Outlook 2010 The Dealer’s
Perspective Page 14
Time to
Support OFDA with your Dues Simon DeGroot Editor in Chief OFDealer
You don’t need me or anyone else these days to tell you about the importance of spending every business dollar wisely and well. But a friendly reminder about the value of continued membership in OFDA might just be in order. Right now, there’s probably a dues notice from the association sitting on your desk, with a request to re-up for the coming year. And while current business conditions may make it tempting to give membership a pass this year, you would ultimately be short-changing yourself and your business. Putting it simply, dealers today need a strong association to provide cross-industry forums for leading-edge management education, best practice exchanges, benchmarking and peer networking. They also need an association to actively represent their interests in Washington, DC and in the industry at large more than ever. On the government affairs front, OFDA and similar associations have been waging a valiant battle to secure meaningful benefits for small business in the healthcare reform bill that is currently working its way through the legislative process. Despite their best efforts, there is little good news to report, but the battle is still far from over and a strong, ongoing lobbying campaign will be needed to minimize damage to the small business community and work for genuine reform and the kind of healthcare system that we really need. OFDA needs your continued financial and grassroots support as a member to do it right.
JANUARY 2010
Closer to home, the association for many years has performed an important educational role for industry manufacturers through its Dealer Manufacturer Satisfaction Index survey. This annual dealer poll provides an outstanding opportunity for dealers to speak with one voice to their business partners and make it clear to them where they’re doing well and where they need to do better. Again, OFDA needs your continued support and participation as a member to do it right. Valuable benchmarking projects like the annual Dealer Financial Comparison survey give dealers the tools they need to better appreciate the strengths and weaknesses of their own operations and identify areas where improvement is needed. OFDA’s annual Dealer Strategies Conference offers the only industry-wide venue where dealers, manufacturers and service partners can exchange ideas and information and learn from their peers. But again, OFDA needs your continued support as a member to do it right. So what are you waiting for? The dues are modest but OFDA can’t function effectively without them. Write the check and put it in the mail today. It’s not just the right thing to do for the furniture dealer community and the industry as a whole. It’s also the right thing to do for your business. Not a member yet? You should be. Visit www.ofdanet.org.
OFDEALER
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news Gov’t Grants and Smart Investing Help Herman Miller Dealer bfi Generate Major Energy Savings There’s hardly a dealer out there these days who isn’t proclaiming their commitment to sustainability and claiming to be doing all they can to run an environmentally-responsible operation. But few have come up with as innovative and cost-effective a way to go green as Elizabeth, NJ-based bfi.
energy-related grants and similar incentives from the federal and local government and your own utility company, you may well be missing out on a relatively inexpensive opportunity to cut your own energy costs and make a statement about your own commitment to the environment.
Former Steelcase Dealer Daniel Hannaher Named SBA Regional Administrator
It took a lot of research and some creative financial footwork, but based on the numbers presented by bfi chief financial officer John Trotter, it was all more than worth it—both for the environment and for the dealership’s bottom line.
Small businesses in Colorado, Montana, North and South Dakota, Utah and Wyoming can be confident someone who knows firsthand their concerns and priorities is at work on their behalf in the federal government, following the appointment of former Steelcase dealer Daniel Hannaher as their Small Business Administration Regional Administrator.
Back in November, bfi installed a new 50 Kilowatt solar energy system. It wasn’t cheap—a total cost of $345,000, Trotter reports. But through a combination of federal and local government grants and subsidies, bfi was able to reduce that bill by an impressive 65%—to just $120,000. Not a bad investment for a system that promises to cut the dealership’s annual electric costs by 50% but there’s still more to the story. The new system also generates renewable energy certificates that bfi can sell to electric utilities needing to show they are encouraging the production of renewable energy. Certificates are sold on the open market, Trotter explains, and by his estimates, they should generate about $20,000 annually for the dealership. The bottom line: the new system—and don’t forget that initial $345,000 price tag—should pay for itself in just 3-4 years, says Trotter. That’s a pretty smart investment by any measure and particularly welcome given current market conditions. And the bfi team isn’t finished yet. When OFDealer talked to Trotter about the new system, he was in the process of scheduling an energy audit through his local utility company, by which experts would come in and identify even more opportunities to reduce energy consumption. And, he adds, more local grants are available to cover up to 80% of the cost of implementing whatever recommendations the auditors come up with. The dealership will probably need a loan of some kind to cove the balance but, Trotter explains, the additional savings on its utility bills should more than pay for the loan. There’s a lesson here for other contract furniture dealers: If you’re not up to speed on what’s available in the way of JANUARY 2010
Hannaher started working at his family’s dealership straight out of school and became president in 1987. Both parents, he explains, were politically active and though their preference was for the other side of the political aisle, he inherited their commitment to getting involved and trying to make a difference. While still at the dealership, Hannaher was a tireless supporter of the Democratic Party in North Dakota. In addition to serving as state party chairman from 1995 to 1997, he was a senior advisor to the Obama campaign during the last election and played an important role in securing President Obama’s decisive win in the state’s caucus. “This is clearly a very challenging time but it’s a great honor the President has given me and I’m thoroughly enjoying the work and helping to open up avenues of opportunity for small businesses,” Hannaher said. “Both the SBA and small businesses of Region VIII will benefit greatly from Dan’s entrepreneurial background,” said SBA Administrator Karen G. Mills in welcoming Hannaher. “With his experience in both the public and private sectors, as well as his commitment to serving the community, Dan will be a tremendous asset and advocate for small businesses and entrepreneurs across the region.”
