012 www.dealersupport.co.uk

management

advice

By staff appreciating for themselves what they could do to change their own performance gave many a new sense of purpose and direction At the heart of this is helping individuals to think themselves, finding inspiration and feeling committed. It takes little more than a few thoughtful questions to engage with individuals, show interest in their opinions and possibly gain useful insights from what they have into the bargain. Critically also, coaching involves managers showing that they are genuinely ready to listen. This is a much underemphasised skill, and one that many of us might do well to work on. Listening offers individuals an opportunity to talk about and come to terms with the issue they are facing. In this regard, it pays to remember a popular mantra – we have two ears and one mouth and would do well to use them in the same proportion. Listening can help garner staff support for what a manager is facing too. We’ve often heard of cases where managers have found their staff being more appreciative of the uncertainty and difficulties that they have to face once they taken the step to show a real interest in what is there staff have to say. For example, a manager at an NHS trust told us how a previously very poor relationship with a critical member of her team had completely turned around once she’d started inviting ideas from her and showing that she was listening. What’s more, a coaching approach can play an important role in transforming performance in other ways. A government agency told us how the morale of its call centre workforce dramatically shot up once it started using coaching to help staff focus on how they handled customer calls. Not only by providing ‘talk time’ between each individual and their manager, but by staff appreciating for themselves what they could do to change their own performance gave many a new sense of purpose and direction; something that was otherwise difficult to achieve an environment where opportunities for career progression were limited. Where individual performance needs improving, a simple coaching technique can also be called upon to reduce individuals’ tendency to feel a need to become defensive. Here, the so-called scaling technique can be used to good effect; simply by asking an individual to judge how well they feel they are performing in a particular area, using a one to10 scale. A manager may then ask what has got the individual to the that point, and make it clear that there is a need to go higher – again asking for thoughts on how this may be achieved. Elsewhere, we’ve seen how coaching can bring about a

february 2012 www.dealersupport.co.uk

change in the way that staff interact with customers. For example, at an organisation of only 10 people, a new MD used coaching to encourage individuals to better appreciate how they might be perceived by customers and to question what they might do to better engage. All of this may be well and good if you’ve yet to experience a downturn in mood, but what if rising conflict is already apparent? Here too, coaching can play a valuable part. We’ve often seen how well-framed questions and the help of someone who is tuning in to what an individual is saying can help them reflect on their situation, see the conflicting issue through a different lens and articulate the outcomes they want to achieve (as well as what may be realistic). Often this has caused individuals to realise that it’s in their best interest to resolve their differences with a compromise or sometimes even by turning the other cheek – something that they have to come to appreciate for themselves if they are to take decisive action. Of course there are some disputes and genuine grievances that require proper investigation or mediation, but even here, a coaching dialogue that runs in parallel can help smooth the path towards a resolution that the parties involved can more readily accept. The other side of the coin, where grievances are concerned, is the concern that many managers have when having to handle potentially thorny issues. The demands of ever-changing legislation concerning staff rights in grievance procedures are enough to make the knees quake. Following a little training, encouraging managers to coach usually costs very little, especially if it becomes integrated as part of an everyday management style. Once managers have taken the plunge to give it a try, many find that dropping into a coaching style takes no extra time than they would otherwise give in conversing with their staff. It used to be the case that leaders were expected to know all the right answers. Now many might be better served if they can ask more of the right questions. It may be tempting at a time when budgets are tight and the priority is to stick to the knitting to not do anything, but this may be a false economy. At least one small business owner told us that the very survival of his business depended on using coaching to break through poor decision-making and internal conflicts that had brought his company weeks away from bankruptcy. Thankfully not everyone may be in this position, but even when business is on an even keel, those who overlook coaching could be missing a vital trick. DS

Jackie Keddy and Clive Johnson are authors of ‘Managing Conflict at Work’ and ‘Managing Coaching at Work’, both published by Kogan Page. They will be leading a free webinar exploring effective communication techniques on 7 March and hosting ‘Managing Conflict and Stress at Work 2012’ in London, 21 March. Visit their website at: www.thejanuspartnership.com.

MANAGEMENT

IDS League Paperstone

IDS LEAGUE

WEB SPINNERS Last August, not only did the team at Paperstone celebrate their seventh birthday, they also swiped the IDS league Web Dealer of the Year award for the third time running. Nina Rosandic takes a visit to swanky Charlotte Street to talk to MD Max Trotter-Landry about steaming ahead in the uncertain and ever-changing world of the online marketplace

february 2012 www.dealersupport.co.uk

IDS League Paperstone

aperstone was not born out of a passion for stationery, but rather an entrepreneurial vision of two young men sighting an opportunity in the internet channel. In 2004, the same year that Zuckerberg and friends gave birth to Facebook, Max Trotter-Landry and Jim Brown (pictured left and right respectively) were bringing together an online empire of their own. Unlike traditional stationers seeking to evolve with the times, Paperstone’s website is not a supplementary platform of the business, it acts as its beating heart. The central London office, located in stylish Charlotte Street, houses a team of 12 staff, including a dedicated IT and tech team with an unrelenting eye on the maintenance of a continuously evolving ecommerce hub. In what is fast becoming a highly saturated and competitive marketplace, Trotter-Landry attributes the company’s success first and foremost to streamlined efficiency – by running everything through Spicers DDC, the stock-free team are “able to just focus on the aspects of the business that don’t involve logistics”. However, Trotter-Landry is well aware of holding onto the fundamental element that sets independents apart from the multinational contenders and is quick to add that the transactional nature of the online model does not make for faceless corporate communication. “We are in essence an IT business, and in that respect, we automate where possible, however, we haven’t let that deter how we deal with people. Whenever there is a benefit to dealing with a human, we will always have a human dealing with a human, “ he insists. “Ultimately people buy from people, and what a lot of us online suppliers try to do is to create personality on our websites, that people will feel comfortable buying from. We’ve tried to convey this in our brand, which we think is very open, approachable, friendly and communicative.” This branding seems to have done the job, as the company has successfully seen year-on-year growth in the number of visitors to the site, built upon a combination of SEO and pay-per-click advertising, however, as anyone working in the online space would know, this is only half of the battle. What has set Paperstone apart from its competitors is its ability to get customers buying, and also, to get them coming back. “Operating in the internet channel, customers are extremely fickle. Lots of customers are coming through the front door all the time, but they are also leaving through the back door – it’s very hard to hold onto them in the middle,” explains Trotter-Landry. The sales team, driven by sales director Brown, has focused heavily this year on customer retention. “We’re trying to be much more proactive in contacting customers who have already bought from us, and it’s working very well. These communications still count. Aside from follow-up calls, we market via email to all customers who have previously ordered from us. Our style is very unobtrusive, we don’t buy mailing lists and there’s no cold calling.”

