BIG INTERVIEW
Connecting the
business products world
Mark Leazer, AOPD April 2020
Covid-19:
Facing unprecedented times
INSIDE THIS ISSUE l
Office Depot’s changing retail strategy l FSIoffice buys Hoyle l US big boxes acquire again l Essendant’s Joe Templet retires
l The future of international trade l New era of voice technology l Paper shifts l EOPA review l Selling services – a natural progression
CONTENTS 16 Big Interview Mark Leazer talks about AOPD’s – and its dealers’ – growth in the context of today’s industry challenges 23 Hot Topic Unprecedented and deeply worrying: Covid-19 is putting the (business) world in a state of limbo – and fear 27 Feature Tom Schinkel takes a look at US exports and the future of international trade 30 Spotlight Though still in its infancy, ‘voice’ is definitely the sound of the future – even in the office 32 Category Update The use of paper may be changing, but it’s certainly not going away
Big Interview: Mark Leazer, AOPD
AOPD as an entity may be small, but its reach across the US is impressive, as is its steadfast endeavour to bring large regional and national business supplies contracts to local independents. Executive Director Mark Leazer heads up this network of dealers that facilitates the acquisition, servicing and retention of these contracts. Fiercely passionate about the independent dealer channel, Leazer talks to OPI in his first-ever Big Interview about contracts, consolidation, cooperation and much more. HOT TOPIC: TESTING TIMES
40 Review: Partnership Strategic, OP industryrelated discussions weren’t the only talking point at this year’s OPI Partnership event in Amsterdam 42 Review: EOPA A look at the winners of the 2020 European Office Products Awards 46 Review: City of Hope Tour & Hall of Fame Dinner The Reinvent Hope campaign got officially underway in late February at City of Hope in California
REGULARS 5 Comment 6 News 48 5 minutes with... Ryan Boyington 50 Final Word Kevin Casey
April 2020
Remember the girl who recognised the 2004 tsunami in Thailand and tried to warn people to get off the beach? How could she convince people the threat was real when the sun was shining and all the extra beach was suddenly exposed as the water pulled back? Public health officials face the same challenge today: from a few tiny warning signs, they know disaster is approaching, but no one else understands them. [It is] hard to persuade an unwitting population living in denial!
36 How to... ... add a service proposition to your offering. If you do it right, it’s worth the effort
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COMMENT The OPI team EDITORIAL Editor Heike Dieckmann +44 (0)20 7841 2950 heike.dieckmann@opi.net Deputy Editor Michelle Sturman +44 (0)20 7841 2942 michelle.sturman@opi.net News Editor Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net Freelance Contributor David Holes david.holes@opi.net
SALES & MARKETING
T
Entering uncharted territory: the C-word
here is only one topic of any real consequence to write about at the moment. But whatever is said is likely to be null and void before the ink has even dried on the page because things are moving so fast – you will see quite a few “at the time of going to press” in this issue of OPI. Covid-19, the devastating coronavirus that is sweeping the world is having – and will continue to have for a very long time – a phenomenal impact everywhere, economically and emotionally. We’ve recently talked a fair bit about business contingency in OPI (see Special Feature, OPI December/January 2020, page 24, and How to..., OPI February 2020, page 44). What we’re facing currently is disaster recovery on a completely unprecedented scale. If affects virtually everybody – certainly every generation and every business.
What we’re facing currently is disaster recovery on a completely unprecedented scale
Chief Commercial Officer Chris Exner +44 (0)7973 186801 chris.exner@opi.net Head of Media Sales Chris Turness +44 (0)7872 684746 chris.turness@opi.net Digital Marketing Manager Aurora Enghis +44 (0)20 7841 2959 aurora.enghis@opi.net
EVENTS Events Manager Lisa Haywood +44 (0)20 7841 2941 events@opi.net
PRODUCTION & FINANCE Studio Joel Mitchell +44 (0)20 7841 2943 joel.mitchell@opi.net Operations & Production Amy Byrne +44 (0)20 7841 2950 amy.byrne@opi.net Finance Kelly Hilleard +44 (0)20 7841 2956 kelly.hilleard@opi.net
PUBLISHERS CEO Steve Hilleard +44 (0)20 7841 2940 steve.hilleard@opi.net Director Janet Bell +44 (0)20 7841 2941 janet.bell@opi.net Executive Assistant Debbie Garrand +44 (0)7718 660249 debbie.garrand@opi.net
We’ve also covered workplace trends – the rise in remote working springs to mind (see Research, OPI February 2020, page 40). I’ve been in the privileged position to be able to work from home some of the time for many years – now, as a result of coronavirus, my workplace is well and truly my home office, for the time being at least. We’ve written so much about technology in OPI over the years and how all industry participants need to embrace it (more), develop it (better) and make it available (more comprehensively) to their customers. It’s payback time. In these days, weeks and months of partial or full isolation, it’s technology that will keep us all connected and the door open to the outside world, your customers and partners. I haven’t alluded to any specific features in this issue so far. That’s not because they’re not important, far from it. Our Hot Topic deals with the C-word, of course (page 23). But there are so many other C-words that we’re covering, the glue that binds our industry together. Read about contracts, collaboration and consolidation in the Big Interview (page 16), celebration in our European Office Products Awards review (page 42), cancer cures in our City of Hope Tour coverage (page 46), and customisation and commerce in our Final Word (page 50). Compassion and conviction are two more words and of both we have aplenty to see us through these difficult times I’m certain. Stay safe and healthy! HEIKE DIECKMANN, EDITOR
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April 2020
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NEWS
in 2020 than the 54 in 2019. It is not a question of Office Depot ‘giving up’ on retail, but this time last year it was “an integral component” of the platform. Now – in Smith’s words – it is “important” – a subtle change perhaps, but one which underlines the company’s strategic priorities and could be interpreted as an admission that the investments to try and drive retail trend improvements have not paid off. STAPLES SIMILARITIES
Analysis: Depot’s changing tune on retail
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Office Depot to focus investments on its B2B businesses. But where does that leave its retail chain?
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While the three pillars – transform, strengthen and disrupt – of Office Depot Inc’s long-term strategy have not changed in the past 12 months, some of the components of those pillars have. One notable difference is in the retail channel, which has evolved from ‘transformation’ in the reseller’s annual 10-K filing in February 2019 to ‘optimisation’ in the 2020 document. In Depot’s most recent quarterly earnings conference call at the end of February, CEO Gerry Smith used the word ‘optimise’ (or derivatives thereof) no fewer than a dozen times when referring to the retail network. Interestingly, he said that the company would “continue to optimise our retail footprint to the benefit of our shareholders”. What did he mean by that? Firstly, Depot is cutting back on the major investments it began to make in its stores in 2018 on initiatives such as Workonomy, the ‘store of the future’ and co-working areas. None of these were even mentioned in the latest earnings and, as an Office Depot spokesperson told OPI: “Our investment focus is directed to our B2B business: supply chain, distribution, service delivery, technology/automation, and e-commerce,” adding that the company was still “testing and learning” with regards to its co-working spaces. At a 10 March investor conference, Head of Investor Relations Tim Perrott said Office Depot was evaluating all store locations with a view to improving profitability and creating a “healthier retail base”, also confirming that most investment resources would go to B2B. In terms of store closures this year, Smith said that “slightly more” locations would shut
The message appears reminiscent of the 20/20 strategic plan that Staples put forward a few years ago before it was acquired by Sycamore Partners. In May 2017, then CEO Shira Goodman said that “the whole strategy for North American Retail is to preserve profitability” as part of a goal to make B2B delivery 80% of the firm’s sales. Another potentially important development to look out for soon is the result of Office Depot’s feasibility study into its operational structure. This is likely to result in a holding company (ODP) at the top, with individual operating companies below that, not dissimilar to what Sycamore did with Staples. One would imagine those entities to be Retail, Business Solutions and CompuCom, possibly with a separate Canadian unit.
[We will] continue to optimise our retail footprint to the benefit of our shareholders As Perrott said, a reason for this change is to give Office Depot “the ability to unlock the value of those assets”. That throws up all sorts of intriguing possibilities of mergers, acquisitions and sell-offs. Could that include Depot and Staples looking to bring their retail operations together? It would be a brave move – especially now, in light of the coronavirus-related hit the retail sector is already taking – but we wouldn’t rule anything out.
DEVARD LEAVES OFFICE DEPOT
Office Depot Inc marketing chief Jerri DeVard left the reseller in March. She had joined Office Depot in September 2017 as Chief Marketing Officer. This role transitioned into Chief Customer Officer with responsibility for the e-commerce business as well as the marketing, communications, customer relations and customer service functions. DeVard was instrumental in the transformation strategy undertaken by CEO Gerry Smith at the beginning of 2018 and formed part of his “world-class Jerri DeVard team” to execute on the plan to create an omnichannel platform for business services and products. Two years later and most of those team members have now departed Office Depot. The 2018 plan included retail transformation, and DeVard’s staff were behind the launch of the Workonomy brand that was designed to develop a range of in-store services for small businesses.
NEWS
US big boxes make dealer acquisitions Office Depot Inc and Staples Inc have both stepped up their acquisitions of US independent dealers recently. Following several smaller bolt-on purchases, Office Depot’s federation strategy would appear to have renewed impetus after acquiring Trio Supply. Founded in 1985, Trio is a Minnesota-based distributor of institutional foodservice disposables, janitorial and sanitary products, and beauty/ spa supplies. According to its website, the company has annual sales of approximately $30 million. The deal ticks two boxes for Depot – acquiring regional resellers and expanding into adjacent product categories. It comes after three smaller transactions in early 2020 involving more traditional office suppliers: Tylander’s (Florida), Chicago Office Products (Illinois) and Artlite (Georgia). The deals come after Staples has rekindled its acquisition programme, snapping up well-respected $30 million Pittsburgh (Virginia) dealer Bulldog Office Products at the end of last year. That transaction was conducted via HiTouch Business Services, bought by Staples in 2018. Joe Templet
Essendant’s Templet retires SPR opens new headquarters
April 2020
In February, US wholesaler S.P. Richards (SPR) officially opened its new corporate headquarters in Atlanta (Georgia), just seven months after a fire ripped through its former head office building. The new premises house all corporate employees, an on-site national customer service team, a newly focused inside sales team and a state-of-the-art training room. “We were fortunate to find the ideal space and location for our employees, customers and partners following the fire at our former headquarters building last summer,” said SPR CEO Rick Toppin. “Our new work environment, featuring an open space concept with a great deal of collaborative workspace, will provide operational efficiencies across the organisation and help us serve our key stakeholders.”
US office products industry icon Joe Templet retired at the end of March following a career that spanned seven decades, with 35 years of those spent at wholesaler Essendant. His career began in 1968 when, fresh out of college, he joined Procter & Gamble to work in its consumer paper products business. He moved to Polaroid in 1973 and then to writing instruments manufacturer Parker Pen in 1982 where he became General Manager of US Operations. Templet was recruited by United Stationers in 1985 to serve as VP of Sales at Johnson & Staley, a large writing instrument, art supplies and college bookstore products company. He then held various positions of increasing responsibility at United (and then Essendant), which ultimately led him to his final role as SVP of Trade Development. Throughout his career, Templet was actively involved in industry associations as well as with the City of Hope. In 2013, he was the recipient of the first City of Hope Hall of Fame award while in 2016, he received the prestigious Spirit of Life award. Two years later, in 2018, he was presented with the Lifetime Achievement award by US-based trade organisation Business Solutions Association. “During his time at Essendant, countless associates turned to Joe as a friend and mentor,” said the wholesaler’s President Harry Dochelli. “Without a doubt, Joe has established himself as a ‘legend’ in our industry. He was one of the biggest voices for customer experience at Essendant and has gained immeasurable amounts of respect from customers and manufacturers alike across the industry. He was the embodiment of Essendant’s values and he will be truly missed – though we wish him well in this new chapter.”
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NEWS
Office Products resilient at under pressure LSC
An improved operating profit achieved by the Office Products division couldn’t prevent the share price of parent company LSC Communications losing more than 50% of its value on 2 March. A further 50% drop in the two weeks to 16 March gave LSC – which derives most of its sales from the magazine and book printing segments – a market capitalisation of less than $2.5 million. The group has admitted that it is “actively evaluating” opportunities to de-lever its capital structure. Providing more details in a regulatory filing, LSC said it was in discussions with lenders to address the “substantial amount of funded debt” on its balance sheet. Solutions may include the issuance of new shares that “substantially dilutes or eliminates their value” or extinguishes its stock altogether. In addition to these funding issues, LSC defaulted on its bank covenants in the fourth quarter of 2019, resulting in a waiver agreement with its lenders. It is also facing a board of directors challenge from an investment firm called Sententia, has adopted a ‘poison pill’ to prevent an unwanted takeover, and has postponed its annual shareholder meeting. Among all this turmoil, the aforementioned Office Products division – which includes brands such as TOPS and Quality Park – has been improving profitability despite the continued secular demand declines in its core paper-based product lines. In 2019, its operating profit increased by 5% to $42 million due to synergies realised from the integration of Quality Park and cost reductions.