OFDEALER
continued on page 5 PAGE 4
Dealer News } continued from page 4 Minnesota Dealer Marco Earns Honors for Community Involvement Congratulations to Jeff Gau and his team at Marco, Inc., a Steelcase dealer headquartered in St. Cloud, MN, for earning special recognition recently for their outstanding record of community involvement and support for worthy causes. The dealer received the 2009 Business Award in Philanthropy from the Central Minnesota Community Foundation. As the award citation noted, corporate philanthropy has been a key element of the company culture for over 30 years. “We believe very strongly that it’s possible to do well and do good at the same time,” said Gau. “In fact, people like to do business with companies that they view as good corporate citizens.” As a company, Gau explained, Marco commits a minimum of 5% of pre-tax profits to local charities and encourages its employees to be active in the community as well. In addition to raising some $87,000 for the local United Way, employees are also heavily involved in the Big Brothers and Big Sisters organizations, as well as the local Boys & Girls Clubs. And on a company level, Marco recently served as a key sponsor for a fundraiser on behalf of a local hospice organization, contributing $25,000 itself and spearheading the effort to secure additional corporate sponsorships.
In Memoriam:
Lester C. Peabody
“It’s certainly not easy for any non-profit to find dollars these days and that makes our own efforts more important than ever,” says Gau.
In Indianapolis, Commercial Office Environments Expands Through Acquisition Indianapolis-based Haworth dealer Commercial Office Environments (COE) announced earlier this month that it has acquired Area 4 Office Furniture, also based in Indianapolis. CEO said the acquisition will further increase its presence and capabilities as a full-service office furniture dealer in central Indiana. “This acquisition will strengthen COE by combining the resources of two successful dealerships,” said Sara Cook, COE president and owner. “Area 4 brings us additional experienced personnel, a strong customer base, and compliments our business model very well. We’re very excited about this new relationship.” Following the acquisition, Area 4’s previous owner Pam Watson will assume the role of vice president of sales for Commercial Office Environments and the two companies’ operations will be consolidated at COE’s existing facility, a 25,000 sq. ft. showroom, office and warehouse space.
surrounded by his family. He was 101 years old.
He soon moved the dealership into the office furniture business and led the firm through the Great Depression, World War II and into the modern era.
member of the First United Methodist Church for over 80 years, Lester was actively involved with the church and the Preachers Aid Society of New England. He also served on the board of directors at the Melrose YMCA as well as Melrose Savings Bank. Perhaps most dear to him was his involvement and support of Beth Israel Deaconess Hospital in Boston as well as the New England Deaconess Association of Concord, MA.
Right up to his passing, Lester remained current on the family business and the overall Boston business community. As a member of various boards, he contributed and worked on behalf of many causes and organizations. A
Memorial contributions in his honor may be made to the First United Methodist Church, 645 Main St., Melrose, MA 02176 or to the New England Deaconess Association, 80 Deaconess Rd., Concord, MA 01742.
After graduating from Boston University in 1931, Peabody joined the dealership that his father Lorenzo had founded in 1899 as a typewriter business.
Lester C. Peabody, who was involved with his family’s dealership in Boston for more than 70 years, died peacefully at his home on December 22, 2009
JANUARY 2010
OFDEALER
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BIFMA November Numbers Show Smaller Declines, Shipments Still Off 29% The Business and Institutional Furniture Manufacturers Association (BIFMA) recently released its market statistics for November and while the percentage decline for the month compared to the same time last year was significantly better than in October, shipments were still down sharply.
year-to-date, but, noted Raymond James analyst Budd Bugatch, the order numbers were helped by a much easier prior year comparison.
