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Ultimately, I guess, I’ve always been drawn to small enterprises and trying to help independents compete in a cutthroat corporate world – that’s where my passion lies and what attracted me to Office Brands.

OPI: We talked to your predecessor Gavin Ward before, last in 2016 I think, so are somewhat familiar with the complex history of Office Brands. What are the facts and figures around the group now?

AJ: We have around 160 members with a total of approximately 1,500 employees. Combined dealer revenues stand at about A$400 million ($264 million) a year.

We’ve seen some good growth over the past year although, admittedly, part of it has been the result of price increases. That said, unit-for-unit sales in several categories are well up, while others are down. Overall, we’re about 2-3% up on the previous year.

In terms of profits, we posted record levels in 2022. The prior year was good too, but you could argue results were a bit distorted due to some COVID-related government subsidies. We delivered good dividends to our shareholders and rebates to members. A lot of our shareholders are in fact also active members, so they’re getting a double win with dividends and distribution returns. Financially overall, we’re in a very solid position.

OPI: I believe there’ve been some staff changes and redundancies.

AJ: That’s true, but we now have exactly the right team in place from a people and culture point of view. We have 20 staff in total at Office Brands. We changed some things around and, yes, there were redundancies in the early part of COVID before I joined.

We’re now back to the full complement and, in fact, added several new roles in the area of technology, development of data, etc. We’ve been really selective in our recruitment process. Our team now has over 100 years of SME ownership, 175 years in small business experience, 140 years in the office products industry and over 150 years in licensing and franchising. All these numbers mean that we know what our members are going through.

The team our independent dealers work with on a daily basis have owned their own businesses in the past. They may not necessarily have experience in office products, but we’ve deliberately recruited people who understand what it’s like to not have a regular salary, they appreciate the pressures of labour and cost increases, dealing with banks and landlords, etc.

We try to drive a member-centric culture of support. It involves moving away from the franchise compliance sort of structure and into licensing support business development with a collaborative approach.

Essentially, if we want our members to be successful, we’ve got to have the right team around them to give them that success. And even with the inclusion of these additional headcounts, we’re still delivering the profits I’ve just mentioned, so we’re quite happy with where we stand at the moment.

OPI: From an operational point of view, what did you find when you arrived in 2021 and what did you feel needed to be done?

AJ: One of my earliest observations was that there wasn’t a lot of collaboration across the industry which led to a substantial duplication of cost. With this in mind, a year ago – last March – we brought together the top eight CEOs from organisations in our sector to discuss some of the big topics.

They comprised ACCO Brands, Avery, Dynamic Supplies, GNS Wholesale Stationers, Hamelin, General Stationery Supplies, OPAL and Furnx International.

It was a really good event and one of the discussion points was indeed how to reduce waste and duplication in the channel. How do we focus on dealer upskilling and increasing that market entrance competence so they have a better chance of success and higher EBIT multipliers? Data collection analysis and sharing certainly help.

There are other challenges. Australian labour laws have created some issues for the groups here. Immigration was effectively stopped through COVID which, in turn, impacted our ability to hire staff – the wage bill went up and the availability of staff down.

One of the biggest topics is addressing supply chain and logistical challenges together. We calculated that, in our space, we probably have about A$10 million in duplicated supply chain costs which could be substantially reduced if we cooperated. We’re due to meet again in May and we will keep pushing ahead on what we can do.

OPI: We’ve often talked about the logistical challenges in a country as vast and regionally sparsely populated as Australia, and the fact there’s still a relatively limited wholesaler landscape. What is your members’ viewpoint on this?

AJ: It’s a mindset issue. Historically, there’s been the perception of “I don’t want to pay an extra fee to a wholesaler”. With the rising costs of distribution and supply chain challenges, that view is being questioned, particularly by smaller members. Operators like GNS and General Stationery Supplies do a good job with next-day delivery and definitely have a role to play.

OPI: I remember Darren Hayes from Quick Corporate Australia – before it was bought by COS – saying that small independents, and their groups, should work together in terms of logistics to minimise costs but also to stand up against the likes of Officeworks. AJ: Definitely. It’s a work in progress.

OPI: You mention GNS. I thought this operator was more closely aligned with Office Choice than you.

AJ: We’re growing year on year with GNS, particularly with private label. We’re trying to rationalise our suppliers in this space. Currently, we have about 20 for 350 products. We want to bring this down to about six.

The other issue is that 90% of our sales come from about 40% of those 350 lines, so there’s some work to do here. We actually only want to be in private label if we need to have a price fighter, not just for the sake of it.

The perception of close alignment between Office Choice and GNS is a little mythical I think and it certainly does not impact our or our members’ dealings with the wholesaler.

OPI: Going back to the CEO meeting you referred to – OPAL won’t be coming back in May since it’s now out of the paper business, will it?

AJ: Sadly, you’re right – that’s a whole different story which is creating serious headaches for resellers in our industry (for more on the paper situation in Australia, see opi.net. See also our Category Update on page 34 with further comments from Adam Joy)

OPI: You didn’t mention Office Choice as part of this collaborative effort. Would it not make sense to include the group, despite the obvious competitive angle?