Veritiv considering restructuring
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Beleaguered North American B2B distribution group Veritiv has confirmed it is evaluating restructuring options. In a regulatory filing, the firm said its management would “evaluate alternatives to restructure the company’s integrated supply chain in an effort to facilitate better alignment with the supply chain needs of [its] customers by segment, with a view towards reducing complexity and lowering overall supply chain costs”. What that means exactly is not clear, but the filing went on to highlight the different market dynamics and business and service needs of Veritiv’s reportable segments. It further admitted that “a fully integrated, fixed-cost supply chain structure is no longer economically or operationally desirable”. There was also a reference to the “ongoing and rapid secular decline of the paper industry” and Veritiv’s moves to “adapt the cost structure necessary to support the Print segment”. Sales at the group’s Print unit nosedived by 21% in 2019 and were down by a similar amount in its Publishing division. A combination of weak 2019 results and market uncertainties sent Veritiv’s share price tumbling by around 50% in the four weeks to 16 March 2020. The distributor confirmed that no specific course of action had yet been determined, but it would seem that a break-up of the company as it currently operates could be on the cards.
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FSI buys Hoyle
US independent dealer FSIoffice (FSI) has extended its footprint in western North Carolina with the acquisition of Hoyle Office Solutions. FSI said it plans to open a distribution centre at the current Hoyle location in Arden, North Carolina, which will allow it to more efficiently serve this area. Full integration under the FSIoffice brand is scheduled to be completed by the end of Q3 2020. Current CEO Kathy Hoyle – the recipient of the Industry Achievement accolade at the 2016 North American Office Products Awards and a co-founder of Office Products Women in Leadership – will continue in the business, taking on the role of Senior Account Manager.
No deal for Zagg
Screen protection and technology accessories supplier Zagg has failed to find a buyer at the right price after conducting a strategic review. The manufacturer – maker of the InvisibleShield brand of screen protectors – said in August 2019 that it was exploring strategic alternatives. At the time, it was thought ACCO Brands was eyeing Zagg as a potential acquisition opportunity. Reporting its 2019 results in March, Zagg said it had been unable to finalise a transaction that was not significantly below its stock market trading price. This was despite more than 30 parties signing non-disclosure agreements as they took a look at confidential information about the company.
NEWS
Leadership change at JPG Jean-Louis Coustenoble
France-based catalogue reseller JPG – now part of RAJA Group – has appointed Jean-Louis Coustenoble as its new Managing Director. He takes over from long-time predecessor Sacha Tikhomiroff who officially left JPG in January. Coustenoble is no stranger to the firm, having spent 25 years at Staples in Europe between 1994 and 2009. His roles included that of Managing Director of JPG and sister brand Bernard (now also owned by RAJA). The Frenchman has joined RAJA from rival European reseller Manutan where he had been leading its sports products subsidiary Casal Sport.
Costin takes over at Bisley
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Richard Costin
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Former Banner Managing Director Richard Costin has been named as CEO of UK-based office furniture manufacturer Bisley. Costin succeeds John Atkin who has left Bisley after 13 years with the company. Atkin had only been CEO since early last year after taking over from long-serving Director Richard Blackwell (Blackwell left Bisley at the end of 2019). With Atkin and Blackwell having both departed, Costin’s appointment signals a new era in the executive management of the iconic furniture brand. He actually joined Bisley in April 2019 and was named to the group board in a Commercial Director role just a few weeks ago. At the same time, Robin Bayliss (Group Sales Director) and David Botterill (Group Finance Director) were also added to the board. Costin said his appointment came at a “pivotal time in the company’s future” and that he would use his experience within the wholesale and retail markets to further develop Bisley’s strategy and clients.
Mac Papers acquired
New York-based private equity firm Monomoy Capital Partners has acquired leading regional US paper and supplies distributor Mac Papers. Terms of the transaction were not disclosed, but the deal brings to an end the involvement in Mac Papers of members of the McGehee family, who established the business in 1965. Running the company under Monomoy’s ownership will be current COO Rick Mitchell who also assumes the title of President. The rest of Mac Papers’ management team – including CFO Greg Gay, EVP of Paper Craig Boortz, VP of Packaging Chris McCabe, Regional Manager Carter Whiddon, VP of Purchasing Steve Collins, and VP of Mac National Jeff Harris – will continue in their roles. Monomoy is a private equity firm with $1.6 billion in committed capital that invests in middle-market businesses in the manufacturing, industrial, distribution and consumer products sectors. Set up in 2005, one of its early acquisitions was that of aftermarket imaging supplies manufacturer Katun – a business it sold in 2017 to Taiwan-based General Plastic.
TOP 100 – NEW ENTRY Peter Kelly, CEO, Winc Australia and OfficeMax New Zealand In March 2020, Peter Kelly, the former head of Wesfarmers’ B2B industrial and safety supplies unit Blackwoods, was named as the permanent CEO of Winc Australia and OfficeMax New Zealand. He took over at the Platinum Equity-owned resellers from Adelle Howse, who had been in the role since the departure of Darren Fullerton last October. Although Kelly moved on from Blackwoods as its performance was being hampered by a tricky ERP implementation project, Wesfarmers said he had left the supplier “in a much better place than when he arrived”. Kelly also oversaw a successful turnaround in his previous role at fruit processing company SPC Ardmona, at that time a subsidiary of Coca-Cola. His appointment comes after a period of restructuring at Winc Australia, described by Platinum Equity Principal Renee Koontz as “aggressive revamping” of its operations.
Peter Kelly
NEWS
CORONAVIRUS UPDATES
See Hot Topic on page 23 for more on the evolving coronavirus situation
GOJO ups production
Massive job hiring at Amazon
Amazon is looking to hire approximately 100,000 people in the US as it reports a significant increase in demand due to the coronavirus outbreak. The online giant said it was opening the full and part-time positions across its US fulfilment centres and delivery network to meet the surge in demand it is seeing. It added that its labour needs were “unprecedented” for this time of year. In mid-March, Amazon said it was seeing a spike in online shopping which was affecting its delivery times and the availability of products, including some popular household categories. One unfortunate consequence of the Covid-19 pandemic has been the artificial raising of prices on ‘basic need’ products by some Amazon third-party sellers. In response to this, the company said it had blocked or removed “tens of thousands of items”.
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WH Smith set for travel business slump
12
UK-based retailer WH Smith has warned that sales for its current financial year – ending 31 August 2020 – could be hit by up to £130 million ($163 million) and underlying pre-tax profit reduced by as much as £40 million due to the coronavirus situation. The company has been building up its Travel division in the past few years as part of a strategy to mitigate the weakening high street retailing channel. However, this has now put it in the direct line of fire of the global slowdown in travel following the spread of Covid-19. As of the middle of March, WH Smith said it had not seen a significant coronavirus-related impact on its high street business. However, it recognised that footfall in its stores could reduce as the UK government steps up social distancing measures.
Xerox to pause HP bid Xerox has decided to pause a number of initiatives in relation to its attempts to acquire HP Inc due to the coronavirus pandemic. CEO John Visentin said it was “prudent” to postpone releases of additional presentations, interviews with media and meetings with HP shareholders, so Xerox could focus its time and resources on “protecting” Xerox’s various stakeholders. The print OEM said it did not consider that the recent stock market decline constituted a failure of any condition to its offer to acquire HP. Nevertheless, the recent sharp decline in Xerox’s share price – down more than 45% in the four weeks to 16 March – has led to some analysts suggesting its combined cash and stock offer could be under threat.
US-based jan/san and hand hygiene manufacturer GOJO has said it is working round the clock to try and meet the surge in demand for its Purell brand. The US-based supplier reported a “dramatic increase” in orders for Purell products following President Trump’s declaration of the Covid-19 pandemic as a national emergency. The company had already activated a ‘demand surge preparedness team’ at the end of 2019 and significantly increased production at its two manufacturing facilities in Ohio, US, and one in France. Despite factories running 24/7, it said it was working to increase capacity even further to meet the growth in demand. The manufacturer confirmed its operating principle of prioritising healthcare facilities and first responders while maintaining a “steady and predictable flow” of Purell products to distributors and retailers, so they can supply schools, restaurants, airports and consumers. The company said it welcomed measures by retailers to limit how much product a single customer can buy and that it was “upset” by price gouging around its brands, adding that it “supports all efforts to stop this practice”.
NEWS
IN BRIEF Emerald expands distribution Sustainable breakroom and foodservice products supplier Emerald Brand is adding a fourth distribution centre in the New Jersey city of Harrison. The location will enable the manufacturer to better serve growing demand from customers in the mid-Atlantic and Midwest regions. The company also suggested it is looking to add two additional distribution centres over the next 12 months.
Paper Source acquires Papyrus stores High-end US stationery and gifts retailer Paper Source has acquired 30 stores from the collapsed Papyrus chain
Aussie stationery retailer in trouble Australia-based high-end stationery and gifts retailer kikki.K has been placed into voluntary administration after blaming a “perfect storm” of external events such as the Australian bushfires, Brexit, the Hong Kong protests and the coronavirus outbreak. At the time of writing, kikki.K’s 65 stores – most of which are in Australia – were still operating, with administrators hoping to find a buyer for the A$70 million (US$46 million) business.
170%
wth of hand Online sales gro ducts in the sanitisation pro eeks to 22 US in the four w February 2020 Source:
$5 billion
15%
Companies on Spain’s IBEX 35 exchange served by Amazon Business
The plan to gain herd immunity against Covid-19 is, in my opinion, either utter incompetence or sheer madness Ninghui Li, Professor of Computer Science, Purdue University, March 2020
Ex-NZOS co-owner joins NXP Dion Neill, the former co-owner of independent dealer New Zealand Office Supplies (NZOS) has taken up a senior sales role at rival reseller NXP (formerly Winc). Neill left NZOS in 2018 following its acquisition of the Fuji Xerox office supplies division. He is now heading NXP’s national sales team for the professional services industry sector.
£430 million Price Bidvest is paying for UK facilities management group PHS
PICTURE OF THE MONTH Label manufacturer Avery came up with an amusing alternative to singing Happy Birthday to encourage people to wash their hands for the recommended length of time.
April 2020
Dion Neill
The NPD Group
Advantia adds MPS UK dealer group Advantia Business Solutions has introduced a managed print services offering for its members in partnership with Synergy Technology Group. The “fully supported service” through Sharp UK is aimed at cutting out the complexities often associated with office products dealers tackling MPS. Name change for Cott Leading beverages distributor Cott is to change its name to Primo Water Corporation as part of its transition to a pure play water provider. Cott completed its Annual sales Canon receives acquisition of Primo Water on 2 March in a $775 million from its supply relationship deal. Coupled with the sale of its S&D Coffee and Tea with HP Inc distribution business, Cott has swiftly implemented its strategy of focusing on the Xerox acquires water market. Canadian MSP Xerox has acquired Digitex Canada, a leading independent services, software and technology provider in the western part of the country. Digitex operates out of 11 locations in the region. Xerox said the acquisition expands its footprint in the fast-growing SMB market in North America.
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BIG INTERVIEW
INDEPENDENTS’ AOPD as an entity – it only has five full-time staff – may be small, but its reach across the US is impressive, as is its steadfast endeavour to bring large regional and national business supplies contracts to local independent dealers
M
www.opi.net
ark Leazer is a well-recognised face in the US business supplies sector. A first-time Big Interviewee in OPI, he heads up American Office Products Distributors (AOPD), a network of dealers that facilitates the acquisition, servicing and retention of a wide range of regional and national contracts across the US. Fiercely passionate about the independent dealer channel (IDC), Leazer brought plenty of experience to the table when he joined AOPD full time, not only from an independent perspective, but also from a technology standpoint, the latter being hugely important in terms of the sheer logistics of servicing nationwide contracts. At a time of uncertainty gripping the world as a result of the coronavirus Covid-19, OPI’s Andy Braithwaite caught up with Leazer on the phone to discuss some other C-words: contracts, consolidation, cooperation…
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OPI: You’ve been in this industry for many years and most people – certainly in the US – will know you from FSIoffice and AOPD. Can you give a quick overview of your background and career? Mark Leazer: Sure. I graduated in 1982 from the University of North Carolina in Chapel Hill with a BS in chemistry. I actually worked as a benchtop chemist for three years before I got into the office supply business. My wife Kim’s family firm was Forms & Supply. Kim is now the CEO, as you know, and the company is known as FSIoffice. I was offered a position there in 1985 to help them computerise the company, so I did that and then managed the IT department for about 13 years. When e-commerce and the internet started becoming important in the late 1990s, we decided to carve e-commerce and certain other things out of the IT unit and create a department called Sales Technology. I was in charge of that part of the organisation which involved integrating our e-commerce systems with those of our customers, dealing with bids and pricing, etc. This pulling away from IT also allowed me to gravitate towards working in sales management directly with Kim at that point.
Day
OPI: So you were at FSI for about 30 years before you joined AOPD as Executive Director, is that correct? ML: That’s right. I took the full-time Executive Director position in 2016. I had actually been interim Executive Director on a part-time basis from 2001 for three years. AOPD at the time was trying to recover from the many big box acquisitions that had happened in the late 1990s. We had been reduced down to a small number of independent dealers and had to reorganise some things. Bud Mundt came on board as full-time Executive Director in 2004. OPI: It can’t have been easy to quit FSI to join AOPD full time after all those years? ML: It was certainly a difficult decision. It was my wife’s family company and I had worked there for 30 years. AOPD was the same industry, of course, but while some of the work was similar, it was definitely a different job with a different company. But we had talked about it a lot in the run-up to Bud retiring and it was a good opportunity for me. And FSI liked it because it felt that AOPD would remain in capable hands. That made it easier for me, as did the fact that I was leaving FSI in very good hands – from my specific job’s point of view – with Carolyn Collins, the lady that took my place. I actually went to high
BIG INTERVIEW Mark Leazer
We’re a dealer-owned, not-for-profit cooperative. It’s one dealer, one vote, and it’s governed by a board of directors school with Carolyn and she came on board from United Stationers – now Essendant. It turned into a good transition. OPI: Tell me a bit about AOPD. Some facts and figures and what it stands for? ML: AOPD was established in 1978. Our business model hasn’t really changed much since that time apart from the technology side of things and how we are run operationally. We exist as a network of independent dealers to work together to service national and regional contracts.