BIFMA said November orders fell 18% compared to the same month last year, versus a 30% decline in October. November shipments decreased 29%, still better than the 34% decline yearover-year posted in October.
“While we are heartened somewhat by the ‘less bad’ statistics, we would note that on a two-year basis, the percentage declines in both orders and shipments worsened in November versus October,” said Bugatch, who suggested the worst might finally be over for the industry. “At risk of invoking an already overused cliché, we may not have hit bottom yet, but we can see it from here.”
November’s percentage decline in orders was the smallest percentage decline
Commenting on some of the industry’s key economic drivers, Bugatch noted
investment analysts are calling for a year-over-year increase in fourth quarter profits for the S&P 500 for the first time in several quarters, though he cautioned that bottom line gains have been mostly driven by cost cutting rather than top line improvement. Bugatch also noted a slight in increase in CEO confidence and modest gains in service-providing payrolls as positive indicators. Less encouragingly, he pointed to a drop in the Architect’s Billing Index, as reported by the American Institute of Architects, and news of a 30% decline in November in new office construction. continued on page 8
JANUARY 2010
OFDEALER
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Industry News } continued from page 7 HON Company. “It reinforces that we’re a smart player in the market, that we have great products driven by customer research, and that we’re ready and empowered to serve our customers and deliver solid solutions.”
HON Introduces New Logo and Branding
For only the third time since it was founded in 1944 and for the first time in more than 40 years, The HON Company has introduced a new logo and branding initiative in an effort, HON said, to “more accurately reflect how the company delivers meaningful products and services that exceed today’s market demands, and provide the tools and support its channel partners need to succeed.” “There was never a better time to introduce a new logo and branding – it reflects the investment HON has made during a very challenging economic climate and publicly demonstrates not only where HON is today; but also where we’re heading,” said Tim Smith, director of brand communications for The
Added Smith, “While our logo may look a little different today, the core HON values of honesty, integrity, fairness and respect remain as important to the HON brand as ever. For us, the new look and feel of the HON brand simply sets these timeless values in a new context.”
Office Furniture USA Hosts Annual Meeting Dealers and manufacturers in the Office Furniture USA organization met in Birmingham, AL, recently for the group’s annual meeting and to review progress in 2009 and set the groundwork for the year ahead. On the program: three days of general sessions, focused breakouts, and hands-on interaction with new product offerings. In addition, 29 achievement awards were given to dealers and manufacturers for 2009. continued on page 9
JANUARY 2010
OFDEALER
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Industry News } continued from page 8 “Our partners look forward to this meeting all year, and we wanted to exceed their expectations,” said Brad Armacost,
KEYS & LOCK CORES OVERNIGHT!
president of Office Furniture USA. “Months of planning went into this meeting, and the results speak for themselves. Our partners were very excited by the overall program and the information they took away.”
United Stationers and Safco Introduce Rewards Program for Dealer Sales Reps
Easy online ordering 24/7/365 for most office furniture manufacturers
United Stationers and Safco Products have introduced a new
We cut, stamp & ship your keys the same business day
sales incentive program that will enable dealer sales reps to earn points for selling specific Safco furniture products. Initially, the program will cover three Safco seating products, the über
Keys arrive in the mail, overnight by 10am anywhere in the USA
24/7 task chair, the Metro task chair and the Cava chair. There is no limit on the number of points that can be earned
An efficient and cost effective web-based solution to manage all your key orders.
but dealer sales reps must register to earn points. The points can also be accumulated and redeemed for reward prizes too. “It’s exciting to bring programs to our dealer partners and their sales staffs, because they benefit everyone,” said Rich Aievoli, vice president and general manager/furniture category for United Stationers Supply. Full details on the program are available at www.safcousscorewards.com.
