OPI APP MAY/JUNE 2021 B

30 Celebrating

thirty years

BIG INTERVIEW

Bob O’Gara & Gordon Christiansen, Highlands May/June 2021

INSIDE THIS ISSUE l What does the ODP split mean? l Judgement day for Depot France l OfficeTeam’s subscription service l Supply chain volatilities l 50 years of Guernsey independence l The post-COVID breakroom l The contactless experience l On the rise: B2B marketplaces

CONTENTS 16 Big Interview Highlands continues to carve itself a broad niche in an increasingly expanding market 22 Hot Topic As the global supply chain crisis continues, the business supplies sector is trying to cope 26 Opinion Guernsey celebrates 50 years of independence 28 Spotlight A look at France’s largest independent dealer and its ‘multi-local’ approach

Big Interview: Gordon Christiansen & Bob O’Gara, Highlands

Highlands is an international sales, marketing and e-commerce agency that began life as a regional manufacturer rep group in 1962. It initially sold office supplies to OP resellers, but has since diversified into many other categories as well as offering a wide range of services, particularly in the digital arena.

The company is headed by CEO Bob O’Gara (the son of Highlands’ founder), and partner/COO Gordon Christiansen.

At a time when the future of the sales function is being increasingly debated, the two executives shed more light on Highlands’ middleman approach and its ever-wider remit.

HOT TOPIC: SUPPLY CHAIN STRESSES

34 Category Update The post-COVID breakroom: what does it look like?

38 Category Update The paper industry: facing many challenges 42 How to... ...create the contactless experience 44 Research The future of cities in a post-pandemic world 48 Research The State of the Industry 2020-21 – study highlights 50 Review: Global Forum Online Optimism and adaptability rein at OPI’s virtual event

REGULARS 5 Comment 6 News 52 5 minutes with...

Dan Fati 54 Final Word Bob Boekema

May/June 2021

We’ve never had a bigger problem in the many years I’ve been in this industry. Demand is significantly outstripping supply.

It started with a lack of containers, then a lack of space on a container followed by much longer offloading at the port. We’ve taken great strides over the years to make the supply chain as efficient and precise as we possibly can. It was stretched initially towards the end of last year – now we’re at breaking point. And it’s unlikely to get better anytime soon.

Before you know it, the big retailers are going to buy freight space to get their Christmas stuff, moving ahead of us in terms of allocation.

30 Interview OPI goes down under for a chat with Quick Corporate Australia’s Darren Hayes

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COMMENT The OPI team EDITORIAL Editor Heike Dieckmann +44 1462 422 143 heike.dieckmann@opi.net Deputy Editor Michelle Sturman michelle.sturman@opi.net News Editor Andy Braithwaite +33 4 32 62 71 07 andy.braithwaite@opi.net Freelance Contributor David Holes david.holes@opi.net

SALES & MARKETING Chief Commercial Officer Chris Exner +44 7973 186801 chris.exner@opi.net Head of Media Sales Chris Turness +44 7872 684746 chris.turness@opi.net Digital Marketing Manager Aurora Enghis aurora.enghis@opi.net

EVENTS Events Manager Lisa Haywood events@opi.net Event Programmer Sophie Carus sophie.carus@opi.net

PRODUCTION & FINANCE Studio Joel Mitchell joel.mitchell@opi.net Finance & Operations Kelly Hilleard kelly.hilleard@opi.net

PUBLISHERS CEO Steve Hilleard +44 7799 891000 steve.hilleard@opi.net Director Janet Bell +44 7771 658130 janet.bell@opi.net Executive Assistant Debbie Garrand +44 7718 660249 debbie.garrand@opi.net

T

Light at the end of the tunnel

here are many topics that have been occupying the minds of operators in our industry over the past few weeks and months. Several were covered at the recent OPI Global Forum, an event that, yet again, had to be conducted virtually (page 50).

And while this format still eliminates the keenly awaited person-to-person aspect, there was plenty of networking, even one-to-one speed dating (for businesspeople, that is). From the future of the workplace in its various iterations to the future of the operators supplying those workspaces, namely our industry – the agenda was wide and varied, and discussions interactive and informative.

They were also broadly upbeat, which was refreshing given some of the market dynamics – macro and micro – the diverse channels are up against. Crisis, volatility, uncertainty, change and recovery are words we hear and see all too often these days, at events such as the Global Forum Online, but also in the pages of OPI.

Without your input, OPI wouldn’t achieve what we strive for – to be a source of insight and analysis From dealing with specific category challenges (pages 34 and 38) and new ways of selling such as B2B marketplaces (page 54) to global supply chain nightmares, it takes resilience and adaptability to always see the light at the end of the tunnel.

On that note, I would like to give a big shout-out to the executives in the industry who help the OPI team – be this for events or any of our publications – with their fantastic insight and knowledge. This applies to many features in this issue. For my part, I’m particularly referring to the Hot Topic (page 22), which delves deeper into the aforementioned supply chain crisis.

It’s easy to be vocal about buoyant sales, happy customers and plenty of opportunities. But when the going gets tough, it’s brave to articulate the challenges and also the misgivings – not in a confrontational manner but constructively and helpfully.

Without your input, OPI wouldn’t achieve what we strive for – to be a source of insight and analysis, to learn from our peers and bring the business products industry together. Not all contributors may be named in features at all times, but you know who you are, so thank you!

HEIKE DIECKMANN, EDITOR

Twitter: @opinews Linkedin: opi.net/linkedin Facebook: facebook.com/opimagazine Podcasts: opi.net/podcast App: opi.net/app

30 Celebrating

thirty years

Office Products International Ltd (OPI) Focus7 House, Fairclough Hall, Halls Green, Hertfordshire SG4 7DP, UK Tel: +44 20 7841 2950

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NEWS

Analysis: Twice bitten, thrice shy

The ODP Corporation is forging ahead with its transformation strategy despite overtures from Staples

www.opi.net

One consequence of each of Staples’ two previous attempts to acquire Office Depot – in 1995/1996 and 2015/2016 – was the weakening of the Florida-based reseller to the benefit of its rival. Staff departures and takeover distractions arguably set Office Depot back by several years on each occasion.

Judging by the announcement made on 5 May 2021, the company has evidently learned from these lessons and is determined not to let lightning strike three times.

On the day it published its quarterly earnings, The ODP Corporation (ODP) – the holding company of Office Depot in North America – unveiled plans to split into two distinct, publicly traded entities by the middle of 2022. One, called ODP (New ODP), will comprise all retail stores and the officedepot.com e-commerce site, plus merchandising and marketing.

The other, as yet unnamed but labelled NewCo, will bring together all B2B operations in the US and Canada (including Federation dealers and Grand & Toy), the new technology platform headed by former Amazon Business chief Prentis Wilson, and all distribution and sourcing operations.

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CONSISTENT MESSAGING Since Staples’ acquisition proposal in January this year, ODP has been consistent in its messaging about bringing together the two resellers’ retail and customer-facing e-commerce sites while it focuses on its B2B ‘pivot’. The New ODP entity ties in very nicely with the assets ODP would like to combine.

However, on the Q1 earnings conference call, ODP CEO Gerry Smith said the company split had “nothing to do with the Staples transaction at all” and that it was “the perfect time to look at both businesses from a B2B and B2C perspective”.

He has a point. Last year, the former Office Depot Inc business was transformed into ODP,

a holding organisation that has three distinct units: Retail, the Business Solutions Division (BSD) and CompuCom. At the time, it appeared this would, among other things, make it easier to hive off the different parts.

With that in mind, New ODP does seem conveniently structured to enable the Office Depot and Staples retail networks to come together (including OfficeMax). It will now be interesting to see how Staples responds to this development.

Its most recent public announcement was a 31 March statement in which it said it would “evaluate all alternatives in its pursuit of ODP”.

Since the beginning of the year, Staples has shown intent to acquire more than just the assets that New ODP encompasses. However, it might have its hands tied by regulatory intervention.

According to OPI sources, there has been a lot of industry pushback against Staples’ proposals during the ongoing investigation by the US Federal Trade Commission (FTC).

In addition, it seems unlikely the FTC will deviate from its stance in 2016 when it successfully blocked the Staples/Office Depot merger after arguing this would reduce competition for core office supplies in the contract channel.

Furthermore, on 4 May, the Canadian Competition Bureau determined that the proposed acquisition by Staples of Grand & Toy would “likely result in a substantial lessening or prevention of competition in the sale of business essentials to enterprise customers in Canada”. While this doesn’t necessarily mean such a deal would be blocked, it does point at least to the prospect of a lengthy and risky legal process.

New ODP does seem conveniently structured to enable the Office Depot and Staples retail networks to come together SYNERGIES With BSD and Grand & Toy essentially out of the equation, a transaction involving the respective US retail stores plus the officedepot.com website seems the one that makes most sense. It’s what ODP has been striving for, while Staples hasn’t been against the idea either. Whatever the future holds for business products retailing, bringing together around 2,200 stores would provide significant short-term opportunities to reduce costs and create a more profitable network.