OPI: Do you pay dividends if there’s a surplus at the end of the year?
OPI: How are you set up in terms of staff? ML: Overall, I would say that we do a lot with very little, and we’re pretty cost-effective in doing so. We’ve got five full-time AOPD staff, including me. Angela Price, Shelley Tousignant and Debbie Jefferies work out of our St Charles HQ in Illinois, while Joe Breczka, our Director of Business Development, works from his home in Buffalo, New York State. I am based in a small office in my hometown of Charlotte, North Carolina. Then we’ve got five consultants that we use on an as-needed basis for various things. Tom Buxton has been working with us in sales management since about 2007. Mike Matthews and Ted Kreider, meanwhile, deal with pricing and bids, and also our POS reporting system. Mike and Ted not only help with the pricing of the contracts we manage for the National Cooperative Purchasing Alliance (NCPA), Premier and some of the other GPOs and co-ops we have, but they are also ‘on loan’ to dealers to help them price a national
April 2020
OPI: And you’re owned by your dealer members, is that right? ML: That’s correct, we’re a dealer-owned, not-for-profit cooperative. It’s one dealer, one vote, and it’s governed by a board of directors.
ML: Any surplus is typically ploughed back into the business to try to develop it for the benefit of the members. All dealers and the board are very much proponents of this arrangement as we aid them with branding, technology expertise and all the other things needed to help them in generating more business.
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Mark Leazer BIG INTERVIEW
piece of business that maybe they don’t have the experience or the confidence level to do entirely by themselves. These gentlemen have big box experience and backgrounds, and are very well-versed in these national contracts. Then we’re using Cris Goodman to help our dealers navigate and penetrate the adjacent facilities supplies category. Cris sold his own business to Corporate Express and then helped develop its facilities business. He was also with WB Mason for some years, doing the same there. Finally, TJ Crayne helps us with our technology. Using these consultants as needed has worked well for us and has also been very cost-effective.
contracts are basically hunting licences where our dealers are authorised to sell under the terms and conditions of the contract that’s owned by AOPD. NCPA and Premier are two of the contracts that we own and that you will be aware of. We’ve got seven at the moment. One of them is what I call a hybrid because it’s one that AOPD is doing a lot of the management and reporting for, but it’s a contract that was actually bid for and won by one of our dealers.
OPI: Can you elaborate a bit on these contracts? How do they work? ML: We effectively have two different types: dealer-owned contracts and AOPD corporate ones. The dealer-owned contracts are the dominant ones – we have 500 of these today. How this works is that we have a so-called contracting dealer and a servicing dealer. The contracting independent is the one who bids, wins and manages the account and the relationship with the customer. Then, through AOPD, it manages the contract with those dealers that service the locations the incumbent cannot service itself. I alluded to the technology aspect already. Prior to 2001, we had a central system, but that was obviously subject to the technology constraints of the time. It worked well for us for a number of years, but it was expensive and it didn’t really solve all of our problems. In 2001, we came up with the current model whereby orders run through the contracting dealer’s e-commerce system. Customers, no matter where they’re located in the country or which dealer is actually servicing them, are ordering off that e-commerce system. It means they get the same experience they would from a big box. The beauty lies in the fact that all transactions reside on the contracting dealers’ computer systems, so they can do all the reporting, invoicing, etc on a national basis. And they have the electronic means of forwarding the orders to the servicing dealers in the markets they all cover. The servicing dealer, meanwhile, processes those orders for fulfilment. The nice thing about this model is that the dealer owns the sale and the profit margin for the locations it services. As such, it has a financial interest in doing a good job.
OPI: Can you provide any figures in terms of aggregate values or some of the sales that go through these contracts? ML: We don’t share total sales since we’re a cooperative, but I can share details of some of the corporate contracts. The NCPA one, for example, is our largest contract and has grown to almost $32 million in 2019. We’ve had a really good run with this contract, just renewed it for a couple of years and also have renewal options to take it all the way through to 2025.
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OPI: You have a drop-ship component as well, is that correct? ML: We do. Let’s say our customer has 20 locations around the country and we have a dealer that can service 18 of them, with two being a little more remote and with no other dealer able to pick them up. We would then use a drop-ship model with the wholesalers for these two locations.
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OPI: What about AOPD’s own contracts? ML: They are those where AOPD manages the relationship: we do the bidding, we win the contract, managing the pricing and so forth. These
OPI: And that’s still owned by the dealer? ML: Yes. It’s the National Chamber of Commerce contract. It was originally bid as a regional contract.
OPI: That’s done well. I believe NCPA was on a $12 million run rate about five or six years ago. ML: That’s right. We grew it $3 million in 2019 and that included a loss of $3 million as a result of acquisition of a couple of our dealers which had some significant NCPA business. So it’s pretty amazing considering the headwind of loss we had from losing those dealers. The other one I would highlight is the Premier healthcare GPO – we’ve had this one for a while now and grown it to about $14.5 million in sales.
[Bulldog] was one of our largest contracting and also one of the biggest servicing dealers, so taking this one out of the equation certainly left a hole OPI: Is all this growth taking share or an opportunity that hasn’t been fully tapped by dealers in the first place? ML: A bit of both. Taking some share, for sure – we’re getting opportunities to take business from some of our competitors. But I think the cooperative world is also exploding. There are new co-ops popping up everywhere where we could be partners. We haven’t gone after all of them and tried to be a member of everything. Instead, we’ve focused and done a good job with, say, NCPA. There’s plenty of untapped potential still out there. OPI: How many dealers do you currently have? ML: We have 67 dealers today and we added six new ones in 2019. We obviously lost some dealers as well because of acquisitions both by the big boxes but also among dealers in AOPD. As regards the latter, most recently Office360º bought
OPI: I guess Depot is only going to accelerate its federation strategy. ML: But it has to find companies that are willing to sell. We’ll have to see how that shakes out.
Cardinal Workplace Solutions, of course. This is ‘good’ consolidation though, because at least these dealers are staying with us rather than going away. OPI: How much of a concern is that big box dealer acquisition strategy for you? ML: There’s no doubt it impacts us. We lose sales and dealer coverage in the marketplace because of it. To be frank, however, some of the acquisitions that were made did not affect us too badly. A lot of people thought we were going to get hit terribly when Office Depot bought Complete Office Solutions because it’s such a big dealer. Complete had come back into AOPD after a little bit of a hiatus, but it hadn’t really got fully engaged. It had taken some business and put it through AOPD, but it wasn’t very much, so the impact was minor.
OPI: When you look at the health of the IDC in the US, it’s typically the larger dealers that are doing quite well. They tend to be AOPD-type dealers and as such main targets for the big box acquisition strategy, surely. ML: To a point. There’s no doubt the best dealers in a lot of cases are also the biggest ones. That said, most that have been purchased recently, especially by Depot, have been relatively small. OPI: Outside of your own dealers, what is the biggest issue for you right now? ML: The wholesalers I would say. What and where are they going to be a year from now? OPI: In terms of Essendant being owned by Staples – have you seen any changes there, either positive or negative, over the past year? ML: Essendant has actually been rather quiet since the last CORE Live meeting just over a year ago. There were some big announcements back then but dealers are still waiting to see how some things are going to shake out. We work with Essendant, it’s a business partner of ours and the team there help us with some of our programmes, just like S.P. Richards (SPR) does. Half of our dealers are Essendant, half are SPR, so these wholesalers support those independents. But Essendant also competes with us. It’s bidding on the Premier contract again, for instance. It’s what I refer to as a ‘schizophrenic’ relationship at times. OPI: You compete directly with Essendant’s Vertical Markets Group (VMG), don’t you? ML: Yes. It’s the VMG arm of Essendant that’s bidding on Premier. I was surprised and somewhat disappointed when I found out this was happening; it did in 2016 and the wholesaler didn’t get an award, but now the bidding is coming round again. You also hear about Sycamore Partners potentially setting up for an IPO. If that was the case, what would that mean for Essendant? Would it go public again or would it be spun off? There’s a lot of uncertainty around that scenario. Then there’s SPR and I have to say there’s some concern about where that company is right now and where it’s headed. We want to work closely with SPR and we have done it successfully on some projects. But is the continuation of that a long-term possibility?
April 2020
OPI: Sandia Office Supply was an important member though, wasn’t it? ML: That’s true, but the biggest piece of business that dealer had with us was the Integrated Contractor Purchasing Team contract and, of course, that’s one we actually lost in 2016, so it wasn’t on our books when Sandia left. As such, the departure didn’t impact us as badly because that contract had already been lost and recovered. Garvey’s was a good dealer and had started really getting some traction with some of our contracts, so that hurt but it wasn’t a killer. And then Perimeter and MySupplies were two pretty good NCPA contract dealers, especially MySupplies. When they left, like I mentioned earlier, it was about $3 million worth of business that they took to their new owners. We went from three dealers in the Atlanta market to one in less than a year. We’ve added another one now to help shore that up – Reach Technologies is one of the six new dealers I referred to before. The goal is to cover the markets where we might lose some dealers. Except for Pittsburgh with Bulldog Office Products, we’ve had multiple
BIG INTERVIEW Mark Leazer
dealers in the locations where acquisitions were made, so we weren’t totally bereft. Pittsburgh is a slightly different story. Bulldog was our force in that location and we’re still working out how to handle that one – the acquisition only happened in December so it’s relatively fresh. Bulldog was a huge contributor to AOPD. It was one of our largest contracting and also one of the biggest servicing dealers, so taking this one out of the equation certainly left a hole.
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Mark Leazer BIG INTERVIEW
We need both the wholesalers to be great wholesalers. We need both of them to be successful because if one or both are not, I’m not sure where that would leave our dealers. Some of these independents are hugely dependent on their wholesalers, especially those that are stockless and are totally tied into their market programmes, etc. OPI: And Genuine Parts is re-evaluating its strategy for SPR again. More uncertainty. ML: Exactly. And if Genuine Parts did decide to spin off SPR, who would buy it? Office Depot? A potential situation whereby one big competitor owns one wholesaler and the other big competitor owns the second one is definitely something that keeps dealers awake at night.
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OPI: Adding another potential nightmare... it’s impossible to have a conversation now without mentioning Amazon. And Amazon Business has made some inroads into the national accounts sector with its US Communities contract as well. What’s your view? ML: No doubt, Amazon is a competitor and it’s here to stay. That operator is a factor in what dealers have to contend with every day. What I’m mainly seeing is that Amazon is competition with smaller accounts locally, because so many customers see it as being the go-to e-commerce site. Nationally, I think Amazon has gained some traction, but as far as AOPD is concerned, we’ve been holding our own fairly well. And some of our dealers have fought Amazon off successfully too. Sandy Grodin down in El Paso was able to fight it off in some of his accounts, and AOPD beat Amazon on its home turf in Seattle with the NCPA contract. We’re hanging in there, which is good.
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OPI: This General Services Administration (GSA) e-commerce platform we’re hearing so much about at the moment: could that impact AOPD, your contracts and your spend into the federal government? ML: It will and we’ve been watching this very closely. Having said that, we’re not that focused on federal business now. We won our first GSA contract back in 2003 and were very successful in terms of winning US Army and Air Force Blanket Purchase Agreements (BPAs). We built that business to about $8-$10 million over time. But then the Federal Strategic Sourcing Initiative (FSSI) popped up and due to many of the constraints, the fees and so forth, we decided not to bid for that. Also because some of our dealers were doing it directly. Supply Room has been a long-standing, outstanding member of AOPD and has its own FSSI contract, as do others. We still have our GSA schedule and we’re doing almost $1 million a year on it, but it’s way down from what it used to be, because we ‘de-emphasised’ it. We kind of left it to others in the IDC, and I know you’re going to get to the AOPD/ EPIC conversation soon. EPIC Business Essentials has a strong presence in federal government business with the platform it has, while we’ve got a much stronger presence in national accounts.
OPI: OK, let’s talk about EPIC Business Essentials then. How would you describe your relationship at the moment? ML: I have to be a bit vague here because we are having conversations with Independent Suppliers Group (ISG) – since the group owns EPIC – about a potential combination of AOPD and EPIC. The talks are ongoing and we’ve got through several issues already, but I can’t give you a time frame of when something might happen. OPI: But since you’re talking, there’s obviously a desire on both sides at least to get a deal done? ML: I think so. The two of us are doing similar things, so from the outset it would appear to make sense and be complementary. Although, quite frankly, the more I’ve learned in the conversations we’ve had, the more I also see that there are some fairly significant differences in what we do and how we go to market. We don’t run into each other that much now in terms of the contracts we’re bidding on. But if you can combine the two entities and as a result become a stronger, larger force with the potential to be even more successful than the two separate organisations were, it’s something worth looking at. That’s what we’re doing. OPI: How advanced are these talks? ML: No announcement is imminent at this point, but we’re some way down the path – that’s all I can say. It’s not some well-kept industry secret; everybody knows we’re in discussions. OPI: Picking up on this collaboration point: the three main dealer groups coming together after all these years to form ISG – has that had any implications on AOPD? ML: Some. There’s been a lot of fragmentation in the IDC for probably too long and that needed to be addressed, so we can speak with one voice.