How Does Your Dealership Compare? Compare your company’s financial performance to the industry’s best players by participating in the OFDA’s free online
Bretford Appoints Chris Petrick as CEO
Dealer Financial Comparison & Benchmarking Guide Survey
Bretford Manufacturing has announced the appointment of Chris Petrick as chief executive officer. “Bretford is a family business—my father and uncle started
Participating dealers can compare revenue & expense structure, and profitability with:
the company in 1948, and my brother and I have continued
Top 10% of most profitable dealers
ownership,” explained Dave Petrick, Bretford’s former CEO
Dealers with comparable total revenues
and current chairman. “While I intend to remain in the
Dealers in markets of similar size
business, the time has come to transition this role to the next
Aligned vs. non-aligned dealers
generation in our family. Chris understands Bretford to the
Dealers with equivalent service revenue shares
core, having worked in nearly all the departments over the years. His experience and leadership talent are exactly what Bretford partners and customers need in order to continue
And, receive a FREE custom report aligning your data with relevant benchmarks for easy use in improving performance! To participate, click this ad or call 800.542.6672
thriving in this new decade.” With this new organization, Mike Briggs will remain in his role as president of Bretford, concentrating his efforts on the sales, marketing and customer service support functions within the business. continued on page 10 JANUARY 2010
OFDEALER
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Industry News } continued from page 9 New President for Groupe Lacasse
USGBC LEED (Leadership in Energy and Environmental Design) Green Building rating. Arrowood has also been certified level 2 by SCS for meeting the criteria of the BIFMA e3 Sustainability Standard.
Groupe Lacasse has announced the appointment of Sylvain Garneau as the company’s new president. Garneau, a veteran business leader with more than 20 years’ experience, succeeds François Giroux who announced last June that he was stepping down as president after more than eight years of service. At the same time, Sébastien Ross, who served as interim leader and vice president of manufacturing for Groupe Lacasse, was promoted to vice president of manufacturing, product development and marketing. Garneau comes to Groupe Lacasse from VAE Nortrak North America, the single largest trackwork and track material manufacturer serving North American railroad carriers, where he served as chief executive officer. Prior to that, he served as executive vice president of Leroux Steel in Chicago.
How Satisfied are You? The Annual OFDA Dealer Manufacturer Satisfaction Index (DMSI) survey is your opportunity to evaluate the products, policies, service and support of your manufacturer business partners to improve dealer-manufacturer relations. Strictly confidential and open to all dealers, evaluate up to four of your primary suppliers in six key categories: training, product lines, service and support, sales and marketing, management, and technology.
National Office Furniture’s Arrowood Casegoods Earn Indoor Air Quality Certification
Top ranked manufacturers will be receive OFDA Dealers’ Choice Awards at the June NeoCon show in Chicago.
National Office Furniture announced recently that its veneer casegood series, Arrowood, achieved indoor air quality and level 2 certification.
As a thank you for participating, you’ll receive a FREE copy of the final report so you can compare your suppliers with others in the industry.
Arrowood earned Indoor Advantage certification under the Scientific Certification Systems (SCS) program, and as a result its specification can help contribute points towards earning a JANUARY 2010
Click this ad for a Link Directly to the DMSI Survey or call 800.542.6672.
OFDEALER
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“OFDA is the voice of the office furniture industry and my membership in OFDA has become a valuable resource for education, networking and business advice. Their efforts on behalf of the dealer community have brought purchasing power for insurance, a forum to address industry related issues across the spectrum of manufacturers and invaluable education to help me grow my business.�
Bill Stoops, Principal Elements, Denver, CO Member Since 2003
The Office Furniture Dealers Alliance (OFDA) is the industry association for office furniture dealers who are serious about focusing on growth, development and profitability. Membership is comprised of leading dealerships and the manufacturers, technology vendors and diverse service providers who support their success.
For membership information call 800.542.6672 or visit www.ofdanet.org
Meet Carlene Wilson, OFDA’s New Board Chairperson During her 25 years in our industry, Carlene Wilson has built an enviable reputation for excellence in sales, sales leadership and business consulting, both for dealerships and manufacturers in Washington DC, New York, Detroit and Dallas. Wilson’s current role as principal and vice president of sales and marketing for BKM Total Office of Texas, coupled with her experience at Steelcase, Haworth and Workplace Integrators, have given a unique perspective on the industry as a whole. A member of OFDA since 2005, Wilson’s dedication to the association and its efforts grew in 2006 when she participated in a panel discussion on the future of the office furniture dealer at OFDA’s annual conference. She subsequently opened up her own dealership for tours during OFDA’s conference. “The networking opportunities that are provided by OFDA are outstanding,” said Wilson. “The most important component of my membership continues to be the access to the many talented dealer principals and members who have shared their experiences and ideas in an effort to help improve my business. The ability to meet with dealers not bound by a single manufacturer or supplier influence has been very educational for me. The synergy between dealers, manufacturers and suppliers at meetings provides a much broader perspective on what is actually happening in our industry.” JANUARY 2010
creative, to question, to experiment to drive innovation. We do that by looking at every facet of our business and asking why and why not. What this does is sharpen our observational skills, so OFDA can better understand how our members experience the products and services we provide at the association and in turn, allow our members to differentiate themselves with their customers.” According to Wilson, OFDA’s changes over the past year have been extremely positive for the association and its members.