AJ: Absolutely it would. We have some detailed anti-competition laws in Australia we need to overcome first. In the past – before my time – there was Office Products Australia New Zealand (OPANZ) which had an overarching collaboration theme.

We did some good stuff with Brad O’Brien and his team – and Paul Yardley at GNS for that matter – as regards government activities in relation to paper supply in this country earlier in the year. There is definitely more we can do together and the relationship is good.

OPI: With Office Choice – and GNS – in mind, you’ll be part of the OPIX event in September, won’t you? Is this becoming the Australian version of Independent Suppliers Group’s Industry Week?

AJ: Similar perhaps, though not quite the same. The trade show will be combined, but other parts, such as the gala dinners, workshops, etc, will still be separate. It’s a massive saving though, as everyone will be in one location at the same time.

It’s a good walk before we run exercise, establishing how we can continue to collaborate with the Office Choice team.

OPI: Will all these baby steps culminate in the two groups joining together?

AJ: 100%. There’s no way Office Choice and Office Brands will be operating separately in three years’ time. Whether it’s a merger of equals, an acquisition or whatever, it absolutely needs to happen.

As you say, the things that are going on right now – the government lobbying, the joining together for expos – will lead to us coming together in some shape or form. Brad and I have spoken about it and we both recognise the benefit of a combined independent dealer group.

OPI: I didn’t know it was quite so actively being discussed.

AJ: It has to. If we continue to go in separate directions, it will be a case of ‘the last one can turn off the lights’. This is not to say everything is in dire straits – not at all. I told you about our profits, rebates, dividends and so on, and have no reason to believe Office Choice is in a worse position.

It makes sense for independents in a country of our size and a population of just 28 million to operate under one banner. We have 160 members, Office Choice 130+ I think. So between us, we’re representing, I would say, about 75% of all business supplies dealers in the entire country.

As one entity, we’d be able to compete much better with the likes of Winc, COS and Officeworks. We would also be able to utilise our wholesalers better. There’s so much to gain from joining forces.

OPI: A united brand would help too I guess. Even just within Office Brands, you still have all these legacy brands that were the result of the various components coming together over the years as one group.

AJ: Well, actually, this is about to change. As of 1 July, and transition period aside, there will be no more Office National, Office Products Depot and O-Net – we’ll just have one brand across the board. We’re doing a lot of research right now, trying to understand what our dealers’ customers value in our proposition and then come up with a new suitable name which reflects that feedback.

You only have to look at the words in our existing brands. Take Office National. ‘National’ is no longer popular in Australia – people want ‘small’ or ‘local’. And ‘office’ is very limiting given what we actually do and sell as a group.

It’s also a question of exposure. As you know, we are a licensee of the New Zealand-based Office Products Depot brand in Australia. But there are only about 13 locations left in the country – it’s hard to market a brand across a nation with 13 locations.

OPI: We’ve seen plenty of consolidation at the top end of the market, so much so that I can’t see much leeway for more. Apart from too many brands, are there also too many dealers in the picture? Is there a need for further M&A?

AJ: There is. The market is oversaturated with dealers, and there’s going to be consolidation. It’s already happening. Five of our dealer members merged recently, for example. They created one new company and now use just one warehouse.

These operators had been working together for a number of years which always helps as you at least know who you’re getting into bed with, so to speak. They dealt with the transition really well, with good communication to their customers, etc. And all five companies are still in business and doing fine, so it’s not as if it was a bunch of struggling entities coming together. They just recognised they were going to be better combined. We’re going to see much more of this happening I’m convinced.

OPI: Who do your dealers sell to and what do they typically sell?

AJ: I’ll start with the end user. In terms of the dealer’s customer, our general target is a business with between 15 and 100 employees – SME and mid-market territory.

But this is almost where the generalisation stops and that is because our typical dealer is no longer typical which I consider to be a good thing. We had a member in January which sold a A$10,000 line marking machine simply because the customer knew the dealer could source and deliver it. My point is, we’re getting really diverse in what we do.

The term office products supplier is becoming redundant because it’s so limiting – I alluded to that earlier when we talked about branding. It’s all about workplace essentials.

OPI: Is there a standout category?

AJ: Furniture is a big one for some of our dealers now. Even taking away price increases, we’re still 19% up in revenues – and we’re changing the way we look at this category. It’s not just items of furniture, but complete project fit-outs, all the way from initial drawings, offering the client options in terms of creating collaborative spaces, maximising environments, and so on.

Then there’s the whole gamut of functional work-from-home furniture – a desk which converts into a bedside table or one that has wheels so can be moved out of the way.

We see a lot more focus on technology in the context of furniture and we’ve been particularly successful with this in the back-to-school (BTS) environment. We’ve increased our average sale for BTS from A$21,000 to A$27,000 per order in the past three years, and that’s driven by the booklist technology we support our members with. Technology overall is a very good category which will continue to grow.

The solutions component is also part of our mantra of not chasing business which doesn’t make money. It’s a hard nut to crack, the reality that it’s not just about top-line revenue. Big-ticket items like furniture help here.

