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Feature
30 FEATURE Onwards & UPWARDS
OPI asked four well-known industry personalities for insight on where the business supplies sector is right now in their region and what lies ahead
US – BILL CARDONE
Over the past 30 years or so, the business supplies sector has gone through many changes. Within the past five years alone, over 25% of the top 50 independent dealers in the US have disappeared. Whether that’s because they’ve been purchased by the ODP Corporation, Staples or another reseller, or indeed succumbed to other pressures such as COVID-19, the independent dealer channel (IDC) is not as large or significant as it once was.
Smaller independents have also been acquiring each other, and I believe we’ll see more changes over the next 18 months as consolidation continues.
How much energy is left in those businesses that haven’t already pivoted because they don’t possess the resources, customer base or the technology? Or, if they have, has COVID-19, work and learn-from-home and the Amazon effect created some permanent shifts?
MOUNTING PRESSURE
It’s not solely about the IDC. The entire industry has been altered on numerous levels, most recently due to COVID. From a manufacturer’s viewpoint, we’ve got to figure out what reseller relationships are going to look like. We still want to be connected to our customers, but clearly need to understand the best way to interact with them without disrupting their business.
The sector is also dealing with the Amazon component which has dramatically modified our landscape and will continue to do so for the foreseeable future.
There’s only a handful of big OP manufacturers left, and I think the value propositions being brought to the table and the conversations they’re having with resellers are different now because of e-commerce and the secular decline of ‘traditional office products’.
The ongoing uncertainty surrounding COVID and the expectations arising from hybrid working is loading further strain on the industry. The longer office staff work from home, the more Amazon wins. If there is a major swing towards a hybrid model, dealers must figure out quickly how to successfully service customers at home.
In the near term, there are external pressures to contend with, the most notable being the supply chain. Currently, it’s a case of securing certain materials to manufacture products. But even if you are able to get materials, it’s impossible to acquire a container. Assume a container can be obtained, you may be unable to hire a trucking company. But if you do succeed with this too, it doesn’t have drivers.
Everyone’s in the same boat, so to speak, therefore, we must be patient and do our best under the current circumstances.
OUT OF THE COMFORT ZONE
Despite the stresses, the prognosis is far from dire. The diversification of the business products sector was already in progress, and the pandemic merely served to propel it forward at an unprecedented pace.
This is a good thing – it forced us out of our comfort zones and this needs to continue. Dealers and their sales representatives need to move quickly from the carpet to the contract to become ‘solutions-based’ entities, whatever that might look like.
Undoubtedly, the industry has more than proven how resilient it is, especially the IDC. Looking ahead, I have every confidence in dealers with succession plans. Many of these have already been implemented, with some dealerships having been passed on to a second or even third generation. These new leaders are doing a fantastic job pivoting their businesses.
That said, many of us should take a step back and rethink certain processes which have been upheld for years. I’m talking about the old catalogue world versus pandemic-induced practices like videoconferencing and hosting virtual sales meetings. Ultimately, the industry needs to move to where the puck is headed, not where it is now. Bill Cardone is VP of Commercial Sales at US office supplies manufacturer TOPS Products
For more of Bill Cardone’s thoughts on the state of the US business supplies industry, listen to OPI Talk – visit opi.net/podcast
Congratulations! OPI is turning 30 and has been expertly serving and inspiring changes in the office environment for over a quarter of a century. And the transformations have been immense. We said goodbye to the fax machine, and hello to smartphones and tablets.
However, it’s not just the technical equipment that has evolved, so too has how and where we work. The secret to the staying power and success of those in the business supplies sector – OPI and Durable included – lies in the willingness to tackle new challenges and look ahead.
To understand the current and future state of our industry and continue to offer efficient solutions for the modern world of work in the decades to come, it is critical to focus on the megatrends that are relevant to the office environment. Above all, this includes significantly greater flexibility in terms of the tools used, location and time.
COLLABORATION
Work-from-home was established almost instantly as a practical alternative to a desk in the corporate office when COVID-19 arrived. In the past year, the percentage of people homeworking ranged from 60% in Northern Europe to 30% in Eastern Europe.
