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BIG INTERVIEW

Connecting the

Paul Musgrove, Nectere

business products world

May 2018

THE

RIGHT MIX?

S D R A C H Special Issue I R P S & T FACILITIES N A D N E SUPPLIES ES S Special Issue

FACILITIES SUPPLIES

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FACILITIES SUPPLIES Special Issue

BREAKROOM

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INSIDE THIS ISSUE l l

GSA’s e-commerce plans revealed l Depot expansion continues l The trouble with plastic waste Special Issueto manage your reputation l How Breakroom opportunities abound l State of the OP Industry Report BREAKROOM

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BREAKROOM

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CONTENTS 18 Big Interview Once derided as a home for failing dealers, Nectere has silenced its critics over time

Special Issue

FACILITIES SUPPLIES 36 Feature Wargaming is an excellent tool to maximise companies’ cyber resilience

Special Issue

FACILITIES SUPPLIES

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38 How To... ...protect your brand’s reputation on social media

FACILITIES SUPPLIES

40 Advertorial Static Control is branching out with its finished goods

42 Preview: European Forum 2018 A look ahead to next month’s OPI event in London

Special Issue

BREAKROOM

SPECIAL

44 Research Results from the latest State of the OP Industry report

Special Issue

Special Issue

Big Interview: Paul Musgrove, Nectere BREAKROOM

SPECIAL with an Foresight and determination – combined impressive dollop of technology – have made Nectere a go-to destination for small independent dealers in the UK. Its premise? Let the dealer do the sales talk while Nectere deals with the nuts and bolts of daily business. Paul Musgrove charts the Nectere journey and warns that other operators in the industry need to be more progressive HOT TOPIC: PLASTIC SOUP

SPECIAL

24 Hot Topic The problem of plastic waste is at the heart of many breakroom discussions 28 Category Update As the office breakroom changes, opportunities open up for resellers 34 Spotlight OPI talks to Byte Foods about a breakroom fridge with a difference

REGULARS 5 Comment 6 News 46 Generation Game Dan Zakai 48 5 minutes with...

Beck Miller 50 Final Word Riley Doherty

May 2018

Interest in the scourge of single-use plastic has recently been ignited by two major factors: Sir David Attenborough and the BBC’s Blue Planet II series and China’s announcement that from January 2018, it would stop importing 24 grades of solid waste, including mixed paper and plastics.

The huge worldwide popularity of Blue Planet, and in particular its final episode featuring the devastating effect of plastic on marine life, has set in motion a major call to action. The general public has been galvanised by disturbing information such as: plastic is making its way back into the human food chain; 6.3 billion tonnes of plastic waste litter the planet; plastic will outweigh fish in the sea by 2050; and around 50% of plastic is used once, then thrown away.

BREAKROOM

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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 Reporter Joshua Allsopp +44 (0)20 7841 2952 joshua.allsopp@opi.net OPI Special Correspondent Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net Freelance Contributor David Holes david.holes@opi.net

SALES & MARKETING VP – Continental Europe, Middle East and Africa Ewan Dickson +44 (0)20 7841 2954 ewan.dickson@opi.net VP – North America and UK Chris Turness +44 (0)20 7841 2953 chris.turness@opi.net Director of Growth Services Jeremy Hughes +44 (0)7807 810617 jeremy.hughes@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 Eda Sismanoglu +44 (0)20 7841 2950 eda@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 (7718) 660249 debbie.garrand@opi.net

Essendant/SP Richards: the hottest topic in town

I

had this column for the Breakroom Special issue of OPI all worked out, talking in some detail about the opportunities that the category presents for pretty much all operators in our industry. This is partly because of the sheer breadth of product that it offers and partly because of changing and more demanding employee expectations.

Then there’s the issue of plastic waste and the tsunami of headlines and activities we’re currently seeing, many of which are closely linked to the breakroom.

It all changed when the hottest topic in town emerged a week before we went to press – the intended merger of Essendant and SP Richards (SPR).

As is always the case at the beginning of such a potentially huge deal, there are currently many more questions than answers. Who has the most to lose if the transaction is approved? The small independent dealers that do not have direct relationships with manufacturers? Stockless dealers that totally rely on their distribution agreements? Dealers that for very specific reasons prefer one wholesaler over the other? And just how long would the integration of the two companies take and how complicated would it be?

As is always the case at the beginning of such a potentially huge deal, there are currently many more questions than answers There is no doubt that something needed to be done at the two US wholesalers. If any further proof was needed of that, SPR’s parent Genuine Parts Company provided it on the day we went to press when it announced SPR’s year-on-year first quarter operating profit decline of 30%.

Both wholesalers will no doubt be quick to reassure dealers – all customers, in fact – that, should the deal be approved by the Federal Trade Commission, which is by no means a foregone conclusion, it will be for their benefit.

On a related note, I can see a real opportunity for Independent Stationers and TriMega if the two dealer groups manage to galvanise their combined strength.

I hope you find this issue of OPI diverse and thought-provoking. I haven’t highlighted specific pages this month, but don’t forget to turn to pages 6, 18, 24, 28, 34…

Have a good month.

HEIKE DIECKMANN, EDITOR

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No part of this magazine may be reproduced, copied, stored in an electronic retrieval system or transmitted save with written permission or in accordance with provision of the copyright designs and patents act of 1988. Stringent efforts have been made by Office Products International to ensure accuracy. However, due principally to the fact that data cannot always be verified, it is possible that some errors or omissions may occur. Office Products International cannot accept responsibility for such errors or omissions. Office Products International accepts no responsibility for comments made by contributing authors or interviewees that may offend.

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May 2018

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5

NEWS

Analysis:

MEGA-MERGER in US wholesale channel The US office products landscape is set to change after Essendant and SP Richards announce their intended merger

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Speculation has been rife in the US since the beginning of 2018 that something ‘big’ was about to happen at wholesaler Essendant. At the end of February in two online articles, OPI presented a number of possible scenarios, including the company going private, buying independent dealers and merging with main rival SP Richards (SPR).

Although we hadn’t forecast the exact nature of the combination with SPR, it is this last – and most dramatic – course of action that was announced on 12 April, with Essendant acquiring its competitor in a transaction known as a Reverse Morris Trust (see ‘Transaction details’, page 7).

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SURPRISE, SURPRISE While many industry insiders were expecting a major development at Essendant, the intended merger with SPR does seem to have taken people by surprise, not so much by the fact that it has happened, as by the speed with which it was announced. There is consensus that each wholesaler is struggling to remain competitive against a backdrop of factors such as secular declines in traditional products, changing buying habits by big-box customers, dealer consolidation and the shift to online purchasing. But most people OPI spoke to when the news broke were caught out by the timing of the announcement.

There were, in fact, some clues in the October 2017 earnings conference call of SPR’s parent company Genuine Parts Company (GPC) that perhaps should have sent alarm bells ringing earlier than they did, although at the time GPC CEO Paul Donahue said the group had “no intention at this moment” of moving away from its office products business (the dreaded ‘Chairman’s backing’ to coin a well-known UK football-related phrase). That message had changed, however, by the time the next conference call took place in February, when Donahue confirmed that GPC was “evaluating its long-term outlook” for SPR. Still, it does look something of an audacious move to try and bring together the two remaining national office supplies wholesalers in the US. The transaction has yet to be approved by the US antitrust authority, the Federal Trade Commission (FTC), and there will always be a question mark

This may be more problematic for stockless or small dealers [and] may accelerate their consolidation

WAIT AND SEE The main reaction coming out of the US office products industry for now is “wait and see”. In an email to his group’s members on the day of the merger announcement, Independent Stationers CEO Mike Gentile said: “We encourage everyone to not overreact until everything unfolds. Your board of directors, management team and Pinnacle leadership will be prudently monitoring [the] news as it develops. For now, our mantra should be ‘Keep Calm and Carry On’.”

We encourage everyone to not overreact until everything unfolds

WINNERS AND LOSERS While it is still unclear what impact this transaction will have on all stakeholders in the business products channel – dealers, big-box customers, buying groups, software and service providers, vendors, etc – taking a major customer/partner out of the equation is bound to have its consequences and there will no doubt be winners and losers.

These things will play out over time. And even if the Essendant/SPR tie-up obtains FTC approval, there will be a long and complex integration process that could take several years to complete.

For further developments, reaction and analysis regarding the deal, make sure you regularly check opi.net for updates.

TRANSACTION DETAILS Essendant is acquiring SP Richards (SPR) in a transaction known as a Reverse Morris Trust. This involves SPR owner Genuine Parts Company (GPC) separating SPR into a standalone company, spinning off this new entity to GPC shareholders and then immediately merging it with Essendant.

The combined new company will be called Essendant, with dual headquarters maintained in Deerfield (IL) and Atlanta (GA). Essendant’s current CEO Ric Phillips and CFO Janet Zelenka will stay in these roles, while SPR CEO Rick Toppin will become COO. Essendant’s President of Office and Facilities Harry Dochelli will remain in a senior management role. No other leadership roles have been confirmed.

The transaction is expected to be completed by the end of the year. Approval from the US Federal Trade Commission and Essendant shareholders is required for the deal to go ahead.

This ‘new’ Essendant will be owned 51% by existing GPC shareholders and 49% by existing Essendant shareholders. The transaction has been structured in this way to make it tax-free to shareholders; SPR will be a wholly-owned subsidiary of Essendant once the deal closes.

ACCO acquired Mead via the same kind of arrangement in 2012.

The deal values SPR at $680 million. Essendant will make a one-time payment to GPC of $347 million, with the rest reflecting the value of Essendant’s shares to be issued at closing. $1.4 billion in asset-based financing has been committed to fund this cash payment and to refinance Essendant’s existing debt.

The combined two wholesalers had 2017 revenues of around $7 billion, although this is expected to be lower at the end of 2018. Together, they have a network of 120 distribution centres.

May 2018

His counterpart at TriMega, Mike Maggio, had a similar message. “Yes, there are some concerns and lots of questions, but only time will tell how this plays out,” he told OPI. On-the-record reaction from the vendor community has been less forthcoming. Only ACCO Brands CEO Boris Elisman provided his thoughts on what the merger would mean for the industry.

“I don’t believe [it] will have a major effect on large stocking dealers,” he told OPI. “They already make calculated trade-offs between buying directly from manufacturers versus distributors. This may be more problematic for stockless or small dealers whose choices will become more limited, and this may accelerate their consolidation.”

Regarding ACCO’s ability to effectively serve the IDC following the merger, Elisman commented: “Independent dealers are very important to ACCO Brands as a way to reach small and medium-sized businesses, education establishments and government. We have direct selling relationships with all major dealers and are agnostic as to whether they

buy directly from us or through distribution. [The] merger may mean that more dealers buy in greater amounts directly from vendors. Our products are also available from SYNNEX, Grainger, Ingram Micro and Tech Data, although in limited assortments.”

Elisman also noted that he didn’t expect to see opposition to the merger from the vendor community.

NEWS

when trying to combine the number one and two players in a particular industry. The prediction that it could take more than seven months to get the deal over the line suggests it is expected the FTC will conduct a very in-depth investigation.

During a conference call that was arranged to discuss the transaction, Essendant CEO Ric Phillips confirmed the wholesalers hadn’t spoken to the FTC about the deal, but that they had been “well advised” by legal counsel and other advisors, and both parties were “confident” antitrust approvals would be obtained.

That, of course, remains to be seen. Independent dealer channel (IDC) figurehead and dealer principal Dave Guernsey told OPI that he expected to see a regulatory challenge to the merger, most likely from the dealer side, although he himself believes the combination will make the IDC stronger. If there is formal opposition to the transaction, then it will likely come from first-call SPR dealers, although initial conversations OPI has had with some dealers cast doubts over whether anyone has the resources or the inclination to mount a serious legal challenge.

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NEWS

US

Analysis:

The GSA’s broad e-commerce approach

US trade association NOPA expresses cautious optimism about the GSA’s plan In March 2018, the US General Service Administration (GSA) revealed its implementation plan for the establishment of a commercial e-commerce portal programme for the procurement of commercial off-the-shelf (COTS) goods for the federal government, an area that accounts for some $50 billion in annual expenditure.

When this e-commerce initiative was first introduced last year by Senator Mac Thornberry as Section 846 of the 2018 National Defense Authorization Act, it was christened the ‘Amazon Bill’. Many viewed it as favouring a shift of federal COTS spending onto the e-commerce giant’s marketplace platform.

However, several months on and it would appear that the GSA has taken a broader approach to the subject and its plan will allow for several types of e-commerce providers to participate. One of the areas it is looking at is its definition of what constitutes a ‘commercial e-commerce portal’.

The GSA has defined three types of e-commerce models that could feasibly be used to serve the federal market. These are:

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l

8

E-commerce: supplier-controlled e-commerce sites (think Shoplet.com, Staples.com, etc) where the reseller is responsible for the fulfilment of the product orders, invoicing, etc. l E-marketplace: an Amazon-type marketplace model where multiple vendors, including the portal provider, compete for business. l E-procurement: punch-out solutions such as SAP Ariba that are currently used in enterprise-level procurement.

The GSA said that its implementation “will use an appropriate mix of these components to create an optimal experience for suppliers and

buyers”. This certainly leaves the door open to the wider e-commerce/e-procurement industry to offer appropriate solutions.

It also demonstrates that the GSA took on board input from the industry at the start of the year.

For example, the need to redefine commercial e-commerce portals and what scope of available and future systems the GSA would be able to adopt was something that both Overstock.com and FedBid called for in their comments to the GSA following an Industry Day that took place in January.

“The GSA has recognised the role our industry plays and seems to be on track to make decisions that include solutions which are friendly to us outside of the Amazon proposals,” commented NOPA CEO Mike Tucker, who has been working closely with the association’s Director of Legislative Affairs Paul Miller to ensure that the voice of the independent office supplies reseller is being heard by the GSA.

The GSA has recognised the role our industry plays and seems to be on track to make decisions that include solutions which are friendly to us There are still a number of important issues that the GSA realises it has to tackle, such as: opportunities for small businesses within the portals; item-sourcing issues and supply chain security; existing trade laws and treaties relevant to implementing commercial e-commerce portals; and unique government purchasing rules such as the requirement to buy certain supplies from mandatory sources like AbilityOne and Federal Prison Industries.

Revising the statutory definition of ‘commercial e-commerce portal’ will require a legislative change, ie it has to be approved by Congress.