OPI: Do you have a relationship with the Office Partners group? That’s still very much a standalone organisation and it’s just formed this sub-group for larger dealers. ML: Yes, I’m close to Matthew Hebert and we go to each others’ meetings. I haven’t talked to him about his new programme yet, but what I would say is that my background is that of a large stocking dealer, so I’m a fan of direct buy programmes. That’s been my bias for 30 years when I was with FSI and I think there’s a lot of value in stocking product and getting it direct from the manufacturer. That’s probably all I should say about this.
We are having conversations with Independent Suppliers Group [...] about a potential combination of AOPD and EPIC
OPI: You co-locate your meeting with that of the Direct Purchasing Catalog Group (DPCG). Is that a format that works well for both of you?
OPI: Talking of Industry Week, I’m guessing you are supportive of it? ML: I am and I applaud ISG for taking on the project after it fell apart last year. AOPD would want to participate in some way; we’ve been invited to do that, but as of now we don’t really have any details other than date and location. I would also like to take this opportunity to say that we would have participated in the original Industry Week. Some people have said the AOPD meeting is redundant with Industry Week or an iteration of it. We didn’t really have a choice at the time. We waited to book our 2020 meeting to see what was going to happen with Industry Week, up to the point of it being cancelled. When we eventually started scrambling around last year to find a site for our meeting this spring, the dealer group merger itself still wasn’t finalised at that point, less even the notion that Industry Week in some shape or form would happen this autumn. OPI: What’s in the pipeline for AOPD in the next 12-18 months or so? ML: The consolidation we talked about earlier certainly presents some good and bad potential scenarios. It affects sales, funding from our suppliers as well as market coverage by our dealer network. However, despite all the headwinds we’re facing we are still growing. And we want to make sure we get recognised for that. We were up 5% in January, so that’s off to a good start in 2020. Losing Bulldog at the end of last year was tough, but I fully expect to make up for that loss this year and still grow. Success can be a double-edged sword, of course. We’ve grown the past six years in a row and 12 out of the past 15 years – eight of those 12 in the double digits. But when you’ve got several continuous good years under your belt, it means you need to grow the next one too or you haven’t done too well and questions will be asked. We want to avoid those questions and just keep on growing. In the current landscape, I don’t know who wouldn’t want to invest in a group that’s growing like we are, whether it’s dealers or suppliers. And if we do combine with EPIC, we’ll have even more resources and strengths between us to be able to fund and drive growth for all our members. My outlook for the near term at least is very positive. OPI: It certainly sounds like you’re enjoying the challenge. ML: I am. It gives you something to look forward to when you get out of bed in the morning. Find the challenges, try to overcome them and keep on developing and growing.
April 2020
OPI: As we’re coming to the end, I just wanted to ask you about your recent meeting in Dallas. How did that go and what were the main takeaways? I can only assume that Covid-19 was a big unexpected addition to the agenda...? ML: Yes, Covid-19 certainly was on the minds of all our attendees. We were right in the time frame when event organisers across the country were considering cancellations and we were on the verge of doing so right up until the night before the start. It was a tough call. We did have some attendee cancellations, but we managed to proceed with minimal disruption. The new normal was elbow bumps instead of handshakes and hugs. Plenty of Purell was consumed. I also want to publicly thank Rick Toppin and Joe Templet, who pitched in at short notice to fill the void left by HP and City of Hope travel bans for our annual City of Hope patient speaker and cheque presentation. Those two past Spirit of Life Honourees are naturals when it comes to sharing their passion for City of Hope. We were very pleased with our educational sessions and one-to-one meetings. Our Town Hall session, moderated by OPI’s Rowan McIntyre, was quite a hit as well. Dealers and business partners seemed to be pleased overall, especially under the very difficult global circumstances.
ML: We’ve been co-locating very successfully for several years now. All the DPCG members except one are members of AOPD, so it makes perfect sense for them to piggy-back their meeting onto ours. We figured that out seven years ago before anybody was debating Industry Week or any of that kind of stuff.
BIG INTERVIEW Mark Leazer
ISG managing to merge three groups into one certainly played a role in our current discussions with EPIC – it was the impetus we needed. But, and this has been said before, independent dealers are independent for a reason. You might get groups together, but will their individual components then act more as one? The theoretical goal behind all this consolidation – ISG or possibly AOPD and EPIC – is to see if we can be stronger and more powerful working closely together while still letting dealers remain independent.
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HOT TOPIC
TESTING times
As global attention to the coronavirus outbreak switched from China to the rest of the world, with Italy being the first country to go into lockdown outside China, the business products industry looks set for a tough few months ahead – or much longer as OPI's Andy Braithwaite finds out
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ITALIAN LESSONS Italy was the first European country to go into lockdown mode in an effort to stop Covid-19 infections spiralling out of control and paralysing its already under pressure health system. Despite this, there is a feeling in office products circles that these types of measures were not taken soon enough and that other nations should act more quickly. “This is a very serious situation. The reaction of the [Italian] government was too late and not enough, and I am very concerned that other countries are making the same mistakes,” says Buffetti General Manager Francesco Villa, shocked by the increasing number of deaths announced on local TV each evening. It is a point echoed by Andrea Ghidini, CEO of wholesaler Office Distribution. “Please do not underestimate this virus,” he pleads. “You can say what you like about Italian people, but we are not idiots. Everyone must take the appropriate precautions; this is something I feel very strongly about and I cannot stress the gravity of the situation enough to OPI readers.” Ghidini likens the coronavirus crisis to a tsunami. “Is it a case of that we have just had the earthquake, but we are still waiting for the tsunami to arrive?” he asks. “If so, when will it hit the beach? In two weeks, in two months?” His words bear an eerie resemblance to those of a commentator on the Wolf Street blog who writes:
Francesco Villa, Buffetti
Andrea Ghidini from Office Distribution
April 2020
n the last issue of OPI (see News, OPI March 2020, page 6), we ran a piece on the initial impact of the coronavirus outbreak. The main concerns then centred on product availability and possible supply chain delays out of China, where a lot of office products are manufactured. Fast forward to the middle of March and the week of going to press with April OPI, and it is a very different story. The number of reported new coronavirus infections in China has virtually dried up and attention has turned to efforts to combat the spread of Covid-19 which was declared a pandemic by the World Health Organization on the eleventh of the month. At the time of writing, the international response to the crisis was in various stages of development: Italy was in a national lockdown, with France and Spain having just followed suit; the US had introduced a ban on travellers from Europe and declared a state of emergency; Germany was closing some of its borders; and the UK was controversially still playing a ‘wait and see’ game, for a short while favouring the so-called ‘herd immunity’ approach. With things changing literally by the hour and the trend moving towards a severe tightening of restrictions and the freedom of movement, the situation will definitely have evolved significantly by the time you read this article.
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Coronavirus HOT TOPIC
“Remember the girl who recognised the 2004 tsunami in Thailand and tried to warn people to get off the beach? How could she convince people the threat was real when the sun was shining and all the extra beach was suddenly exposed as the water pulled back? "Public health officials face the same challenge today: from a few tiny warning signs, they know disaster is approaching, but no one else Adriano Alessio, In Ufficio
Danny Berendsen from Bi-silque
solidarity and help each other. I think we are setting the roadmap for others to follow.” Another OP executive to be impacted is Danny Berendsen, Sales Director EMEA at viscom products manufacturer Bi-silque, who lives in the north of Italy. While also critical of the length of time it took the Italian government to react, he hopes that other countries will learn from these lessons and not wait before taking decisive
The best thing is to show solidarity and help each other. I think we are setting the roadmap for others to follow understands them. [It is] hard to persuade an unwitting population living in denial!” In Italy, Adriano Alessio, Managing Director of dealer group In Ufficio believes the measures put in place by the Italian government, and the reaction of its citizens, will help prevent the spread of coronavirus. “We are not by nature a people that likes to be isolated,” he notes. “But we are showing that this kind of situation can happen to anybody, and the best thing is to show
actions. “It’s difficult, of course, but it’s the only way to keep this virus under control,” he states. Berendsen quickly understood that he had to limit his travel and told his team in Europe to do the same as early as February “Perhaps I was more cautious because I was in the middle of things,” he adds. From a business perspective, Bi-silque is still shipping to customers and distribution routes remain open, but Berendsen is naturally
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EVENTS CALENDAR DECIMATED
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While Paperworld in Germany at the end of January escaped relatively unscathed from the impact of coronavirus (see Event, OPI March 2020, page 40), it has been a different story since then for trade events and exhibitions. As of 10 March, global exhibition industry association UFI estimated that €14.4 billion ($16.5 billion) of economic output had been lost due to trade show postponements and cancellations, a figure that does not include the large number of company-specific conferences affected. While rescheduling events might help reduce the mid- to long-term impact, UFI believes even short-term postponements have immediate repercussions because they delay scheduled business and revenues. “This poses an existential risk, in particular for small and medium-sized companies,” says Christian Druart, UFI Research Manager. Paperworld organiser Messe Frankfurt was forced to call off its Middle East and India editions of the event which had both been scheduled for March. In the case of Paperworld Middle East, news of its cancellation came just a few days before it was due to take place. “We wrote to all our exhibitors to gain a sense of whether we should proceed with Paperworld Middle East as per the original schedule, and the response was both swift and definitive,” said Show Director Alexandria Robinson. “The overwhelming majority of exhibitors opted to postpone the show until March 2021 and, having carefully reviewed this feedback, we decided to honour these wishes.” Paperworld India and its co-located shows have been put back until January 2021 meanwhile. “The current situation represents a major challenge for the [events] industry over the world. We have been in constant dialogue with industry players and, keeping the interests of our valued exhibitors foremost, we felt it was imperative to take this decision at this point,” said Raj Manek, Executive Director and board member at Messe Frankfurt Asia Holdings. Messe Frankfurt said it was committed to delivering a safe environment for business exchange across all of its trade
shows, and that the health of attendees, contractors and staff was its “top priority”. This is a message that is being echoed around the world. “It’s important that everyone both feels and is safe,” said US wholesaler S.P. Richards (SPR) when it announced that it was postponing its annual Supplier Summit which was scheduled for 24-25 March. “We simply don’t want to put anyone in the potentially uncomfortable position of travelling during what feels like an uncertain time. “[While] we are very disappointed to postpone this annual event, in the current environment avoiding any large group meetings such as this seems to be the correct approach.” SPR’s meeting was also an important date in the fundraising calendar for cancer research facility City of Hope (COH). In order not to hurt these efforts, SPR has requested that suppliers still commit funds for the event to COH. In exchange, the wholesaler has said it will hold a modified Supplier Summit – at a date yet to be determined – at no additional cost to vendors apart from travel expenses. The jan/san and hygiene sector has also been severely impacted. In the UK, the Facilities Show has been put back to September as has the Manchester Cleaning Show. Meanwhile, leading European show Interclean Amsterdam will be rescheduled for later in the year, although new date has not been confirmed yet. Where possible, and when it makes good business sense, events are now being held virtually, either in the form of teleconferences or streamed live over the internet. Staples Solutions’ supplier meeting at the beginning of March was one such example, while Italian dealer group In Ufficio did the same for its Vendor Week from 16-20 March. Just as OPI was going to press, NeoCon, Clerkenwell Design Week, UFIPA and The Stationers’ Company were some of the latest organisations to announce postponements or cancellations of their events in the next few months. See opi.net for more information.
HOT TOPIC Coronavirus
EDITOR’S NOTE
he suggests that some of his customers “won’t survive the shock” due to the poor capitalisation of many local small businesses. “We are seeing how much credit we can give to our clients and, at the same time, looking the other way to see what support we can get from our suppliers,” he says. “We will have to work things out together, and I’m not counting on the help of the banks or the government.” What will be the overall impact on the OP industry in Italy? It is too soon to tell, says Villa, who believes that many would come through unscathed if the shutdown was limited to three or
We are seeing how much credit we can give to our clients and, at the same time, looking the other way to see what support we can get from our suppliers For the moment, production at the group’s Pigna stationery brand is carrying on, but whether it will be able to continue – in what is an important period before the shipment of back-to-school products – is unknown. Factories in Italy are still operating, but there are calls to shut everything down. At In Ufficio, Alessio has fewer concerns about the supply chain and product availability as he does regarding a drop in demand and the knock-on effect this will have. Two of his group’s dealers recently closed for a week and Alessio points to the “suffering” of the Italian economy which is heavily reliant on small businesses and the availability of cash. Office Distribution’s Ghidini has similar reservations about the economic situation. While his own company is in a relatively strong position,
four weeks. However, if it is much longer than that, he is worried it could sound the death knell for many businesses. “It is a very big question mark hanging over us, but it is one we cannot answer at the moment,” he concludes. What has been happening in Italy over the past few weeks is likely to become a stark reality for many other nations in the coming months. The office products industry will need to show great resilience in what will no doubt be a period of low demand as economic activity slows down and businesses and consumers rein in their discretionary spending. As an industry, there is already a feeling that we are going through a period of unprecedented challenges and change. Covid-19 will only accelerate this evolution.
April 2020
This feature was written using information available up until 16 March 2020. We appreciate how quickly the coronavirus situation is evolving and escalating, and that new, important developments will most certainly have occurred by the time you read this. Please check the News section on opi.net for the latest information on how coronavirus is severely impacting all aspects of the OP industry. We will also follow up with more comment and insight in the May issue of OPI.
concerned that Italy could be plunged into a recession, something he believes could be a “devastating situation” for the local OP industry. For Buffetti, the circumstances have meant that most of its 750 stores are currently closed – just a few that offer official services such as registered mail have been allowed to remain open. And while online sales have been growing in the double digits, Villa says that average order sizes fell by around 60-70% in the days following the government-imposed lockdown, although demand for products such as ink and toner has been holding up well.