OPI: On this note, pricing has long been an issue in our industry. It’s definitely come up in every single interview we’ve done with an Australian operator over the past ten years. What’s the answer?

AJ: In one word – data. We’ve got some really good data scraping tools we’ve been sharing with our members. In any given month, we can give them a list of 40 items they can take to their customers – existing or new – and show them that they are actually cheaper than, say, Officeworks, on some of these. see what would stick. Now we’ve categorised all of the data for our members using the Australian Bureau of Statistics to make sure we target exactly the right companies with our marketing campaigns.

Pricing in our sector has to change. The notion of giving a national price for instance is ludicrous because there are so many variables. We need to price by location –circumstance even – and show our members how to use margin calculators, compete better and be more profitable.

It’s a real challenge as our members have always had the pricing done for them, by us. And there needs to be a step change in chasing margin where you can rather than being worried about upsetting the customer.

OPI: Other than what you’ve already said, what further challenges are there?

AJ: Attracting talent is a huge issue, as is succession. There’s not enough money in our industry to make it desirable for young people – they have very different salary expectations, even straight out of university, to what a dealership can offer.

As regards succession, we’re constantly working on this with our members. Do dealers want to sell the business at some point? If so, how should they maximise EBIT to get the best multiplier at the right time?

We are asking our dealers: what’s around you, who is your competitor and how close is that competitor? A dealer might not have an Officeworks next door. So why are you trying to price-match on manilla folders? Give yourself some extra margin – your customer is not going to drive to the next superstore for A$5.

It’s about finding products where you can get that basket margin. And you find them by looking at the data. When dealers go to their customers, with the data, and combine this with personal touch and agility, they can win.

OPI: This agility – and personal touch for that matter – has always been the USP of the independent dealer, hasn’t it?

AJ: Absolutely. We have phenomenal competition in Australia with big operators that have amazing centralised warehousing like COS or Winc. Or, of course, Officeworks with its very clever marketing of “we’re always cheaper – or we’ll give you 5% off”. And everyone is trying to branch into new product adjacencies and new customer segments – the mid-market being the holy grail of acceptable margins and decent volumes.

Agility and being adaptive are what make dealers stand out and it’s our job as a group to give them the clever tools to do that. We’re in the process of rolling out a brand new CRM and EDMS system through HubSpot, which includes some great marketing automation and personalisation tools.

Up until now, we’ve had a bit of a shotgun approach where we just sprayed all the information we had into the atmosphere and

Another obstacle is simply changing old habits to cope with a more demanding market situation. There is often a perception among small independent dealers that they have to be experts at everything. They don’t. We can help them get into national accounts, work more collaboratively or use social media.

Rolling out HubSpot has been a real eye-opener for many. There are templates for things and you don’t have to be a designer to change your website. Don’t sell HP printers if you don’t want to, sell Brother ones. In other words, be in charge of your own destiny in a more comprehensive fashion.

OPI: Let’s finish on a high – where are the biggest opportunities?

AJ: Again, it’s all about digital transformation and the use of data. But we need to help our members understand data and how to dissect and apply it. Don’t be too fancy and send out 35 different reports. If you don’t show someone how to use their ‘abandoned cart’ report, it just sits there and builds up. We have to teach them how to use the information at their disposal properly. That’s a huge opportunity.

In the same data context, expand it to product imagery and data enrichment AI, ChatGPTand customer involvement – 3D rendering, augmented reality and so on. What do customers want or need to see; how can they interactively choose, say, an office chair with ergonomic neck support?

Much of this may sound like pie in the sky and we don’t have the answers yet. But there’s so much potential. We have our operational teams dealing with today’s issues, while our strategic people are thinking about the future, what we’ll be looking at in three years’ time and coming up with a plan to be ready. Ahead of the curve even.

Central National Gottesman (CNG) raised a few eyebrows when it acquired S.P. Richards (SPR) in January this year. There had been rumours in the marketplace that the US wholesaler might be for sale, and it was with a certain sense of relief in some quarters when it was snapped up by an independent distribution group.

Family-owned and run CNG is traditionally media shy, so when OPI’s Steve Hilleard had the opportunity to attend SPR’s supplier event in San Antonio, Texas, he jumped at the opportunity. There, he spoke with Bill Meany, long-standing President of CNG’s Lindenmeyr Munroe division who is now also SPR President.

OPI: Bill, for those of our readers who are not entirely familiar with CNG, could you give a brief rundown of the company’s history and activities?

Bill Meany: Sure. CNG has primarily been involved in the forestry sector and products related to it. We are a fifth-generation business, founded in 1886, and have been continuously run by the same family since then.

We have offices in 29 countries, with 4,300 employees, and sell in 100 other geographies.

OPI: Something of a hidden giant. Has reaching that figure been through M&A, organic growth or a bit of both? Are you an acquisitive company by nature?

BM: We are. In distribution, we go back to 1984 when CNG acquired Lindenmeyr Paper. But we really began buying other companies in earnest from 2010 onwards, after the financial crisis.

OPI CEO Steve Hilleard interviewed S.P. Richards’ Bill Meany at the company’s recent vendor summit. The topic of conversation?

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