Back in 2016, it was estimated that such a combination would lead to synergies of approximately $500 million. Since then, ODP has made great strides in closing underperforming stores and improving productivity – Retail has been its best-performing division for several quarters and achieved an operating profit of $100 million in Q1 2021. Plus, there has probably never been a better time to renegotiate more favourable lease terms with landlords.

Clearly, this Staples/New ODP retail merger is a no-brainer. What then happens to their respective B2B operations is another matter altogether.

NEWS

OD France fate set to be sealed One way or another, the future of Office Depot (OD) France will now be decided following a court meeting scheduled for 25 May 2021 (after this issue of OPI went to press). The company’s administrator had been due to announce details of the chosen takeover proposal(s) for the firm on 20 April, but a commercial court near Lille agreed to put this back by a few more weeks to allow eleventh-hour negotiations to take place.

13 bids were received for various assets of OD France, with just a handful of those being given serious consideration. These include a proposal

by CEO Guillaume de Feydeau to acquire the whole business, plus bids by Fiducial Office Solutions and several members of Groupe Alkor to acquire B2B and some retail operations, respectively.

De Feydeau’s plan – the only one not to break up OD France – had previously received support from the company’s Works Council, but council members changed their tune when exact details of his proposal emerged.

It was revealed that the CEO’s takeover – which is being made through a company he owns, called Deham Management – would safeguard around 875 jobs, out of a total of just under 1,500 currently employed at OD France.

This news led the head of the Works Council, Sébastien Fournier, to say: “We are extremely disappointed by M. de Feydeau’s proposal. Last month [March], he spoke about keeping on 1,250 staff.

Today, he has announced 875.”

A source familiar with the matter told OPI that the 1,250 number came from

OD France staff demonstrating at a court hearing near Lille

a transformation plan that had been put together pre-COVID. The updated figure of 875 is based on the current situation at OD France after it reported wider losses in 2020 – largely due to a sales and earnings slump in the Contract division, which has been loss-making for some time.

De Feydeau has put together a solid and coherent plan for the company, but it does require a slimming down of operations. This is something staff at the reseller recognise needs to happen, but they had probably not envisioned the extent of the CEO’s cutbacks.

According to documents seen by OPI, the retail arm will remain largely intact, with 55 of OD France’s 60 stores to be kept. The main focus areas of the

www.opi.net

PBS Holding buys regional wholesaler

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European multichannel operator PBS Holding has strengthened its position in Germany after buying 100% of the shares of Hofmann & Zeiher (H+Z), a regional wholesaler headquartered near Frankfurt. Financial details of the transaction were not disclosed, but the effective date of the acquisition has been backdated to 1 January 2021.

The origins of the wholesaler can be traced back to 1922, while the actual H+Z name was established in 1968 by Dietrich Zeiher. His son, Matthias, has been leading the business since 1999 and will stay on as Managing Director as the company continues life as a distinct brand under the PBS Holding umbrella.

The addition of H+Z – which has annual sales of around €15 million ($18 million) – takes PBS’s revenue from the German market to approximately €100 million, while its three logistics centres serve more than 7,000 customers.

changes will be reductions in the supply chain network and the Contract division.

For example, in order to get the company onto an even keel as soon as possible, de Feydeau is prepared to abandon loss-making contracts with large customers that are currently worth around €40 million ($49 million) a year.

Apart from creating a scramble in the market to win this business, his plan projects the division to be profitable in 2022 – versus a double-digit million EBITDA loss in 2020.

It may seem like drastic action but, as de Feydeau himself told OPI earlier this year, the commercial court does not want to see OD France come knocking back on its door in 12 months’ time.

AF International parent sold

HK Wentworth (HKW), the parent company of cleaning products vendor AF International, has been acquired by US-based speciality chemicals group Element Solutions (ESI) in a deal worth around $60 million.

With the transaction announced just as this issue of OPI went to press, further details were not available.

However, it would appear to represent an interesting opportunity for AF; HKW generated sales of around $44 million in 2020, but the brand is now part of a $1.8 billion group listed on the New York Stock Exchange.

“Our global scale and relevant customer intimacy should allow us to grow this business substantially in the near term,” noted ESI in a press release.

Herman Miller and Knoll are to combine to create the world’s largest workplace furnishings manufacturing and distribution business. Number two global player Herman Miller is set to acquire number three Knoll in a transaction worth $1.8 billion which will create a $3.6 billion group. That is slightly larger than Steelcase, which had revenue of $3.4 billion in 2020.

When the deal goes through – expected by the end of September this year – Herman Miller CEO Andi Owen will serve as CEO of the combined company. Current Knoll CEO Andrew Cogan will leave the business after a 30-year career with the manufacturer.

One important task post-merger will be to integrate each company’s dealer network in the US. Responsibility for this will lie with former Staples Business Interiors General Manager John Michael. He was confirmed as President of Herman Miller’s Americas region in April.

Fiducial Office Solutions acquires

Fiducial Office Solutions (FOS) has increased its presence in the Belgian market after acquiring independent dealer IPL Business.

IPL was founded about 30 years ago, has three locations in the country and employs 20 staff. It specialises in office supplies and workplace furniture; in addition, it’s a Ricoh partner for print and document management services.

France-based FOS has been operating in Belgium for 25 years. In the 12 months to 30 September 2020, its Belgian subsidiary achieved sales of €12 million ($14.6 million).

May/June 2021

The end of Staples Solutions is in sight, with – at the time of going to press – just one of its businesses left to be sold off. On 3 May, Nordics reseller Wulff announced it had acquired the shares of Staples Finland and its parent company EMO Finland for about €6 million ($7.2 million). On the same day, it was confirmed that multichannel distributor Firmo had closed its previously announced deal to acquire the 34-store network and related assets of Staples Portugal.

The Finland transaction virtually doubles Wulff’s annual sales of €57.5 million in 2020 and should also lead to a significant boost to its bottom line. In the 12 months to 31 January 2021, Staples Finland – which employs 110 people – generated revenues of €55.8 million, adjusted EBITDA of €3 million and adjusted operating profit of €2.2 million. It is particularly strong in the contract space for enterprise and public sector customers.

Wulff said it was aiming for synergy benefits from the acquisition of approximately €3 million by 2023, through combining product portfolios, procurement and operations. It expects one-time acquisition-related expenses of about €0.7 million.

Those costs are more than offset by a one-off income benefit of €4.5 million that Wulff will book from the recognition of negative goodwill. This figure is based on the difference between the €6 million purchase price and Staples Finland’s equity value of €10.5 million.

Wulff’s move was good news for purchasing organisation Interaction, of which the Finnish reseller is a founding member. Over the past few months, Interaction companies such as PBS Holding (see page 8), EVO Group of Companies (via Banner), Bruneau and now Wulff have all made major acquisitions.

Meanwhile, in Portugal, Firmo will more than double in size following the acquisition of Staples. The Porto-based business – which has manufacturing, wholesaling, contract, and cash and carry operations – will now have annual sales approaching €100 million with the addition of the 34 Staples outlets.

In connection with the transaction, venture capital firm ActiveCap has spent about €4 million to acquire a 35% stake in Firmo. It will now partner with the company’s historical owners, the Carvalho family, who repurchased the business in 2011, 20 years after selling it to Antalis.

“The combination of Firmo’s manufacturing capabilities and the strength of the Staples brand will provide both organisations with the necessary means in a sector where innovation will be a determining factor for success,” commented Firmo CEO Rui Santos Carvalho.

The sale of Staples’ Portuguese and Finnish units now just leaves the reseller’s Benelux operations to be formally divested. Once that has been concluded, it will be a case of ‘job done’ for Staples Solutions CEO Dolph Westerbos and signal the end of Cerberus’ four-year ownership of Staples in Europe.

Mega merger in furniture segment

NEWS

More Staples Solutions businesses divested

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NEWS

Analysis: Will office supplies subscriptions catch on?

OfficeTeam, the contract business products reseller arm of OT Group, recently introduced a subscriptions offering to address homeworking and hybrid working trends

www.opi.net

As the UK begins to emerge from lockdown and staff start to return to the office, a plethora of ‘future of work’ studies point to some level of ongoing work-from-home (WFH) for people who, prior to COVID-19, used to spend the vast majority of their working lives in an office. Many businesses will also have WFH protocols in place in case of future lockdowns.

One consequence of WFH has been staff buying supplies outside their firm’s normal purchasing channels. This ‘spend leakage’ is an issue that UK reseller OfficeTeam says 90% of its customers have reported.

It comes on top of the ‘soft’ costs involved in processing employees’ expense claims – the average amount of which is £27.40 ($38), according to the reseller. Staff could also be purchasing products that are not approved or do not comply with company policy.

To try and overcome these challenges, OfficeTeam has launched a subscription service with a selection of its customers. This means employees will receive a pre-approved home delivery each month which contains the products they need to fulfil their duties.