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FEATURE
End of an era = A NEW DAWN?
In the second part of this feature on trade relations – particularly with China – Thomas Schinkel looks at US exports and speculates on the future of the international OP community
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ast month, I explored the past few decades of US trade policy, which were predominantly defined by free trade and no tariffs. All of that came to a halt in 2016 when a new administration under the leadership of Donald Trump started to create a very different narrative. Which, incidentally, resonated with a lot of voters. LACKLUSTRE EXPORT FIGURES With imports into the US covered, what about the export side of things? Has there been any fundamental change and, if so, what are the lessons to be learned? The diagram below is a comparison of US exports of all commodities to all countries versus US exports of specific OP categories. This is quite an amazing chart. Even though the US economy is notoriously weak on
exports, the ‘all commodities’ curve shows a tenfold increase over the 20 years covered. Not so for the office products industry. To the contrary, exports of OP to the rest of the world have seen lacklustre growth, barely positive over a long period of time.
Exports of OP to the rest of the world have seen lacklustre growth, barely positive over a long period of time Taking a look at China specifically, the actual numbers of exports of office products categories are very, very small. Total exports for the products
FIG 1: US EXPORTS TO ALL COUNTRIES 1997-2017 (INDEX 1997 = 100) 1,200 1,000 800 600 400
Source: US International Trade Commission and author’s calculations
April 2020
200
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International Trade FEATURE www.opi.net 28
FIG 2: US EXPORTS TO CHINA 1997-2017 (INDEX 1997 = 100)
Source: US International Trade Commission and author’s calculations
2,500 2,000 1,500 1,000 500 0
included amounted to approximately $20 million in 2018. The graphs above (Fig 2) show that at least two categories, writing instruments and office equipment, saw relatively significant growth in their exports to China, although this tapered off towards the end of the time frame. Now compare US exports to China with those to Canada and Mexico (Fig 3). Again, we’re looking at all commodities and the four OP segments. For clarity, the amounts of exports in the OP categories are much larger than for China. Total volume for these amounted to $624 million in 2018, ie a very different story from a volume point of view. Writing instruments in the Canada/Mexico graphs had a couple of years where the growth rate spiked above the average, but the other categories consistently fell behind overall exports. Having observed the situation on the ground in both Mexico and Canada over this entire period, my interpretation of this is as follows: with the wisdom of free trade enveloping not only the business community in the US, but also in Canada and Mexico, all countries shifted their sourcing from within the North American Free Trade Agreement region to China, and the OP industry did this in a massive way. Canadian, American and Mexican manufacturers and distribution channels (ie big boxes) went on a cost-reduction spree to exploit low-cost labour that China was offering during this period. The gold rush resulted in a severe weakening of the vibrancy of OP manufacturing capability and industrial prowess in the three countries. These charts do not tell the whole story, however. To get the full picture, you have to dig deeper into supplies of parts, components and raw materials. Also, my calculations are limited to data that provides a complete pattern for the entire 20-21 years we are looking at. Finally, there are some commodities where the US Department of Commerce has changed the ‘Harmonized Tariff Schedule’ codes, often at the request of industry, and I have excluded these items for the simple reason that we would start comparing apples to oranges. With these caveats, I believe that the observations as regards the weakening of the industry are quite valid.
SPECULATING ABOUT THE FUTURE But what about the future? Here are just a few of my speculations: • There is no doubt in my mind that the era of unrestrained globalisation, expansion and lengthening of the value chain all the way from producers in the outer provinces of China to the consumer in Nebraska is over.
The era of unrestrained globalisation, expansion and lengthening of the value chain [...] is over
• Equally, this same era, which is still somewhat visible in the rearview mirror, has lifted hundreds of millions of people out of abject poverty, and the office products industry has played its part in that. On the flip side, it has also brought severe economic imbalances on a global scale and that is not sustainable in the long run. • Going forward, expect a period of recalibration, shifting production to countries other than China and also back to the US. In the overall context of major technological advances on numerous fronts, the old ways of doing things are fading fast. Regardless of trade policies, one way or another, this change is irreversible. If the 1990s saw a paradigm shift in favour of distribution channels dictating the rules of the game in the industry, another paradigm shift may be in the works moving in the other direction. • It would not surprise me if we saw a duration of inflation ahead after a long deflationary spiral that lasted more than 20 years. It is all a case of our industry’s ability to adapt. Innovation and entrepreneurial instincts, in combination with good business practices, will get us through. The ones that are the most vulnerable in my view are the large corporate bureaucracies where sentinels of change are not as welcome.
Thomas Schinkel is an internationallyrecognised business adviser who works with senior executives of large and medium-sized companies, exploring strategic issues including corporate value improvement, exit planning and growth through acquisition. Schinkel can be reached on Thomas.schinkel@ thomasschinkel.com.
Trade Commission and author’s calculations
FIG 3: US EXPORTS TO CANADA AND MEXICO (INDEX 1997 = 100) 400 350 300 250 200 150 100 50
FEATURE International Trade
Source: US International
0
In the short run, these bureaucracies have a propensity towards rent-seeking, extracting value from their suppliers without offering any new, meaningful or additional value in return. Long-term, this is not sustainable. As the pendulum swings back, all assumptions about globalisation may have to be revisited. ADAPT AND EVOLVE My advice? Don’t let this seeming crisis about trade tariffs go to waste. One aspect I have always admired in entrepreneurs is that they don’t allow themselves to be defined by the constraints and
orthodoxies of a particular industry. And I am not only talking about Steve Jobs, Elon Musk or Jeff Bezos. Leaders of all stripes often create new value propositions by ignoring or simply breaking the rules that everyone else seems to believe are cast in stone. With that attitude in mind, there are opportunities aplenty, especially during periods of turmoil and crisis. A willingness to explore new avenues is not limited to products. Think distribution channels, pricing, costing, sourcing, automation, micro-manufacturing, shortening the value chain… the potential combinations are limitless.
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The last OPI European Forum was one of the best that I have attended. As always, plenty of networking opportunities, but combined with interesting, relevant and thought-provoking presentations that provided me with some tangible takeaways for my business to work on
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SPOTLIGHT
The voice of
THE FUTURE Despite being in its infancy, the use of digital voice assistants in the office is increasing, says OPI’s Michelle Sturman
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aise a hand if you use Apple’s Siri, Google Assistant or Samsung’s Bixby on your phone. Now put up your other hand if you, in addition, use Alexa on Amazon Echo, Microsoft Cortana on Windows, or Google Assistant for Google Home. These are all collectively known as virtual assistants and artificial intelligence (AI) is making them increasingly, well, intelligent. They should not be confused with chatbots (see Definitions on page 31), which are frequently used within businesses in customer-facing roles to gather and respond to certain information and criteria. While both services use natural language processing (NLP), AI-powered voice assistants are more intuitive and responsive. They are also growing in popularity. The use of intelligent digital assistants was initially driven by the launch of Siri in 2011 for iOS and was followed by Google Assistant in 2016 for Android and its Home speaker (originally called Google Now which was released in 2012). Microsoft launched Cortana in 2013, while Amazon jumped on the bandwagon and introduced Alexa for its Echo smart speaker in 2014. Each service offers individual applications, but the essence of each assistant is the same: they are all internet-connected and answer voice-activated commands and questions.
There is no question that voice will grow into a tool for workers to use
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1.8 billion 30
Number of digital assistant users by the end of 2021 Source: Tractica
BOOSTING SKILLS Besides their core functions, ‘skills’ can be added to expand the number of activities the assistants can react to. These are primarily created by third-party developers, although manufacturers are also continually releasing new skills. Currently, Amazon and Google are the frontrunners in the voice technology market as partnerships with other brands are cemented. Apple is lagging, primarily due to its insistence on keeping Siri tied to iOS and Apple hardware. Microsoft, meanwhile, has shifted Cortana to focus predominantly on the business rather than the consumer side.
In what is expected to represent a boost for this particular industry, Amazon recently announced the Voice Interoperability Initiative to ensure voice-enabled products provide choice and flexibility through multiple, interoperable voice services. Participating companies – including Baidu, BMW, Bose, ecobee, Harman, Logitech, Microsoft, Orange, Salesforce, Sonos, Sony Audio Group and Spotify – will work with one another to ensure customers enjoy the freedom to interact with multiple voice services on a single device. According to Oscar Orozco, Senior Forecasting Analyst at eMarketer, more and more of us are using smartphone voice assistants. He says that this year, US users of these services will surpass 100 million, with the figure expected to rise to 108 million in 2021. One of the drivers of this growth has been the introduction of smart speakers such as Amazon Echo using the Alexa voice assistant. As people incorporate these speakers into their daily routines, they extend the same behaviour to their smartphones. The utilisation of voice technology in the consumer world is now commonplace for things such as internet searches, playing music, turning on lights at home, etc. In the workplace, however, it is a relatively recent practice, but one that is rapidly gaining traction. POWER OF SPEECH Alexa for Business was launched by Amazon in 2017, and along with other voice-activated AI assistants for the office such as Cortana, Cisco’s Spark and Google Assistant, are making inroads. This technology is a seemingly natural fit for the changing workplace environment and integrates particularly effectively with the collaborative working movement. Although uptake is evidently still in its infancy, especially in the office environment, voice assistants are frequently being used to increase employees’ productivity. Currently, most of their use revolves around calling and messaging, starting and preparing conference sessions, scheduling meetings, managing to-do lists, checking calendars, dictation, and finding information in business applications. These may represent relatively mundane and straightforward tasks, but rapid advances are happening in AI in areas such as machine learning and NLP. As a result, there is tremendous
VOICING CONCERNS All that said, the critical issue of data privacy, confidentiality and security is something to contend with. This area represents a main cause for concern, not only due to the sheer amount of material that voice assistants collect, but also the sound clip recordings which highlight the key questions of access, storage, protection and destruction of these files. There are other matters like speaker recognition and authentication. A 2018 survey by global technology marketplace Spiceworks of 500 IT professionals across North America and Europe identified errors encountered among companies using AI chatbots and intelligent assistants. These included misinterpretation requests (59%), misunderstanding nuances in human dialogue
Definitions:
Voice assistant, digital assistant, AI assistant, intelligent assistant, smart assistant A digital voice assistant is an application program that understands voice commands through the use of natural language processing (NLP) and completes tasks for the user. The program continually learns through the use of artificial intelligence applications such as a machine learning which enables it to replace some of a human’s day-to-day responsibilities. Chatbot A chatbot is either a standalone app or web-based application primarily used in customer service to conduct a conversation using textual or voice commands to answer or reroute basic queries. A chatbot also uses NLP.
(59%), executing inaccurate commands (30%) and difficulty understanding accents (29%). Another potentially damaging problem, particularly relevant for businesses, is the validity of the information that the voice assistant provides, as it’s often sourceless and therefore cannot be verified without further investigation. Baker suggests smart assistants will not replace the keyboard and mouse in the office although it is expected that voice on a computer would evolve to help manage productivity, especially around calendars and collaboration. “In this respect, Amazon’s partnership with Microsoft and the latter’s decision to focus voice on productivity applications bodes well for those technologies to assume a leadership position,” he adds. As we head through the decade, the aforementioned issues will no doubt be resolved as usage of the technology grows exponentially to automate routine and day-to-day tasks and activities. Simultaneously, software developers will continue launching generic business apps while in-house experts in that field design bespoke apps specific to their company’s requirements.
SPOTLIGHT Voice Technology
potential for voice-activated duties to include more demanding and intricate functions like sending email requests or extracting complex details from companies’ financial spreadsheets. The integration of voice will only become tighter as the evolution of the smart office, home and city gathers pace. Says NDP Group VP of Industry Analysis Stephen Baker: “There is no question that voice will grow into a tool for workers to use. How and how much they utilise it in the workplace will be very task-specific. I expect remote and field workers to have the highest use, and the most likely usage models will include fieldwork and factory work, where hands-free and touch remain a mainstay of an employee’s current workflow.” In a meeting room environment, voice technology comes alive through the addition of smart speakers and, more recently, smart displays. Imagine hosting a meeting when a client requests certain facts you weren’t expecting. A quick voice command to the digital assistant searches for the data or report and provides the particulars on the screen while you maintain the conversation. Impressive, although all of this is still in its initial stages. But the potential is evident.
$40 billion
Value of online shopping conducted by voice-only in 2022 Source: OC&C Strategy Consultants
30%
Percentage of all web browsing sessions that are done without a screen in 2020 Source: Gartner
April 2020 31
CATEGORY UPDATE
Changing patterns in the way consumers are using paper products is causing shifts in the marketplace, forcing the industry to adapt – by David Holes
D
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espite enormous advances in the digitisation of working practices, paper still plays a vital role in the workplace and the lives of most people. But we’re changing the way we interact with the product, resulting in a boost to some sub-categories, while others are in decline. Global paper industry consultant EMGE says 2019 was a tough year for sales, with high prices forcing publishers, printers and other end users to strategically cut consumption so as to control their costs. However, Director Iwan Le Moine is more optimistic looking forward: “It’s not all bad news as pulp prices have now collapsed, meaning that surviving mills are currently actually operating on better margins. With end product prices falling much slower over the past few months, profits are improving, especially as the higher-cost mills have exited the business, leaving behind a more streamlined and efficient sector. “As demand reduces, the challenge for paper mills will be to respond with voluntary capacity management to stop prices falling too low again, especially if pulp prices recover. The alternative will be a return to the previous, undesirable scenario of weak operating rates, quickly rising costs and terrible margins forcing prices up, but not fast enough to stop bankruptcies.”