Wilson has become a highly motivated and outspoken proponent for the association and its dealers. As the incoming chairman of the board of directors, she hopes to increase membership in OFDA by elevating awareness of the many benefits OFDA can provide to dealers—such as educational programs, benchmarking and networking opportunities. "We have done a commendable job bringing educational opportunities to our members. However, in today’s unpredictable and challenging economic times, we must innovate and bring value to our members beyond what they can achieve on their own or through other organizations," said Wilson. “My vision is to challenge all members to be more OFDEALER
“Last year’s OFDA Dealer Strategies Conference, with its new format and dedication to education, was very well received,” added Wilson, who also noted that she is looking forward to even more success at the 2010 conference. “In addition, the OFDealer e-zine, the weekly OFDA eNewsletter and the association’s recent venture into social networking make membership in OFDA an even more valuable resource for dealers and their partners.” “The importance of OFDA’s advocacy efforts on behalf of the dealer community cannot be overestimated,” continued Wilson. “It isn’t just the economy that has made it difficult to be a dealer these days and OFDA is our unified voice to government. The efforts of the association on behalf of the dealer are unparalleled and well worth every dealer’s involvement.”
PAGE 12
Outlook
2010
The Dealer’s
Perspective By Alicia Ellis
Just over a year ago, OFDealer reached out to dealers across the country and asked them what they felt 2009 would hold for them. That was back in November and December of 2008 and dealers were just beginning to feel the effects of what would become the most challenging business environment since the Great Depression. Responses to our survey back then reflected not only dealers’ difficulties at the time but also considerable concern about the future. Nearly 40% of dealer responding said sales in 2008 were off by more than 10%, primarily due to a slowdown that began in the third quarter and only worsened as the year progressed. In anticipation of a difficult year ahead, nearly 60% of dealers said they expected lower sales in 2009 and over half called for profits to be down as well. While a few hardy dealers remained optimistic, the general consensus in early 2009 was that the dealer community was only at the beginning of what would be a very difficult year. If anything, dealer sentiment back then underestimated the severity of the downturn. Last year was tough to say the least. After starting out predicting a 12% drop in shipments for the year, BIFMA spent the next twelve months ratcheting that forecast ever lower before finally settling on a decline of fully 30%. Seeking out new revenue streams and offering practical advice to help dealers succeed and plan for future growth became the primary focus of OFDealer as we sought to establish the publication as a positive, upbeat motivator in difficult times. Throughout the year, we reported on the many ways dealers were responding to the downturn and even though the market overall was challenging and there was more than enough bleak news to go around, there were also plenty of stories about entrepreneurs with a dogged “refuse to participate” attitude and the vision and leadership skills to run successfully against the tide. Disciplined
financial
management
and
cost
control,
diversification into new, services-related revenue streams, maintaining or even increasing the marketing budget and staying closer than ever to a rapidly changing universe of buyers and influencers were among the keys to weathering the storm that was 2009. Here’s how some of our readers responded. “We trimmed our workforce by 10% and then added back selectively higher skilled people,” said Jim Herr, president of Parron Hall Office Interiors in San Diego, CA, who expects sales and profits to be about the same this year as in 2009. “Equally continued on page15 JANUARY 2010
OFDEALER
PAGE 14
Outlook 2010 } continued from page 14 important was to realign our staff to support the strong federal
product and services offerings while beefing up marketing
government work that is carrying us.”
efforts in their responses.
“We reduced our employee head count and utilized a shared
“We restructured our company and increased marketing efforts
work program of reduced work hours for employees with state
to emphasize floor coverings and cosmetic improvement
unemployment compensation,” said Renee Craven, quality
purchases,” said Bryan Geiger, general manager of BBI-Interiors
assurance director for BiNW in Seattle, WA, whose company
in Costa Mesa, CA.
expects sales to increase over 10% in 2010 and profits to be up slightly. “This allowed us to be nimble with retaining employees and to be able to respond when the opportunities come forth.”
As end user budgets tightened, dealers also put greater emphasis in their product mix on less expensive items. While Shelly Hall, a designer with Rosa’s Office Plus in Richmond, IN,
“We aligned our overhead costs to adapt to the economic
extolled the benefits of incorporating mid-market furniture into
realities,” said Jack King, president of Elements IV Interiors in
the company’s line, Larry Scruggs, owner of Gator Office
Dayton, OH who expects sales in 2010 to be about the same
Furniture in Jacksonville, FL expanded his used furniture sales.
but forecasts profits up slightly in the coming year. “We also shifted as many fixed costs as possible to variable.”
