under 30 candidates

I would much rather have a duopoly in our industry, with wholesaler choices

OPI: That aside, what are your other high-priority objectives right now?

MG: We want to collaborate more with others in our industry – DCPG, AOPD and Office Partners – as well as adjacent category buying groups and associations. Again, it’s a case of getting the right people together and ascertaining what we can collectively do for the benefit of all of our members.

OPI: Before we talk some more about the generic industry landscape, I just wanted to ask you about Industry Week in November. How are plans shaping up for that?

MG: Our registrations are ahead of schedule. We’ve developed seminar content based on feedback from our members. And, as you know better than anyone, we’re going to have a general session hosted by a certain Steve Hilleard. People will be on the edge of their seats.

Seriously though, we’re encouraged for now and are praying that COVID will not throw a monkey-wrench in the works and stop us from moving forward as aggressively as we would like to. There’s so much we have to do with our membership that is difficult to do in any other format than a live, in-person annual meeting.

OPI: I’m looking forward to it and very much hoping that your government will let me in. Let’s talk about the industry landscape and stick with the wholesalers for a moment. How have they performed throughout COVID?

MG: First up, huge credit to Yancey Jones Sr and Mike Maggio for acquiring SPR during a pandemic and then managing it through a very difficult time.

Both wholesalers have been constrained with supply chain issues, particularly with imports – it’s affected their service levels and line fill and consequently our members.

As regards Essendant, some would say the acquisition by Staples’ owner Sycamore Partners has not yet delivered on many of the promises made. Part of that is obviously COVID related and Essendant is trying to resolve it. The wholesaler has implemented the ECP as we discussed earlier, and our members are taking advantage of it.

SPR is exploring other types of programmes and synergies which, hopefully, dealers will be able to evaluate soon.

All told, I would much rather have a duopoly in our industry, with wholesaler choices, than a monopoly, particularly if it is a monopoly owned by our members’ largest competitor.

OPI: What’s your view on the ongoing discussions between Office Depot and Staples?

MG: We now have enough pieces of the puzzle to kind of know what the final picture will look like. This would most likely be Sycamore being successful in acquiring Depot’s retail operations and integrating them into its fold. ODP will become a B2B distributor only, a standalone public entity.

I used to work for a company – Boise Cascade Office Products – that was strictly B2B, so it feels like going back in time.

OPI: Boise had a wholesale business as well at one point in its history.

MG: And we divested it and became strictly B2B. When you strip out all the retail SG&A expenses, you can operate more efficiently and be more strategically focused. ODP will probably want to go in that direction and invest more into the procure-to-pay technology platform managed by some very talented people like Prentis Wilson.

It’s a different B2B sales cycle, but worth exploring, and the company could come out of this more focused than it is right now.

OPI: This platform – Varis – has not really been spoken about much yet, but as you say, Prentis and some other well-paid individuals have joined the team there.

MG: It’s interesting. When I was at Boise, we were ahead of our time in terms of what we wanted to do – have an integrated supplier portal – but the technology did not exist, just the stagnant traditional ERP platforms.

Going to enterprise accounts with a total ERP procurement system which reduces the number of vendors you do business with streamlines your processes, decreases your procurement costs, and lowers your overall cost of goods. The technology exists today and what Varis is hoping to do is integrate it into its enterprise system. It is all about execution.

It might be a strategic opportunity for Depot. The greatest competitive threat is within the Fortune 100 space which many ISG members don’t play in. But there could potentially be synergies for some dealers to collaborate with Varis.

OPI: To what extent are Depot’s and Staples’ interests in dealers – let’s just call it their federation strategies – a concern for you?

MG: We’re not going to be able to prevent people that own dealerships from exploring options for themselves and their families, be that for succession reasons or because of balance sheet challenges. What we can do as a member-owned cooperative is to increase the services and value we provide.

Again, it’s all about synergies. As much as I consider Staples and Depot competitors, I view Amazon as the greatest threat. Maybe there are some opportunities to all work together and gain mutual benefits?

OPI: So, no type of collaboration is off the table is what you’re saying.

MG: Correct – but that is up to ISG’s Board of Directors and the membership. One should not disregard anything. Some people would disagree, but I think that’s very insular and narrow-minded.

OPI: Let’s move to another large entity – what’s your view on WB Mason?

MG: I have known Leo Meehan for most of my career and competed against him aggressively at Boise, and our members compete against him now. I have the utmost respect for him and his team. They’ve done a tremendous job building that brand and growing the business. Obviously, COVID has been a significant blow to his top line.

WB’s succession plan will determine what happens. It’s a hugely creative and entrepreneurial organisation. The thought of acquiring that company and having it ingested by a Staples or a Depot – I don’t know what would happen to that brand and its market share.

OPI: You do, you’re just too polite to say it.

MG: OK, we saw what happened with some previous acquisitions. But more recently with some of these dealer purchases, they’ve left them alone. How long this will continue is the question.

OPI: There’s always the temptation to go in and see if you can make some efficiencies.

MG: I’ve been there and done it with Boise. We made numerous acquisitions and integrated every one of them. We changed branding and cultures – rightly or wrongly – all with the objective of reducing cost and creating synergies. We lost business and some good people while doing it.

OPI: The last major group in our industry are the vendors. What have the past couple of years been like in terms of manufacturer support, as you’ve taken ISG through the various facets of integration?

MG: I have been extremely pleased with the support that our key suppliers have given us. Many stepped up right after the merger and especially during the pandemic to provide what we needed and asked for: extended terms, accelerated rebate payments, development of new products, etc.

Vendors understand that independents sell and value their brands. We will continue to focus on this at ISG and work with those suppliers investing in resources – by that, I mean field reps, in-house support staff and marketing resources – to our members rather than reducing them.

Contrary to what some may think, it’s not just about rebates, but about paying attention to the IDC, creating value and keeping it competitive. Many manufacturers have done that and we’re going to recognise them during Industry Week.

OPI: The flipside of this is compliance. Are dealers supporting those programmes and complying with the terms? How do you get people who are naturally independent to conform? ISG’s Chairman Jordan Kudler not long ago made an impassioned plea to your membership, asking people to get behind the vendors. Are you making progress here?

MG: Compliance can be defined in several ways. You can count on one hand the number of product categories with multiple suppliers now. This used to be very different a few years ago – you had four or five filing suppliers, four or five binder vendors, etc. You don’t have that nowadays.

At the end of the day, dealers have to meet the needs of end users, and these end users have product preferences. There are too many knock-off brands out there in private label that are deteriorating the value of brands, particularly what’s coming out of Staples, Depot and Amazon. Where compliance comes in is in terms of supporting the brands; it’s not about a couple of categories where you have numerous suppliers.

Manufacturers have to constantly adjust their product specs and price, so the brands don’t cost significantly more than the private label. Some, of course, are in a difficult situation because they make the private label too. They are creating this dilemma themselves. Easy for me to say, of course, I don’t have a private label. Yet.

OPI: (laughs) Let’s see if this comment comes back to bite you! Before we wrap up, anything you’d like to say about US Communities?

MG: We don’t refer to it as US Communities now. It’s Omnia Partners, which is an all-encompassing co-op of multiple categories. We have a healthy relationship with Omnia, and we will grow it – that’s about all I can say.

OPI: OK, final question then: what do you see yourself doing five years from now?

MG: I hope to be on Cape Cod, Massachusetts, sailing through the canal. And maybe I could write a guest column for OPI every so often.

OPI: That sounds like a great plan. Thanks for your insights Mike – it’s been a pleasure talking to you. And hopefully, we can continue the conversation in person in November!