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EUROPEAN PERSPECTIVE In Europe, paper and board production decreased by 3% in 2019 compared to the prior year, according to the Confederation of European Paper Industries (CEPI). Although new factories came on stream and some existing ones were upgraded, other closures and lower production rates dragged volumes down across a range of countries. The slowdown of the EU economy, combined with global instability and trade tensions, meant a domestic 4% drop in sales. However, total pulp
production increased by 0.8%, driven by export market demand which leapt by 40%. In response to this, European companies continued to invest heavily to bring about greater efficiencies in the way they process raw material. 2020 will be a very important year for Europe, according to Jori Ringman, Director General of CEPI. “The EU Green Deal will unfold and our industry stands ready to help through the use of our sustainable raw materials, fossil fuel-free products and energy-efficient operations. It’s vital consumers are able to differentiate our products from CO2-intensive alternatives on the market or the scheme just won’t work. CEOs representing the European industry have outlined their plans to help the continent reach a climate neutral stance by 2050 in a declaration which has been handed to policymakers. We now look forward to working with them.” Dr Liz Wilks, EU Director for Sustainability and Stakeholder at Asia Pulp & Paper (APP), says a diminishing European market for printing and writing paper – driven partly by digitisation – is not necessarily a bad thing: “It’s just a sign of an evolving market reacting to new realities. The supply side will adjust, with manufacturers only producing what they can sell. “Globally, demand varies hugely. It may be declining in the developed regions, but there is still growth in India, other Asian countries and in the Middle East. Demand in Africa has also increased exponentially. Worldwide, the stationery products sector was valued at $90.6 billion in 2018 and is forecast to grow annually by 5.1% until 2025 – 30% of that huge market is paper-based.” GOING STATESIDE Across the water in the US, copy paper sales actually rose in 2019 and were worth $519.5 million in total, an overall 9% increase compared to the
CATEGORY UPDATE Paper
previous year, according to research from The NPD Group’s retail tracking service. But consumer purchasing habits are changing, with in-store sales down by 6%, while online volumes surged by 13% as purchasers shifted to e-commerce ordering. The growing use of digital alternatives as well as sustainability concerns are certainly having an effect, says Leen Nsouli, Executive Director and Office Supplies Industry Analyst at NPD: “For example, bullet journaling which really took off a few years ago, boosting sales in this category, is now an activity which can also be done on an app. In schools too, the burgeoning use of laptops and tablets means much less need for paper products.” Interestingly, a counterpoint to this shift towards digitisation is emerging in some American Ivy League universities. Spurred on by several international studies which quote evidence that students learn better when taking notes using pen and paper, these institutions have now banned tablets and other digital technologies being used in lecture theatres.
Competition between traditional supply routes and newer ones is fierce. The pie may be shrinking, but it’s still very big. Everyone wants a piece… Like any sector, our category evolves and adapts, says Gerald Demets, Commercial Director for International Paper’s European Papers business: “Paper will continue to play a key role in day-to-day life as its benefits have been well studied and proven. Compared to other media, it is more effective for communication and, in contrast to electronic solutions, it can actually be more secure. Consumption trends vary between countries but, although difficult to predict, our view is that overall office paper volumes in developed economies are likely to continue declining at a low single-digit rate – a much more moderate fall-off than, for example, in the graphical printing segment. “In general, we see three strong trends currently affecting the use of paper products. The first is the sustained rise in the take-up of managed
Source: CEPI
PRODUCTION OF MARKET PULP IN CEPI COUNTRIES
print services within businesses. Secondly, home subscription models such as HP Instant Ink are becoming ever more popular, but will increasingly be used to supply paper as well. Lastly, we are seeing the industry developing a greater understanding of end-user needs. For example, there is a move towards using lower-quality products for black-and-white printing of drafts, and high-quality paper only for colour versions of finalised documents.”
April 2020
SUPPLY CHAIN STRATEGIES With a considerable number of different stakeholders in the manufacturing, distribution and consumption chain, it’s obviously an advantage if they operate in a collaborative manner to realise the category’s full potential. However, Le Moine admits that this is not happening as much as it should: “Rather than working together, companies are often fighting hard over a stake in a declining business – sometimes it’s less about maximising potential and more about minimising the risk of bankruptcy. “Competition between traditional supply routes and newer ones is fierce. The pie may be shrinking, but it’s still very big. Everyone wants a piece however, so it’s becoming ever more competitive and some strategies are turning towards a ‘last man standing’ philosophy.” Other supply chain difficulties are caused by the sheer weight and bulk of paper which means distribution costs are high compared to other products. As such, says Tim Percival, Office Divisional Director at paper product distributor Antalis in the UK, consumer expectations of high service levels present many challenges around cost efficiencies. The company’s response has been the introduction of what it claims is a unique proposition aimed at the digital print market. Known as Easystock, it provides vendor-managed inventory services, specifically developed for users of paper, visual communication products and packaging. “The system employs cutting-edge digital technology to automate repetitious order flows and optimise inventory levels,” says Percival. “Consequently, you save valuable time that can then be directed to other production tasks.”
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Paper CATEGORY UPDATE
Further challenges, such as the huge pressures caused by environmental concerns, are catalysing new cross-sector initiatives. For example, CEPI has forged a value chain alliance called 4evergreen, a forum that connects industry members from across the fibre-based packaging value chain. It includes paper and board producers, packaging converters, brand owners and retailers, as well as technology and material suppliers, waste sorters and collectors. Its aim is to look specifically at designing products with future recycling needs considered in order to optimise the sustainability and circularity throughout the life cycle of packaging solutions. CARBON CRUNCH Le Moine suggests that, at this time when plastic has become the new bogeyman, the paper industry has the perfect opportunity to promote its green advantages and push home the sustainable nature of its products.
At this time when plastic has become the new bogeyman, the paper industry has the perfect opportunity to promote its green advantages and push home the sustainable nature of its products
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Consumer pressure is certainly a massive driver of change across the sector. “Customers actively request paper which is CO2 neutral,” says Johannes Klumpp, Marketing and Sales Director at Mondi Uncoated Fine Paper. “In response, we’ve extensively expanded our portfolio of recycled products and we calculate the carbon footprint of all products for customers – our Color Copy and Nautilus ProCycle brands are now available in carbon neutral versions. A recent EMGE study additionally found that most customers want to see sustainable sourcing (FSC or PEFC) certification when buying cut-size paper. The Blue Angel label is also highly requested by customers in Germany.” ExaClair in the UK now ensures all its paper-based items are compliant with one of these certification schemes. It further uses a carbon offsetting scheme which helps boost native woodland. Marketing Manager Clement Rouillard
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1. FSC or PEFC certified forests 2. Debarking & wood chipping 3. Pulp making/ cooking 4. Bleaching 5. Paper production 6. Paper 7. Use/consumption 8. Kerbside collection 9. Waste paper sorting 10. Cleaning & de-inking 11. De-inked recycled pulp preparation 12. Paper production 13. Recycled paper Source: Mondi – The Cycle of Sustainability
reports that French parent company, Exacompta Clairefontaine, is developing new products based on materials such as cocoa shell and denim, and is formulating an oil-coated, water-resistant paper. He explains: “It’s innovations like these which enable us to continue meeting consumer demand, while protecting our environment and taking responsibility for our industry’s carbon footprint.” APP, meanwhile, is taking a proactive stance in educating customers and raising environmental awareness. Wilks says the company has launched a Save the Earth campaign which it’s planning to promote in schools across the globe, with a particular focus on the Middle East, Africa and Southeast Asia. She says: “Our aim is to educate students about how they can help protect the planet through small environmental initiatives in the home, school or office which will make a big difference in the long run.” Additionally, the sector is helping to progress sustainable solutions for products outside of its traditional range, according to CEPI’s Ringman: “For example, it’s now possible to purchase textile garments made from wood fibre and we are utilising other materials generated during the paper production cycle in innovative ways. Lignin, for instance, is a class of complex organic polymers which trees require for structural integrity in their support tissues. We are now able to now extract valuable ingredients from this substance which can then be used to make other items – drilling fluids, thermoplastics, disinfectants, detergents, medication and cosmetics, just to name a few. It can even be employed as a replacement for graphite in the production of batteries. “Our raw material – wood pulp – is intrinsically renewable if it comes from properly managed forest sources. The sector has already made huge strides towards implementing fully sustainable production techniques, but we must continue to move forward which is why our industry is investing at a rate of more than €5 billion ($5.6 billion) per year. This is targeted at making our processes ever more efficient and decreasing our overall carbon footprint through collaboration with our partners and the clever use of new technologies.”
HOW TO...
Selling Services?
NOBODY SAID IT WAS EASY
Our industry is about products, correct? It is, but that alone often isn’t enough anymore. In the first part of this How to… guide, Jeff Gardner highlights the opportunities – and pitfalls – of adding services to the mix
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significant challenge many office products dealers are facing today is their ability to remain viable and profitable for the future. To counteract the many competitive pressures they’re up against, there has been a trend over the past few years of looking beyond selling products alone and moving into selling services alongside their traditional offerings. Selling services is a natural progression for dealers. In some ways, they have always done that, of course – it’s been their differentiating factor. And especially in a commodity market like OP where the products are more or less the same wherever you go, the only way to differentiate beyond price is through service. But – and this is a big ‘but’ – historically, service has been defined as offering prompt delivery, order accuracy, sales and service support, usage reports, etc. There was no charge to these offerings and, in fact, they’ve long become the expected norm. The kind of services I’m talking about now are those that you generate revenues with. Here are just some examples that are being tried and tested by the most progressive operators out there.
Coffee service products and fulfilment Self-checkout micro markets for breakrooms Office/facility cleaning services Document shredding services Managed print services (MPS) Computer services: set-up, repair, wireless network set-up and tech support, etc • Facilities equipment repair and services: auto scrubbers, industrial vacuums, etc • Office equipment maintenance and service contracts • Furniture installation
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• • • • • •
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• Office supply vending machines • Industrial, MRO, tool and safety supply vending machines, and automated dispensing and inventory management There are dozens of services that the target audience of independent office products dealers require. Once again, we can take a cue from Amazon which advertises these in its ‘Business and Professional Services’ offerings – it’s a veritable marketplace of organisations selling services rather than products. From all manner of technology set-ups and installations to office furniture assembly, office cleaning and plumbing services, the list is comprehensive. START SLOWLY AND FOCUS Being all things to all people is obviously not remotely feasible for your ‘average’, even if very progressive, independent dealer. And simple outsourcing in the Amazon vein is not what we’re talking about in any case. Let’s take a look at coffee as a good example. Many dealers began selling coffee and accessory
EXTEND BEYOND THE CORE – BUT JUST Expanding your offering to include more services is a strategic decision that requires significant planning and commitment. However, it may be vital to ensure your company’s future growth. Look at providing something that is an extension of your current business. I have some clients in the janitorial supply business that also provide commercial cleaning services. It makes perfect sense, since the opportunity in the commercial cleaning market is significant. Annual revenues for these services are estimated to be $45-$60 billion.
It’s not about selling coffee anymore, it’s about selling the service of a coffee management programme The largest part of the market is commercial office buildings, with healthcare the second biggest segment. A growing area is educational facilities as more and more schools are looking to outsource their janitorial cleaning services to save money. In researching this article, I also found a company that focuses on providing cleaning specific to automobile dealerships, illustrating that even within a service offering there are niche opportunities.
April 2020
THE TALENT CONUNDRUM There are many operational and financial considerations when it comes to adding services to your portfolio and these will quickly sort the ‘possibles’ from the ‘impossibles’. From a sales perspective, however, which is my area of expertise, who will sell the services? Will your current sales team have the capacity (time), the competence (skills) or the commitment (willingness) to sell new service offerings? I have spoken with many OP dealers and jan/san distributors about how they got into selling services. The number one response was that their current or legacy salespeople have not been successful in making the transition to selling services. The companies concerned spent time on training and provided additional financial incentives to motivate the legacy reps. Yet in most cases, it was an uphill battle that wasn’t effective or worth enduring. Changing behaviour in people is difficult unless they want to change. The common belief that salespeople are purely money motivated is not necessarily accurate. Different people are motivated by different incentives. Yes, some salespeople are guided by money; however, if they are at an income level they are comfortable with, it is difficult to coerce them into changing, even if it means more money. Another factor is that selling services is different from selling products; it requires additional knowledge and a specific set of skills. The most effective and common path is to hire specialists who are experts in their category, such as breakroom/coffee services, MPS, facilities services, IT, etc. The role of these specialists is to drive growth in their particular area. They engage with the current sales team and customers to identify opportunities as well as manage the sales process to win new business. The account salesperson, meanwhile, has the responsibility of managing the overall relationship with customers while using multiple specialists to gain new business. But even in that role, the account salesperson will need training on how to interact with and introduce customers to your service specialists. Compensation is another complicated topic, but one that probably doesn’t belong here. Suffice it to say that if you are adding solution specialists to your sales team, you will likely need to make changes to how you compensate your current sales team. This is because it may not be financially feasible to absorb the additional investment while keeping your current sales compensation plan in place. That said and to potentially absorb the additional expense, services may help drive profit margin since they are typically not as price sensitive as transactional products. Dealers I have spoken to referred to declining margins in their current products predominantly due to competition, but experienced higher margins in their service offerings. Protecting the profitability of your dealership may just be an additional reason to expand into services.