There are three other areas of the GSA’s plan that will require legislative reform. These include raising the micro-purchase threshold for purchases on GSA-approved portals to $25,000, updating competitive bidding practices, and giving the GSA more leeway in certain contractual arrangements.

Miller told OPI that he had spoken personally to Senator Thornberry about the need to go back to

Congress and that he (Miller) expects these legislative changes to be approved. Miller gave the GSA credit for what it had achieved in a short space of time and expressed cautious optimism that the agency would continue to take on board input from industry stakeholders. However, he noted that previous commitments to small business suppliers by the federal government have not always delivered, and is therefore mindful that NOPA needs to continue to monitor the situation very closely.

OPI understands that NOPA is developing a federal e-commerce solution, and that it will be presenting its plans to the GSA during a one-to-one meeting this month. It should also be noted that NOPA is involving various independent dealer channel stakeholders – including AOPD, Independent Stationers and TriMega – in this initiative.

In addition, dealers will have a chance to bring up the e-commerce portal subject with their elected representatives in Congress as part of NOPA’s Small Business Advocacy Fly-In that takes place on 15-16 May. The first steps taken by the GSA in this e-commerce initiative are encouraging and certainly point to a desire to allow for fair competition. Nevertheless, as NOPA’s Miller recognises, there is still a long road ahead and nothing should be taken for granted.

TIMETABLE FOR IMPLEMENTATION The GSA has committed to a five-phase implementation of the e-commerce initiative, with a full roll-out of the solution to be made by the end of the US government’s 2020 financial year (FY20) on 30 September 2020. l l l l l

Phase 1 (mid-March 2018): Implementation plan and policy assessment (completed) Phase 2 (by mid-March 2019): Market research & consultation Phase 3 (by mid-March 2020): Implementation guidance Phase 4 (by end of FY19): Potential initial rollout Phase 5 (by end of FY20): Assess and scale roll-out

In the current financial year, the GSA has said that it will initiate impact assessments to existing programmes – including Multiple Award Schedules, the National Supply System, small business, socio-economic and other preference programmes – to help it begin to understand the potential impacts facing existing programmes and stakeholders.

These impacts will be assessed in FY19.

The potential initial roll-out during FY19 should be noted

by OP resellers. It is likely that office products will be included in the first batch of products in this pilot stage.

An upcoming report undertaken by OPI and its research partner Martin Wilde Associates aims to explore the ‘mid-market battleground’ of large regional and small national B2B end-user accounts.

To be published in September 2018, The Waterhole Report will focus on UK firms with 50-500 employees where business products are purchased ‘as required’ (ie not under formal contract) across the manufacturing and service industries.

The research for this study will comprise 400 in-depth interviews with buyers of business products. Key questions that the report will explore include: • • •

Which business products categories do these organisations buy and how muchh did they spend on each categoy in 2017?

For which categories are Amazon/Amazon Business used?

What are the key criteria used when choosing a supplier?

Order your copy online at opi.net/waterhole before 31 May 2018 for only £2,500 (approx. $3,600). The regular price of £2,950 will be applicable thereafter.

Platinum swaps Winc for OfficeMax

Private equity firm Platinum has reached a deal with New Zealand’s Commerce Commission (ComCom) to sell Winc NZ once it completes its acquisition of OfficeMax NZ. Platinum completed the acquisition of OfficeMax Australia this February, but efforts to close on the takeover of the company’s New Zealand arm had stalled due to antitrust concerns.

Last November, ComCom – in conjunction with Australia-based dealer COS – had filed an injunction with the High Court to halt Platinum’s bid to acquire OfficeMax in New Zealand. Platinum and OfficeMax had not applied for clearance and ComCom was concerned the acquisition would be “likely to have the effect of substantially lessening competition in the supply of stationery and office products to large corporate and government customers”.

Now it appears that the US private equity firm has got its way. It has provided an undertaking to ComCom and the High Court committing to sell Winc NZ to a purchaser approved by ComCom once it (Platinum) completes the acquisition of OfficeMax NZ. It remains to be seen who will buy Winc NZ as a standalone business as it is largely dependent on its Australian namesake in terms of systems and senior management. Winc NZ will also be going up against the might of the combined OfficeMax/Winc Australia in the government, education and enterprise segments.

Its relative size puts it at a disadvantage, as does the insider knowledge that Winc Australia has regarding its contracts and pricing in New Zealand.

OF WORKERS SKIP THEIR LUNCH BREAK

Cenveo files reorganisation plan Beleaguered US envelope maker Cenveo has submitted a reorganisation plan to lift itself out of bankruptcy. It outlined a comprehensive restructuring of the business to strengthen its balance sheet and increase financial flexibility.

New CEO for Ricoh Americas Japanese electronics vendor Ricoh has appointed Joji Tokunaga as President/CEO of Ricoh Americas. He joined back in 1985, most recently serving as General Manager of Shared Services within Ricoh Americas in the US. New member for Pinnacle US large dealer group Pinnacle Affiliates has welcomed furniture dealer Perry Office Plus as a new member. The Texas-based company was founded almost a century ago and has a catalogue that includes jan/san and breakroom supplies alongside more traditional lines.

Humanscale recruits marketing chief US-based ergonomic office furniture maker Humanscale has appointed its first-ever Chief Marketing Officer. Leena Jain joins the team after 12 years as VP of Marketing for cosmetics brand L’Oréal and is set to lead Humanscale’s new promotional strategy.

Memjet seals Canon agreement Printing technology company Memjet has entered into a cross-licensing agreement with imaging giant Canon. Although the terms of the arrangement remain confidential, it involves a long-term, global partnership in key segments.

ADVEO sells French warehouse European office supplies wholesaler ADVEO has sold its warehouse in Châteauroux, France, for €5 million ($6.12 million). It follows the closure of the Compans site in January and is part of the group’s transformation strategy.

WB Mason fleet goes green US mega dealer WB Mason has taken delivery of a new fleet of electric delivery vehicles leased from Ryder. The upgraded trucks will reduce emissions by 75% and are six times more efficient than older non-electric models.

Faber-Castell appoints CFO Pencil maker Faber-Castell has appointed André Wehrhahn as CFO. He brings to the team decades of experience in top management positions, including Swiss logistics firm Kuehne & Nagel.

FedEx plans 500 Walmart spots Delivery giant FedEx has partnered with Walmart to roll out 500 new FedEx Office locations across the mega retailer’s stores in the next two years. The small-format counters offer packing, shipping and printing solutions.

May 2018

52%

IN BRIEF

NEWS

OPI to release mid-market report

11

NEWS

AHI signals national push

Texas-based US independent dealer organisation AHI Enterprises has appointed former Fellowes executive Bill Clark, as it looks to sign dealers from across the country onto its PACE cooperative contract.

Highly-respected 40-year business supplies industry veteran Clark joined AHI (pronounced AH-HEE) after spending the past 37 years at Fellowes, the last ten or so as National Account Manager working with buying groups and independent resellers nationwide.

At AHI, Clark also takes on the role of National Account Manager. As mentioned, his chief responsibility will be the on-boarding of dealers to AHI’s PACE cooperative contract that runs until 2024.

AHI was formed in 2010 by Texas-based dealer principal Mark Nolan as a vehicle for independents to service the state’s office supplies contract. That came to an end in August 2017, but Nolan told OPI that AHI had already been enjoying greater success with its PACE cooperative contract run by the San Antonio-based Education Service Center Region 20 public agency.

AHI is now four years into what is potentially a ten-year PACE contract (with renewals).

Bill Clark Nolan said that PACE sales have been growing in the double digits, helping strategic partner Essendant achieve strong growth in its Vertical Markets Group.

While its initial focus had been on the Texas market, AHI has taking steps to allow dealers from other states to piggyback onto the PACE contract. A total of 11 members now span the states of California, Georgia and Indiana.

www.opi.net

Newell in $50 million Office Depot tiff

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In February 2018, manufacturer Newell Brands revealed a 55% decline in sales from its Writing business due to a trade dispute with a major customer.

The identity of the party involved has since been confirmed and it is none other than US reseller Office Depot. The spat has apparently cost Newell nearly $50 million in lost sales and stems from the withdrawal of certain shipments of writing instruments to Depot last year.

Newell Brands CEO Michael Polk said he had to put pressure on the reseller as he believed it wasn’t doing enough to promote Newell’s products – which include Sharpie permanent markers and Paper Mate pens – and was using marketing money to improve its own margins.

The dispute has reportedly been resolved. Polk said the mounting pressure from online competition was to blame as retailers see foot traffic decline and look to cover their margins.

Newell is currently involved in another battle, this time with hedge fund Starboard over plans to cut back its core consumer brands categories.

(See News, OPI April 2018, page 9).

WHO’S WHO IN OP

Top 100 2018: Simon Drakeford – CEO, EO Group Simon Drakeford was made CEO of UK-based Euroffice Group (EO) in 2007. Since then he has grown the business to more than double its annual sales – from £18 million ($25.7 million) to nearly £40 million – according to the latest figures. Prior to joining EO Group, Drakeford had worked for telecoms providers T-Mobile UK and Orange, heading their e-commerce strategy.

EO Group – which incorporates Euroffice UK, Euroffice Italy, Euroffice Germany, UK Office Direct and Office Power – acquired UK dealer Eurostat Office Solutions earlier this year for an undisclosed sum. The deal arose from an initial meeting between Drakeford and Eurostat owner Stefan Mercado, who had revealed plans to retire.

According to Drakeford, the opportunity was too good to pass on and EO Group soon took over Eurostat’s four UK offices. It has added the business to its Office Power subsidiary, where revenues are already up 75% year on year – encouraging news for the initiative that now has 45 dealers on board and which has been the focus of much investment over the past few years.

The Eurostat deal was followed by the appointment of former Tesco.com boss John Browett as EO Group’s non-executive Chairman. Drakeford met Browett via a mutual contact and is looking to tap into his tech-related experience with big consumer retail brands – including Apple.

New campus for City of Hope Cancer research and treatment centre City of Hope is building a new $200 million facility in Irvine (CA) in the US. Part of real estate group FivePoint’s Great Park Neighborhoods project on the former El Toro Marine Corps Air Station, the new centre will be equipped with cutting-edge technologies and dedicated oncologists to provide high-quality patient care to Orange County and beyond.

The site is being developed on property donated by FivePoint and will complement City of Hope’s main base in Duarte (CA). The centre has been expanding its clinical network over the past five years, growing to 17 locations across Southern California.

Office Depot has snapped up another large independent office supplies dealer in the US. Following on from the acquisition of $150 million dealer Complete Office Solutions, Depot recently finalised the purchase of leading New Mexico reseller Sandia Office Supply.

Headquartered in Albuquerque, Sandia is thought to have annual sales of around $50 million. It also has locations in Oklahoma after acquiring Tulsa-based dealer Admiral a couple of years ago.

It is understood that Depot will maintain the Sandia brand and operate it as a separate entity within its Business Solutions Division, the same strategy it adopted for Complete. It will mean that Office Depot essentially acts as a wholesaler for the local dealer, although the long-term viability remains to be seen.

Sandia was a first-call SP Richards dealer and also a member of Pinnacle Affiliates. Sources in the US have told OPI that there are several more dealers out there with non-disclosure agreements in place and that further acquisitions are expected to be announced in the coming months.

In related news, Dan Stone, the CEO of Office Depot’s recent IT solutions acquisition CompuCom, has been appointed President.

He served as the head of South Carolina-based CompuCom from November 2016 until its takeover by the OP reseller in November last year. Stone takes on the new role just as Depot embarks on a major services-based transformation (see OPI April 2018, page 8) and aims to offset ongoing retail declines.

Depot also recently updated CompuCom’s corporate headquarters, opening a state-of-the-art digital campus ready for its planned expansion. The new site is expected to house 3,500 personnel over the next five to seven years.

CompuCom’s new Fort Mill headquarters

IN BRIEF HMS founders retire Canadian OP dealer HMS Office Supplies is passing on the baton.

Founders Henri and Gloria Gallant are handing over the family business to their son Pierre after deciding to retire. HMS recently partnered with multichannel operator Novexco.

NEWS

Depot expansion continues

Essity closes Spanish plant Sweden-based hygiene products group Essity is restructuring its Consumer Tissue production in Spain. It plans to close the La Riba facility and one of its tissue machines at the Allo plant, in line with its strategy to optimise its production footprint.

Spector & Co sold Canada-based customised and branded items vendor Spector & Co has been acquired by private equity firm Blue Point Capital Partners for an undisclosed sum. Co-founder Rob Spector said the partnership with Blue Point would support its ongoing growth strategy.

Dams invests in UK site UK-based office furniture maker Dams is building a new multimillion-pound manufacturing facility at its headquarters in Knowsley. Due to open in October, the 85,000 sq ft (8,500 sq m) site consolidates four existing locations and is expected to significantly boost the company’s production capabilities.

Exertis adds development chief European IT wholesaler Exertis has expanded its Innovation Team.

Paul Jacobs has been appointed to the newly-created position of Director of Business Development and Innovation. He joins from international IT distributor Tech Data where he spent 18 years in both sales and product marketing.

EIS becomes ‘Buy on Purpose’ US dealer EIS Office Solutions has announced a major rebrand. The Texas-based supplier – which donates 50% of its profits to charity – is changing its name to Buy on Purpose. While ownership remains the same, the new image aligns the company’s name with its values.

Corporate Essentials buys caterer US office refreshment company Corporate Essentials has acquired Martin + Fitch based in Brooklyn (NY), expanding its offering to now include one-off or regular food supply services and daily ‘grab-and-go’ lunch solutions.

Bolt-on acquisition for Avery

New CEO for Nuance US-based voice recognition software company Nuance Communications has appointed Mark Benjamin as CEO. He brings to the role more than two decades of experience in technology markets. He succeeds Paul Ricci who retired at the end of March after 18 years in the top spot.

The Mailing Room expands UK-based postal services company The Mailing Room (TMR) has acquired regional franking machine specialist MailServe and its sister company Monsters Ink for an undisclosed sum. The deal adds a further 700 customer accounts to its growing portfolio and extends TMR’s geographic presence in the UK.

May 2018

Global manufacturing conglomerate CCL Industries has announced a new bolt-on acquisition to add to its label maker subsidiary Avery.

