Secrets of Success

Intivity, Rochester, New York

When Fabricio and Debby Morales first moved to the United States, they found a Day-Timer supplier and won a bid to supply personal organizers to the Kodak Company. Using the profit to expand their offerings, the couple bid and won again, this time to provide office products and janitorial supplies to Kodak’s operations worldwide. Within two years, they were able to buy a space for their company, Intivity. Twenty-eight years later, Intivity is thriving, with $55 million in annual sales. Meanwhile, Kodak didn’t pivot fast enough when computers and digital photography entered the picture; and in 2012, the former king of film photography was forced to declare bankruptcy. It was a lesson not lost on Intivity’s management.

“When Kodak started to run into trouble, we realized we needed to diversify our products and customer base,” says Nate Morales, vice president of the strategic sourcing division. “By then, we were selling contract furniture. We expanded our offerings in various categories and started selling to the state and local government sectors.”

Currently, Nate estimates the New York State government accounts for about 80 percent of Intivity’s business, with healthcare, corporate accounts and nonprofits filling in the remainder. In addition to being a Steelcase dealer, the company offers thousands of products across a wide range of categories, including less traditional segments.

“We sell MRO [maintenance, repair and operations] and industrial supplies—everything from HVAC [heating, ventilation and air conditioning] to electrical to lighting to architectural products,” Nate says. “We were there when the governor signed the New York State Minority Women-Owned Executive Order in 2010 pushed by Grainger to proactively add these suppliers, so we offer the entire Grainger catalog.”

Meeting challenges

“The biggest challenge has always been staying relevant with customers and making sure we are diversifying our offerings fast enough,” continues Nate. “Technology is also a challenge—making sure e-procurement and our marketing are up to par with the big box stores. We also recognize now a slight weakness: because of how the office environment is changing—we need to get into more audiovisual [AV].” As a result, the company is looking for ways to marry AV with contract furniture.

While Nate admits Amazon and similar entities can be viable competitors, losing business to them is not a major concern. “Amazon is definitely aggressive in its pricing,” he acknowledges. “But not every customer is meant to be ours. I am not sure we can make every purchase as convenient as Amazon, but we invest in our customers. We ensure we put the right program in place to get them what is needed and provide the right solution for their problems. I don’t believe big box stores do that.”

Successful tactics

Company: Intivity

Headquarters: Rochester, New York

Top management: Fabricio Morales, president and CEO; Debby Morales, chief operations officer; Nate Morales, vice president, strategic sourcing division

Main wholesaler: Essendant

Number of employees: 100

Annual sales: $55 million

Online business: 60%

According to Nate, Intivity’s success is due to a few key factors: “We stayed lean from an overall corporate perspective, so we are able to pivot quickly. We have great customer relationships, which I believe is the main differentiator for the IDC. Early on, we also learned the importance of diversifying and were able to expand our product offerings. The missing piece is that our product offerings and customer relationships are driven by our people. Much of our competition is switching to inside sales and having customers call an 800 number. When you call us, Robin answers the phone. She knows our customers’ names and they know hers. We offer a more personal experience and that’s a huge part of our secret sauce.”

Finally, Nate has some sage advice for other independent dealers looking toward the future: “Keep an open mind. How it has been done for years is not always the best. Maintain that entrepreneurial mindset and continue to look for opportunities. For independent dealers that keep that in mind, I see nothing but growth and success.”