According to many dealers we spoke to, the answer to lagging sales is increased marketing. “We stayed close to our existing
John Sorteberg, president of Commercial Furniture Services Inc.
customer base, and maintained an aggressive telemarketing
in St. Louis Park, MN, reported a similar pattern. “We made
approach to reaching out to clients,” said Carlene Wilson, vice
major cuts in staffing and variable expenses, in addition to
president of sales and marketing for BKM Total Office of Texas
receiving rent concessions and reducing our warehouse space,”
in Dallas, who relayed that keeping in touch with existing clients
he said.
while reaching out to new prospects has worked well.
Sorteberg is optimistic about the coming year, looking for sales
What lies ahead for the office furniture industry?
to be up over 10% and profits to be up slightly from last year. In addition, he’s looking for less competition in 2010 as some competitors have gone out of business and others have cut back on their service offerings.
Drawing from last year’s survey, we engaged readers once again to give us their thoughts and opinions on the overall outlook and discuss their plans for 2010. Most of the dealers we surveyed are optimistic about the year
While adjusting expenses and creating a leaner operation is important, 41% of dealers surveyed also included diversifying
ahead, with only about 25% calling for another sales decline and fully 40% calling for an increase of some kind. (See Figure A)
Figure A: Looking ahead, do you expect that 2010 sales compared to 2009 will: 0
25
Be about the same 7.4%
Up 5-10%
7.4%
Up over 10%
25.9%
Off 1-5%
Off over 10%
100
33.3%
Be up 1-5%
Off 5-10%
50
11.1% 0.0% 14.8%
continued on page 16 JANUARY 2010
OFDEALER
PAGE 15
Outlook 2010 } continued from page 15 Only 19% of dealers believe net profits will decrease in 2010, with 26% predicting flat profits and some 55% divided between the belief that profits will increase either slightly or significantly. This optimism is tempered only by the expectation that the industry will not start to improve until late in 2010 or into 2011. (See Figure B)
2010. “Government sales offer the greatest opportunity in 2010 and we need to do the basics better than anyone else and stay focused on executing the plan,” he contends. “Increases in government regulations, the proposed cost increases associated with the healthcare bill, and the tax
Figure B: When do you believe the office furniture industry will begin to come out of the current recession? 0 First Quarter 2010
25
100
3.7%
Second Quarter 2010
14.8%
Third Quarter 2010
18.5%
Fourth Quarter 2010
22.2%
Not until 2011 Not until 2012
50
37.0% 3.7%
Forging Ahead Despite Challenges When we ask dealers for their opinions about where the best opportunities lie in 2010, it was no surprise that more than 44% of dealers mentioned healthcare as a viable target. Because dealers could give more than one response, another 30% of respondents pointed to the government market and 26% cited education as a possible growth area in 2010. Other areas where dealers saw opportunities for 2010 included custom millwork, modular interiors, growth from within existing accounts through services like flooring, cleaning and painting, and increasing sales of used/refurbished office furnishings. The challenges that lie ahead, however, are some of the biggest that the industry has seen in many years. Of all dealers surveyed, 60% cited the economy as the biggest challenge facing the industry in the coming months with concerns about the banking industry, available capital, small business costs including health insurance, construction slowdown and continuing high vacancy rates all figuring prominently on the list. “Government policies are disincentives to small businesses and the decisions the administration is making are hurting small business and jobs,” said Tom Walsh, president/COO of Grooms Office Environments in Springfield, MO, but despite all this, he still expects his company’s sales and profits to be up slightly in
increases that will be needed to fund this and other bills will have a negative effect on small business,” said Mark Eley, CEO of ID&A in Louisville, KY, who expects business to be about the same as last year. “If small business is not in a position to hire we will not see any marked changes in the unemployment numbers and if unemployment remains high, consumer spending will not improve and the economy will not recognize a sustainable recovery anytime soon.” That said, Eley has focused this past year on diligently increasing sales activity in the government, healthcare, and education markets. “I think healthcare will continue to invest in capital projects and offers the best opportunity for product and service sales.” The remaining 40% of dealers surveyed relayed that their biggest concern was with decreasing margins on products. Greg Wolf, VP finance & administration for Custer Workplace Interiors in Grand Rapids, MI, believes that healthcare and education may be the only two bright spots for dealers in 2010. In anticipation of more sales and profit decreases in 2010, Custer has spent the past year focusing on cost reductions in an effort to remain profitable in spite of declining sales and margins. “Healthcare and education are the only two segments continuing to purchase,” he said. “I believe our biggest challenge in 2010 continued on page 17
JANUARY 2010
OFDEALER
PAGE 16
Outlook 2010 } continued from page 16 will be a continued decline in corporate buying and even more margin reduction because of the competitive nature of what business remains.” Elements IV’s King echoes Wolf’s sentiments in regards to margins. “Predatory pricing practices will catch up to the industry. We are training our clients away from best value and shifting our business to more of a commodity,” he lamented. “Institutional markets like government, healthcare and education appear to have the capital budgets to move forward with projects,” said Tom O'Neil, president of OfficeWorks in Fishers, IN, who expects sales and profits to be up in 2010 despite concerns about the often discussed “jobless” recovery. According to Bill Stoops, principal of ELEMENTS in Denver, CO, diversifying
into other products and services while taking over more of the day to day operations helped his company get through 2009. Anticipating flat sales but increased profits in 2010 thanks to these changes, Stoops believes that dealers must get more creative, particularly when it comes to selling services, in order to differentiate themselves in an increasingly crowded market.