The pandemic certainly turbocharged this development, but while there are still many homeworkers, numbers are dwindling again as lockdowns ease. Ultimately, globalisation requires teamwork, flexibility and operating in networks.
Speed is of the essence when it comes to coming up with innovative ideas and solutions, and only teamwork will achieve the pace that’s needed. In modern working scenarios, employees are assembled specifically for the task at hand. Often, some members work in offices, while others are based at home. A handful might even be located in other countries, and the line-up may also include external experts.
How do they all collaborate? In many cases, analogue communication remains a crucial element, but digital is growing. 89% of European companies expect online meetings to increase by between 100-500%, according to an international study conducted recently. As such, efficient software solutions are just as vital to a team’s success as the correct kit for videoconferences and other communication methods.
HEALTHY REMOTE WORKING
Where do I want to work today? At the office, at home or in a café? The ability to choose a location gives employees greater freedom in their professional and private lives. However, wherever ‘work’ is, ergonomics plays a key role, as illustrated by a survey conducted by German health insurance companies in August 2021.
Results revealed that 25% of all sick days in 2020 and the first half of 2021 were due to back pain. This is 8% more than in previous years when far fewer people were working from home. These problems are preventable with proper equipment, such as monitor mounts and tablet holders which promote back and eye health.
CO-WORKING
Leasing an office can be quite a costly proposition, especially in cities with high rents. Although the pandemic has temporarily slowed the co-working trend, freelancers and the self-employed still account for up to 30% of the working population in Europe.
The shared locations they may use remain in demand and are growing in popularity. Besides providing a workplace whenever it is needed, serviced office environments give users opportunities to talk shop and work alongside people from other disciplines.
Companies, too, are harnessing the benefits of cross-departmental spaces and provide shared workspace in their buildings. Mobile storage solutions such as drawer boxes and portable furniture units increase flexibility by ensuring staff have the utensils and documents they need close to hand at all times.
WORK-LIFE BLENDING
As we move forward, employer ‘branding’ is one of the biggest challenges for European organisations as the competition for good staff becomes tougher. How do you attract talent to your business? For the younger generations, high wages are no longer the sole criterion – work-life balance is now a main priority. The freedom to choose where and when they carry out their job and being able to adapt both to their private lives is essential for today’s young talent.
Identifying office trends early and responding appropriately will become increasingly vital. I have no doubt that there’ll be plenty more on this topic in forthcoming issues of OPI. Rolf Schifferens is Managing Director of Germany-based office products vendor Durable
Considering the current economic scenario, I would say that we are undergoing a period of recovery in South America. Our performance indicators are evolving positively and are now more robust. While all countries have experienced a slight sales decline over the past year or so, businesses are starting to enjoy growth following lockdowns.
SUPPLY CHAIN PRESSURES
However, the stationery and retail sectors are unfortunately tremendously understocked, which is being exacerbated by the increase in the cost of international air and sea freight and the shortage of containers.
Other modes of transport are also causing huge inconveniences and are suffering from escalating costs. For instance, to help combat COVID-19, governments of some countries bordering Brazil decreed that truck drivers must be tested for coronavirus when crossing the borders, causing delays.
All these supply chain pressures have already added a few percentage points to inflation, and the issue of high freight costs persists with no normalisation as yet on the horizon.
Despite this, it is increasingly noticeable that the region is heating up again as vaccination programmes roll out and students return to classes. In addition, demand for organisational and technology products for the home office, as well as for those employees returning to the workplace, is steadily rising.
There is increasing business confidence from SMBs and economic recovery is continuing as governments offer emergency aid. All this bodes well for the future of our industry.
As Brazil represents the largest country on the continent and the strongest market economically-speaking, it is worthwhile looking at what’s going on here. The country offers a great deal of opportunity for both B2C and B2B segments, and while the stationery and office products sector is huge, it is also undergoing significant transformation.
DIGITAL EVOLUTION
Although there is no specific data available, it is a fact that new online stationery retailers emerged during the pandemic to respond to consumer demand – many of these had never engaged with e-commerce before.