It has purchased Richmond, Canada-based Imprint Plus for around $25 million, marking the sixth such addition by CCL since buying Avery in 2013. Imprint Plus manufactures custom name badge systems, signage solutions and accessories. Sales for the year ended May 2018 are estimated to reach $16 million, while adjusted EBITDA is forecast to be $4 million.

CCL CEO Geoffrey Martin said the addition of Imprint complemented similar propositions already in place and that the company continues to build its portfolio of web-to-print technologies and brands.

Staples job cuts revealed A legal notice seems to have confirmed rumours that Staples’ private equity owner Sycamore Partners has laid off a number of employees. Around 170 Staples workers were made redundant in January according to the filing. Sycamore cited the adverse impact from increased imports as the reason for the cuts.

13

NEWS

Rocada ramps up German business Spain-based office furniture and communication equipment manufacturer Rocada Group has reported a change in leadership as it expands its European footprint.

After ten years as General Manager, Marc Roca is to become CEO of the firm’s German branch and is relocating to Hamburg as the group aims to make the region its “second pillar”.

Roca succeeds Dieter Hahn who will retire in September and has been leading the subsidiary for 13 years. In Spain, Roca will be replaced by current Sales Manager Aitor Rivera.

By 2019, Rocada wants sales in the German market to match those of its home country Spain. Currently, it represents 25% of the group’s overall sales, while Spain accounts for 45%.

Marc Roca

Scottish dealers join Nemo UK dealer group Nemo is set to welcome 11 new independent dealers after forging an agreement with buying cooperative The Unibuy Group.

Inverness-based Unibuy is closing after almost 17 years serving the Scottish independent dealer channel. Founder Murdo Mackenzie has decided to retire, prompting a review of suitable partners for its members.

Mackenzie commented: “Following a period of review and due diligence of buying groups, Nemo quickly became the best fit. I was impressed by the variety of procurement options, services and marketing programmes available that will add value to our members.”

Nemo Managing Director Tim Beaumont said the additional dealers enhanced Nemo’s Scottish geographical coverage without impacting its existing membership. With Unibuy, Nemo now has more than 130 dealers from across the UK.

$4.5

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BILLION

14

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BIG INTERVIEW

Sprinkling

FAIRY DUST

Foresight and determination – combined with an impressive dollop of technology – have made Nectere a go-to destination for small independent dealers in the UK. Its premise? Let the dealer do the sales talk while Nectere deals with the nuts and bolts of daily business

E

www.opi.net

stablished in 2010, dealer services provider Nectere was initially somewhat derided as a last-ditch attempt for failing dealers in the UK to survive. Eight years on and the critics have been silenced, acknowledging and appreciating the now readily-accepted model of enabling independents to drastically reduce their cost to serve while focusing on acquiring, retaining and growing their customer base in an increasingly difficult market.

The organisation’s founder and Managing Director Paul Musgrove welcomed OPI CEO Steve Hilleard to Nectere’s brand new ‘work in progress’ facilities in Birmingham. A long-time member of the UK OP fraternity, Musgrove first became aware of the absolute need to change dealers’ business model over a decade ago. Here, he talks openly about Nectere’s – and its dealer partners’ – journey as well as the challenges of the industry as a whole.

18

OPI: Here we are in your new premises – or new premises to be! What’s the backdrop to the move that’s about to take place?

Paul Musgrove: It’s manifold. In terms of sheer infrastructure, we simply reached capacity and needed more space. We have 65 staff in the UK currently (and four in Ireland). Initially, we’ll be putting 100 desks in here, but this building’s capacity is for 200 people, so we won’t ever have to move again.

But it’s not just desk space. Training is really important for us, so we’ll be holding a lot of courses

here. We have a multimedia video conferencing training room where our dealer partners can log in and have some training sessions from the manufacturers, for example. The room we’re sitting in right now is our hands-on training facility where we will hold sessions on any number of topics, but particularly those that help dealers in the newer growth sectors: coffee training, selling uniforms or facilities supplies, you name it.

Lastly, this is a great central place for the whole of the UK, and we wanted to move away from our old industrial warehouse location to somewhere with a much nicer working environment for our staff. Our people are our business and it’s really important to keep them happy, so that they want to continue to work here for a long time. That’s quite a hard task, especially in terms of attracting the millennial generation.

OPI: For those of our readers who don’t know you, can you give me a snapshot of your career background and why we are here now?

PM: Originally, my passion was to become a chef.

But everybody said I’d be good at sales, so I started off working for Mars confectionery which lasted for three and a half years. That gave me a background in fast-moving consumer goods (FMCG).

At the end of my time at Mars, I saw Esselte looking for FMCG people in the UK. I applied and got a job

BIG INTERVIEW Paul Musgrove

there, so that was my entry into this sector. I moved around the industry a bit with Rexel, Helix and a few other companies. But ultimately I felt I wanted to do something else. That was in 1990. My wife Serena had a very good job at the time, which gave me some options in terms of my own regular income.

I already knew this industry well, so I decided to set up my own business – PS Office Supplies. It was an exciting time starting completely from scratch and doing absolutely everything in the beginning. The first big account I had to present to was the Royal Automobile Club – perhaps better known as the RAC – which has its head office in Walsall where we were based. We grew from there and, at our peak, did just over £3 million in sales ($4.3 million). It is a nice business and we’ve won a lot of BOSS awards.

OPI: Before we talk about Nectere in more detail, what happened to PS Office Supplies?

PM: It’s still going strong. I own the company, but have a Managing Director who runs it. PS is also a dealer partner of Nectere.

OPI: Now for Nectere – tell me a bit more about it and the journey you went on. You use the word dealer ‘partner’. Is Nectere effectively a dealer group? That’s how it’s often referred to – a dealer group with a difference.

PM: We’re not a dealer group at all. The difference as I would describe it is that we sit in line with the dealer while a ‘typical’ dealer group sits on top of that line.

Dealer groups make a living in an entirely different way from us and are not part of the transactional supply chain between the manufacturer, wholesaler, dealer, end user, etc.

May 2018

OPI: I remember the awards. What happened next?

PM: Well, it was 2007 and I was sitting on a beach in Morocco and wondering how I could get my company to support my family to retirement. The industry was changing and PS Office Supplies had to as well if it was to survive.

I began from the outset of: “If I had to start in this industry all over again, what would I make it look like?” That’s how the Nectere model came about. It took three years to go from the first basic concept to launching in 2010.

We’re not a dealer group at all. [...] we sit in line with the dealer while a ‘typical’ dealer group sits on top of that line

19

Paul Musgrove BIG INTERVIEW

have to go out there, sprinkle their fairy dust and make themselves heard.

As I mentioned, I have my own office supplies business, so it was easy to envisage what kind of functions I would be happy to relinquish to someone else. Nobody is going to tell me what price I can sell for or what accounts I can open, for instance. It’s my business and some things are only for me to decide.

OPI: I believe you and your wife own Nectere 100%, with nobody else having a stake in it?

PM: That’s correct. We have never sought or received any financial backing.

OPI: It must be annoying then that so many people refer to you as that – OPI included in the past!

PM: I always find it quite amusing and I use the words “lack of understanding of what we do” to those who bunch us in with the dealer groups. It’s like comparing tractor pulling with Formula 1. Yes, they’ve both got engines and four wheels and they compete, but they’re completely different. I’m not saying which of the two we are. But we aren’t a dealer group.

As for our model and the journey you ask about, the basic premise is to create a better future for office products dealers. The only way of doing that is to literally reduce their costs. That can be done in various ways, but for Nectere it’s all a question of scale. If you can make something work better with scale, why would you want to do it individually?

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What perhaps we didn’t anticipate initially was how much of a software house we would become

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To go back to the dealer groups, they are doing a bit of that, of course, with their range of marketing activities. And that’s obviously good in terms of doing it centrally, but there are limitations to how much you can do without being really immersed in the business.

So how can you do things better with scale? What resources can feasibly be shared? No customer is ever going to care about the back-office system of a dealer and who runs it. To me it means you can share it.

There are many things that you can ‘take’ from dealers and very effectively centralise. It then leaves them to, as we call it, “sprinkle fairy dust”. And that’s what they need to do. Nobody would logically buy from an independent dealer – why would you? There are bigger companies out there with probably lower costs and stronger balance sheets. That’s why they

OPI: What are the core services that you provide and how do you charge for them?

PM: It’s a cornucopia of things, all working from the basic idea of “do once, use many”. We do 100% of the buying, for instance – everything else would result in chaos.

In addition to the purchasing, we do the accounts, the invoicing, collect the money, do the banking, etc. We also do a lot of marketing and recently recruited a social media person, so we lead dealers’ e-marketing and their web stores. They price it, but we have a team and robots and software that handle it all in the background.

What perhaps we didn’t anticipate initially was how much of a software house we would become. Nearly 10% of our entire workforce – including my wife – in some capacity work in software development. That’s how we can deliver significant efficiencies of scale.

In terms of our revenue stream, we take a fee from our partners. We also get marketing contributions from manufacturers for featured products – we produce a 650-page catalogue, web stores and all sorts of other things.

OPI: But it’s not a menu-type offering whereby dealers get to choose which part of Nectere they want to sign up to, is it?

PM: No, it isn’t. In our sales presentations we actually say, “You can’t be half pregnant”. Because it’s end to end, our cost to serve is 7.8% for our dealers. That’s not possible standalone – a typical dealer’s cost to serve is 15-17%. If dealers synergise properly with us, then they suddenly have this chunk of margin they can use elsewhere. But they have to be willing to change.

With regards to what we offer, there’s also the delivery and distribution part, of course. Dealers can still use their own vans and I think that’s another fairy dust moment. If you have a driver who’s been going to these customers for the past 20 years, it works and makes a difference. But they can also use one of our 15 hubs around the country.

OPI: What’s a ‘hub’ in your business?

PM: It’s a dealer that has a logistics infrastructure other partners can tap into. There are certain rules for hub partners. Their vans must either be white or include our specific signage. Drivers wear a uniform which again is specific and unbranded. The dealer pays the hub partner for the delivery; Nectere doesn’t take anything as the middleman – the money is simply transferred.

OPI: How do these hub dealers feel about holding inventory and supplying products to a customer that they might feasibly think could be theirs?

PM: Stealing other dealers’ customers is absolutely not an option; it’s simply not allowed and our systems would pick up on anybody trying to open an account with another dealer’s customer. But there’s collaboration. I know of several dealers in this region that get together about once a quarter and say: “Look, we’ve lost this account, you have a go at it”, and they share information. If you can get independent dealers properly working together rather than just pretending, it can be very powerful.

As for the inventory, we own that, and if a partner becomes a hub, any stock in the building we own.

All you do is say: “I can deliver to these postcodes and it will cost £5.50 for each delivery I make.” That’s really cheap because we can negotiate a better price on a direct ship. It helps delivering dealers sweat their assets and gives them an additional income stream.

OPI: How many dealer partners do you have now?

PM: We have 178 dealers in the UK and Ireland, hoping to hit about 190 by mid-year. That means about one in eight dealers in the UK are with us now.

Our combined revenues are £40 million.

We’re now in our fastest-growing phase and in the past financial year our partners opened 2,000 accounts, so they’re adding a lot of new business all the time. It’s a dynamic and fun environment to be in.

OPI: I recall that when you first got up and running, quite a number of people referred to Nectere as “the home for failing dealers”. There was also criticism about the hub concept. And why would a dealer want to hand over so much of their identity to you? How have you managed to overcome all of that criticism?

PM: My sales director always says: “We’re not a lifeboat, we’re a cruise ship.” A cruise ship has to have some lifeboats on it, so yes, there are dealers that come to us in troubled situations. When we

started, naturally our venture presented some risks and maybe those dealers that were struggling the most financially were willing to take that risk. We were kind of their last port of call.

Those days are gone though. We have also evolved ourselves, of course, in terms of what we ask of dealers and allow them to do if they come on board. Some things that we demanded initially have since fallen by the wayside. Branding, for example, is now advisory not mandatory, while other services have been added.

OPI: What’s your ‘ideal’ target dealer partner?

PM: In terms of revenues, it’s between zero and £1.5 million which actually means the vast majority of dealers in the UK. But we really hit the sweet spot with a company that is very much sales-driven. If it’s more admin-driven, the dealer can feel lost quickly because we take so many of the roles away.

We offer real opportunities for dealers that are aiming higher too. Lots of dealers have good sales people and they’re not in financial difficulty. But they have credit restrictions. If they are a £100,000 dealer and suddenly get a £20,000 order, no supplier would give them product worth £20,000.

They also have no chances with any big tender projects, as they haven’t got the right balance sheet.

These types of dealers are great for us because we can get the credit, they can use our balance sheet, and they get the opportunity to tender for business.

We have a couple of very big tenders going through at the moment.

BIG INTERVIEW Paul Musgrove

My company PS here in Birmingham delivers for about 26 dealers across the country. One of our Belfast dealers has two customers in Birmingham, for example, so we can give a personal delivery service in Birmingham for a dealer from Belfast. It just works.

OPI: Are there any pitfalls in terms of dealers expecting too much?

PM: I do believe there’s a perception out there that having a web store will suddenly change a dealer’s life and fortunes. It won’t. Euroffice has spent tens of millions of pounds over the years on Google and is not exactly a business that’s growing significantly.

And these really are guys who know what to do in the UK in terms of online shops.

It’s similar in the US if you look at the likes of Shoplet – they’re going backwards. A web store isn’t the solution, it’s a tool. You need the skills that all these people clearly have to make it a fantastic tool, but in my opinion the secret still lies in the people who want to go and sprinkle the fairy dust. That’s what gives independents their edge.

May 2018 21

Paul Musgrove BIG INTERVIEW

One of the issues these online-only players have is retention. You can throw all this money at Google, but retention is the hardest thing in the fickle online world.

OPI: What do you do in terms of the online presence of your partners?

PM: We used an SEO agency called Cap. We went to them and said: “This is our marketplace. How do you win with all these independent dealers and how do you make an impact online?” The company did its analysis, came back to us and said: “You don’t make an impact, that’s the basic answer.”

Obviously, the feedback was a lot more expansive, but essentially we were told that there is no way of making a small dealer powerful on the internet. But there is this strategy you could adopt: drive your SEO about being local and through corporate web stores – not e-commerce stores because Google matches the data together, believes you’re just a copy store and downgrades you. That’s the strategy we’ve adopted and it’s working very well. It’s the same old thing again – the fairy dust. Have the tools in the bag, but don’t present just the tools – do the sprinkling instead.