There is a big difference between having an online space for your customers to order, and to compete in the online marketplace. It’s not easy to sell online and it’s getting increasingly more difficult. So is it an area that every dealer should enter? “I don’t think so. I think it’s important for a traditional dealer to have a B2B portal where customers can order for themselves, which they can either build themselves or are available through all the major back office systems. That’s cheap and efficient and easy. But to try and compete in the online space is more difficult and there’s not enough space online for everyone to be successful,” says Trotter-Landry.

We are in essence an IT business, and in that respect, we automate where possible, however, we haven’t let that deter how we deal with people “We invest heavily in IT, and research and development, and we’re always trying to improve our shopping experience, he continues“It’s an ongoing process. There’s no formula unfortunately – we’re constantly evolving and tweaking things to improve. We’re constantly coming up with innovative ideas, but noone knows which ideas will work, especially on the internet where everything’s changing so rapidly, so what we’re doing now is prototyping lots of ideas. We’re giving it a little bit of space, testing it first and seeing how it goes rather than rolling something out that may not work,” says Trotter Landry. “It’s essentially looking at tweaks on the website, improving the usability; so you might move the ‘Add to basket’ button one way, or increase the size of it, or decrease the size of it. It’s those kinds of subtle changes to increase conversion. Sometimes they matter, sometimes they don’t and sometimes they have a negative impact. But sometimes they make a difference and for us, we’re really trying to get better at understanding those differences, which are subtle, but a 0.1% increase in your conversion makes a big difference over a period of time”, he explains. In a space where the rulebook changes on a daily basis, Trotter-Landry is well within his rights to be proud of a three year run of IDS wins. “We as a company are working really hard, everyone is pulling together to develop the company – and we’re ambitious. Recognition like this is really well received, it’s fantastic and everyone here feels that. To be recognised by your peer group and to be shown to be doing well amongst your peers is what you want as an individual and a business, so we’re really happy.” And they aren’t stopping for breath, with a fourth award in their sights, watch this space. DS

www.dealersupport.co.uk february 2012

FINAL wORD

Keeping momentum Matthew Searle, director, Canon Partner Channel

This year will see many SMBs and corporates seriously investigating how new technologies could help streamline and optimise their business processes

february 2012 www.dealersupport.co.uk

ooking back over 2011, itâ&#x20AC;&#x2122;s been an extremely difficult year for vendors, resellers and customers alike. Devastating natural disasters have led to supply and demand issues, which in turn have had a significant impact on resellers. And things are not getting any easier - as we look ahead this year, there are fears that we are facing a double-dip recession, largely due to public sector spending cuts, tighter household spending and a difficult economic climate for exporters. This is going to affect the office supplies industry in a number of ways. When it comes to printing, we expect that some organisations will be more cautious in adopting colour printing to save costs. While cost-effective black-and-white devices will remain an important part of the industry, vendors and resellers need to provide strong cost-control capability for colour printing. This will enable them to restrict individuals on what they are allowed to print, but ensure that they can make use of the benefits of colour printing without compromising on cost, when necessary. This year will also see many SMBs and corporates seriously investigating how new technologies could help to streamline and optimise their business processes. Managed print services is one example, as more customers look to third parties to provide consultancy and the day-to-day management of printers to improve ROI. This is good news for resellers as it will also provide a gateway into providing other services and solutions to their customers, as they become more familiar with their other business processes â&#x20AC;&#x201C; whether this is invoice management, document management, processing or distribution, for example. As an additional route to increased efficiencies and cost savings, organisations understand that they need to be smarter when it comes to how documents enter their business and how they are subsequently managed. For example, speeding up the time taken to process documents such as customer invoices, purchase orders, and sales contracts will improve cash flow and will be crucial for smaller businesses. For organisations trying to improve and optimise the flow of their information, electronic document capture remains the all-important first step in this process. By linking directly into the corporate network and systems, and into cloud-based applications and technologies, scanners and multifunctional devices can bring a strong competitive advantage for businesses and workgroups. Resellers will need to consider the importance of cloud-based technologies this year as businesses will expect compatibility with cloud applications. Looking at scanning independently, we expect to see more price competition, particularly at the lower end of the scanner market with personal and desktop workgroup scanners. This is good news for home users, who will be able to afford professional scanners - benefiting from faster, higherquality batch scanning technologies. The industry is clearly feeling the impact of the consumerisation of IT. From smartphones like iPhones, to iPads and tablet PCs, consumers are increasingly able to access information and documents anytime, anywhere. This in turn will further stimulate growth in the consumer and home office market for sheet-fed document scanners. DS

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