Recent research indicates 70% of Brazilians utilise social networking platforms, with an astonishing 96% using WhatsApp. Figures suggest almost 70% of the population was online in 2020. For the first five months of 2020, online sales rose by 57%, with May soaring by 75% as COVID-19 took hold.
This year, eMarketer predicts e-commerce retail sales will increase 37% across the continent to just under $85 billion, with Argentina representing the fastest-growing market, rising 79% over 2019. In Brazil, the estimated growth is 35%, according to eMarketer, while Ebit/ Nielsen suggests 2021 sales will hit R$110 billion (US$20.3 billion), up 26% over 2020.
As a result of the pandemic, the use of technology in the home office is becoming prevalent, and companies are more comfortable with the concept of a flexible working model.
In a post-COVID world, this will result in the creation of extra co-working spaces. Additionally, more firms are offering to kit out their employees’ home offices, boosting the importance of desktop accessories and workplace essentials.
One final point revolves around sustainability. We see consumers posting comments about environmental issues, particularly recycling. Companies are now more engaged with and sensitive to social and environmental initiatives – they’re much higher up on their agenda.
UK – ROBERT BALDREY
Commentators have remarked how COVID-19 has hastened existing trends, and the effect on the UK business supplies industry has been no different. The rise of the internet and the subsequent digitisation of the workplace, an effect which has precipitated a steady decline in traditional stationery items over the past decade, was massively accelerated as people creatively used technology to facilitate working remotely.
Products that have been helping to compensate for reduced OP demand over the years, such as coffee and water, were also hit as a result of people not purchasing these from regular suppliers while working from home.
Hybrid working, a rising trend pre-coronavirus, gained huge momentum, with most organisations currently looking to establish a 3:2 day office/ home pattern in the future. This undoubtedly boosted the growth of online organisations geared up for residential deliveries like Amazon Business during 2020 and 2021 as individuals sought easy access to goods. However, this trend may have slowed as some traditional contract players are adapting to the new situation.
RESTRUCTURING
The pandemic has definitely accelerated the number of shareholders looking to improve their results. Cerberus selling its Staples UK contract business to EVO and its Staples 3PL distribution division, including the Rockingham distribution centre, to Wincanton, is Natalia Gastaldo is Marketing Manager of Brazil-based office products manufacturer Acrimet
Robert Baldrey is Contract Chief Sales Officer at Office Depot Europe
an example. Aurelius, meanwhile, sold its Office Depot UK contract business to OT Group along with the Ashton distribution centre.
There is still too much capacity in the UK market, and this consolidation activity aimed at driving economies of scale and efficiency savings in a declining sector will most likely continue.
We are bound to see a gradual consolidation of adjacent channels (such as Paragon entering office products from the print and marketing supplies channel) as customers seek to realise efficiencies from combining their purchases through one supplier.
We can likely expect company failures in the upcoming months as government financial support is removed and sales of pandemic-related items like hand gel and masks – which have propped up many businesses – settle down to more normal levels.
ADAPT OR DIE
The market is clearly moving to one with fewer operators, with Staples and Office Depot becoming trading brands rather than separate companies, and a large number of resellers being acquired or disappearing. At a recent conference I attended, it was confirmed there are only around 1,000 business supplies resellers in the UK now. I can remember not so long ago when this number was around 3,000.
Undoubtedly, there are prospects for those firms which adjust to the changing world. Hygiene in the workplace will likely remain a key area of focus for the foreseeable future. Businesses are also wrestling with the task of adapting to a permanent change to hybrid working. This presents possibilities, from supplying mobile products that employees can easily use wherever they are, through to office reconfigurations for companies requiring more collaboration workspaces.
It seems inevitable that global warming will drive an increased focus on low carbon items and services, a trend only a few firms appear to be taking seriously at the moment.
Finally, employee well-being and mental health are much higher on the agenda in most boardrooms as we exit the pandemic. This, I believe, is both a test and an opportunity for all of us to address properly.
I might be accused of overstating things, but I do believe we will look back at this period and recognise it as a moment when the world of work changed irrevocably. The challenge for everyone is to adapt to the new reality or die. I am optimistic that the imaginative and nimble, and those completely focused on the customer, will survive.