decline in employment and increased interest rates, he remains positive that aggressive
marketing
will
put
his
company's sales and profits up by more than 10% in the coming year. What will come of our industry in 2010 remains to be seen as we begin this New Year. Hopefully this article has left you with some ideas for future growth areas to watch as you make your way. I’ll
Harvey Schumacher, president of Envi-
leave you with this parting quote from
ronments 4 Business in Cleveland, OH,
noted Swiss philosopher Henri Frédéric
agrees. While acknowledging that it may
Amiel who said, “"He who is silent is
be difficult if banks continue their tight
forgotten; he who does not advance falls
credit policies, Schumacher believes that
back; he who stops is overwhelmed; out
there are funds for projects in higher
distanced, crushed; he who ceases to
education, healthcare and design build.
grow becomes smaller; he who leaves off,
And, while John Mele, president of MB
gives up; the condition of standing still is
Contract Furniture in Benicia, CA, recog-
the beginning of the end."
nizes the possibility of another sharp
Because customers demand more every day, we’re prepared for whatever comes your way. Need 10 offices in 10 business days or less? What about 20 chairs? Or maybe 10 tables? No problem, with our To You In 10 Days or Less Quick Delivery program, we’ve got you covered.
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JANUARY 2010
OFDEALER
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Technology meets Tradition By Alicia Ellis
dealer profile Combining solid sales techniques with online tools has enabled
Corporate Environments to evolve and expand despite the economy.
There are three really interesting things that help Corporate Environments stand out as an office furniture dealership. The first is that, despite the economy and a 20% decrease in revenues in 2009, they are expanding their vertical market categories to include K-12. The second is that they are not just about the furniture. The revenue stream at Corporate Environments is drawn from a wide range of products and services that you may not find in a typical dealership. And finally, and probably most importantly, over the past year and a half, this dealership has embraced the Internet and all its many tools as a way to cost effectively market themselves, their products and services. In business since 1991, Corporate Environments is a $10 million Herman Miller dealer located in Bethlehem, PA. With 30 employees, including six dedicated salespeople and a business
development manager, Corporate Environments has traditionally focused its efforts on providing quality furnishings to the corporate, higher education and healthcare markets. Like most dealers, when the recession reared its ugly head and corporate sales began to fall, Corporate Environments looked at ways that it could reduce costs and fill the void by better managing finances, increasing their used furniture offering and promoting services like cleaning and reupholstering. Corporate Environments also sought out ancillary products that would allow them to provide more than just the furnishings. Window treatments, lighting, accessories, presentation products, floor coverings, sound masking and even solar panels allow CE to stand out from their competition. continued on page 19
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Dealer Proflie } continued from page 18 “Ancillary products and services were something that salespeople would think about as an afterthought,” said Steve Pettia, Corporate Environment’s vice president of sales & marketing, who explained that the economy has opened the sales department’s eyes. “We are not just furniture, we are all about offering solutions that address the entire workplace environment and we drive it home as much as we can. It didn’t happen overnight but we are seeing the results.”
With the help of technology manager Brian McGonigle and director of new business development, Chuck Stehly, Pettia and his team came up with an approach to drive sales by marketing Education Environments as a leader in the education market and getting involved as early as possible in the bid specification process to work with project planners while simultaneously educating the school principal or decision maker. Working with a marketing budget that had already been cut back to help streamline expenses, the decision was made to take a more hands-on approach to marketing, while using the power of the Internet to extend the new company’s reach into the marketplace. “While we cut back on advertising and shotgun blasts, we created more targeted pieces that focused on a particular market and sought to draw new and existing clients to our showroom,” said Pettia. “We enlisted the help of our vendors and began offering CEU-accredited classes and hosting events to showcase our wide range of products.” Instead of taking clients on a bus trip to NeoCon East in Baltimore as it had done in previous years, the dealership hosted an open house in its showroom with a NeoCon theme. Their exhibit type show drew more than 150 current and potential customers to check out new products and learn about not only Corporate Environments but Education Environments.