HOW TO... Selling Services
products such as sugar, creamer, cups and so on. Then some added basic coffee brewers. However, their larger customers required higher-usage commercial type coffee brewers which then evolved into providing installation of the brewers and plumbing them into the water supply. The customer was still responsible for re-ordering the coffee and supplies though. This sometimes led to an office running out of coffee – an emergency of sorts. So customers asked their OP dealer: “Can you make sure I am fully stocked on all my coffee supplies? And, by the way, one of my brewers just broke down yesterday, are you able to repair it?” Pretty soon, savvy resellers began selling the entire coffee fulfilment process from installation and re-stocking product to repairing and maintaining equipment. It’s not about selling coffee anymore, it’s about selling the service of a coffee management programme.
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Selling Services HOW TO...
A DIFFERENT PROPOSITION But how do you actually sell a service? Products are tangible – you can touch and feel them. Services are not. As such, selling this intangible ‘product’ relies on the ability of salespeople to identify ways in which the service they offer will help the client. That is complex and takes time. For a start, there are often multiple people at your customer’s organisation who will be involved and have influence in the decision. In addition, the decision-maker for services will typically be at a higher level. Managerial and executive level buyers are more apt at seeing the benefits of a service in the context of the total cost of the business. The secret is not to get stuck at a purchasing or buyer level where price is the only criteria. Service solutions are not usually one-size-fits-all; instead, they are customised to the specific needs of each client. The starting point to selling services is to understand clearly what need the service fulfils and what problems it solves for prospective customers. Who is your target audience? Look at demographics – size, industry or location – as well as psychographics, ie attitudes and values of the organisation. Understanding the latter is important especially if you are selling a service that is new or progressive. OFFER SOCIAL PROOF Once you determine that the business meets your target segment requirement, it is up to the sales person to engage the prospect. The first part of that engagement is to create confidence with the potential decision-maker by establishing credibility. This is done through the use of ‘social proof’, a term first coined by Robert Cialdini in 1984. Social proof is essentially answering the question of who else has used the services and what were the results.
Jeff Gardner is the founder and President of Maximum Performance Group, which provides sales training systems for the OP industry. Gardner has over 20 years’ experience as a sales performance consultant, speaker and coach and is the co-author of ‘Maximum Selling – Bob and Rob’s Journey to Sales Success’. What separates Gardner from other consultants is that he’s out on the street and on the phone working with salespeople, customer service reps and sales leaders. He uses these experiences to ‘field test’ the techniques and coaching strategies he teaches to make sure they get results where it counts – with real-life customers and prospects.
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Discovery assessment […] is about uncovering information to determine if the prospect customer is a good candidate for your service
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The best way to illustrate this is through case studies and testimonials. Share success stories where you have implemented your service with other, similar businesses. If you are engaging with a law firm regarding your IT services, for example, the best way to get a prospect decision-maker to pay attention is by sharing accomplishments you have generated with other such firms. The key to an effective testimonial or case study is to make sure that it clearly identifies the measurable results that were achieved. Simply saying “ABC Company’s IT Services and Solutions are incredibly valuable” is nice, but it doesn’t really say much. Ask for specifics from a previous, happy customer. What was the end result? Did the service increase productivity by 18%; did it up customer response time by 33%; did it
grown employee satisfaction by 22% and reduce absenteeism by 15%? The social proof part of the engagement should be swift: if done properly, it will allow you to then continue with the sales process. DISCOVERY ASSESSMENT The next step is discovery assessment, which is where you will spend most of your time. It is about uncovering information to determine if the prospect customer is a good candidate for your service. Teaching your sales team to ask the right discovery questions and to assess the prospect company’s current situation is critical. The important thing is to establish the prospect’s problem first before pitching the solution – it is something I’ve seen going wrong many times in the sales person’s eagerness to ‘sell’. Only when you have clearly determined that the potential customer is experiencing a significant level of problems to the point where it verbally acknowledges the issues, should you move to present your solution. As a general rule, it’s easier to highlight the features and benefits of one product compared to another than it is to present the outcomes of a service. You need to have at your fingertips an explanation of how your service will solve the problems the client is experiencing. And the benefits the prospect will receive as a result of using your service. There are many things to get right and many potential things that could go wrong, but moving into selling services may be the strategic move your organisation needs to remain viable and profitable. Nobody said it was easy.
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An unprecedented EVENT OPI PARTNERSHIP REVIEW
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he seventh year of the annual OPI Partnership was in many ways an unprecedented event. Covid-19, the coronavirus that began to sweep the globe at the beginning of 2020, has resulted in many companies implementing a travel ban, including some business supplies firms due to attend Partnership. Understandably, the effects of the coronavirus – not only on the gathering but on the broader OP industry – were a major talking point. But as illustrates the unique nature of the event, it was only one topic of conversation during the two days of meetings and networking sessions. Despite several cancellations due to coronavirus concerns, those manufacturers able to send attendees to the event hosted at the 5-star Hotel Okura in Amsterdam, the Netherlands, covered the breadth of the business supplies industry. They included Bi-silque, Newell Brands, Fellowes Brands, Stewart Superior, Exacompta, Highlands, Hamelin, International Paper, Avery, BIC, Duracell and Greenspeed. And despite absences here as well, vendors were joined by some of Europe’s largest and most influential resellers and wholesalers such as Staples Solutions, Lyreco, EVO Group of Companies, Interaction, Wulff, Office Centre, RAJA Group and eBay.
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MOVING FORWARD To ensure the intense schedule of confidential, high-level strategic meetings could still take place – despite cancellations – videoconferencing sessions were arranged to replace face-to-face exchanges where necessary. That said, the real
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power of Partnership lies in the direct one-to-one dialogues. As one delegate told OPI, while the virtual calls functioned well overall, the value missed by not catching up in person with those who were unable to attend, was striking. OPI Chief Commercial Officer Chris Exner commented: “The 2020 OPI Partnership event was yet another immensely valuable gathering. Given the worrying and at the time slowly escalating situation surrounding the coronavirus,
I was struck by the positive spirit and attitude of everybody to ensure they maintained high-quality, valuable meetings that will drive their businesses forward
MARK THE DATE The next OPI Partnership event is scheduled to take place from 8-10 March 2021. It will once again be held at the Hotel Okura in Amsterdam, Netherlands.
with several companies imposing travel bans, a significant proportion of manufacturers and resellers and their senior leadership teams still attended. I was struck by the positive spirit and attitude of everybody to ensure they maintained high-quality, valuable meetings that will drive their businesses forward. What’s more, all attendees were extraordinarily supportive of each other. It shows the ‘office products family’ is safe and well.” Over and above the top-level discussions, there were also still plenty of networking opportunities, starting with the welcome dinner at the Okura’s Michelin star teppanyaki restaurant Sazanka. The 2020 European Office Products Awards, meanwhile, were held at the end of the first day (see page 42 for a full review), which provided ample time to revitalise existing relationships and establish new ones in a relaxed setting.
EVENT
EUROPEAN OFFICE PRODUCTS AWARDS
Resilience – and excellence – IN THE FACE OF ADVERSITY
The 19th European Office Products Awards once again showcased innovation and excellence in terms of products, services and initiatives, and outstanding leadership by the companies and individuals in our industry
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he winners of the 19th European Office Products Awards (EOPA) were announced at a special presentation evening at the Hotel Okura in Amsterdam, Netherlands, on 9 March 2020. The annual EOPA were once again presented during OPI Partnership which was held from 8-10 March and brought together the leading vendors, resellers and distributors from the European business supplies industry for strategic one-to-one meetings (for a review, see page 40). Only this time it was all a bit different, as fears around Covid-19 circulated and many companies and individuals were unable to attend Partnership or indeed the EOPA dinner. It didn’t stop the evening’s celebrations, however, starting with a drinks reception, followed by a fabulous meal, some great ‘stand-up’ entertainment courtesy of OPI’s CEO Steve Hilleard, and an uplifting industry toast by Bruneau’s CEO Nicolas Poitier. The special spirit and atmosphere of this year’s EOPA was evident throughout the evening and culminated in the last award of the night with a standing ovation for Industry Achievement winner Jonathan Smith. Togetherness, community and a determination to get through anything – from now somewhat banal-sounding margin pressures and secular headwinds to extreme personal and professional challenges – this is the biggest achievement of our sector.
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PRODUCT OF THE YEAR WINNER: COLOP – E-MARK In this category, the judges were looking for innovation, quality, evidence of commercial success, and benefits for the consumer and the reseller. Product of the Year is often the award with the most entries and this year was no exception. Austrian manufacturer COLOP was the runaway winner this time with its e-mark. This battery-operated electronic marking device for mobile printing is based on inkjet technology. It works in combination with an app whereby imprints can be individually designed and sent to the device via wifi. The EOPA judges were very impressed with this product, particularly given that it’s so difficult to create something truly innovative in the historically traditional stamping category. COLOP has successfully done that and also achieved considerable commercial success with the e-mark. Highly commended: ACCO Brands – GBC Foton 30 Automatic Office Laminator From left: COLOP’s Franz Ratzenberger and Ernst Faber
OPI would like to thank the following sponsors for their generous support:
WHOLESALER OF THE YEAR WINNER: PBS HOLDING As has become quite customary for this category, the shortlist for the Wholesaler of the Year award featured some well-known names from across the European business supplies industry. It covered the spectrum from broad, multinational and multichannel operator to small, national player. And it was indeed one of the growing breeds of hybrid, multichannel companies that took home the prize – Austria-based PBS Holding – although the EOPA judges very specifically only assessed this operator’s wholesale operations, not the company in its entirety. With said wholesale divisions in Austria, Poland, the Czech Republic, Slovakia, Germany and Italy, the panel commended PBS and its leadership for constantly driving the business forward and investing in it, be that through technology, acquisitions or spotting niches in the market. A truly excellent European player and a strong force in our market.
SUSTAINABILITY AWARD WINNER: BI-SILQUE (VENDOR) WINNER: COMMERCIAL (RESELLER)
This category is open to any organisation that can clearly show the success of a specific marketing campaign. Judges evaluated the objectives of the campaign, an understanding of the target audience, specific marketing methods and their creativity, and return on investment. The winner is a company that has been shortlisted for this award every year since 2014 and won twice during that time. This alone is testament to a comprehensive appreciation of successful marketing. Fellowes Brands triumphed in this category with its Meet Emma: Our Work Colleague of the Future campaign. The judges were hugely impressed with this hard-hitting initiative that, in a very short period of time, has already enjoyed extraordinary exposure and created considerable awareness of the office well-being category. It is completely on trend and further cements Fellowes’ growing position as a healthy workspace solutions provider.
which are now firmly part of its DNA and culture. For a vendor to achieve all-round sustainability excellence is no mean feat and the judges acknowledged the fact Bi-silque has done exactly that with great commitment. UK-based reseller Commercial, meanwhile, also impressed the judges with its completely ingrained
Fellowes Brands’ Louise Shipley with award presenter Pieter Wolters from Staples Solutions
sustainability focus, which has been the “beating heart” of the company for many years. From an initial focus on addressing Commercial’s direct contribution to climate change from greenhouse gas emissions, its remit has gone much broader over the years and now encompasses every aspect of corporate social responsibility.
VOW Wholesale’s Debbie Nice (l) picking up the trophy on Commercial’s behalf and Bi-silque’s Perpetua Malta and André Vasconcelos (r) with award presenter, Greenspeed’s Michel de Bruin
April 2020
This is a new award for EOPA 2020 that seeks to recognise a genuine commitment to sustainable business practices. Judges were looking at overall corporate sustainability performance and assessed entries based on a range of criteria: evidence of a strategic focus on sustainability and how a programme goes beyond best practice; implementation and communication of initiatives; methods used to monitor and measure their impact; and benefits both to the business and the wider community. Given that sustainability has become one of the hottest topics in our industry, there were predictably plenty of entries. After lengthy discussions and a fairly comprehensive shortlist, the judges decided to give the award to two companies – a vendor and a reseller. Neither of the winners has jumped on the 'green' bandwagon as a result of its current popularity. Quite the opposite. On the vendor side, Portuguese viscom operator Bi-silque was hailed for its wide-reaching CSR achievements
MARKETING CAMPAIGN OF THE YEAR WINNER: FELLOWES BRANDS
EVENT EOPA
From left: Jan Van Belleghem collects the award on behalf of PBS Holding from Bi-silque’s André Vasconcelos
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EOPA EVENT
VIDEO OF THE YEAR WINNER: BIC Video is becoming an increasingly important medium, but are companies producing interesting, creative and informative content? Do these videos showcase their products and services, engage the customer and, importantly, also offer a tangible return on investment, be that in terms of sales generated or enhanced brand awareness? This was a difficult category this year with plenty of entries, but not many that really stood out and captured the judges’ imagination. Hence, the shortlist of potentially very worthy winners was relatively short. Ultimately, and after much discussion, BIC was the unanimous winner of the Video of the Year award with its Gel-ocity Quick Dry video. Short, punchy and on trend, BIC perfectly meets this category’s criteria by capturing the viewer’s attention – particularly the younger demographic which in itself is great news for our sector – using celebrity endorsement and influencing, while bringing its product to life and conveying exactly what it does. From left: BIC’s Denis Bonnet with award presenter Alain Josse from RAJA Group
VENDOR OF THE YEAR WINNER: FELLOWES BRANDS
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Vendor of the Year is always a popular as well as hotly contested category that encourages entries from many companies across the business supplies spectrum. The criteria for this award are wide-ranging. The judges look at sales performance and market share gains; product innovation; efforts to diversify product or service offerings; and brand strength, to name but a few. All of the shortlisted manufacturers displayed several of these characteristics. The winner, however, ticked all the boxes and, yet again, scooped this particular award (as well as two others): Fellowes Brands. This company excels in its outstanding and always positive relationships with its reseller and distributor partners as well as its persistent efforts in embracing adjacent and new product categories. Brand awareness is phenomenal as is its ability to always provide rich data and content thanks to great exposure and thorough research. Highly commended: International Paper
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From left: Fellowes Brands' Louise Shipley, James Webb and Esmeralda Gonzalez
Allison Fishlock from Integra Business Solutions
INITIATIVE OF THE YEAR WINNER: INTEGRA BUSINESS SOLUTIONS Initiative of the Year is always a wide and varied category, as it’s not tied to any product, service or channel. It recognises initiatives and programmes that, in one way or another, have a positive impact on an organisation. Despite the many entries, these were fairly quickly condensed to an outstanding shortlist. But it was Integra Business Solutions’ i-merge platform that ultimately won the award after much debate. This initiative is a confidential service designed to bring together businesses that are looking to buy or sell a dealership. Tapping into the perennial issue of succession planning, i-merge, said the judges, solves a current need in the market and helps to secure the future prosperity of the independent dealer channel. The platform has already benefited numerous members of the UK dealer group since its inception. Highly commended: International Paper – Reikan
RESELLER OF THE YEAR – REVENUES UNDER ¤100 MILLION WINNER: LOMAX Discussions for the overall reseller category were quite different from a year ago, with plenty of entries from players across Europe. The shortlist in the Reseller of the Year with revenues under €100 million segment was particularly diverse in terms of geographic coverage as well as companies' achievements. It was Denmark-based Lomax that came up trumps after lengthy debates. This company has evolved from a supplier of core office supplies to a tech-savvy operator with a very broad product portfolio. Lomax is investing in the market and has grown to become the number two player in the country. The EOPA judges particularly recognised Lomax’s strong growth – with most of that now being generated through its online shop – and Award winner Kenneth impressive customer Borup from Lomax retention figures.