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THREE-TIER MODEL The service is based on a three-tier model – home starter, print unlimited and executive office – priced at £9.99, £14.99 and £49.99 per month, respectively. There is also the possibility for bespoke pricing based on individual needs.

The programme was the brainchild of new OT Group Sales Director Stuart Derbyshire, who joined the company in early 2021 after spending many years at Office Depot.

“With lockdowns continuing longer than first thought, we believed there might be an opportunity for such a service,” he told OPI.

“Some account managers ran the idea loosely past clients to see if finance or purchasing departments would be interested in a fixed-price model for people working from home. The responses around spend visibility and hidden costs were convincing enough for us to feel the market was ready for something different and to go ahead and try it out.”

He continued: “Procurement managers are looking for WFH solutions, but they want something that is simple to manage and can be measured.

If a company has 200 people working from home and all their office products needs are bundled into one monthly invoice, that is reducing complexity and creating efficiencies.”

The main focus in the early stages has been on the entry-level home starter tier. OfficeTeam works with the customer on an individual basis and then subscribed staff members are provided with a 12-month plan, based on one order per month.

They may receive a ream of paper, sticky notes and some pens one month, and some staples, a lever arch file and envelopes the next. It depends on the requirements of that person’s job.

INK AND TONER DEMAND For the higher levels, Derbyshire said demand for ink and toner was wider than had first been expected, with many different printing requirements. This has led to OfficeTeam working closely with MPS partners such as Brother and HP, as well as its own ZenOffice business, to provide a variety of possible solutions.

Procurement managers are looking for WFH solutions, but they want something that is simple to manage and can be measured

Stuart Derbyshire

Is there a danger that OEMs will sidestep OfficeTeam and go direct to customers through their own subscription services? Derbyshire isn’t concerned. “Not really,” he said. “I am sure they would get good traction separately, but we’re now aligned with them and set up as a preferred partner. Plus, I believe we have certain advantages: we already have the customer set up, and can deliver and bill ink with other products, which is more cost-effective than the OEMs doing this separately.”

The subscription programme is still in its infancy, but Derbyshire is encouraged by the interest it’s generated so far. “Even if we don’t have another lockdown, from listening to what customers and prospects are telling us, hybrid working will be with us for the long term. Therefore, we believe this model gives them a lot of the added value they are looking for.”

Time will tell if the initiative is a success, but the concept seems to appeal to purchasing managers. For end users, one trend is the desire to have more control over the products they use in a WFH environment – for example selecting national brands over private label products. That may be something for OfficeTeam to consider in the future.

NEWS

ON THE MOVE It has been a busy past few weeks for senior staff appointments in the global business products world, so we have dedicated a whole page to some of the key announcements. What is refreshing to see – in what is still a male-dominated industry – is that 50% of the stories below involve women being appointed to the top job at leading dealer group, vendor and reseller organisations.

BRESITZ TO TAKE OVER AT OFFICE FRIENDLY Following the decision by Julie Hawley to accept the CFO job at purchasing organisation YPO, UK dealer group Office Friendly has appointed Jeanette Bresitz as its new Managing Director, effective 1 June.

Bresitz is a familiar face to most people in the UK OP channel. She has worked in the industry since the late 1990s, starting with a merchandising position at Viking Direct. She joined wholesaler Spicers in 2004 and worked there in several sales, marketing and merchandising roles. In 2017, Bresitz moved to Staples (now owned by Banner), where she led its merchandising and marketing functions and the online division.

Jeanette Bresitz

Adam Joy

NEW ROLE FOR BUREAU VALLÉE’S ADRIEN PEYROLES Adrien Peyroles, son of Bureau Vallée founder Bruno Peyroles, has been made Managing Director France at the leading office supplies retailer.

Adrien has been working in the business since 2009 and has held several roles during this time. These have included learning the trade in company stores, developing Bureau Vallée’s operations in the Belgian market and, more recently, leading the reseller’s communications and digital functions.

His sister, Christel Jaffres, who was previously in charge of Bureau Vallée France, is now VP of the group’s foundation and has also started her own business – Les Bergers – which is aimed at helping local French farmers.

Adrien Peyroles

www.opi.net

Sara Armbruster

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OFFICE BRANDS NAMES CEO Australian dealer group Office Brands has named Adam Joy as its CEO, effective 15 June. He succeeds Gavin Ward, who left the organisation last year.

Since 2018, Joy has been COO at the University of Wollongong Pulse, a non-profit entity that aims to improve student life. He previously spent almost ten years as CEO of the Australian Lottery and Newsagents’ Association – a tenure that was notable for a rebranding from the Australian Newsagents’ Federation and a heated battle with synthetic lotteries organisation Lottoland.

CEO CHANGE AT STEELCASE Workplace furniture giant Steelcase has confirmed a leadership transition following a two-year planning and recruitment process. Current CEO Jim Keane is to step down from his role on 4 October this year, and will formally retire on 7 January 2022.

61-year-old Keane joined Steelcase in 1997 and led global teams responsible for corporate strategy, IT, research, product development, design, engineering, manufacturing, sales and distribution, before assuming his current position in 2013.

Succeeding him in October will be Sara Armbruster who, in the interim, has been appointed EVP and become a member of the board of directors. She joined Steelcase in 2007 to lead corporate strategy and acquisition activities. She has also been in charge of multiple businesses at the manufacturer, including Steelcase Education, Steelcase Health and PolyVision.

Maria Zesch

TAKKT APPOINTS ZIMMERMANN SUCCESSOR MRO and business supplies reseller Takkt has named telecoms and digital specialist Maria Zesch as the successor to former CEO Felix Zimmermann, effective 1 August.

Currently, Zesch serves as a member of the board for B2B & Digitalisation at Magenta Telekom (formerly T-Mobile Austria), an Austrian internet and mobile operator – part of the Deutsche Telekom Group where she has been since 2008.

Zimmermann, after almost 20 years with the group – including more than ten as CEO – left the company following its AGM on 11 May after asking for his contract to be terminated. Until August, Takkt will be run by a transition team comprising management board members Claude Tomaszewski and Tobias Flaitz, as well as senior management and representatives of the company’s operating units.

Frank Esser

SOENNECKEN ADDS TO EXECUTIVE BOARD The executive board of German dealer group Soennecken has been expanded to three members.

Joining board members Dr Benedikt Erdmann and Georg Mersmann full-time is Frank Esser. He has been acting as a board member on an interim basis for the past several months.

Explaining the development, Group Chairman Dr Erdmann pointed to the need for additional resources to steer the group through the tough economic conditions and the “enormous challenges” being faced by the business supplies industry.

NEWS

IN BRIEF

Rebrand for Complete The UK’s largest independent dealer has dropped the words ‘Business Solutions’ from its name and will now simply trade as Complete. The new branding can be seen on its electric vehicle fleet that will provide 100% emission-free deliveries in London.

opi.net poll

What are your sales expectations for COVID-related products in 2021?

20% 58% 22%

n Worse than last year n Better than 2020 n The same

The past 12 months have seen the acceleration of an online retail shift by at least five years, and this is something I don’t see changing now; consumer behaviour has flipped Theo Paphitis, Chairman TPRG, April 2021

500 million

www.opi.net

ber of Estimated num able s avail individual SKU on Amazon

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PICTURE OF THE MONTH If you have been craving not only the human interaction, but also the smell of the office over the past year, then the scented candles in the Eau d’Office range created recently by staff from US design agency R/GA may be just what you need.

Fragrances include ‘Afternoon rush at the coffee bar’, ‘Warm 96-page deck left on the printer’ and ‘Breakfast leftovers in edit suite 1’.

BOSS Charity Day in September UK trade association BOSS will hold its 2021 Business Supplies Charity Day on 15 September at the Belton Woods resort in Lincolnshire. The event – which will include golf, spa treatments and a charity dinner – will be preceded by the BOSS AGM. More information about how to support this initiative can be found at www.bossfederation.com/ boss-business-supplies-charity

$4 million

Photo: Katie Facada and Thibault Gerard, R/GA

Price paid by ACCO Brands for German visual display firm Franken

BIG INTERVIEW

Creating touchpoints, bridging gaps,

ADDING VALUE

H

At a time when the role and remit of the sales function is hotly debated, Highlands continues to carve itself a broad niche that bodes well for its – and its customers’ – future

www.opi.net

ighlands is an international sales, marketing and e-commerce agency that began life as a regional manufacturer rep group back in 1962. It was founded by the father of current CEO Bob O’Gara. Based in Atlanta, Georgia, in the US, O’Gara has spent most of his professional life at the group, buying it in 1996.

Highlands went national in 2009 and international in 2014 when it launched in the UK, shortly before Gordon Christiansen joined. Born in Denmark and raised in Australia, Christiansen had moved to the UK in 1991 and worked for Canon for several years.

His office products career began in 2004 when he joined the London Graphic Centre. He ran this London-based independent dealer in its various iterations for about ten years. Having helped to get Highlands UK off the ground, Christiansen ultimately became a partner and COO of the group in 2018.