OPI: Let’s talk some more about technology because it’s such a big part of the processes and saving opportunities that you offer, as you already alluded to. How do you deploy technology at Nectere and how do your dealers benefit from it?

PM: Some say it’s all about consolidation of technology, but that’s just words. You’ve got to consolidate all the processes and that’s very costly.

My wife is a systems analyst. Rather than starting with a blank sheet of paper and writing the software yourself – which is never-ending and the cost also never goes away – Serena’s strategy was the opposite: take the best-in-class systems and bolt them together. Systems houses have to keep updating software to keep it alive with current trends.

They have to keep adding new features. And the cost to us is significantly lower.

To me, there was also the logic that we can’t claim to be a low-cost operator, urging our partners to take cost out of their businesses, and then spend £5 million on software to make it work. We’ve been working with artificial intelligence robotic software now for four and a half years. Sometimes it would be technically possible to use more conventional IT development, but we’re trying to be as low cost as we possibly can.

OPI: These robots are intelligent software programs that sit on your computer I presume. You call them minions, don’t you?

PM: Yes, all our robots have names like Bob and Stuart, which are names from the Minion films.

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OPI: Are there legal ramifications for doing that?

PM: Ultimately, they are just names. But we do own a lot of genuine Minion toys.

22

OPI: What processes do these robots go through?

PM: One of Kevin’s tasks is doing the banking. It – or ‘he’ even, whatever you prefer – does the work of three full-time people and that’s just for banking, so that’s payments coming in, posting to ledger, matching up, etc – Kevin does it all, by 8am in the morning.

OPI: There must be some human intervention because it’s not an exact science.

PM: What happens is we get a reject saying “I can’t do this job”. The robot doesn’t know why it can’t do it because we haven’t taught it that yet, but once we do, the next time we won’t get a reject, so you’re constantly refining them. Kevin sends an email to our head of credit control each day to say “I’ve done that, it’s finished”, so when she gets in at 8.30 am, there’s an email waiting for her saying “I’ve done the job”.

We desperately need the manufacturers, distributors – everybody in fact – to think differently about what they do and how they do it If it hasn’t done the job, it says, “I’ve not completed all the tasks and here’re the three tasks that I haven’t completed”, and we can then check to see if it’s a one-off or a ‘what if’ scenario. If it’s the latter we teach him that. Or maybe it’s a data entry on a new account where somebody has given the wrong codes or the wrong bank account, and it can’t match the business with the cheque. We can fix that too. There are lots of things we can do with our minions to save time and therefore money.

OPI: I’m not going to dwell on this much more, but what does Bob do?

PM: Bob sits in our admin department and does all the back orders. It checks every single day the goods that have arrived in. If they haven’t arrived in on the

OPI: Let’s wrap up the last couple of areas. You flirted with entering the US market a few years back. Why didn’t that happen and are there circumstances that could reignite that interest?

PM: We just got the wrong partner. They didn’t see any value in our experience, thought they could do it themselves, lost an awful lot of money trying to copy us and went bust in the end. It would be interesting to do what we do in the US, definitely. We just have to find the right partner to do it with.

BIG INTERVIEW Paul Musgrove

By the time we move into these premises we will have as many as 50 different robots because the whole customer service team is going to have one on their computers and each department will have one as well.

OPI: What would be the qualities you are looking for in that partner?

PM: The ideal partner would be a ‘donor’ dealer. This should be a good-sized dealer, say $10 million in revenues, that already has most of the infrastructure ready that we would want and need. You then overlay the systems and processes on top and move staff out from the dealer into the company that will then be created.

It’s also important to work with a large wholesaler in the country – at present it looks as if there may only be one broadline wholesaler left fairly soon.

due date, Bob will send an email to the supplier to say: “You promised us x on this date and it hasn’t arrived. Can you please give me a date?” When an email comes back, Bob can read it, take the date out and post it onto the system, so the new date is on there. I could go on forever about what our minions can do – it’s very clever.

For more exclusive content from the interview, including the topics of Amazon, and the current state of dealers, dealer groups and wholesalers in the UK market, visit the May issue in the Magazine section on opi.net.

May 2018

OPI: Do you have any more robots planned?

PM: We use a US software house for the robots.

Obviously, it’s a shell and you do all the writing yourself and there’s an intellectual value in it. But the company has changed its pricing structure, so the ‘programming’ robots are now quite expensive.

The ‘doing’ robots are very cheap, but you need a programming robot to teach them. When we move into these new premises, every customer service person will have a ‘doing’ robot on their computer.

When a customer rings in, for example, we have a screen part that tells us good morning, whatever the name of the dealer partner is and as they answer, it also pops up who the customer is and where it’s based. The robot will read the address, postcode, tell the operator the weather in that location, etc, so he/she can engage with the customer. We can also set up other boxes with personal information, while on the other side of the screen the customer’s account opens up for an order to be put in. Any system could use traditional IT development to achieve this, but it’s costly and slow.

None of this might appear to set the world alight, but it makes such a difference, because it’s so efficient while at the same time being really personal.

OPI: Do you foresee any limitations given the significant geography of the US market versus that of the UK? PM: No, not really. When we were just hours away from signing contracts last time, we had already spent a fortune on lawyers and all sorts of things. There were a couple of issues – sales tax being the single biggest one of them because it works very differently in the UK. But we’ve already dealt with that and other nuances and know what to do.

There might be slightly different products, codes and descriptions as well, but it’s still a SKU. As long as the overall premise is the same – let’s take cost out, let’s consolidate – it doesn’t matter a great deal where you are. I’m talking to two countries in continental Europe at the moment – dealers in those countries have the same challenges and strains that we do here.

Somebody far cleverer than me – Seth Godin I believe – said: “Change almost never fails because it’s too early. It almost always fails because it’s too late.” My fear for our industry is that it will change too late. We – by that I mean Nectere – were too early. When I had the original idea, it was ahead of the technology available at the time and ahead of people’s perceptions. We’re doing ok now, but I’m worried that some of the industry will be too late.

We desperately need the manufacturers, distributors – everybody in fact – to think differently about what they do and how they do it. We need to let technology deal with so much more than it currently does.

Here’s another pearl of wisdom: If you wait for perfect conditions, you’ll never get anything done.

So true – Nectere lives by that mantra. We’ll keep launching, moving and improving. Things are never perfect, so why worry about it?

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HOT TOPIC

Special Issue BREAKROOM

SPECIAL

P Plastic waste and its disposal has been hitting the headlines constantly over the past few months. Much of the attention has focused on typical breakroom items such as coffee cups, food packaging and disposables that include plastic bottles and cutlery. Michelle Sturman takes a look at the plastic planet…

www.opi.net

I

24

nterest in the scourge of single-use plastic has recently been ignited by two major factors: Sir David Attenborough and the BBC’s Blue Planet II series and China’s announcement that from January 2018, it would stop importing 24 grades of solid waste, including mixed paper and plastics.

The huge worldwide popularity of Blue Planet, and in particular its final episode featuring the devastating effect of plastic on marine life, has set in motion a major call to action. The general public has been galvanised by disturbing information such as: plastic is making its way back into the human food chain; 6.3 billion tonnes of plastic waste litter the planet; plastic will outweigh fish in the sea by 2050; and around 50% of plastic is used once, then thrown away.

Add to this China’s imports ban and suddenly governments and businesses have also been announcing initiatives and schemes to deal with plastic pollution. The block has caused European countries and the US, for example, to rethink the disposal of plastic waste. Admittedly, the EU has been working on a plan for a circular economy since 2015.

A 2017 initiative, meanwhile, focuses specifically on plastics, with a goal of ensuring all plastic packaging is either reusable or recyclable by 2030, along with a

legally-binding target to recycle 55%. According to the European Commission, plastic packaging today accounts for around 60% of post-consumer plastic waste. On an annual basis, Europeans generate 25 million tonnes of plastic waste, less than 30% of which is collected for recycling.

SMALL STEPS The introduction of the single-use plastic carrier bag charge in 2015 in the UK has been hailed a success, reducing their use by around 80%, the equivalent of about nine billion bags a year. In March 2018, the UK government announced a '25 Year Environment Plan' which includes schemes to tackle plastic waste, especially its impact on ocean life.

Following the success in almost 40 other countries, the UK also recently announced plans for a deposit return scheme to increase the recycling of drinks bottles, including plastic ones.

550 million

Number of plastic straws thrown away every day in the UK and US Source: Ecocycle.org

THROWAWAY SOCIETY Globally, the most attention is being paid to single-use plastic, including drinks bottles and coffee cups, along with plastic cutlery, food packaging, plastic bags, coffee pods, etc. As such, this throwaway culture is hugely relevant to companies' breakrooms.

In 2016, France took the lead by declaring plastic cups, cutlery and plates must be made from biologically-sourced material and compostable by 2020. Few have followed in the country's footsteps – until now. Even the most reticent businesses have realised that public perception over this issue matters and legislation is looming large.

Plastic waste is one of the biggest sustainability issues the world is facing today

PLASTIC FANTASTIC In addition to reducing plastic waste in the breakroom through the more conventional methods, Netherlands-based Plastic Whale is cleaning up the plastic soup in Amsterdam’s canals. The social enterprise has built ten designer sloops made from recycled waste, which are now used for plastic fishing.

The waste is used to produce high-end office furniture, with the debut collection consisting of a boardroom table, chairs, lamps and acoustic wall panels – perfect to help furnish a breakroom.

Dutch furniture manufacturer Vepa is responsible for the technical development and production of the range. “For the manufacturing of the furniture, we use PET (polyethylene terephthalate) bottles that have been fished out of the canals. We use steel waste from our own factory for the cast-iron bases of the chairs,” says Vepa Managing Director Janwillem de Kam. The company also provides a deposit return scheme to ensure no new waste is created. “At the end of a product’s life cycle, we will collect it from the consumer, who will receive a refund of the product’s surcharge. We will then disassemble the furniture so that individual parts can be reused or recycled,” he explains.

Plastic Whale Circular Furniture can be ordered via dealers with international shipping possible on request. “The furniture is ideal for every company that wants to realise its sustainability goals,” adds Plastic Whale founder Marius Smit.

For more information, visit www.plasticwhale.com.

May 2018

Soft drinks giant Coca-Cola, which produces over 100 billion single-use plastic bottles every year, has even bowed down to pressure and stated at the beginning of 2018 that it will implement changes. The company’s plan ‘World Without Waste’ will encompass the entire packaging life cycle – from how bottles are designed and made, to how they are recycled and repurposed. It also set a goal to collect and recycle the equivalent of every bottle or aluminium can it sells globally by 2030.

In the UK, London’s Selfridges department store has stopped sales of single-use plastic bottles for fizzy drinks. Supermarket Waitrose will halt sales of plastic straws from September 2018 and now uses compostable straws in its cafés. Other initiatives from the retailer include stopping the use of black plastic packaging from its own label range from the end of 2019, and committing to making its own label packaging widely recyclable, re-usable or compostable by 2025. Additionally, the company has pledged to remove all its takeaway disposable coffee cups from its shops by autumn 2018, thereby saving more than 52 million cups per annum.

Global manufacturers well known for their breakroom products, such as Nestlé and Unilever have also made public their stance on plastic reduction. Nestlé said its ambition is to make 100% of its packaging recyclable

HOT TOPIC Plastic Waste

All of the government's initiatives to reduce plastic waste are beginning to filter down into the business environment and the workplace. As this feature was being written, a flurry of announcements designed to tackle single-use plastic pollution were released from different sectors, including a ban on plastic straws and bottles by Buckingham Palace. The city of Malibu in California followed suit by compelling businesses to provide alternatives to plastic cutlery and straws. Many US cities have already banned the use of styrofoam, with the prohibition of plastic straws and utensils expected to follow soon.

25

Plastic Waste HOT TOPIC

or re-usable by 2025 so that none of its packaging, including plastics, ends up in landfill. Nestlé CEO Mark Schneider comments: “Plastic waste is one of the biggest sustainability issues the world is facing today. Tackling it requires a collective approach.

We are committed to finding improved solutions to reduce, re-use and recycle.”

Meanwhile, Unilever has publicised its partnership with start-up Ioniqa and the largest global producer of PET (polyethylene terephthalate), Indorama Ventures.

The venture aims to pioneer new technology that converts PET waste back into virgin-grade material for use in food packaging – including coloured packaging. Currently, only about 20% of PET packaging ends up being recycled. Unilever Chief R&D Officer David Blanchard says: “This innovation is particularly exciting because it could unlock one of the major barriers today – making all forms of recycled PET suitable for food packaging. Making the PET stream fully circular would be a real milestone towards this ambition, not just helping Unilever, but transforming the industry at large.”

BREAKING AWAY FROM PLASTIC There is definitely a groundswell movement now within the office environment to reduce single-use plastic.

And one of the easiest ways to get started is to move away from plastic water bottles. As Staples Business Advantage (SBA) Director of Sustainability Jake Swenson explains, many businesses are achieving this through the deployment of water services, with a growing number of organisations, particularly schools, installing bottle-filling stations for a more sustainable option. However, he points out that there is still an appetite for non-sustainable breakroom products.

“Plastic water bottles are inexpensive, disposable and convenient, and many businesses still like to have bottled water available for guests and visitors.”

Major companies are already publicly stating their intentions to drastically reduce plastic within the workplace. Professional services company KMPG, for example, said it planned to stop using plastic water

A big part of the problem is throwaway food and drink containers, so targeting disposable items in the breakroom is a good starting point

1 million

Number of plastic bottles bought every minute (globally)

www.opi.net

Source: The Guardian

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cups across all its UK offices by September, saving three million cups a year.

By this August, the company said it will also phase out the use of plastic cups for its hot drink vending machines – saving another three million cups per year – instead looking to replace them with either paper or compostable cups.

KPMG Environment Manager Sarah Lindsay comments: “We have already withdrawn the use of plastic straws from our offices and saved over a quarter of a million items of plastic cutlery this year by removing them from some of our smaller offices. We will be doing the same across the entire firm by the end of the year.”

The reduction of plastic waste in the office is certainly a big step forward, says Andrew McKenzie, Head of CSR at UK dealer Commercial Group: “A big part of the problem is throwaway food and drink containers, so targeting disposable items in the breakroom is a good starting point for organisations that want to eradicate single-use plastic.” If a recent OPI poll is anything to go by, the transition has already started – a mere 6% of respondents said disposables was their biggest growth category for breakroom (for the full poll results, see 'Give us a break', page 28).

