7 minute read
Opinion
by OPI
50 YEARS OF independence
Recessions, evolving competition, technology causing product redundancies, not to mention a global pandemic, have all marked the past 50 years at Guernsey. Through it all, this dealer has always promoted one characteristic – independence
David Guernsey, CEO, Guernsey
On 4 May 1971, David Guernsey created what is now simply known as Guernsey, a Dulles, Virginia-based independent dealer. At the age of 23, with savings of $234 and a confidence-inspiring loan of $1,300 from a local bank, Guernsey operated as a one-man band for the first two years of its life selling and servicing typewriters, the forerunners of the computer keyboard.
Wind forward 50 years and the company is currently a $100 million+ workplace supplier with a workforce of 240 and locations in several states on the East Coast of the US. The man behind the company has had an immeasurable impact on not just the US, but the global business supplies space, internationally most notably with his involvement in dealer group consortium BPGI.
In a recent celebratory OPI Talk podcast, Guernsey talked about the past 50 years at the helm. He charted the milestones, the highs and the lows, and of course alluded to the future of this progressive dealership that’s been a beacon of light for the independent dealer community (IDC) and a perennial and welcome fountain of knowledge for the OPI editorial and events team.
Some of his thoughts are summarised below.
Economic strife
Most of the milestones of the past 50 years have been economic in nature, quite frankly. I’ve been through many economic downturns and they’re all difficult, particularly for small businesses.
In the late 1970s when Jimmy Carter was President, we had double-digit inflation and double-digit prime (bank base) rates. It was an awful business climate and we had a very hard time growing our revenue base.
The financial crisis of 2007/2008 and what followed was another period and about as difficult as anything I could have ever imagined. A lot of my peers decided to close their businesses back then because they didn’t want to go through it yet again, another few years down the track.
The birth of BPGI
It all began when the power channel entered the fray in the late 1980s and very early 1990s – the big public companies like Staples, Office Depot and OfficeMax. It was a real shock to the industry. Not only were they huge – some of the private entities were big too – but they seemingly had limitless capital to put into their businesses.
We had never seen anything quite like it. There was panic in the industry and a huge amount of concern, especially when other players – the large contract stationers like Corporate Express and US Office Products – also turned up and were making acquisitions left, right and centre.
Again, it became a question of staying in business or selling it. Guernsey opted to stay and so did many others. But we really needed to band together. At the time, about six different dealer groups existed in the US, all of them essentially doing the same thing and buying from the same manufacturers. So the initial idea was for BPGI to knit together all the groups in the US.
A couple of groups in Canada became interested so we morphed into a North American entity. Then I got a call from Hugh Sear at Officeteam in the UK and they joined. This was followed by interest from New Zealand and Australia. All of those groups combined became BPGI. We brought together all that buying power and sat down with the manufacturers. We said we would make buying commitments almost across
Left: David Guernsey on holiday in Africa in 1995 Below: Guernsey’s sales team in the early 1980s
the globe but, in return, we expected programmes that would allow us to be competitive against all these public organisations. It was a real sea change in terms of how the IDC worked together. We made tremendous strides.
We all know how it worked out, of course – BPGI is now a European organisation. Ultimately, in my view, it didn’t morph into what it needed to be at the next level, so the North Americans pulled out.
Small versus large dealers
I had been Chairman of the Independent Stationers (IS) dealer group and shortly after my term ended, moves were afoot that meant IS would effectively go into the wholesaling business. As part of the grand design, all dealer members had to participate in the programme. But it wasn’t an initiative that was very meaningful for larger dealers like Guernsey; in fact, it penalised us.
I remember pleading with the directors at the time not to force dealers to utilise the programme. That fell on deaf ears and they went ahead with it so I, along with ten other large IS independents, left in 2004. We devised a plan of what a dealer group for larger dealers should look like and were going to go it alone as Pinnacle. Then TriMega approached us, wanting to adopt our ideas as part of its group. So Pinnacle joined TriMega, was renamed the DSC, and it went on for a few years like that before we spun out.
We regrouped as Pinnacle Affiliates and attached ourselves to IS again. The whole idea was always to keep the buying power within the IDC. But we also wanted to insulate larger dealers from the typical structure that many groups have, as in the ‘one dealer, one vote’ idea, irrespective of size. That kind of structure with so few large operators can really disadvantage the big independents.
We worked very closely with IS as part of Pinnacle. And obviously, ultimately, we found a way for the three groups to come together within Independent Suppliers Group (ISG) and eliminate the many redundancies. And ISG today, I believe, is a very meaningful organisation that makes a lot of sense for all dealers.
COVID-19
We’ve always forecast economic downturns in the company. Not with any dramatic precision, but we know they’re coming and we squirrel away resources to survive them. But we’ve never forecast a pandemic.
What have I learnt? The value of my balance sheet. If I could impart anything to the younger generation and the newer people in this industry, I would tell them to rapidly build their balance sheet. Don’t enjoy the profitability of your business and take it out for personal spending. Instead, invest it back in the business.
When COVID struck, the Guernsey organisation had an extremely strong balance sheet and that’s been quite necessary. When we got about a month or two into the pandemic last year, my team and I decided that it’s time to manage the balance sheet and not worry about the P&L. And that’s what we’ve been doing ever since.
I think overall, we’re going to come out of this stronger than when we went in, and I hope the same can be said for my peers and the entire IDC, my competitors included. But to say it’s been hard would perhaps be the understatement of the past 50 years.
The future
One of the things we have to get away from is to characterise ourselves as the office products industry. We’re the business products community. Technology has prompted monumental change in our sector. We started with typewriters, then processing equipment, calculators and copiers.
At some stage, we had to make a decision as to whether to focus on business machines or go with the office products side. We did both for a while, but decided our balance sheet wasn’t strong enough to do that. We ultimately chose the OP direction and that served us well for many years.
But today, if you’re only in office products, you’re slowly disappearing, whether you realise it or not. Embracing the adjacencies is absolutely critical. Guernsey Office Products rebranded in 2013 to become just Guernsey, with the tagline ‘The Workplace Source’. We’re now in five different categories: office supplies, office furniture, breakroom products/services, janitorial and facilities products, and corporate promotional products.
The good thing about being a complete solutions provider is that the opportunities don’t go away – they will still be here for future generations. What we sell and what we make available to customers and the way in which we do it will continue to be in demand.
There will be more surprises along the way. One of the things you appreciate when you’ve been in business for half a century is that anything can happen. And I’ve got a few surprises of my own still to come, even after 50 years. You will read about them here in OPI, I have no doubt. I will be here until the end of the year I guess, and then I’m planning to do a lot more skiing and a lot more sailing.
For much more on Guernsey’s 50 years of independence, listen to OPI Talk – visit opi.net/podcast
David Guernsey at the opening of a new distribution centre
