9 minute read
Category Update
Bouncing BACK
As schools and universities return to the physical classroom, the education sector finally appears to be on a more stable footing – by Michelle Sturman
While the coronavirus pandemic has presented everyone in our industry with a crazy time, you’ve got to feel sorry for and equally be full of admiration for those that had to deal specifically with the education sector. Highly irregular school openings and closures, and massively volatile spending patterns have been just two factors to deal with.
Admittedly, 2021 was not as stop-start as the previous year as students returned to the physical classroom for lengthy periods. But it certainly hasn’t been easy, as plenty of those supplying the sector can confirm.
GOVERNMENT AID
Taking a broad overview of the vertical, sales last year substantially improved over 2020 and all the signs point to a very welcome bounceback in 2022. In the US, for example, federal action and funding have had a positive impact.
Says Charles Forman, EVP Sales and Marketing at dealer organisation Independent Suppliers Group (ISG): “As of 24 November 2021, the Department of Education had already distributed two-thirds of the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) funds, totalling approximately $81 billion throughout the country. A total of 48 ARP ESSER state plans have been approved since June, but with supply chain and inventory issues, not all funds have been used – many have been approved but are yet to be spent.”
Eddie Baird, VP of Furniture Sales for US-based wholesaler S.P. Richards (SPR), agrees: “We feel educational spending will continue to rise over the next couple of years due to the stimulus packages put in place.”
The sector has already performed exceptionally well for SPR during 2021. The company’s SVP of Merchandising Curt Small told OPI in December that 2021 year-to-date pureplay education product sales for SPR had surpassed those in 2020 and even exceeded 2019 figures in both core education and educational furniture.
Baird adds: “We have seen very strong sales in all brands of furniture that focus on education. Our ‘Classroom by Lorell’ experienced significant growth in student desks versus activity tables. Many schools were looking for additional desks to achieve social distancing in the classroom. Fortunately for us, we had increased our inventory at the beginning of the school year.”
US education furniture specialist Whitney Bros also experienced an exceptional 2021. According to VP Sales and Marketing Brian Vaillancourt, sales volumes rose to their highest level in the company’s 117-year history: “For 2022, we are similarly bullish, with a strong pipeline of forward orders, robust demand for our collections, and the tantalising promise of the federal government funding Universal Pre-K – finally.”
DISRUPTIVE FORCES
In the UK, the education market is also buoyant. Speaking to OPI, Nick Cash, owner and Director of Nick Cash Agencies, which represents over 60 companies in the furniture and interiors market, reports that sales for its partners in 2021 increased above inflation, but were generally “a little more erratic than normal”.
His expectations for 2022 are again above just inflation sales, although he says there are still specific challenges to deal with, such as changing school spending patterns and the reliable supply of components due mainly to Brexit and global shipping problems. “This has meant making sure suppliers are holding sufficient stocks; our stock levels are appreciably larger than before.
“Along with this, partners are passing on price increases – sometimes monthly – which need to be transferred onto our customers.”
Even though sales have rallied, there is still disruption in the sector related to the lingering global economic and societal fallout associated with the pandemic. Inflationary concerns and supply chain complications continue to hamper a full recovery (see also Final Word, page 50).
According to Forman, continuing supply chain issues have caused manufacturers to raise prices or collect transportation premiums, for instance. “Price increases are very tricky when so many products are on previously negotiated contracts, thereby causing severe margin erosion.
“Numerous items are manufactured overseas, and installation deadlines have been missed because goods were stuck on cargo ships. In addition, labour shortages are hampering domestic manufacturing even if the raw materials are received.”
He says three key details will be important moving into the 2022 selling/buying cycle. The first is understanding how education buying works in the post-pandemic era – think supply chain disruption levelling out and current swelling budgets beginning to normalise in Q2. The second requires re-envisioning the typical purchasing cycle by preparing for the unexpected. Lastly, re-evaluating the kind of information administrators need at each stage of the cycle is vital.
On this final point, Forman refers to trends in The K12 Education Buying Cycle eBook from the Education Market Association (EDmarket) and Agile Education Marketing. These highlight what educators want to know prior to making a purchase and include: evidence of success (57%), associated costs (52.8%), key benefits (38.3%), features (37.9%), implementation details (34.1%), and examples of uses in other districts (25.2%).
BACK TO REALITY
While challenges exist – mostly global – they are not insurmountable. The general consensus is that last year’s gradual return to normal buying patterns in the education sector will continue.
In South Africa, where the school year begins in January, there has been an improvement in sales for the BTS period, for example, according to Craig Noyle, CEO of dealer group Inovocom. On the downside, however, he says there is no doubt that parents’ budgets remain constrained, and there is a lot more demand for cheaper items.