OPI CEO Steve Hilleard caught up with both O’Gara and Christiansen in a still customary virtual meeting to find out more about Highlands’ middleman approach, its ever-wider remit and reach and, of course – befitting for a company focusing on sales – the future of the sales function.

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OPI: Bob, Highlands has come a long way since you joined your dad in the business in 1994. You started out as a small manufacturer rep group, but have evolved somewhat over the years. How would you describe the company today?

Bob O’Gara: As you say, we began as a regional rep group selling office products to OP resellers. We were pretty good at it and actually still do that now, but we also offer a lot of other services.

We diversified into facilities supplies in 2009, for example, and started an e-commerce division in 2010. Geographically-speaking, our first foray abroad was into Europe in 2014, followed by Canada in 2015.

Today, the business is split into two related, but distinct divisions – Highlands B2B and Highlands Digital. The former is essentially an extension of our roots – we help manufacturers sell into the B2B space. But the remit has widened considerably, both in terms of the manufacturers as well as the resellers we work with.

We sell everything from OP and furniture to breakroom, jan/san and MRO. And we sell those products to any B2B reseller – accounts range from Staples and Office Depot to HD Supply, Grainger and Fastenal.

Gordon Christiansen: As regards Highlands Digital, what we’ve developed is a team of specialist people who can cover all the different touchpoints a manufacturer requires to successfully sell online. For example, we have creatives who can help build brand messaging and develop compelling content. We have a tech team that builds e-commerce enabled websites, and then further downstream marketing specialists who are well versed in Google ads, social media, Amazon as a marketplace, Walmart, Wayfair, etc.

What we’re trying to do with Highlands Digital is give manufacturers a turnkey solution to maximise their online sales strategy. That offering has been well received, particularly by smaller and medium-sized vendors which don’t have the resources and talent required to drive this side of the business from within.

BIG INTERVIEW Bob O’Gara & Gordon Christiansen From left: Gordon Christiansen & Bob O’Gara

What we do is offer a lot of solutions to even large, sophisticated companies that sometimes just haven’t got round to really exploring the B2B angle

OPI: You work with Reckitt I believe. Is that a good example of what you’re referring to?

OPI: You mention COVID. How has the pandemic impacted your business? Have you had to reposition your organisation in any meaningful way?

BO’G: We’ve been lucky. Those decisions we made years ago to get into e-commerce and diversify into facilities supplies have played out well for us. I’m not saying all of our clients did well – they certainly didn’t. But overall, we managed to get through it relatively unscathed.

It speaks to the importance of diversification and not being reliant on maybe just an individual channel or a single class of products.

So no, no fundamental changes, just an acceleration of what was happening already. It

May/June 2021

OPI: But some of the manufacturers you work with are not small fish, they are fairly substantial organisations. In an industry that’s pretty mature, how do you keep finding ways to support the brands you collaborate with? Is there a limit to what you can do or are there more opportunities in terms of expansion and diversification?

BO’G: You’re absolutely right, we work with some large brands. One of the challenges they sometimes have is the B2B side of things.

The methodologies and how you attract B2C customers through retail are pretty well defined.

B2B is a different – and difficult – proposition to get their heads around.

What we do is offer a lot of solutions to even large, sophisticated companies that sometimes just haven’t got round to really exploring the B2B angle. That’s certainly an opportunity.

BO’G: It is. Reckitt is very good at many things, but one of the effects of the pandemic for companies like Reckitt, or Henkel with its Dial brand as another example, has been to awaken their senior leadership to the potential that exists in B2B. Many of those companies couldn’t ramp up manufacturing capacity fast enough to meet the demand in the marketplace. That’s no longer the case, but the opportunity to extend those great brands and get them better established in the B2B world is now clearly understood. It’s exciting to see how some of them are addressing this with investments. Highlands is fortunate to be right in the middle of some of the action.

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Bob O’Gara & Gordon Christiansen BIG INTERVIEW www.opi.net 18

gave us, like any major event, the impetus to think more deeply and to move faster. It perhaps also drove home the fact that market share may shift from one channel to another. But the market size is still there and it’s still growing.

The more end-user engagement we have, the more successful our brands will be. That is true of any brand – big or small. Letting people buy how and when they want and from whom is critical and has really shaped our thinking.

On the digital side, it’s one of the reasons why we are so engaged in building direct-to-consumer websites. We do this very carefully so it doesn’t disrupt distribution, but we find it gives brands another way of reaching consumers and having a relationship with them.

At the same time, as I said, distribution is super important and we always try and make sure that our products are available from as many sources as possible.

GC: There’s been a lot of research on this.

Increasingly, people buying for business

behave much more as if they were buying for themselves and the notion of B2B is becoming a bit redundant. As Bob mentioned, we have to facilitate this concept of being able to purchase anytime, anywhere, anyhow. Whether you are a manufacturer, a reseller or somewhere else in the chain, you’re going to struggle if you don’t.

OPI: What does the product mix look like for Highlands nowadays? Does it vary across the two continents you’re in and indeed the resellers you sell to?

BO’G: Yes, it depends on the geography and also the marketplace. Broadly speaking, however, increasingly we’re less office products driven in terms of the manufacturer brands we represent.

It’s an important part of what we do, don’t get me wrong, but our vision is that channels are blurring anyhow and that it’s the end user who matters the most.

We used the pandemic as an opportunity to change our field sales model to be more end

manufacturer into the reseller and driving that as an outsourced model can be very effective for both parties, because you can kill three, four, five, six birds with one stone.

I got excited about the idea of being able to accelerate sales through different channels. I guess I was buying more into the vision of what Highlands could become than what it actually was at the time.

OPI: You’re in the business of selling solutions rather than just products. How receptive is your traditional reseller audience to that notion, particularly as regards sales teams and their ability to understand and be trained in dealing with these new opportunities?

BO’G: It depends on the organisation, but the successful ones are completely on board and recognise the necessity to get trained, accept new solutions and deploy them in the marketplace.

OPI: I’m guessing you’re not where you want to be in Europe yet though.

GC: We’re not. As you know, we’ve recently started working with Jonathan Smith on a part-time basis to help us develop deeper relationships with European resellers. It’s going well and those relationships at headquarter, merchant and senior sales and marketing levels are really important.

If we keep expanding into Europe, the big challenge naturally is going to be whether to start setting up an infrastructure on the continent. Employing people in mainland Europe, particularly countries like France, can be quite a challenge, so we’ve so far only focused on managing HQ relationships.

We do quite a lot of e-commerce work for several brands across Europe as well and that helps. Brexit – again – has somewhat changed our thinking in terms of what we need to do and how to do it. I definitely think our business in Europe over the next three to five years will evolve slightly differently than that in the US.

OPI: Assuming you’re speaking mostly for the North American market here Bob, is that also true for Europe Gordon?

GC: Overall, the dynamics differ a bit from those in North America, but there’s definitely an awareness of the opportunities. The European market is going through some extreme strains and stresses at the moment. In the UK certainly right now, the ramifications of Brexit are evident – product simply isn’t available as quickly as it used to be.

I definitely think our business in Europe over the next three to five years will evolve slightly differently than that in the US The fallout from the former Staples and Office Depot empires being broken up is another interesting component. Bruneau extending its geographic reach through these acquisitions, RAJA getting heavily involved in the office channel – there are a lot of repercussions from these two operators fragmenting.

Some companies are also very strongly positioning themselves in the online space as a supplier of choice, such as Germany’s Böttcher.

In the case of Printus, it’s a definite repositioning to that same online space.

As regards Highlands specifically, we have slightly different product ranges here. And, of course, we can only offer the solutions that are supported by the clients we represent.

OPI: In what way?

GC: We’ll probably have to provide a bit more of a total solution for manufacturers, particularly those coming in from outside Europe looking to sell on the continent. It could include things like customer service, warehousing and logistics.

This is not something we offer in the US; we don’t need to because of the existing infrastructure.

OPI: Understood. In terms of anyone reading this interview, what sorts of businesses out there should be picking up the phone and talking to you then?

GC: Any manufacturer that is looking to explore new markets, be it in the US or Europe, and wants to create some sales and marketing efficiencies.

OPI: Sticking with Europe for a moment longer, this market is so much more fragmented than North America, with many substantial large regional or national players. How do you address that?

GC: It’s a challenge. Market dynamics in the Nordic countries are very different to those in Spain, which again are different to the specifics in Italy, Greece, France or Germany. Breaching this fragmentation is difficult for an organisation like ours that is still relatively small in Europe.

This is why events such as OPI Partnership have been successful for us in the past. In that setting, we meet new resellers with the brands we represent. And we deliberately approach these players with brands that are a bit left field, but

May/June 2021

OPI: Gordon, you came on board shortly after Highlands acquired a small business here in the UK in 2014. What attracted you to the model of the company?