Many of its customers are making great strides, according to McKenzie. When broadcaster Sky launched its Ocean Rescue campaign in 2017, it put its money where its mouth is and set about reducing single-use plastic throughout its business, including the canteen. “We also worked closely with law firm DAC Beachcroft, for example, helping them engage employees and introduce eco-friendly coffee cups.

This single act cut its use of disposable cups by 40,000 per year,” adds McKenzie.

While the aforementioned companies are busy – and successful – in scaling back on their use of plastic, it’s actually easier said than done. One of the growing concerns is how to replace plastic food

1 trillion Plastic bags thrown away every year (globally) Source: EPA.gov blog

packaging, especially disposable coffee cups (see 'The Coffee Conundrum', right). There are many manufacturers working on solutions such as edible cutlery and packaging – everything from Ooho water pouches made from brown algae, Evoware seaweed food packaging and Loliware or Herald Plastic’s edible straws to Bakeys edible spoons and Lollipop USA's bioplastic foodservice range.

“Alternatives to single-use plastic for the breakroom range from reusable items to biodegradable products such as Vegware’s compostable catering disposables.

I anticipate that we’ll see a steady increase in the demand for and availability of such products over the next 12-18 months as consumer expectation filters through to the workplace,” says McKenzie.

With major retailers and business taking the initiative along with big media campaigns and coverage, the plastic-free wave is gathering pace.

However, there is still much to be done to ensure the breakroom doesn’t continue to contribute to the planet’s plastic soup.

As Staples Business Advantage's Swenson points out, unless compostable products are cost-effective and have the same perceived quality as conventional items, companies might not make the switch.

“For cutlery, plates and cups in the breakroom, commercial composting is needed to responsibly recycle these items, but there is fairly limited availability of that for most businesses,” he says.

The unfortunate truth for those that get their joie de vivre from a cup of the black stuff is that they are potentially contributing greatly to the world's plastic pollution problem.

Billions of single-use coffee cups – 2.5 billion in fact – are discarded every year, with only a minute percentage ever recovered and recycled.

The problem lies in the almost invisible thin polyethylene (PE) layer that is bonded to the inside of the paper/styrofoam cup to keep it waterproof. It is incredibly difficult to separate the plastic from the paper.

As a result, as few as one in every 400 cups thrown away in the UK are recycled.

HOT TOPIC Plastic Waste

THE COFFEE CONUNDRUM

RECYCLING DEMANDS The easiest solution for everyone – governments, businesses and coffee drinkers – would be to use a non-disposable vessel. Failing this, there are some great ideas coming to the fore to deal with the issue, but it’s not as easy as you may think. In the UK, for instance, there are only three recycling centres that have the capability to deal with plastic-coated cups.

One of these is papermaker James Cropper with its CupCycling facility, which turns single-use coffee cups into plastic-free packaging on a commercial scale. The plant is said to have the world’s first process dedicated to upcycling disposable coffee cups that involves removing the tricky plastic coating which makes takeaway cups waterproof, all the while preserving the paper fibres. It may only be the proverbial drop in the ocean, but to date more than 20 million coffee cups have been upcycled and the facility has the capacity to process 500 million each year. McDonald’s, Costa Coffee and Selfridges have all signed up to CupCycling, but the plant is still only using a small fraction of its capacity.

Paper and packaging firm DS Smith is running lab and pilot plant-scale recycling tests that have evolved into research on an industrial scale. This will provide the whole supply cycle with data on the recyclability of paper cups in mainstream packaging mills. The company believes it could recycle the whole 2.5 billion cups annually, but needs the overall recycling infrastructure to be far better.

Of course, proper recycling options of the cups in the first place would help enormously. Recent YouGov research found that over half (52%) of regular takeaway hot drink consumers dispose of their paper cups in the office, while 88% of the UK public say they would use a purpose-built bin to ensure recycling; 24% would go out of their way to use one, while 47% would hold onto their cup if they knew they would pass a purpose-built bin.

At the beginning of the year, the Alliance for Beverage Cartons and the Environment (ACE UK) announced that all of its banks will accept PE-lined paper cups for recycling, with 14 major brands including Bunzl, Stora Enso, Nestlé, International Paper, Starbucks and McDonald’s UK signing up.

May 2018

WASTE NOT, WANT NOT Perhaps if we started at the beginning, ie with the cups themselves, the rest of the system would fall into place. British company Frugalpac has developed a cup that can be recycled with other paper material in regular recycling centres – the plastic liner in a Frugal Cup is lightly glued in place so it separates easily when the cup is repulped.

In the US, Smart Planet Technologies offers EarthCoating in a variety of packaging applications. It is a highly mineralised resin alternative to 100% plastic coatings for paper-based packaging. Using EarthCoating, Smart Planet’s reCUP is a paper cup engineered to be processable through existing standard paper recycling streams. It looks the same, works the same and is manufactured using the same equipment at full line speeds as traditional paper cups. Fibres from this cup can be recycled up to seven times.

The reCUP is now available throughout the US and the EU. Smart Planet Technologies President Will Lorenzi comments: “The first step to paper cups being broadly recycled is to give the recyclers a paper cup designed to be recycled. With a simple change of the lining to EarthCoating, paper cups become a material that is easily processed by recyclers.”

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CATEGORY UPDATE

Special Issue BREAKROOM

SPECIAL

As office breakrooms evolve from underused backwaters into comfortable, collaborative work areas, there are increased sales opportunities for OP resellers – by David Holes

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www.opi.net

he office breakroom is undergoing fundamental change. No longer seen as just a place to grab some foul-tasting coffee or warm up a ready meal in the microwave, progressive companies are beginning to view it as a business space with its own intrinsic value.

Riley Doherty, Area VP of Category Solutions at Staples Business Advantage in the US, explains: “There’s untapped potential in the breakroom and this can be exploited if you rethink its purpose.

Companies that do this and realise it as an asset will reap the benefits. If employees come to see the breakroom as an inviting and collaborative space, they are much more likely to hold meetings there and make a coffee on-site rather than leaving the office for a Starbucks run.

“Going beyond the consumables a breakroom is filled with and considering the overall design of the space can attract employees and keep them coming back. Additionally, when businesses show they care about their staff by investing in their breakroom area, productivity can actually go up.”

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FINANCIAL SENSE This renewed focus on the breakroom area is proving to be good business for those OP suppliers that are active in this category. “The breakroom category represents approximately 40% of our facilities supplies sales and it’s expected to continue to grow at around 5% per annum,” says Stuart Pearson, Director of the Facilities Supplies Division at the UK’s SPOT Group.

European wholesaler ADVEO, meanwhile, is seeing double-digit growth in this category, and despite it not being part of its traditional core offering, it now views breakroom as highly important. “It’s what we call a ‘Star Category’”, says European Purchasing Director Sofía Grypari. “Healthy margins and expanding customer demand are strong indicators that this is a field which needs to be explored further.

As such, we are planning to accelerate growth here over the next few years.”

The consensus is that this is not yet a mature market either. Consequently, there are many opportunities for new entrants to innovate and differentiate themselves from the competition.

There’s untapped potential in the breakroom and this can be exploited if you rethink its purpose “The key is understanding the end customer better and adapting your offering to their needs,” adds Grypari. “In my experience every service element – product selection, purchasing process, delivery flexibility, after sales support, etc – is vitally important. The reseller that makes it easy, quick, safe and convenient for the breakroom customer will win

HEALTHY EATING TRENDS The health and wellness zeitgeist that is increasingly prevalent within the corporate environment is making its presence felt in this category too. In tandem with government initiatives to get us all eating more healthily, the combined effect is having a significant impact on the type of products being supplied in the breakroom sector.

“April 2018 marked the introduction of the Soft Drinks Industry Levy – commonly referred to as the Sugar Tax – in the UK,” says Pearson. “This will mean increased prices on products like Coca-Cola and Pepsi. In the past we have seen price rises such as these influence buying behaviour and we believe they will encourage more people to adopt the ‘diet’ versions of these products.

“It’s also noticeable that more employers are offering free fruit to their employees. This relatively cheap initiative that promotes healthy eating is generally regarded as a very popular staff benefit.”

The key is understanding the end customer better and adapting your offering to their needs It’s increasingly recognised that the more businesses listen to and act upon their employees’ wants and needs, the higher the likelihood of keeping employees on site, happy and productive. And, as Doherty remarks, end-users’ tastes are continuously becoming more sophisticated as they seek a balance between convenience and quality.

“As more single-serve coffee options like Keurig, Flavia and bean-to-cup become available, customers are moving away from batch-brew systems and are now willing to pay more for a better experience. Other

THE PERFECT BREAKROOM Many companies are now creating breakrooms that try to reflect their corporate culture. While their overall layout and furnishings vary, there are some key design aspects that are proving to be universally popular and beneficial.

TOP TEN TIPS

11.

If you want to improve productivity and workflow, your breakroom should be efficient and stock everything employees need.

Seeking feedback from staff on the products they would like to be available makes perfect sense.

22.

Furnishings are vital. Comfortable chairs, effective lighting and large tables encourage interaction, collaboration and chat. The right design can mean the breakroom area often becomes an ad hoc meeting space.

With the right forethought, it can also double as a venue for team or company social events – the celebration of departmental achievements or birthdays, for example.

33.

Differentiation is important. Don’t be tempted to make your breakroom an extension of the rest of your office. Make it stand out with the creative use of colour, layout or design that contrasts from the workspace. This sense of separation is important because it will allow staff to fully disconnect from their office environment, giving them a chance to relax and embrace the change of scenery.

44.

Game-themed breakrooms are perfect for company cultures with a ‘work hard, play hard’ philosophy – pool, table football and table tennis are all popular, but less energetic board or card games are equally good at fostering a team ethos.

55.

There’s no reason why creativity can’t be part of the experience. The provision of whiteboards or rewriteable wall paint can facilitate the flow of ideas during breaks or meetings while staff-orientated notice boards can be used to spread news or advertise social events.

66.

Include quiet areas. Not everyone wants to go crazy on their break, some just want to catch their breath. If you’ve got the space, delineating the area to include such zones can cater for different people’s needs. Some companies are taking this approach even further and providing ‘nap rooms’ for employees.

77.

The most effective breakrooms have features that have been requested by employees themselves. A comment box that allows them to submit suggestions is a great idea. It gives staff a sense of ownership and, if they are implemented, shows the employer cares about their opinions.

88.

If you make a breakroom a place where people feel they want to spend time, then staff are more likely to congregate there, even when the working day is over. They become more like home environments which presents significant opportunities for the inclusion of different types of products and furniture, including brown and white goods.

99.

Prepare an emergency kit. While you should obviously have a first aid kit on hand for cuts and scratches, also consider a kit for cleaning up food spillages – a mop, bucket, gloves and absorbent towels are a minimum requirement in this area.

CATEGORY UPDATE Breakroom

out over competitors, even if they offer cheaper prices.

Stock the right mix of products, offer free samples when you introduce unfamiliar, new items and this will help build trust and customer loyalty.”

10. Above all, remembering the ‘break’ part of breakroom is imperative. In 10

May 2018

the drive for increased productivity and improved output don’t forget that employees need and benefit from ‘down time’. Company policies that actively encourage people to take time out of their busy schedules can reap rewards. A recent Staples survey revealed that 86% of employees believe breaks make them more productive, 59% indicated that regular breaks increase work satisfaction, 43% said breaks improve personal happiness.

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Breakroom CATEGORY UPDATE food and beverage choices are evolving too, with companies considering healthier options to stock their breakrooms – items such as seltzer waters and Kind bars are on the rise, for example.”

Globalisation and an exposure to a broader variety of cultures is certainly a driving force behind changing tastes, according to Grypari: “The

Environmental concerns in this sector are highlighting everything from efficiency in transport and distribution, through to the packaging materials used and the durability of the products

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increasing availability of goods from other regions or countries is affecting tastes in a rapidly-expanding, inclusive way. Among western countries the 20-50 year-old population is now far more likely to travel or study abroad than any previous generation and this brings them into contact with new tastes and products, which ultimately they’d like to experience when they return home.

“Additionally, as consumers place more value on the nutrients they get from their snacks and beverages, there’s a big opportunity for ‘health-fostering’ products that are nutritionally sound or offer other benefits – such as being gluten free, organic or low in sugar.”

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CLEAN AND GREEN A recent opi.net poll found that the biggest growth sub-category in the breakroom sector was in cleaning products. It topped the list with 44% of the vote.

This highlights the important point that the coolest breakroom in town could be ruined by a microwave that’s never cleaned or a pile-up of dirty dishes.

And there’s clearly a sickness risk too. Worldwide cleaning association ISSA established that breakroom sink taps, microwave and refrigerator door handles, water fountain and vending machine buttons were the worst areas for microbial contamination.

Laying some cleanliness ground rules and sorting out a staff rota are good starting points. But the provision of appropriate cleaning products is another essential part of creating a successful breakroom.

It also shows that even if resellers aren’t part of the food, beverage or furniture industries, they can still participate in this sector if they stock cleaning and hygiene products.

Finally, sustainability is a major influence on the breakroom category today. The recent focus on the difficulty of recycling coffee cups in the UK is a case in point (see also ‘Plastic Soup’, page 24). But with a millennial workforce more focused on environmental issues than ever before, green thinking needs to be applied to every aspect of the breakroom set-up – from the products sold and the disposables consumed, right through to the stewardship of the wood that the furniture is made from.

Breakroom CATEGORY UPDATE

The provision of a number of well-placed recycling bins is also key to make it easy for employees to separate recyclable plastic bottles, aluminium cans or other products.

Pascal Bönsch, Cleaning & Hygiene Manager at Office Depot Europe, predicts that demand for breakroom products which fit within the green office concept could grow considerably over the coming years. “Stringent legislation such as the EU Ecolabel is partly responsible for this,” he says.

“We now track the whole supply chain from raw materials through to the product delivered to end users, and are also seeing increased interest in the cradle-to-cradle concept within the sector. This approach seeks a zero waste outcome by either reusing or repurposing a product after it has served its first intended function.”

Grypari adds: “Environmental concerns in this sector are highlighting everything from efficiency in transport and distribution, through to the packaging materials used and the durability of the products.