In the reseller award for operators in the ‘over €100 million revenue’ bracket, discussions – as always – were heated about a worthy shortlist and an even worthier winner. Most of the shortlisted companies were very familiar to the EOPA judging panel and several were previous winners, including this year’s prize taker – Germany’s Böttcher. This online operator’s phenomenal success story has continued during the past year, with outstanding financial results, ever-expanding product categories and key investments in its infrastructure. The judges were united in their acknowledgement of Böttcher and its ability to continue to fight a winning battle with the mighty Amazon (and others).
OPI’s Heike Dieckmann picks up Böttcher's award
PROFESSIONAL OF THE YEAR WINNER: CÉDRIK LONGIN
EVENT EOPA
RESELLER OF THE YEAR – REVENUES OVER ¤100 MILLION WINNER: BÖTTCHER
From left: Cédrik Longin with Franck Suhit
The second individual award, the coveted Professional of the Year, went to someone who has spent many years in the business supplies industry and has transitioned a company in a very traditional category to one that now successfully attracts a much broader and changing audience. The winner of this award, introduced by Lyreco’s Franck Suhit, was Cédrik Longin, Managing Director of CEP Office Solutions. Over the past 20+ years at CEP and particularly since he took on the top job in 2013, Longin has turned this once small regional French manufacturer that is fast approaching its 100th anniversary into a real force in the market with a bright future ahead. CEP’s core business is still in desktop accessories, but Longin has also developed a focus on adjacencies that either won’t be affected by digitisation or which complement it – breakroom items, lighting and charging ports are just a few examples. Highly professional, very personable and extremely humble, in accepting the award, Longin never once took credit for his achievements himself, but always referred to the team around him as the real enablers.
INDUSTRY ACHIEVEMENT WINNER: JONATHAN SMITH From left: Esmeralda Gonzalez with Louise Shipley
YOUNG EXECUTIVE OF THE YEAR WINNER: ESMERALDA GONZALEZ
From left: Graham Cundick with Jonathan Smith
April 2020
The Young Executive of the Year category was the first of three ‘people’ awards announced during the EOPA night. As every year, it seeks to reward young and dynamic individuals who are making a real difference to their organisation already and have the potential to really shape our sector going forward. The nominations, as well as the shortlist, were impressive this year and a good omen for the future of the industry. It was Esmeralda Gonzalez taking home the award, however, completing an all-round excellent night for Fellowes Brands. Gonzalez has consistently impressed in her five-year career with the vendor, having been promoted several times already (most recently to European Category Development Specialist in the well-being category). She, as Fellowes’ Louise Shipley who announced the winner, highlighted, always displays a can-do attitude, has great attention to detail and an excellent work ethic. She is a fantastic asset to her team and the company as a whole.
The final award of the EOPA evening is always dedicated to an individual who has had a significant impact on our industry. It’s a person who shines with excellent leadership skills and outstanding competencies in terms of the products he/she sells, the company he/she represents as well as overall industry knowledge. This year, it’s also someone who deeply cares about our sector, what it stands for, how it has evolved and what it will become. This year’s Industry Achievement winner, to his utter surprise, was Jonathan Smith, VP Sales for Avery Europe. As a fellow EOPA judge on a panel that had ‘seemingly’ decided on a completely different winner, Smith was introduced by former award winner and industry veteran Graham Cundick. The penny took a while to drop, but references to his 38-year career in the OP industry, interspersed with examples of his philanthropic work as well as tales of his sporting and fitness prowess, finally eliminated any doubt. “Brilliant negotiator” and “outstanding at mentoring and building customer relationships” were just two of the accolades bestowed on Smith at the end of a heartfelt tribute to an extremely popular and well-liked industry personality.
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EVENT
STRIVING for a
CITY OF HOPE TOUR AND HALL OF FAME DINNER REVIEW
CANCER-FREE
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FUTURE
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ore than 150 executives from all channels in the business products, technology, facilities and furniture industries gathered in Pasadena, California, in late February for the annual City of Hope Tour and Hall of Fame Dinner. The event officially kicked off the 2020 Reinvent Hope fundraising campaign, spearheaded by Spirit of Life Honouree Stephanie Dismore, SVP and Managing Director of HP North America (pictured top left). At the time of many instances of ‘freak’ weather and, of course, the extremely worrying onset of the Covid-19 virus (but before any travel restrictions were in place or even contemplated), the beautiful Southern California weather provided an idyllic and calming backdrop for the annual tour of City of Hope. Industry supporters were briefed on the latest medical and research advancements at City of Hope in its mission of finding the cures to cancer, diabetes and other life-threatening illnesses. PRECISION MEDICINE FOCUS The tour was headlined by presenters Dr Stephen Gruber, Dr James Lacey, Dr Tijana Jovanavic-Talisman, Dr Harlan Levine and Dr Saul Priceman – each of them extolling City of Hope’s continued commitment to finding the cures for illnesses that still impact so many we know and love. The common theme these medical experts covered was ‘precision medicine’. As Dr Steven Rosen, City of Hope Provost and Chief Science Officer, said: “Precision medicine is the future of cancer care.” He added that every person’s genetic make-up, lifestyle and environment are unique to that individual. Cancer is also unique to each patient and requires treatment customised for that specific individual. This is precision medicine. The new approach, made possible by dramatic advances in genetic science, represents the leading edge of an exciting new area of cancer treatment. City of Hope, with the financial support of entities such as the National Business Products Industry (NBPI) Council, is at the forefront of developments in this exciting area. What followed the educational as well as humbling tour of the research, treatment and education centre, were the always highly anticipated evening festivities. This year, the NBPI dinner at the Langham Huntington Resort celebrated the inauguration of two iconic OP personalities into the Hall of Fame, incidentally both leaders of US manufacturer rep groups: Nick Aronis of Vanguard Sales Group and Todd Gaede of Frey Gaede. An inspirational speech from City of Hope patient speaker Laura Watts capped off two special days which alone raised more than $300,000 for City of Hope and the Reinvent Hope campaign. Culminating this year’s campaign, the Spirit of Life Gala dinner is currently scheduled to be held on 17 September 2020 at the Swissôtel in Chicago, Illinois. City of Hope is closely monitoring the Covid-19 situation and will provide updates on future events up to and including that date as and when they become available, always bearing in mind the safety of all industry supporters and participants.
5 MINUTES WITH...
Ryan Boyington
CAREER Q&A
What’s your life philosophy? Be nice. Be positive. Have fun. What special skill do you possess? I am pretty good at ice fishing. My friends have named specific fishing holes after me. Describe yourself in one sentence. I’m very laid back until you give me a good reason not to be. What scares you? The divide in our political system and the impact it will have on my kids and future generations. What’s your favourite food? Smoked ribs. What makes you happy? The opening day of hunting season. Favourite way to spend the weekend? With family or friends and a local IPA in my hand. Optimist or pessimist? Realist.
Ryan Boyington, Storey Kenworthy
Your favourite gadget? My game cameras in the woods that tell me what is walking around my farm. Typically, I see deer, turkeys, bobcats, coyotes and the occasional pheasant or quail. If you could change one thing about yourself, what would it be? I wish I had decided to live abroad at least once.
What is humankind’s greatest invention? The aeroplane. It’s like a time machine that allows us to see the world.
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I’m very laid back until you give me a very good reason not to be
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Describe your current job. I wear a few different hats. I manage some of our strategic accounts, oversee our supply operations team as well as our print and promotional product categories. As VP of Performance Excellence – a role I’ve recently taken on – my responsibility is centred around improved execution of our core business. With growth comes complexity and a greater need for the continuous improvement of processes and simply doing the little things right. Your worst ever job? Cleaning rotten corn out of old grain bins. Yes, I am from Iowa… If you weren’t doing your present job, what would you like to be doing? Real job: coaching. Dream job: fishing and hunting. Best moment in your career? Winning Young Executive of the Year in the 2017 North American Office Products Awards.
Your best piece of advice to someone who has just joined the OP industry? Visit another dealership and learn from your peers. There is an amazing amount of experience and expertise in our channel – we are all in it to win together. What do you like best about our sector? The people. I’ve only been in this industry for five years, but in that time I have established some great friendships and met many people who have had a positive impact on my career.
FINAL WORD Personalised e-commerce:
BUT HOW?
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rowing their e-commerce sales remains a priority for resellers in 2020. The next challenge is keeping buyers happy. In the current marketplace, that means providing customised and compelling online experiences. . As conversations about personalisation ramp up, buzzwords like ‘real-time data analysis’ and ‘artificial intelligence’ swirl, leading to confusion for B2B e-commerce newcomers. All this language clouds the real intent behind tailored marketing efforts: making the purchasing process easier and more relevant for buyers. Customised e-commerce strategies can sound highly technical and/or theoretical. But personalisation is already built into our everyday encounters. Ever placed a ‘product related to this item’ in your online shopping cart or prolonged a Netflix session with a movie ‘recommended for you’? There you are, you’ve experienced personalisation first-hand. 82% of business buyers want the same shopping situation for work that they have at home, including bespoke recommendations. Resellers can no longer avoid this trend. But where should they start?
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PERSONALISATION DRIVES SALES Today’s buyers are information seekers. When researching items and considering purchases, they want relevant product details quickly and conveniently. If the right information isn’t presented, they’ll simply look elsewhere. Businesses can leverage personalisation to capitalise on this search for relevant content. Buyers’ search history and buying patterns provide seeds of information you can nurture into individual offers or messaging. While users may come to your site looking for one item, tailored content can increase interest in related products and nudge them towards additional purchases. This allows you to increase average order value while simplifying the buying process. Through personalised marketing, you can use data to ensure buyers enjoy a more engaging and relevant experience on your site. And the impact of this data extends far beyond the e-commerce browsing window. Your sales team can wield insights on what buyers search for or leave in their cart as a tool for connecting with customers offline. Their online behaviour provides a roadmap that helps you understand them and better meet their needs. There are three basic components to a personalised strategy: signal, content and channel. Understanding the mechanics behind these requires more technical knowledge, but the process itself is straightforward.
Signal Every data point represents an opportunity for customised marketing messages. The signal is the situation that triggers personal messages – for instance, a buyer leaves an item in the online cart. Identifying these situations marks the first step towards developing a personalised digital marketing strategy. These signals can also provide insight into larger opportunities. For example, buyers searching for coffee when they’ve never purchased breakroom items can open up a conversation to a larger breakroom sale.
Kevin Casey, Senior Director of Marketing, Essendant
Content Next, you must determine what message the event should unlock. In the case of an abandoned cart, the content may prompt the user to return to the site and complete the order. You can also use buyers’ procurement history to approach them
As data collection capabilities improve, resellers’ personalised marketing options grow with complementary products, like promoting cups, lids, spoons, creamer and sugar for a user who recently bought coffee. For items that need to be replenished, you can deliver timely marketing content using purchase cycle data. Channel Once you’ve selected the signal and relevant messaging, the last step is choosing where to engage purchasers. Identifying the right channel depends on a variety of factors, from customer preferences to message details. If shoppers abandoned their carts, it would make sense to target them through email or on your e-commerce site. Resellers may also use this data to brief salespeople, giving them an opportunity to reach out to discover – and address – the reasons the buyer didn’t follow through with purchasing. CONTINUED EVOLUTION As data collection capabilities improve, resellers’ personalised marketing options grow. Increased data sets paint a more comprehensive picture of who your buyers are and what factors push them to either purchase or go elsewhere. The resellers that achieve sales success will be those that capitalise on these techniques and pinpoint the signal, content and channel combinations which produce their desired outcomes.
NEXT ISSUE Big Interview Danièle Kapel-Marcovici, CEO, RAJA Group Category Updates l Breakroom l Education/ back-to-school Research The State of the OP Industry 2019-2020 How to... ...sell services, part 2