GC: When I first met Bob, he was telling me about the business as it was then and where he envisaged it to go. Having worked on both the vendor and reseller side in the past, I saw how providing really good sales representation from the

BIG INTERVIEW Bob O’Gara & Gordon Christiansen

user led, and we’ve invested significant sums in its regeneration. As an example right now, we’re highly focused on the largest school districts across the US. There’s so much funding going there to help them safely re-open – that offers real potential to our vendor partners.

As the pandemic eases further, we will also try and help businesses to securely re-open – we’ve got a great portfolio of clients to support this.

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Bob O’Gara & Gordon Christiansen BIG INTERVIEW www.opi.net 20

interesting. They might present a new opportunity for the reseller as opposed to a similar product they can buy from their existing supplier.

It’s about getting out there, knocking down doors – and pre-conceived ideas and misconceptions – and selling some stuff.

OPI (laughs): Thanks for the plug Gordon.

We’ll have a lot of new resellers joining us for this year’s later-than-usual Partnership in September, so hopefully that’ll work well for you guys too. Let’s talk about the role of sales people – we’ve touched on that briefly already.

Gordon, you attended a recent OPI virtual event where sales-i’s Kevin McGirl referred to the sales person of the future. Did anything in his presentation pique your interest that perhaps reshaped or solidified your opinion?

GC: It reinforced some of the things we were thinking about as an organisation ourselves. The ‘death of the salesman’ is much talked about these days, as you know.

The reality is, if you’re not adding value to the sales process, then your job is going to be made redundant. It just is. It’s about adding value, that’s the bottom line.

A lot of that value is generated at the front end and digitally. OPI has written about this before – younger people don’t want to see sales reps anymore. They’re very happy making their decisions remotely. They are doing their research online, so much so that 70% of the decision process is made before they even speak to anybody. As such, organisations have to adapt their strategies. Sales people of the future are going to be increasingly sought after because they will be highly skilled, highly trained and there will be fewer of them, so they’ll be a scarcer resource.

Sales people of the future are going to be increasingly sought after because they will be highly skilled, highly trained and there will be fewer of them, so they’ll be a scarcer resource OPI: One of the things Kevin mentioned was the potential influence of AI on the reseller’s ability to sell. Do you share his view that AI could become a game changer?

GC: I do. Using AI to satisfy client needs, deal with incoming enquiries, fix customer service issues, all those kinds of things, will definitely be a game changer.

Editor’s note: look out for the July/August issue of OPI magazine where Kevin McGirl will explore this topic in more detail.

OPI: What are your views on how the marketplace – I know how much you dislike the term ‘the office products industry’ Gordon – will shake out in the next year or two, particularly as regards the bigger channel players? There’s so much happening on both sides of the Atlantic, some of which we have already alluded to with Staples and Depot disbanding in Europe, for example.

BO’G: That’s an interesting question. It’s difficult to assess how well many of these businesses are performing since there’s only one publicly-traded company left.

More acquisitions are clearly on the cards for both Staples and Depot in the US, so there’s a lot of jockeying going on among independents. The benefits of those two entities coming together in some guise are also pretty clear. Maybe that will make them robust enough to be competitive in an ever-changing and difficult marketplace.

Editor’s note: at the time of going to press and after this interview took place, The ODP Corporation announced that it would split into two separate businesses – see Analysis, page 6.

GC: Because we work across so many different channels, we always look way beyond ‘our industry’ – and you’re right Steve, I don’t like to be constrained by that term. The Home Depot buying HD Supply was really interesting for us, as we do a lot of business with both. The way in which Grainger has reshaped its sales organisation is something else we’re looking at.

OPI: You used to run a local player in London all those years ago. If you were back in that dealership now, what actions would you be taking to future-proof your business?

GC: The key for me would be to establish what you’re really good at. As a local independent OP dealer, you can’t compete with Amazon head to head – end of story. Find what you’re good at and make sure there are enough people out there who like what you do.

OPI: As regards Highlands, what are your most pressing priorities for the coming year or two?

BO’G: Execution is important. Improving our engagement with end users so that we can have

OPI: We talked about consolidation earlier.

As a final point, there’s been quite a bit of that in your own community – and by that I mean manufacturer rep groups in their narrowest and broadest forms. Do you foresee further movement in this regard? If so, will you likely be a part of it?

BO’G: Our interest would be more in developing stronger links to other verticals, such as the industrial space potentially. I would view that as a better opportunity.

GC: There are a lot of great rep groups out there in many different channels. We’ve tended to plough our own furrow, however, and we’ve deliberately re-engineered our business according to what we’re seeing in the market and what we feel are the right decisions going forward. We wouldn’t typically react to what other rep groups might be doing.

I’m a huge advocate of Amazon’s philosophy: always think about your customers and what’s best for them. Ideally, wherever possible, try to be a little ahead of the game, anticipating what’s next and creating the infrastructure to help customers navigate the choppy waters ahead. If we can do that, customers benefit and we benefit. A win-win, as the saying goes.

May/June 2021

OPI: Pretty close to you in Atlanta, Bob, is S.P. Richards (SPR). In the event of a potential Staples/Depot tie-up, in whatever format depending on what the Federal Trade Commission feels comfortable with – do you think that would make this wholesaler incredibly vulnerable?

BO’G: Or, on the other hand, you could argue that SPR might become more important as the last bastion of independent dealer support, so to speak. I would also wager that the company is already doing quite a bit of business outside the traditional OP channel, so it might be better positioned than we think. I don’t know is the honest answer.

a sustained opportunity with them as different solutions present themselves.

GC: The goal from a Highlands Digital perspective is precisely what Bob’s just said: execution. But similarly, it’s about delivering real added value. Some of the clients we work with are relatively digital savvy, but not necessarily so when it comes to promoting their products using things like Google Ads, LinkedIn, other social media and so on.

It’s often tricky to really get across the message that the “we’ve always done it like this and we managed ok” attitude doesn’t work anymore. Buyers are changing their habits, so the companies selling products need to do the same. It’s a slow process, but I’m confident we’re getting there.

BIG INTERVIEW Bob O’Gara & Gordon Christiansen

The upshot is, if something is new and exciting, investment follows. You get to the end of that investment cycle and consolidation happens – we see this right now in many of the very mature B2B channels. Staples and Depot will continue to exist – Office Depot most likely without its retail stores. And, as Bob mentioned, they will continue to fight over independent dealers to see which ones can become part of their strategy, federation or otherwise.

But what about small to medium-sized independents, the typical and traditional office products dealers? Can they continue to exist and survive? Many will, but…

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HOT TOPIC

SUPPLY CHAIN

stresses

Not necessarily caused, but certainly perpetuated by COVID-19 is the current global supply chain crisis. With inflation on the rise, the business supplies sector is anything but immune, as OPI’s Heike Dieckmann finds out

T

alk of a myriad of global supply chain issues has been relentless for months. In a rather simplified and far from comprehensive summary of events, COVID-19 and the resulting and ongoing stay-at-home, no-travel mandates have prompted unprecedented surges in demand on the B2C side. Sales of home sports equipment, toys, arts & crafts, home office furniture and technology have skyrocketed – many of these times were ordered through online channels and come from Asia.

As an example, according to the Wall Street Journal, 177 container ships arrived in February in Southern California’s main shipping ports – which, incidentally, handle a third of all imports into the country – carrying more than 800,000 containers.

That’s 31% more ships and 49% more containers than in the same month in 2020.

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All the supply chain challenges are magnified in those categories that are experiencing exponential growth

22

Meanwhile, the main shipping route between Asia and core European ports such as Felixstowe (UK), Rotterdam (Netherlands) and Barcelona (Spain) takes in the – now very well known – Suez Canal. Shipping news journal Lloyd’s List estimates that approximately $9 billion worth of goods – that's $400 million an hour – passes through the Suez Canal daily. It’s not hard to imagine the financial and economic damage inflicted when a container ship like the Ever Given gets stuck in this shipping artery for six days.

Behind the big media headlines are bottlenecks in all parts of the supply chain. Costs for raw

materials and components such as plastics, pulp, steel and semiconductors have exploded.

According to credit rating agency Fitch Ratings, global shipping rates have peaked, having roughly quadrupled on the Asia-Europe route and doubled on Asia-North America journeys (for an inkling of the scale of the world’s top ocean freight carriers, see ‘Where the money is going…’, page 24). Once products reach their country destination, further problems in terms of domestic transportation await, among them severe driver shortages. This is a problem particularly prevalent in the US right now.

Jeff Nielson, VP of Operations & Customer Experience at Fellowes Brands, offers a broad overview of what is happening: “With all the supply chain issues that are occurring, all of Fellowes’ products are experiencing some effects – both our domestically manufactured items and our sourced/ manufactured items from overseas.

“We are seeing some unprecedented demand, especially within the air purification category.

But we have also experienced growth in our work-from-home product categories like household shredders and even from our Bankers Box division within the moving category. All the supply chain challenges are magnified in those categories that are experiencing exponential growth.”