Cardboard has been a viable alternative to plastic disposables for a long time, but we’re now seeing bamboo and other sustainable wood products taking over. In addition, biodegradable plastic will gain share and eventually come to be the standard for breakroom items such as serving trays and storage solutions.”

Overall, the breakroom sector continues to grow and indeed the pace seems to be accelerating. This diverse category includes a variety of very different types of products, with many different entry points for all channel participants. If they aren’t already on board, it’s most certainly a category that needs to be given due consideration.

A PERFECT BREW Rombouts – founded in Belgium in 1896 – has been a leading supplier of high-quality coffee and ancillary equipment in the UK for over 50 years. OPI spoke to Sales Director Simon Remmer about the breakroom segment and how current tastes are changing.

OPI: How is the B2B breakroom category performing for you?

Simon Remmer: At the moment we’re working with over 100 different wholesale and foodservice suppliers, but our presence in the office sector is not as large as we’d like. We view it as a great opportunity with plenty of growth potential.

We know from our current customers that they want a one-stop-shop for all their hot beverage products, meaning they can easily maximise the end user’s demand for variety. This is the USP we always highlight to prospective new clients.

www.opi.net

OPI: Are end users’ tastes still evolving?

SR: Definitely. The days of having one tin of instant coffee in the office kitchen are long gone. Consumers enjoy the choice and quality that high street coffee chains offer and expect the same in the workplace.

As such, we’ve seen a rise in bean-to-cup and pod-based machines in offices where they are the

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Simon Remmer

perfect solution for a consistent, quality coffee offering without the need for trained staff and lots of space.

Looking at the hot beverage sector as a whole, what we’re seeing is a demand for a range of premium drinks, be it tea or coffee, throughout the day.

Many people start with coffee in the morning and then switch to traditional and herbal teas in the afternoon.

OPI: How are health and wellness issues affecting the sector?

SR: Healthier options or drinks with perceived health benefits are a great option for office breakout areas: sugar-free syrups, non-dairy alternatives like soya and coconut milk, plus fruit and herbal teas all offer a choice for those wishing to pursue a healthier lifestyle.

Coffee and herbal teas are regularly heralded in the media as being beneficial and have become a championed alternative to sugary and fizzy soft drinks that are currently seen as public enemy number one. Obviously hot beverages cannot replace soft drinks directly as they are a different offering. However, with the likes of cold-brew coffee, matcha (powdered green tea) and herbal teas which can be enjoyed cold, these products can come close to being a replacement for people who want something with more flavour and taste than mineral water.

OPI: What other factors are pushing demand for particular products in this category?

SR: Consumers are looking for organic products as standard when it comes to choosing coffee. Fairtrade items are also in demand so long as there’s no compromise in flavour or quality.

It’s an intrinsic part of our business philosophy that we ensure our coffees meet the needs of both consumers and producers. As such, each year we increase our commitment to Fairtrade and organic products, and work directly with coffee farms to ensure our products are not only of higher quality, but also more sustainable.

SUPPLIES Special Issue SPOTLIGHT

FACILITIES SUPPLIES Special Issue

BREAKROOM

SPECIAL

T

KEEPING OPI speaks to Lee Mokri of Byte Foods about its innovative approach to improving the breakroom facilities in some of California’s best-known companies

Special Issue he concept of Byte Foods is simple:

BREAKROOM

it makes, installs and maintains state-of-the-art refrigerators at places of work and restocks them daily with fresh meals and snacks. Users simply swipe their credit cards, pick out the food they want and the machine’s built-in system does the rest. No more fridge theft by pesky colleagues or out-of-date food left to rot over the weekend.

Byte has already deployed around 500 on-site fridges across the San Francisco Bay and Sacramento (CA) area with big names such as Amazon, Cisco Systems, Stanford Hospital and Tesla listed among its clients.

With plans to expand the service to the rest of the US – and maybe beyond – OPI’s Joshua Allsopp caught up with Byte founder and Head of Sales & Marketing Lee Mokri to learn more about the next generation of office catering solutions.

SPECIAL

www.opi.net

OPI: Please describe Byte Foods in a nutshell.

Lee Mokri: Essentially, we offer effortless access to fresh food away from home. We started in late 2015 by licensing the technology for the smart fridges we make from a company called Pantry and quickly grew to become its largest customer, which led us to acquire the software in mid-2016.

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it fresh

Now we’ve grown to about 55 members of staff and work with some well-known firms in the San Francisco Bay area. As well as the big names, we also partner with smaller companies and non-profits. Using Byte’s technology, we’re able to work with any size business.

Hospitals, universities, gyms, apartment complexes – you name it, we can put a fridge there.

OPI: Could you elaborate a bit more on the technology and what it does exactly?

LM: From a user experience perspective it’s very simple. You walk up to the fridge, the door is locked and there’s a screen on the front that acts like a menu where customers can filter based on preferences, allergies and favourite snacks.

They simply swipe their credit card to open the door and at that point they treat it like a normal retail experience whereby they can browse, pick things up and read the labels, then put them back on the shelf.

It’s not weight sensitive, so it doesn’t matter if you move stuff around.

When you close the door, it locks again. The first time you use the machine it will ask for your email address and if you want a receipt. When you next use the fridge, it will just automate the process for you and send an itemised sale ticket to your inbox. You don’t need to check out or add things to a cart. It’s as

SPOTLIGHT Byte Foods

simple as opening the door, grabbing whatever you want and walking away. Similar to Amazon Go, but scaled down to fit in an office.

OPI: What’s the uptake been like in the relatively short time since you began operations?

LM: We started about two years ago with just one fridge and now we have more than 500 locations. We tripled our revenues in the past 12 months and last year added close to 50 new sites per month.

OPI: Broadly speaking, what is your current business model?

LM: There are two arms to the business. The main one is the service section which is available in the San Francisco Bay and Sacramento area. This is where we place a fridge in a certain location, typically an office, and then we stock it with food each day. It’s fresh, perishable stuff such as salads, sandwiches, wraps, breakfast burritos, bagels and cold-brewed coffee. We’re also launching meal kits for people to grab on their way home.

The second part of the business involves us licensing the technology to large food service providers, restaurant chains and vending operators throughout the US. We’re even beginning to license to entrepreneurs who want to add a second unmanned retail location somewhere they can guarantee an active customer base. In this respect we’ve got many more partners leveraging the technology, from Hawaii to New York.

We feel like we’ve cracked the code when it comes to offering fresh food in the office.

We feel like we’ve cracked the code when it comes to offering fresh food in the office OPI: Do you prepare the food yourself?

LM: No. Right now we don’t cook any of it ourselves, instead we work with high-quality suppliers in the area. We source the produce directly and then deliver it in the middle of the night to fill our fridges, so they are ready to go first thing in the morning. It’s the last-mile flexibility that really sets us apart from other on-demand businesses.

OPI: Do you restock the fridges yourself or use third-party distributors?

LM: To begin with, we had our own fleet of drivers but we’re in the process of moving towards third parties that specialise in this type of delivery. Our ultimate goal is to transition over entirely to a national logistics provider. That would allow us to scale into new markets more quickly, but we’re not quite there yet.

OPI: There’s clearly a gap in the market then.

LM: Exactly. The vast majority of businesses just don’t offer anything to their staff and when they do it’s either expensive or shelf-stable and often unhealthy.

When we stock a fridge we’re trying to predict what each person is going to eat. The employee buys the food from the fridge – not the employer– and Byte covers the cost of anything that doesn’t get sold. This way our goals are aligned with those of the company.

We found that many of our prospective customers were really keen to provide high-quality fresh food, but had no viable option available. They like our fridges because it means their team can stay on site during lunch or breakfast and it encourages better eating which in turn increases productivity, lowers healthcare costs and boosts company morale.

OPI: Finally, what are your expansion plans?

LM: We’ve identified dozens of regions in the US where we think there’s a market for fresh on-site meals, including the obvious ones like Chicago, New York, Los Angeles and other big cities where local food providers do really well. But we also have plans to expand internationally. There’s been quite a lot of inbound interest and we do intend to explore that, but probably not for another year or so.

May 2018

OPI: What do new customers need to consider when signing up with you?

LM: It’s a little different from a traditional catering company where the client chooses the food, it arrives at a set time and then the customer throws away what is not used. With us, employers aren’t paying for anything that isn’t sold. Byte uses complex algorithms

For more exclusive content from the interview, including topics such as getting started, fridge theft, and curbing food waste, visit the May issue in the Magazine section on opi.net.

that each day anticipate what people are going to eat.

We then stock the fridge accordingly.

Traditionally, offices have had only three choices when it comes to feeding their teams: don’t do anything – no food on site which is probably about 99% of workplaces; traditional vending machines – typically candy bars, crisps and soda which a lot of companies are moving away from because it’s on the wrong side of the healthy eating trend; and then 100%-subsidised meals which are really expensive, on average around $15 per person per day in the US.

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FEATURE

WARGAMING for CYBER RESILIENCE All organisations are prone to cyberattacks these days.

Wargaming is an excellent way to accelerate learning in anticipation of a crisis and minimise the effect of an incident, says ReSolve Cyber’s Jasvinder Mahrra

O

www.opi.net

ver the course of the past few years there has been a constant stream of headlines relating to cyber disruptions, including cybercrime. In recent months, the Wannacry, Petya and NotPetya strains of ransomware indiscriminately targeted and crippled global multibillion dollar businesses, governments and small businesses alike.

There is nothing new about these types of cyberattack, with the first worm (ie network-born virus) having been developed by an academic in the 1980s, using social engineering techniques to infect computers. What has changed, however, is that the global nature of the consequences and impacts today are infinitely more severe than we have seen before, because of the interdependency and complexity of transnational networks.

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BIG BUSINESS Cybercrime has become very big business indeed.

Most of today’s attacks are targeted to get something valuable – sensitive personal information, monetary funds, intellectual property, authentication credentials and insider information to name just a few – rather than the random ‘hacker’ behaviour of old. Although defensive technology such as firewalls, antivirus software and web gateways has been deployed for years to keep up with the ‘bad guys’, the cyber risk is a fluid and constantly changing environment.

No sooner is one breach identified and closed down, another emerges as criminals are busy developing ways to avoid detection. As such, relying on technological tools and protective measures can certainly assist, but they are unlikely to be sufficient as a standalone, and rarely offer true resilience. It requires a much more holistic approach to enhancing cyber resilience which takes into account a number of factors, including the company, processes, people and culture. This is because cyber has empowered individuals, downward and throughout organisations, meaning that everyone is responsible

for cybersecurity and everyone has to learn about this particular environment.

Cyber resilience requires a corporate approach that starts with senior management who must first understand the nature of the risk specific to their business and then set out a strategy to mitigate losses arising from cyber incidents. This strategy must be communicated to employees so that they know what is expected of them in terms of establishing a cybersecurity and resilience culture.

Putting the technology in place, together with creating policies and procedures, is all very well, but without embedding the desired cultural change, the overall effectiveness of cyber resilience is greatly diminished.

Just like a fire drill, testing needs to take place in a safe, controlled environment so that when an actual incident occurs, people are capable of taking the appropriate response without panicking PLANNING AHEAD Some companies believe that if they spend money on technology and test their operational effectiveness they are protected from the impact of a cyber incident. Wrong and simply not enough.

First and foremost, senior executives need to be able to respond quickly to cyber incidents as, ultimately, they will be held accountable as to how well their organisation recovers from it. These leaders will need to be prepared for any event likely to cause disruption to their business and offer a portfolio of options to address them. It is therefore advisable to work through the decision-making process and assess their effectiveness ahead of an actual incident.

FEATURE Cyber Resilience

Having plans and lists of what assets to protect is essential, but if those plans are not exercised and people are not trained, how can the effectiveness of the defences be assessed? Does a senior executive really want the incident response or recovery plan tested for the first time in the midst of a real incident?

Just like a fire drill, testing needs to take place in a safe, controlled environment so that when an actual incident occurs, people are capable of taking the appropriate response without panicking. That’s wargaming.

Organisations may say they are cash-strapped and cannot afford a specific budget for cybersecurity training, but training, education and assessment are important aspects of cybersecurity and wargames offer an effective means of assessing the robustness of plans, processes and people against a cyber incident.

By repeated rehearsal, individuals develop the capacity to build muscle memory so that the tactical drills become almost automatic and the focus moves towards the strategic priorities. It is the planning, not the plans that will be useful in times of crises.

information. Wargames are also not predictive, illustrating only possible outcomes. The learning comes from how and why the decisions were made.

LOOK OUT FOR...

ReSolve Cyber founder and CEO Jim Wheeler will be speaking at the forthcoming OPI European Forum in London, UK, about ‘Boardroom insights into cybersecurity’ (see also ‘London’s Calling’, page 42).

THE BENEFITS Conventional ‘live’ exercises take a long time to plan and are very expensive to deliver, with their focus often very much on the performance of the individuals.

In comparison to these exercises, wargames are quick to design and deliver, meaning they can be delivered more frequently. The focus in wargames is on the process of making decisions and why those decisions are made. They allow for the exploration of ‘messy’ questions and help participants discover what they don’t know.

Used correctly, wargames can prepare senior executives well for any event likely to cause disruption to their business and offer a portfolio of options to address them. Genuine resilience arises from planning and testing against situations that could occur. Expecting and rehearsing for such incidents in advance reduces the impact of potential losses, increasing the capacity for the organisation to return to normality quickly.

Wargaming enables organisations to accelerate learning and share valuable best practice in anticipation of crises. Doing so helps make them resilient and also provides a degree of security.

Jasvinder Mahrra is Head of Operations & Lead on Wargaming at ReSolve Cyber, a cybersecurity consultancy that provides clients with services such as strategic consultancy, executive training, cyber wargaming and executive protection.

May 2018

DESIGNING WARGAMES Wargames can do poorly because of bad design, therefore the scenarios must be plausible, realistic and credible. They should play out over the course of two or three hours in duration, which gives enough time to devote to the exploration of issues in depth.

The design of the game should be a light but rich minimalist scenario because the combined behaviour of participants – not a script – should determine the course of the wargame.

It is useful having an independent facilitator whose role is not only to manage time, but more importantly to press participants on planning and other assumptions they may be making as well as ensuring that they act in the realm of reality.

Wargames are not meant to instruct a user on how to respond, but provide information for participants to imagine a particular future and how they make decisions based on incomplete and inconsistent

Used correctly, wargames can prepare senior executives well for any event likely to cause disruption to their business

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HOW TO...