“While day-to-day business is important to any dealership, we really wanted to reach out to the A&D and construction communities to secure larger projects and the K-12 market seemed like a great fit,” said Pettia, who explained that he and his team got tired of driving by local school construction sites and seeing all the work they weren’t getting. “With strong business in higher education and a decent reference list, we decided to target a seven-county area and move forward. We talked to other Herman Miller K-12 dealers in other states and planned our strategy.” Under the guidance of a local PR agency, early last year Corporate Environments created Education Environments, an offshoot of the company geared specifically to the education market. Goals were outlined and plans made but how, given the state of the economy, could Education Environments effectively market this brand new company without costing a small fortune?
They say a picture is worth a thousand words and Corporate Environments embraces this philosophy to create sales pieces and case studies on many of their projects. Utilizing a simple template, salespeople can easily create a sales flyer that outlines projects with complete product lists and photos of finished installations. References and testimonials are also incorporated to create a complete sales portfolio which can also be used as a marketing piece to garner more business in a particular area. “It’s often an added vote of confidence that many clients need to solidify a sale or to realize what we can do,” said Pettia. “We make a point to do these things and create more lines in the water.” One example of the effective use of these flyers came when a salesperson visited a branch office with a project flyer featuring one of their sister branches. “The company had no idea that we had done work for the other branch until we showed them,” said Pettia. Another example was a flyer created from a testimonial praising Corporate Environments for a furniture cleaning job well done at a local college. “We sent the testimonial in a flyer to college facility managers offering similar services to other schools during their winter and spring breaks and received a great response,” he continued. continued on page 20
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Dealer Profile } continued from page 19 All of the company’s marketing efforts are wrapped into a strong online presence. Whether through Corporate Environments’ website complete with a retail used furniture site; with its newly developed Education Environments site, or by embracing social networking, Corporate Environments is positioning itself as an informational source for both existing and potential customers. Like Corporate Environments’ website, the newly designed Education Environments site will feature product information, industry and company news, as well as a blog and links to Corporate Environments’ social networking sites including LinkedIn, Facebook and, most recently, Twitter. “The site itself is really a web presence to put a face to our K-12 division, Education Environments,” said McGonigle. “Our intent is to use the site not only as an information resource for Education Environments and the products we offer but also provide a comprehensive K-12 industry resource with white papers, project profiles, new products announcements and blog. By developing the site to function in this manner along with the various other marketing materials we’ll be creating, we feel we will make a big impact on our K-12 targets in the immediate area and show a strong local presence which is lacking for the most part. This is pretty evident by the fact that we’ve already been approached by two A&D firms to work on three K-12 projects in 2010. Not a bad start considering we feel we are just getting out of the gate with this initiative.”
“Our followers consist of a good local base of companies, people and even newspapers that we are filtering information to,” boasted McGonigle. “I try to tweet a couple times a day with interesting information that is not repetitive or a sales pitch.” Most recently McGonigle tweeted about a sad cubical contest that was held. Providing a link to the cubical images, McGonigle simply tweeted, If your cubicles look like this, you may want to give us a call. McGonigle has also been known to tweet articles on green products, cleaning and fun furniture facts. “The key is to have some fun with it and provide useful information,” continued, McGonigle. “We’ve gotten a great response to our social networking efforts and believe it is an integral part of what will ultimately mean success for both Corporate Environments and Education Environments.”
According to McGonigle, who maintains the company websites and social networking posts, the foray into social networking started about a year ago and was exploratory at first. “It started off with LinkedIn, where I built a profile and joined local business groups and those related to our industry,” said McGonigle. “Seeing the potential, I got the salespeople to join and we really began to market our company through these groups.” McGonigle then developed a company page on Facebook and tied their blog into the pages. Today however, McGonigle is most interested in Twitter and has been marketing Corporate Environments and Education Environments as an educational resource to the more than 80 followers who currently receive his tweets. JANUARY 2010
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S A V E
T H E
D A T E
OFDA 2010 CONFERENCE
October 9-12 Hyatt Regency Coconut Point Resort and Spa Bonita Springs FLORIDA