SHORTAGES AND PRICE RISES All of the above point to two sobering conclusions for operators in our industry: product shortages and price rises. Both are topics everybody is discussing behind closed doors but few want to talk about too frankly and openly.

As an industry executive in the US – indeed one preferring to remain anonymous – comments as regards shortages: “We’ve never had a bigger problem in the many years I’ve been in this

BALANCING ACT Passing on price increases is always a balancing act and often a question of when rather than if.

One global manufacturer with a large footprint in Europe explains: “Have we experienced shortages and price increases? Absolutely. Have we passed them on since the beginning of the year? Not yet.

“We talked about it but decided not to. You need to balance two things: financial resources and expected results. The volatility we’ve seen over the past year uses up a huge amount of internal resources. On the one hand, you need to do all the calculations, very frequently; on the other, your sales force often misses the chance to talk with customers about sales opportunities, promotions, driving the business, etc, because so much time is spent on talking about price increases.

“Resellers do not typically accept these overnight, so it’s easy to spend two or three months just discussing prices. You have to weigh it up: do we need to do this now or can we wait, absorb the increases and add them during the standard pricing review at the beginning of the year? Is it better to pass on small increases incrementally or in one larger chunk later?

“Resellers don’t like price hikes – end of. And we have fixed contracts with them that last from 1 January to 31 December. If you try and break these contracts, you’ll likely spend a lot of time fighting with customers. Whereas if you implement increases in January, it’s not a question of when but how much.”

In ‘normal’ circumstances, this is certainly true, but these are not normal times, as Smith explains: “It’s certainly easier if you can do that, but when you’re faced with the changes we’ve seen, it’s hard to wait. One of the raw materials we use has gone up 71% since January. In our commodity business and with the margins we work with, Deflecto hasn’t got the luxury to absorb these till next year.”

Jan Van Belleghem, Managing Director at European purchasing alliance Interaction, offers his thoughts from a private label perspective, meaning Interaction’s Q-Connect range: “Most of our Asian suppliers settle for price increases in the mid-to-high single digits. Margins for Q-Connect suppliers are much tighter than those of our key vendors, therefore prices tend to go up with a higher percentage, which is logical. But they also tend to come down quicker.

6%

65%

opi.net poll

To what extent is your business being affected by global supply chain issues? n A lot n A little n No effect

May/June 2021

PLASTIC PANIC Any PVC-based products are among those considerably affected by the crisis. Two companies that know this only too well are Deflecto and Avery. Both vendors source from China but also manufacture locally in the US. Pricing has been – and continues to be – a huge issue.

Avery President Mark Cooper comments: “Inflation is a big issue right now for commodity plastics such as polypropylene and we’ve announced price increases across all products that are affected by this. We gave notice of these at the end of February and they will come into effect at the beginning of July.

“It’s not something we do very often, but the amount of increases we’re seeing, the wide range of suppliers applying them and the sheer level in terms of percentages are just too large to sustain for any given period. If this inflationary pressure continues, it’s not out of the question that further rises could follow.”

Kenneth Smith, VP and General Manager at Deflecto, a company which makes everything from desk accessories, storage and organisation products to chair mats, signage and PPE, concurs: “The major resin suppliers issued a force majeure because demand had exceeded supply so much.

Many of us are now on allocation because of supply constraints. When this happens, pricing goes up, exponentially so.

“The increase we implemented at the start of the year was the result of demand shift from our core products to new PPE-related items. Before we had this spike in raw material costs at the end of 2020,

we were hoping that we could absorb small changes with better efficiencies.

“But then PVC and all resin went up dramatically. In parallel, we saw domestic and international freight costs go up. Combined with the 29% bad weather in March in Texas and Louisiana which really impacted resin suppliers and hurt domestic supply, it was the perfect storm. We were relatively lucky because we buy early, in contracts and in large quantities. Therefore, we were able to hold off as long as we could before passing increases through, but it now looks as if we’ll have to implement another price rise soon.”

HOT TOPIC Global Supply Chain Challenges

industry. Demand is significantly outstripping supply. It started with a lack of containers, then a lack of space on a container followed by much longer offloading at the port.

“We’ve taken great strides over the years to make the supply chain as efficient and precise as we possibly can. It was stretched initially towards the end of last year – now we’re at breaking point.

And it’s unlikely to get better anytime soon.

“Before you know it, the big retailers are going to buy freight space to bring in their Christmas stuff, moving ahead of us in terms of allocation.”

As regards shortages, there is a perception among some that the US OP wholesalers have struggled more than others in terms of getting goods. Says Mike Gentile, CEO of Independent Suppliers Group (ISG): “There’s no doubt that inventory levels of the manufacturers have been severely impacted by the shortage of shipping containers, raw material constraints and increased demand. But they are still faring better than the wholesalers, particularly if you factor in private label products and manufacturers diverting product to Amazon and other online players.

“We are strongly encouraging our dealers – and have done so for some time – to ‘buy direct, sell brand’. This means supporting the ISG direct buy manufacturers. When you sell brands, you sell at a higher average price, your gross margin dollars are greater and you are less vulnerable and not so reliant on private label.”

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Global Supply Chain Challenges HOT TOPIC

“Our Asian partners realise that our transport costs have gone up dramatically, so they share our burden. With most of them, we’ve been on a long journey and they know that we regularly check all pricing influences. And, as I said, from the moment the pressure comes off raw material prices, they tend to drop their price for us quite quickly as well – one supplier has done this already in April.

“As regards the rest of the year, we foresee freight costs coming down from July onwards and a gradual easing of raw material pricing in Q3 and Q4.”

Pointing perhaps to differing geographic business practices, he adds that in Europe, Interaction also tends to stick to contractual pricing review periods with its suppliers, in line with what the aforementioned Europe-based vendor said.

Stand up for your company, your brand, your shareholders and implement what’s justified Back across the Atlantic, price rises are commonplace and broadly accepted, says Ken Schroeder, CEO of US independent dealer FriendsOffice: “Price increases are rampant currently, but our vendor and wholesaler partners are good at giving us some notice, so we haven’t had too much pushback implementing them to the end customer. We’re passing on most increases immediately and wherever we can. It’s not always possible due to contractual obligations, but eventually, they will get passed on.”

“It’s also worth noting that, quite frankly, we haven’t seen a lot of increases in the past few years. As such, I think we at Friends and also our customers are a little more understanding.

And while the shortages we’re seeing are predominantly a result of the pandemic – and I’m hoping this will get better in the second half of 2021 – the price hikes are additionally due to general labour cost increases and the fact that manufacturers were holding prices down for several years.”

DAVID VERSUS GOLIATH Nobody’s doubting the reality of inflationary pressures. But could it be argued that the larger the customer, the more leverage they have, a permanent bone of contention for smaller operators with less buying power?

ISG’s Gentile maintains there’s still often a David versus Goliath mentality. “The list of manufacturers with Q2 price increases is the longest I’ve seen in many years. But look at some of the publicly-traded vendors’ Q1 and Q2 earnings – they expose some of the intentional inflation. I understand the reasons for many increases and it’s imperative they get passed on because we must have a viable supply chain in the industry.

“My message is this: don’t just pass them on to independent dealers because you can, and when Staples and Office Depot push back and say they will not accept any price increases – because they think they can – do not acquiesce to them.

Stand up for your company, your brand, your shareholders and implement what’s justified.”

Strong words. Avery’s Cooper concludes that keeping continuity of supply is the main priority right now. But, he adds: “At the same time, you need to be careful not to panic about it, thereby creating the toilet roll syndrome we had last year when the pandemic first hit and everyone thought there was going to be a shortage and overstocked.

“It’s a conversation you should have: assure customers you can get what they need, but only what they really need as opposed to excess inventory. Don’t create a domino effect and fill up a bunch of warehouses which generates a shortage further down the line for those that haven’t ordered in bulk. It’s walking a tightrope, that's for sure.”

WHERE THE MONEY IS GOING...

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The Ocean Freight Market Update, published on 29 April 2021, reveals some astonishing financials for the world’s biggest ocean carriers.

Revenues ($ billions) Net Profit ($ millions) Carrier 2019 2020 Change (%) 2019 2020 Change (%)

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Maersk Line 38.890 39.740 CMA 23.113 24.230 COSCO 20.988 23.936 Hapag-Lloyd 14.137 14.519 Ocean Network Express (ONE) 11.724 12.640 Evergreen Marine 6.166 7.006 Hyundai Merchant Marine (HMM) 4 5 Yang Ming 4.826 5.118 ZIM 3.300 3.992 Wan Hai 2.360 2.770

Source: DHL Global Forwarding

2% 5% 14% 3% 8% 14% 16% 6% 21% 17%

509 2,900 470% -68 1,860 2,835% 341 1,732 407% 406 1,054 160% 35 1,599 4,469% 4 824 22,448% -1 0 121% -139 405 391% -18 518 2,978% 116 383 231%

OPINION

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

O

www.opi.net

n 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.