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ocial media is a great way to market your company, but it can also have a significant impact on your brand’s reputation. As Warren Buffet famously said: “It takes 20 years to build a reputation and five minutes to ruin it.”

It can be alarming for a brand to suddenly find itself at the centre of a social media storm, or being attacked for something that it just didn’t see coming. Just ask Paperchase, which came under pressure from the Stop Funding Hate campaign for running a Christmas campaign in the Daily Mail newspaper. It apologised for the promotion and vowed not to do it again.

Every brand needs to be prepared to face the wrath of a social media mob at some point. Being proactive about it means you can manage your reputation and avoid many of the issues that catch brands unawares. There are a number of things you can do to avoid a reputational issue and build a positive and engaged audience:

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In the first part of our How to… guide to reputation management, Tamara Littleton offers advice on how to protect your company on social media Listen to what people are saying Use a social media listening service to understand what people are saying online about your company.

Analyse the data to see if there are common themes that you can learn from and act upon. Listening to social media conversations could highlight an issue that you should address – and you might be able to catch it early enough to avoid a bigger problem.

You could even use this for R&D, analysing hard data that shows what people want to buy from you.

Know your audience At a time when the US President regularly calls out brands on Twitter, and companies are having to take a stand on political issues, it has never been more important to understand what your customers believe in and expect from you.

While we don’t advocate that brands get publicly involved in party politics, you could find yourself in a situation where you need to have a position on an issue that is inherently political. The gender pay gap is an obvious current example. Or if your business relies on migrant workers, you might have to take a stand on immigration issues. So find out what matters to your employees and to your customers. You never know when you might have to defend them publicly.

Be open and honest If social media has taught us anything, it’s that people will dig up everything you try to bury. If you’re going to talk about your sustainability policies, make sure they stand up to scrutiny. Consumers have never been so well-informed, nor had so much information available to them. We talk about ‘conscious consumers’ now – they want to know where products are sourced from, whether paper comes from sustainable forests, or if that factory in China has good working conditions.

Be prepared to answer difficult questions and do it honestly and openly.

LOOK OUT FOR...

Tamara Littleton will be speaking at the forthcoming OPI European Forum in London, UK, about ‘Managing and protecting your corporate reputation’ (see also ‘London’s Calling’, page 42)

If social media has taught us anything, it’s that people will dig up everything you try to bury Post in your brand’s tone of voice Does your tone of voice on social media sit comfortably with your website or your contact centre team? If you have more than one person posting to social media, do they sound similar in tone? Knowing what your tone of voice is on different channels – and in different situations – is really helpful to your social media team, and means people can hand over to each other at the end of a shift. It also avoids any faux pas.

If you’re dealing with a serious issue, that ‘cheeky’ tone may not be appropriate. And there’s nothing worse than a really corporate brand trying to talk on social media like a teenager.

Invest in top-quality customer service Great customer service is a differentiator for brands.

Research shows that 70% of consumers have used social media for customer service on at least one occasion, and that customers spend 20-40% more with companies when they engage and respond positively to them on social media. This means social media customer service is great for sales.

But it’s also important for reputation management. If you regularly – and publicly – interact with customers on social media, you will build trust among your audiences. You will gain a reputation for being open and honest, and for helping your customers, all of which will stand you in good stead if you have to field an issue in the future.

Plan for a crisis However well you do all these things, at some point you will probably have to deal with an issue or two.

Prepare for it. Have a crisis plan in place that includes social media. Have the ability to scale up your team to cope with increased volume. Know who you should call at 3 am if you need to. Practise managing your social media platforms in a crisis by running a simulation that will identify any holes in your plan before you have to use it for real.

Above all, remember this: the reputation you have when you hit a crisis is the one that will see you through that crisis. Make sure you’ve done everything you can do give yourself the best chance of emerging unscathed.

HOW TO... Reputation Management

Your social media presence should reflect your brand values Brands invest heavily in creating and communicating their values. Your social media presence should adhere to those values. If one of them is diversity, for example, then make sure that’s reflected in the content you promote on social media. Or if you’re proud of how you give back to the community, then show that on your channels too.

Tamara Littleton is founder and CEO of The Social Element. She set up the global social media agency in 2002, before Facebook and Twitter even existed, but knowing that the future would be digital. The agency now operates in 45 countries and works with some of the world’s largest brands, including Oreo, Toyota, The Oprah Winfrey Network and Nissan. In 2013, Littleton also co-founded Polpeo, a crisis simulation platform for companies and their agencies.

Keep content real Use social media to be creative with content, but make sure it is authentic and reflects who and what you want to be. You can usually be a bit less formal on social media, so experiment with images and videos. Measure what works well, ie what gets the most engagement, clicks, shares and comments, so you can do more of it. Whatever content you’re creating for social media channels, it should be real and authentic to the brand.

May 2018

Engage with people This is where the rubber hits the road. All the preparation you’ve done is leading to this point. It’s your chance to showcase how you want your brand to be seen. Get involved in conversations, post about things the company cares about, and of course post your own content, such as new products, catalogues, initiatives, opinions and blog posts to amplify your message. It should be a mixture of your own content, other people’s content and conversation.

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ADVERTORIAL

The

finished ARTICLE

Long-established and well-known in a specific segment of the remanufacturing sector, Static Control is branching out, bringing its expertise and solutions to the OP industry’s reseller community

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istorically known as a component provider for the remanufactured cartridge market, Static Control is fast becoming a major supplier of finished cartridges. As such, its target audience has vastly expanded, now comprising all channels of the business products industry’s supply chain.

OPI speaks to Ken Lalley, Managing Director of Static Control in Europe, and Josh Braendle, Business Development Manager in the US, about the manufacturer’s expanded focus and what this brings to our sector’s reseller community.

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OPI: Many of our readers will be familiar with Static Control as a global components supplier to the remanufacturing industry, but perhaps not quite so aware of the fact that you’re now offering much more than that. Can you provide some background?

Josh Braendle: You’re absolutely right. The fact is, if you’ve ever purchased an aftermarket cartridge, the odds are it contained some level of our componentry.

Our traditional customer base has been the remanufacturers which have used our component supplies for the past 30 years. For decades, we’ve been the leader in developing and manufacturing the components, toner and cartridge chip technology, and providing all of the items that go inside a remanufactured printer cartridge.

So while our foray into that final step of assembling our technology into finished cartridges is still relatively new, it builds on our extensive knowledge and experience.

OPI: Why have you decided to enter the market as a finished goods manufacturer given your existing success in selling just components?

JB: The decision started with demand from our customers. As the variety of printer models available has continued to increase, most remanufacturers were pushed into a ‘make some/buy some’ model to avoid prohibitive overheads investment. This put them into the position of having to rely on others to provide reliable, high-quality cartridges and led to overwhelming demand for Static Control to fill that role.

Our remanufacturing customers knew that with Static Control assembling the cartridges, they would be built with the best componentry and undergo stringent quality assurance steps throughout the process. Our ability to deliver on these expectations while also developing new and unique solutions led us to expand our market to include office products resellers, as they also need reliable aftermarket cartridges to support their customers.

Ken Lalley: What’s also important to note from a European perspective, for example, is that a huge amount of Chinese imports have come into the market selling only on low cost – to the point that remanufacturers in Europe are really struggling to compete and, as Josh mentioned, increasingly turning to outsourcing.

We’re filling that gap now by supplying entire cartridges in both a remanufactured and compatible offering rather than just the components for them.

OPI: You say Static Control is selling both a remanufactured and compatible offering…

KL: Yes, we offer the best of both which is a unique solution. We use our remanufactured

history in terms of delivering quality product, whether that be components, our remanufactured offering or compatible solutions. I encourage you to visit our headquarters in North Carolina to really see what makes Static Control different. Our website also contains lots of information about our differentiators.

Ken Lalley

Josh Braendle

The compatible market has been plagued with a lack of consistency as it pertains to quality. This is where we noticed an opportunity OPI: There’s always been a perception that compatible products are not quite as good as remanufactured cartridges… What would you say to that allegation?

JB: Historically yes, the compatible market has been plagued with a lack of consistency as it pertains to quality. This is where we noticed an opportunity.

Quality levels range across the board from one manufacturer to another. That’s not only limited to the compatible market, of course.

We accepted this challenge of inconsistency in the market and used our 30 years of knowledge and componentry development to help stabilise these builds. Since we develop and engineer every aspect of the cartridge from start to finish, we can maintain a level of quality unseen by others.

We could speak all day about what makes our products and processes different. We have a fantastic

Static Control’s HQ in Sanford, North Carolina

OPI: Given that you’re based in the UK Ken, and Josh, you are in the US, I assume your overall approach is global?

KL: Yes, Static Control is a global organisation which ships to over 160 different countries. Here in Europe, we do that through a mix of direct fulfilment to remanufacturers, wholesalers and resellers, as well as working with a great network of distributors in regions where that makes sense. That said, we have a further four regional distribution centres in Europe planned for this year.

JB: In North America, we directly service 100% of our customers on the continent from three distribution centres in the US and one in Toronto, Canada. In addition to the existing locations, we are planning two additional distribution centres in the US before the end of the year.

ADVERTORIAL Static Control

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products for areas where we may have increased intellectual property risks or haven’t been able to qualify a suitable product through a compatible offering. That being said, we also accept the fact that compatibles are a significant growth opportunity in the market today, with first-to-market potential and room for massive product improvement.

The unique opportunity for Static Control in the compatible segment lies in bringing a solution to market for those seeking a high-quality product at a competitive cost through the use of our industry-leading componentry.

JB: One of our largest differentiators in the compatible market in the US is having an excellent infrastructure.

A lot of the compatible resellers have limited infrastructure and no testing facilities domestically – they simply bring in products in container loads and sell them at a very low price.

Static Control is very different: we have a global infrastructure headquartered in Sanford (NC) with extensive R&D facilities; we have established technical support teams as well as experienced sales teams; and we have rigorous quality control. It’s altogether a different outlook, process and result – and that’s what sets our finished product apart.

OPI: What’s been the initial feedback to your foray into being a ‘finished product’ rather than component manufacturer?

JB: We’ve seen very positive growth. We’re not new to the market, of course, and our traditional customer base already knows and appreciates our technology, our attention to detail and our ability to make the highest-quality products. What is great is that we are also hearing these same responses from our new customer base, so it’s been hugely encouraging.

KL: I agree with Josh. We are finding significant success, especially with our unique offerings and first-to-market replacement cartridges. Those are the products that have opened doors for us and introduced new revenue opportunities to the market.

OPI: To sum up, what’s your core USP? KL: We have several and expertise is undoubtedly one of them. For more than three decades, we’ve been the leader in designing and manufacturing components and chips for the aftermarket.

Our knowledge on how to develop an imaging system that delivers premium quality is unmatched.

We’ve taken that knowledge and placed it into each finished cartridge we offer, be it laser or inkjet. We still invest heavily into our R&D and chip technology in order to stay ahead of our competitors when it comes to first-to-market solutions.

May 2018 41

EVENT

London’s EUROPEAN FORUM 2018 PREVIEW

CALLING T

he 7th OPI European Forum for senior executives from the business supplies industry will be taking place next month in London, UK. Designed as a relatively small-scale, exclusive event that brings together C-level executives from the leading operators in our industry – and increasingly associated sectors too – this year’s forum addresses what is fairly permanently on every single senior executive’s mind: digitisation and the need to embrace and evolve with it.

The focus is on learning and education, and on stimulating thought and debate. This is done through a varied agenda that comprises everything from high-quality keynotes and panel discussions to a broad range of roundtable sessions.

Topics to be discussed in great depth by a high-profile selection of speakers and panellists from within and outside the industry include: How to become digitally-savvy Private equity in the business supplies market l Reputation management (see also ‘Protecting your reputation’, page 38) l Blockchain l Strategic planning l Distribution models in the digital age l Delivering the healthy workplace l Leading digital transformation programmes l Payment innovations l Internet of Things l Digital pricing models l Cybersecurity l How is mobile commerce shaping B2B l Dynamic pricing l

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MARK THE DATE 5-7 June 2018 at the The Royal Horseguards Hotel, London, UK. For more information, visit www.opi.net/EF2018

MAXIMISING THE EXPERIENCE Taking delegates through the event this year is conference chair Gordon Christiansen. COO and SVP of Marketing at sales and marketing agency Highlands, Christiansen is extremely well-placed to maximise their experience by leading, directing and steering conversations into the most relevant channels for attendees.

Judging by feedback from previous forum events, visitors always highly value the opportunity to speak to fellow leaders in the industry about the latest hot topics and developments. As such, in addition to the organised conference sessions, there will be plenty of time for more informal networking and private discussions. As ever, to ensure that all of this can be accomplished in an appropriate and confidential environment, the European Forum will be operating under Chatham House rules.

As OPI CEO Steve Hilleard says: “The European Forum has over the past few years evolved into a must-attend event for the European – and wider even – business supplies industry, so much so that we’ve decided to hold it on an annual basis now, instead of the initial 18-month cycle. There is plenty to discuss and to learn about for the leaders in our sector, which is becoming ever broader and more challenging. But many opportunities remain for those open to discover, debate and – potentially – change.”

RESEARCH

FINDING

that anchor While adjacent product categories are undoubtedly on the rise for resellers, the rate of decline in core OP demand may also be slowing down – that’s the verdict from the latest State of the OP Industry 2017-18 report

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he fifth incarnation of The View from the Top: The State of the OP Industry 2017-18 is highly indicative of the changes that are incurring in the business supplies sector today. By any measure, 2017 was somewhat of a watershed year for many operators in our space. Here are some of the most notable stories of last year:

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• Office Depot completes the sale of its European operations to Aurelius and its Chinese operation to Shanghai M&G Stationery. It also acquires Complete Office Solutions and CompuCom. • Staples finalises the sale of its Australia and New Zealand business to Platinum Equity, is acquired

by Sycamore Partners in the US, and in turn buys Gulf Coast Office Products.

• Amazon secures the US Communities contract, starts its Amazon Business operation in the UK and India; and launches in Australia towards the end of the year.

• ADVEO announces plans to become a ‘multichannel workplace solutions platform’, targeting almost €70 million ($80 million) in annual sales from its direct business by the end of 2020. The wholesaler outsources its Spanish logistics and launches its Pergamy own label stationery brand.