Further factors at play may mean the rebound in the country is not vigorous as in others, as Noyle explains: “Stock availability is currently a key issue and product is being substituted on a daily basis to fulfil orders. There was also a lack of confidence and planning due to the muted sales last year, and now most dealers are scrambling for whatever stock they can find.
“The other issue is the devaluation of the rand coupled with inflation of oil and pulp prices, which is placing immense pressure on prices in the marketplace for educational spending.”
In Australia, Jane Richardson, owner and Manager of Victoria-based dealer CVOS Office Choice, says COVID did not actually have a significant effect on last year’s sales. She explains that schools kept purchasing during lockdowns, even when pupils were off campus, because they were putting together kits to send out for homeschooling.
That said, she adds: “We are now noticing schools ordering less due to existing stock sitting around. Parents are also purchasing less as they received home supplies which previously they would have had to buy themselves,” she adds.
Melbourne-based business products retailer Officeworks is firmly established as a BTS supplier, offering price promises and school list services. Managing Director Sarah Hunter says its research shows that parents have become more involved in their children’s education through the pandemic.
“This, together with the many consumer behaviours we’ve seen emerge from COVID-19 – increased online shopping and a greater focus on
The HON Company Tangram soft seating solution for K12 students
value and sustainability – is going to change the way parents shop for school supplies we believe.”
In the UK, Alan Calder, Marketing Manager for dealer groups Nemo and Office Club, refers to supply chain problems which will require earlier buying commitments. He says: “In recent years, but pre-COVID, the BTS purchasing period for dealers had moved much later in the calendar to where it used to be 10-15 years ago.
“We anticipate this will change in 2022 and suppliers will want orders much earlier again to ensure stock availability and deliveries on time.”
In terms of combatting availability predicaments, SPR’s Baird is in complete agreement, warning the supply chain will continue to be an issue for all products. “Even domestic vendors are having problems obtaining raw materials. For example, a large component of education furniture is steel, and there are many challenges with access and the rising cost of the material.
“This is causing lead times to extend out past 12-14 weeks. The only way to overcome these challenges is to order a long way ahead.”
CHANGING PATTERNS
While these availability challenges rumble on, there are positives too. One of them is an ever-broadening product range to sell as classrooms are rejigged, pack sizes are changed, and new items are introduced.
SPR’s Small, for instance, mentions pack sizes in categories such as writing and colouring that have become more individual versus the traditional ‘class’ kit.
In Australia, both Hunter and Richardson are seeing more technology products added to the list, including memory cards, laptops, tablets and headphones. “The technology space is increasing in popularity as schools move their learning to interactive and digital platforms,” notes Hunter.
Additional trends, according to ISG’s Forman, include flexible, movable furniture and outdoor learning spaces and products. In addition, soft seating is being utilised and innovative storage solutions are being included within most new school projects.
Furniture manufacturer The HON Company says education represents an important and growing division of its business. In the past few years, the company has quadrupled the team members working in this category.
Talking to OPI, Megan Wadsworth, Education Channel Marketing Manager at HON, comments: “As learning has grown increasingly flexible, schools are looking for adaptive furniture that fits their teaching style and can move around to support individual, small or large group sessions throughout the day. The furniture needs to encourage collaboration while also supporting the use of technology.”
To this end, HON has launched several new product ranges, such as the Build Makerspace table and the Tangram soft seating solution. Education Product Manager Whitney Potratz states: “With the growth of STEAM environments, HON launched the Build Makerspace table, which incorporates intuitive storage and organisation options for the classroom.
“As we see the emphasis on collaboration and social skills continue to develop within schools, we have also launched a new soft seating collection, Tangram, designed specifically for K12 students. While educational institutions are adjusting their teaching styles to meet the needs of students, our furniture must do the same.”
WORKING TOGETHER
As a collaborative initiative, ISG and EDmarket recently formed an education industry purchasing consortium to grow dealer and supplier sales, and provide the back office service and centralised billing.
As Forman explains: “EDmarketplace powered by IS Contract will grow sales and bolster the education channel through a broad range of goals: establishing preferred pricing with participating suppliers; strengthening supplier-dealer relationships; training personnel to better represent brands; focusing salespeople and designers on specifying active suppliers; and raising the industry profile of the associated brands.”
In spite of the diverse concerns those supplying the education segment still have, the category is definitely recovering and a vertical worth pursuing. Says Calder: “As one member put it to me recently, schools and education establishments are difficult accounts to win, but when you do secure them, they are also much less likely to leave you.
“The other benefit, particularly in this difficult period, is the fact the sector is very good at paying on time, making it an excellent and reliable account to have.”