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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

David Guernsey, CEO, Guernsey

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.

[BPGI] was a real sea change in terms of how the IDC worked together.

We made tremendous strides 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

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.

David Guernsey

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.

For much more on Guernsey’s 50 years of independence, listen to OPI Talk – visit opi.net/podcast

OPINION

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.

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

David Guernsey at the opening of a new distribution centre

May/June 2021

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.

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SPOTLIGHT

DEVELOPING

a multi-local approach Former Fiducial Office Solutions Managing Director Laurent Bertrand is now leading France’s largest independent dealer, Lacoste Dactyl Bureau & École. In a currently rare outing, OPI’s Andy Braithwaite recently caught up with Bertrand at the firm’s head office near Avignon

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L

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aurent Bertrand was not away from the French office products industry for long following his departure from Fiducial Office Solutions in mid-2018 after 15 years with the company. Nine months after leaving the Lyon-based reseller, he was named Managing Director of the country’s largest dealer, Lacoste-Dactyl Buro (LDB), as it was then known.

LDB came into existence at the end of 2018 when two regional French dealers – Lacoste, based in the south, and Dactyl Buro, located in the centre of the country – merged in a leveraged buyout. This transaction created France’s first ‘multi-local’ independent reseller, with the potential to expand its reach nationwide. In 2019, the company generated annual revenues of about €100 million ($120 million), employed 520 staff and had 40 locations (offices, warehouses and stores) dotted around the country.

When Bertrand joined LDB, he was tasked with integrating the two companies, moving them onto a common IT platform, developing a single e-commerce solution, and optimising the distribution network for its office products and educational supplies offerings. He was right in the middle of this project when COVID-19 hit in March 2020.

“It was a real nightmare,” he says. “We had to switch almost overnight to coordinating everything in a virtual working environment.

Having said that, the fact that the level of business declined dramatically did provide a

window of opportunity to make good progress with various aspects of the integration, especially as regards the supply chain.

“When I look back now, it’s difficult to say whether COVID made things more challenging or, strangely enough, actually helped us,” he notes.

“But when orders began picking up again in June [2020], we were up to speed both in terms of logistics and the IT systems.”

REBRANDING In January 2021, the two companies legally merged and the business rebranded to Lacoste Dactyl Bureau & École (LDBE). There was a subtle change in the spelling of ‘Bureau’ (from Buro) to the standard French form of the word ‘office’, while ‘École’ was added to highlight its expertise in the school supplies market.

It’s difficult to say whether COVID made things more challenging or, strangely enough, actually helped us

Laurent Bertrand

“It was important to show our true activity and to illustrate through our logo and trademark that we are a French player,” Bertrand explains.

The approach to merging the legacy Lacoste and Dactyl Buro businesses has been a pragmatic and realistic one. It has not been a question of taking a hammer to either and trying to drive home a single corporate culture or imposing one set of values over another.

Quite the opposite. Bertrand recognises there are separate ‘north’ and ‘south’ cultures, but he is happy to keep it this way. “You have to accept the differences and try and build on the strengths of each to develop the whole,” he states. “Company culture isn’t something that is decided; it’s the result of something; in our case, the realisation of our project and what we want to achieve.”

There are office assistants in their twenties who want to deal with a real person “If we had tried to put both sets of products in the same warehouse, firstly they would not have fitted and, secondly, we would not be able to accommodate the growth plans we have,” explains Bertrand.

LOCAL HEROES

In March 2021, Lacoste Dactyl Bureau & École (LDBE) introduced its first-ever catalogue devoted entirely to products made in France.

Managing Director Laurent Bertrand recognises that, as a result of COVID-19, customers have become more aware of the origin of the products they purchase.

“While this might sometimes present buyers with a dilemma – between price and where an item is made – we believe local purchasing is a trend that is here to stay,” he says.

Certainly, France is well placed when it comes to business products manufacturers. With companies including Pilot Corporation, BIC, Hamelin, Exacompta Clairefontaine, CEP, Tarifold, Pentel, Viquel, Proven and Jex which all have production sites in the country, LDBE has been able to fill a 135-page catalogue with more than 1,800 ‘Made in France’ items.

Pages describing the manufacturers highlight areas such as the number of workers employed in France, the locations of production sites and company histories.

“We can all play a role in safeguarding French manufacturing jobs,” notes Bertrand. “The companies selected for our catalogue represent more than 10,000 employees. Not only that, but reduced shipping distances also have an important impact on reducing carbon footprints – and this is something purchasers are increasingly taking into account.”

May/June 2021

GROWTH OPPORTUNITIES One of the planned synergies from the merger is to develop the school and public sector markets in the north of the country. For example, while Lacoste has a thriving business in the education channel – with annual sales of around €20 million – Dactyl Buro had virtually nothing in this segment.

The target is to grow this to €20 million over the next 3-4 years. The early signs are encouraging; this year, school supplies sales in the north of France should be between €3-€4 million.

Other areas Bertrand has identified for organic growth include developing the product assortment to gain a greater share of customer wallet. Packaging, health and hygiene, breakroom and furniture are some of the categories he is targeting. There are also geographical expansion opportunities, particularly in the north-west and south-east of France.

While LDBE does not have a large retail presence with just 11 outlets, growing this part of the business is also on Bertrand’s to-do list. He isn’t giving much away about his retail expansion plans, but is hoping LDBE will become an attractive choice for entrepreneurs from other banners who are looking for something different or are considering selling their businesses.

There has been a lot of talk in the office products world recently about the changing role of the salesperson, even questioning whether resellers actually need an outside sales team.

For Bertrand, sales is a “human story”, and the rep remains a core part of the customer service proposition. That, of course, is dependent on whether the customer values this human interaction. Bertrand appreciates that some buyers are self-sufficient and use online-only channels, but he firmly believes there are still many companies – especially among LDBE’s core base of SMBs located in the French provinces – that “want to do business via a human being”.

“People value our approach of giving advice, helping to find the right products, and saving them time and money,” he notes. “And this is not just with older generations. I’ve been out on customer

visits and there are office assistants in their twenties who want to deal with a real person. The French market is not all about catering to those working in a big office tower in La Défense [main business district in Paris].”

With the LDBE entity now established, is Bertrand looking at making any acquisitions, especially considering the reseller’s private equity backing? “There are always external growth possibilities,” he says, hinting that something might occur in the near future.

One thing is certain: LDBE isn’t in the running to acquire Office Depot France, but there are plenty of other fish in the sea in what is still a relatively fragmented French market.

SPOTLIGHT Lacoste Dactyl Bureau & École

In terms of the two main locations – Le Thor, near Avignon (Lacoste) and Bourges (Dactyl Buro) – there are distinct roles for each. The Le Thor site is now set up to handle all distribution for the 12,000 school SKUs, while the 10,000-strong office supplies range is shipped from Bourges.

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INTERVIEW

PUSHING the boundaries

Declining demand for traditional OP, ultra-competitive pricing and COVID realities are all contributing to Australia’s challenged business supplies landscape.

But options for a bright future remain plentiful, as one optimistic independent dealer tells OPI’s Heike Dieckmann

Q

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uick Corporate Australia (QCA) is the third largest B2B reseller in the Australian marketplace, after Winc in the top spot (by some margin) and Complete Office Supplies (COS) in second place.

Perth, Western Australia-based QCA is also the largest dealer in the Office Choice dealer group, perhaps a lesser-known fact given its unbranded status in the organisation.

CEO Darren Hayes has been at the helm of the reseller for eight years and a member of the Office Choice board for over two. With a background predominantly in the telecommunications industry, he’s been bringing a bird’s eye view to the table that has served the company well in these ever-changing times.

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OPI: Shall we begin with a quick round-up of QCA’s history?

Darren Hayes: Certainly. The company started on the West Coast of Australia about 30 years ago as Quick Cup, mainly supporting the canteen supply into small to medium-sized firms. Our owners have many business interests here in Australia and overseas, and they had a real ambition for Quick Cup to grow and become a national operator.

Eight years ago, they completed their fifth acquisition in the country in the office products sector, thereby finally gaining a national footprint with what were formerly several smaller players in the various territories. It was at that time I was brought in to consolidate the business and create the synergies of a nationwide operator. We did that and have had good, steady growth since.

There’s another side to the business which is not branded under the QCA name. We have a 49% stake in a company called Kulbardi, the largest indigenous-owned holistic workplace supplier in Australia. This joint venture started about six and a half years ago and has been hugely successful since, with double-digit growth on a quarterly basis. The appetite for indigenous engagement in Australia has grown very strongly over that period.

OPI: Is that where the Bibbulmun range Office Choice dealers sell comes from?

DH: Yes, Bibbulmun is part of QCA’s and Kulbardi’s indigenous-branded product offering.

We bring the majority of this high-volume range in directly from overseas. Where it differs from other products is that every time it is bought by a customer, a percentage of the purchase price goes back to what’s called The Bibbulmun Fund.