During such periods of industry convulsion, it is vital that senior executives have an anchor on what is happening in the market: what have been the effects of these and other changes? Where is the market going in terms of product demand and distribution? What are the underlying trends at work in the sector?

It is precisely these kinds of questions that this study, carried out by market researchers Martin Wilde Associates (MWA) in conjunction with OPI, aims to answer. The State of the OP Industry 2017-18 (SOTI) report is an authoritative sourcebook that is based on the results of 66 in-depth telephone and online interviews with senior executives in Australia, Benelux, Canada, France, Germany, the UK and the US (see Fig 1).

REPORT FINDINGS Overall, the research unearthed some interesting findings across these seven countries: The rate of decline in core OP demand may be slowing down While 72% of all respondents reported a market decline in 2015, only 68% did so in 2016 and 2017.

Fig 1: Respondents by region Source: MWA

Benelux: 5% Canada: 6% Australia: 9% UK: 30%

France: 14% US: 21% Germany: 15%

Respondents are generally more positive about the future of core OP demand than they were before

Respondents are more likely to report that their margins had increased (36%) rather than decreased (33%) in 2017.

The full report details the average gross margins achieved and expected by respondents in each country in 2017 and 2018 and gives reasons for this margin growth.

The channels that are most widely reported to be losing share in 2017 were the national contract stationers, small independent dealers, OP wholesalers and OP superstores.

The full report shows that there are some countries where combined mail order/internet resellers and consumer mass market retailers are among the top three channels reported to be declining in 2017. It also forecasts the key decline channels by country in 2018.

The product categories that are most widely reported to be growing in 2017 were catering/ breakroom supplies, janitorial/cleaning supplies and office furniture.

The full report shows that there are some national markets where workwear/ PPE/signage products, 3D printers and well-being/ergonomic products are among the top three categories reported to be growing in 2017. It also forecasts the key product growth categories by country in 2018.

State of the OP Industry Report

Survey respondents’ overall sales continue to outperform the core OP market 63% of respondents reported growth in their own sales in 2017, compared to only 18% referring to growth in core OP market value in that year.

The full report explains how respondents in each country achieved this sales growth in 2017 while also predicting revenue increases for 2018.

The channels that are most widely reported to be taking share in 2017 were Amazon/Amazon Business, other internet-only OP resellers and large independent dealers.

The full report shows that there are markets where OP superstores, mass market retailers and combined mail order/internet resellers are among the top three channels reported to be growing in 2017. It also forecasts the key growth channels by country in 2018.

RESEARCH

The full SOTI report explains the reasons for the decline in each country. It also shows that there are some countries where respondents are still reporting some value growth in demand for core OP. It further highlights that respondents are generally now more positive about the future of core OP demand than they were before.

ADJACENT CATEGORIES ON THE RISE The average share of distributor sales accounted for by janitorial/cleaning supplies, catering/breakroom products, workwear/PPE/signage items, business gifts/promotional products, well-being/ergonomic products and MPS is projected to increase from 2017-18.

The average share of sales accounted for by private label and online sales, meanwhile, is expected to increase during that period.

Another interesting observation from the SOTI study is that the majority of respondents are looking to acquire another business in 2018. The report indicates the types of company that are being targeted for acquisition and shows that fewer than half of these respondents are now looking to buy an OP specialist.

The product categories that are most widely reported to be declining in 2017 were traditional stationery, cut office paper and printer/IT consumables.

The full report shows that there are some markets where tablets/iPads and shredders/binders/ laminators are among the top three categories reported to be declining in 2017. It also forecasts the key product decline categories by country in 2018.

ANSWERING THE KEY QUESTIONS The SOTI report also provides answers to other key questions on the state of the market. These include:

Fig 2: Respondents by activity Source: MWA

Distributor/reseller: 59%

Product manufacturer/ vendor/paper mill/ OEM: 38%

The View from the Top: The State of the OP Industry 2017-18 is available now for only £850. Please visit www.opi.net/soti2018 to order your copy.

May 2018

Other: 3%

• What was the value of the core OP market in 2017 and what will it be worth in 2018?

• What was the value of the addressable facilities supplies market – and its key constituent categories – in 2017?

• Which product categories are actively being developed by respondents in 2018?

• What share of the core OP market does Amazon/ Amazon Business now have in each country, and which types of customer is it being most successful in capturing?

• What are the recent and future ramifications of the Staples and Office Depot divestments?

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GENERATION GAME

THE

YOUTH of today the office of TOMORROW

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ith 50% of the global working population expected to be under the age of 35 within the next few years, office facilities and their design are failing to meet the basic needs and expectations of the rising millennial generation.

According to a study of 2,000 office employees in the UK, commissioned by co-working solutions provider Mindspace and research firm One Poll, many companies are struggling to attract and retain young talent due to their supposedly ‘boring’ and ‘uninspiring’ workplaces.

The survey revealed that over a fifth of millennial jobseekers have rejected a potential employer because of the poor look of the office, while a further 16% have even left a job they already had because of the bad design of their place of work.

Overall, respondents said they were becoming increasingly bored of their current working environment, with 31% saying it didn’t inspire them to succeed, while 28% described their place of work as ‘outdated’ and ‘dull’. In the UK, there appears to be a particularly strong need for more natural light, air conditioning and improved interior lighting to help boost morale and enhance conditions.

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HIGH EXPECTATIONS But it’s not just millennials being fussy. A badly designed office has other repercussions too. Most notably, it has a detrimental effect on productivity as well as mental health. Many respondents said issues such as poor lighting and sub-standard furniture made them feel tired (24%) and stressed (20%) at work.

The research shows the importance the younger generation is placing on the aesthetics and atmosphere of the workplace, as expectations about what employers need to provide are completely overhauled. Get it right, and the payoff is clear. In fact, 34% of millennials said they would be willing to commute up to an hour each way to an office that they considered to be perfect, compared to just 22% of those aged 45-54, a clear sign of the urgency and significance of workspace design and its impact on corporate culture for this generation.

Expectations also go beyond the mere layout of the office. Companies need to adopt a more holistic approach if they are to attract younger workers.

‘Perks’ are just as important, with 26% of those aged 25-34 stating that a company’s benefit packages – ranging from free lunches to massages and dog walkers – are one of the biggest factors when considering a new employer.

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Special Issue BREAKROOM

SPECIAL

Many millennials state that they currently have access to amenities such as a kitchen (72%), meeting rooms (66%), and free tea and coffee (53%), but what they expect from an office in terms of layout is the ability to collaborate and feel part of a wider team or community.

COLLABORATION In a bid to curb isolation, many companies have embraced open-plan offices in recent years, but a significant proportion of young people (46%) said this style still failed to improve communication between colleagues and across different teams or departments. What’s more, nearly a fifth of respondents said they did not feel their current office encouraged them to collaborate with others.

This means millennials are unable to do what they do best: share ideas and find creative solutions. More than a quarter expressed a need for proper, functional breakout areas where they can chat and build relationships with fellow workers, while 19% said they wanted so-called ‘brainstorming’ spaces to allow for more active, tactile meetings and problem solving.

On the other end of the scale, offices are also failing to provide private areas where people can go to get away from the chatter and focus on individual work –.

23% said their office was lacking in this type of space.

Commenting on the study, Mindspace co-founder and CEO Dan Zakai says: “Millennials are the future of the workforce, but so many graduates and young people are turning their backs on potential employers because of the poor design of their office.”

He adds that while most of the younger generation in the UK still value a wholesome corporate culture and decent salary, employers need to start placing more of an emphasis on the look and feel of the office. Zakai concludes: “Companies now need to foster a more collaborative workspace in order to attract the very best talent through their doors.”

Dan Zakai CEO, Mindspace

5 MINUTES WITH...

Beck Miller

CAREER Q&A

What would you be the patron saint of?

Holidaymakers. I believe that holidays are good for the soul. There’s nothing better for clearing your mind and body of the everyday stresses of life, and then coming back relaxed and refreshed.

Everyone should have at least one holiday a year to refocus.

What’s your life philosophy?

Everything happens for a reason. I’m a firm believer in this.

What do you do in your spare time?

I love to read and losing myself in a great book. I read a real mixture of genres, but I do enjoy a good thriller – Karen Rose and Jeffrey Deaver are my favourite authors. If I’m not reading, you’ll find me engrossed in a box set or shopping.

What’s your most prized possession?

My photo albums. They hold some of my most treasured memories: my wedding, my boys growing up and family no longer with us. Life is so digital now. Which reminds me – I really must get around to digitising these albums.

Your favourite gadget?

Hair straighteners. I spent too much of the 1980s dragging curling irons through my naturally wavy hair to straighten it – with extremely dodgy results. I take them so much for granted, I don’t even think of them as a gadget but a household necessity!

What’s your specialist subject?

It would be Sons of Anarchy, a US crime drama that ran from 2008 to 2014. It was my introduction to box sets and I’ve been hooked ever since.

Best way to spend the weekend?

It really does depend on my mood and the weather.

I love a city break in the sunshine with my husband or friends. I also love chilled weekends at home with my family if the weather is cold and miserable.

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What’s your favourite place to visit in the UK? Hayle in Cornwall. I spent many holidays there as a child and have fond memories. I returned about four years ago for a mini-break with my parents and nan, who sadly passed away last year at the age of 97.

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If you were Prime Minister, what would be the first law you pass?

I’d definitely introduce the three-day weekend.

My view is that it would restore more of the work/ home life balance and people would become more productive during their four working days – everyone’s a winner.

Best compliment you’ve ever received?

Being asked to be a director of Advantia.

If you could trade places with someone for a day, who would it be and why?

I’d trade places with my nan when she was younger – living through the war and bringing up seven children would have been tough. It would be interesting to go through the struggles she faced and would certainly give me a renewed appreciation of my own life.

Do you have any famous ancestors or relatives?

Not to my knowledge, but perhaps one day I’ll delve into my family history and uncover my famous ancestry. I did have a great-uncle Sid who was a well-known magician within the Magic Circle. He had a shop called The Magic Box on the Isle of Wight and made props for many famous magicians, including UK comedian Tommy Cooper.

What are you most proud of?

Apart from my children and grandchildren, it would be becoming a director of Advantia two years ahead of my personal goal.

Describe your job.

Marketing and Operations Director at Advantia Business Solutions. I’m responsible for the day-to-day running of the business and developing its marketing strategy.

I’m also a Director of Comgem, the B2B e-commerce solution provider that Advantia part-owns.

Worst moment in your career?

I haven’t really had a worst moment yet... there’s still plenty of time!

The industry figure you most admire?

Simon Biltcliffe from Webmart. I first came across Simon at Stationers’ Hall when he was a guest speaker at the 2016 BOSS Young Managers’ Conference.

His presentation stayed with me; he has a real passion for life, a great work/life balance and a fantastic attitude towards his staff.

I’ve not seen Simon’s original blend of capitalism and Marxism in business anywhere else within the OP industry – interesting to say the least!

What do you like best about the OP industry?

The people. It’s such a friendly industry, everyone knows, or knows of, everyone.

I must say, I’ve met very few people in this industry that I haven’t liked instantly.

What personal item do you have on your desk?

Molten Brown orange & bergamot enriching hand lotion… I just need to use it more often.

FINAL WORD

Chocolate or kale?

IT’S ALL ABOUT BALANCE

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t’s 2.30 pm and you are ready for an afternoon pick-me-up at the office. You head to the breakroom for a snack and while your brain says kale crisps, your heart is saying chocolate. What will you choose? Fear not, the modern-day breakroom allows you to have the best of both worlds.

When we hear the word breakroom, we often envisage an overstuffed refrigerator packed to the brim with lunch bags, a microwave splattered with leftovers or perhaps even the lingering smell of everyone’s worst nightmare – heated up fish.

The reality is thankfully quite different. In recent years the breakroom has changed and evolved into so much more than a place to store and reheat lunch.

Employees are increasingly looking for multifunctional spaces designed with their best interest in mind. In fact, our recent Workplace Survey found that 80% of staff believe their employers have a responsibility to keep them mentally and physically well. Cultivating an inviting breakroom space that employees want to spend time in can also contribute to overall office morale, engagement and productivity.

Speaking of office morale, as the US unemployment rate continues to decrease, employers are constantly looking for ways to both retain and recruit quality staff. This means that they really need to listen to their employees’ needs and wants – from benefits to breakroom design – and try to include them in decision-making, particularly related to workspace culture. After all, staff typically spend the majority of their work week at the office.

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BEST OF BOTH WORLDS Many of the businesses we work with are turning their attention to alternative options as employees are requesting that more healthy snacks are available to them throughout the work day. Don’t get me wrong, companies aren’t completely abandoning the sweet treat. Who doesn’t reach for the afternoon chocolate?

But they are also being smart about listening to, and then acting upon, the requests of staff who want the option to make healthier decisions.

Some employers offer free snacks and drinks, and sometimes even full meals, while others provide fully-stocked vending machines in the breakroom.

Healthier vending is a new trend and some businesses are making subtle changes to support this, including switching from potato crisps to kale crisps or swapping out the Cheetos for pretzels.

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form of food. There’s also been a shift in beverages, far beyond the obvious takeoff of water. For example, instead of opting for a second coffee or a diet cola in the afternoon, many companies are looking for substitutes, whether it be green tea or chai tea or even ‘enhanced’ waters with nutrients or added energy.

STRIKING A BALANCE At the end of the day, everyone’s definition of being healthy is different. Some people are looking to eat clean, unprocessed foods all the time while others just want to strike a balance.

TheSpecial most important Issue thing is for employers to provide staff with food and beverage items BREAKROOM SPECIAL that have clear labelling so that individuals can make the choices for themselves.

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FACILITIES SUPPLIES Riley Doherty, Area VP, Category Solutions, Staples Business Advantage

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Everyone’s definition of being healthy is different.

Some people are looking to eat clean, unprocessed foods all the time while others just want to strike a balance People want to know what they are putting in their body and are looking for greater visibility into ingredients through labels, seeking to understand if it’s non-GMO, vegan or has Fairtrade certification, for example.

So if they are asking for healthier options, are more aware of their sugar intake and trying to do a better job with portion control, why aren’t more employers making a full commitment to 100% health-conscious options? I see two reasons: price and demand.

Price certainly becomes an issue as many of the traditional snacks are manufactured in bigger batches and the pricing is often more affordable; demand because as much as health is a concern for everyone, we are still seeing very high demand from people who want to treat themselves. And you know what they say: happy employees are productive employees!

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