Price is not the key driver behind customers wanting to work with us. It’s more about finding those logistic irritants that customers have and fixing them OPI: So where are the current DCs located?

DH: There’s one here in Perth, Western Australia, another in Sydney, New South Wales, and the last one in Melbourne, Victoria.

OPI: Do you work with GNS Wholesale Stationers as well? I believe Office Choice has quite a close relationship with this operator.

DH: To a degree. The difference between our business and some of the other members of the Office Choice group is that our buying volumes are quite large, so we don’t necessarily need to rely heavily on partners like GNS which can break the product down into smaller consignments.

OPI: Retail shelving is pushing the boundaries of office products or even the broader term of business supplies.

DH: Absolutely. It’s an example of a bit of lateral business and of moving where that business is.

Logistics is logistics, whether it’s pens and pencils or shop fittings.

Our core range is in diminishing demand as a result of technology, so we need to look at what else we can do. We’ve got these big warehouses around the country. Let’s fill them with what customers want.

We’re in the lucky position of not being too constrained by our size. When I speak to my leadership team, one of the analogies I always use is that Quick Corporate is like a battleship rather than an aircraft carrier. When I look at a competitor such as Winc, for instance, I see one big beast, fully laden and travelling in one direction. For an operator like that to change its business offerings and strategic approach is difficult and takes time, as I have experienced myself working with big multinational businesses.

We, on the other hand, can be a bit more nimble as a battleship; we can tack and change how we do things quite quickly. And that’s what we do: look at the businesses we engage with and see what else it is outside their workplace supplies that they have issues with.

OPI: How would you sum up the past 14 months or so? It would be odd not to mention COVID-19 in the context of both QCA, but also the Australian landscape as a whole.

DH: As a company – much like everybody else – we obviously saw a growth curve in terms of all kinds of PPE, sanitising and jan/san products.

A bit of panic buying occurred initially, but we haven’t seen the initial spikes continue. In other categories, we’ve seen some declines.

May/June 2021

OPI: What’s your core market and how do you differentiate yourself in that space?

DH: It’s definitely the mid-market where we see our biggest value proposition and where we sit most comfortably. In terms of differentiation, that can be a challenge. We all sell pretty much the same products: paper, pens, toner, ink – the offering is very similar. We also sell in the various adjacent categories, such as breakroom and jan/san, and we’re big on promotional goods and corporate uniforms and workwear.

Quick Corporate Australia

OPI: Let’s go back to QCA. You say you have a solid national footprint in the country now.

DH: We do. Up until two years ago, we had distribution centres in all five key states across Australia. But part of our business strategy was to get as tight and lean as possible as a result of margin pressures.

Distribution was one area we looked at. We wanted to create a more efficient supply chain to the marketplace, with the big caveat that we still had to deliver the next day for orders received by four o’clock the previous afternoon.

We found we could make this promise from three strategic locations in the country. As of late last year, we are down to three DCs, obviously bolstering those three to take on the workload and capacity of the two other states where we closed.

Many of the products in our portfolio are sold on price. The Australian marketplace has been challenged in this regard, so much so that profitability has been hit very hard. Our big competitors know all about it, hence the consolidation that’s taken place in an effort to gain some critical mass and bring back profitability.

Although I personally would question that the needle has really moved as regards profitability.

As regards Quick Corporate, price is not the key driver behind customers wanting to work with us.

It’s more about finding those logistic irritants that customers have and fixing them. I give you one customer as an example. It’s a large retailer in this country that had issues with being able to get the supply chain to deliver the shelving capabilities for all its retail stores on a timely basis.

This operator approached us and asked if we could carry those shelves in our DCs. We looked at the specifics, the supplier we needed to work with and came to an arrangement. We now stock all those retail fixtures and fittings. The retailer has 260 locations around the country – and can draw on our inventory and fulfilment on a daily and weekly basis.

INTERVIEW

That fund’s charter is to support indigenous people in Australia.

The work we do is quite varied. We arrange business camps, for example, where we teach indigenous people how to take an idea from conception to real-time execution. We also support indigenous scholarships around the country with some major universities.

We’ve seen a high resonance to this programme, particularly in the large corporate sector where businesses can be seen as good corporate citizens while their staff get to use the product and appreciate that part of the proceeds go back to a great cause.

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Quick Corporate Australia INTERVIEW

To be honest, we could not be luckier as a country when it comes to the impact of COVID and we’ve definitely benefitted from our remote locality.

Here in Western Australia, it’s almost like life goes on without COVID. We’re under no illusion that this might change, and we continue to look and plan ahead to make sure that we’re in a good position whatever happens.

One big standout – and again, we’re no different from anyone else in that regard – is the shift to work-from-home (WFH), especially from traditional city buildings. And we’ve seen a real resilience of the workforce actually returning to the workplace.

It’s been a challenge to supply those businesses where staff are currently working from home. From a residential delivery perspective, all three of us in the B2B space are certainly capable of delivering to the home easily, but I just haven’t seen the take-up. Perhaps COS and Winc would disagree – Winc has launched this membership programme for home workers earlier this year – but that’s my perception.

Operators like Officeworks, meanwhile, have really capitalised and benefitted from that shift, as employees have been happy to pop down in their car and pick up whatever they need from their local Officeworks superstore.

OPI: But being more at home in the mid-market as opposed to the large corporate sector, have you not been a bit sheltered from that particular hit?

DH: It’s a valid question. As I said, it’s the large companies where we’ve been seeing the biggest shifts to WFH. We’ve had some leakage, no doubt, but I would argue that the likes of Winc which are very heavily engaged in this top end of the market would be feeling it more. COS to a slightly lesser extent, though still very noticeable.

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OPI: What about Amazon, a fairly established player now in Australia. Do you see leakage there too, COVID or otherwise?

DH: My answer at the moment is “I don’t”. I’m sure Amazon will have benefitted from some incremental growth from our sector. But do I see it as a huge competitor in our industry, in the way that Officeworks is threatening to be in the B2B space? No. Australia is a very large place and Amazon’s fulfilment centres are not located across all of the country, so they can’t provide a next-day delivery capability nationally.

Amazon is not my biggest concern now.

But I firmly believe we – and by that I mean the independent dealer channel – could be doing much more to become a formidable force against the more pressing competition that is Officeworks.

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OPI: How so?

DH: Many years ago, in the mid-1990s, Bunnings – part of the Wesfarmers group which also owns Officeworks as you know – started opening these big warehouse-style stores around the country in the hardware sector. They started to cannibalise a lot of the independent hardware shops around

QCA CEO Darren Hayes

the country, so much so that not many of them are left now.

When I joined the OP industry, I had this sense of déjà vu – wherever Officeworks opens up one of its large stores in whatever location around Australia, it was at the expense of the smaller traditional dealers. Those small dealers have real trouble trying to be price competitive against such a big business. What they lack is large logistics capabilities – warehouses where they can hold their stock and deliver from.

If the independents organised in the dealer groups, for example, were to unite, join forces and work together in terms of logistics, I believe it would be of real benefit for the industry and open up the market.

They could not only deliver within their own local area or even state, but everywhere in the country. If we gave that empowerment to the independent dealer channel, it would be a completely different opportunity.

OPI: Are you talking about a coming together of the two dealer groups or just referring to Office Choice? The necessity of two groups is another discussion point entirely, of course.

They are quite different in make-up and identity.

DH: I believe Office Choice could certainly do it within its own right. But why not join forces with Office Brands? You wouldn’t have to change names and could run as two different branded channels with whatever you feel is your own personal offering. I have seen this strategy play out in the telecommunications market.

Why couldn’t the two [dealer] groups look at a way of putting their aggregated volume together and create a logistics capability?

Why couldn’t the two groups look at a way of putting their aggregated volume together and create a logistics capability? All of a sudden, our joint capacity would be doubled. We’d be bigger than COS and it would put smaller independents in a formidable position to really scale up.

Yes, we are competitors too, but could we possibly take the blinkers off and have a holistic look on a big scale? This could be something to protect all members in both groups long-term in my personal opinion. .

OPI: It’s refreshing to hear you speak so openly about it. It’s not something that would work in many other markets, I’d hazard a guess, but in Australia, given the lack of a really established wholesale scene combined with the might of Officeworks, it would certainly open the market up. A great way to end – thank you.

For more details on several of the topics covered in this interview with Darren Hayes, tune into OPI Talk – visit opi.net/podcast

CATEGORY UPDATE

The POST-COVID

breakroom The breakroom as we know it is gone, at least temporarily. In its place is a space that is definitely cleaner, arguably less social but full of new gadgets and products – by Heike Dieckmann

W

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hen offices across the world started shutting down from Q1 last year due to coronavirus lockdowns, so did the entire breakroom sector. As Jay Tittman, President at US dealer Rocky Mountain Business Products, quite simply puts it: “Breakroom is a category that disappeared for a year.”

For any reseller that is heavily reliant on this business segment, including Virginia, US-based Guernsey, for example, where it makes up 30% of total revenues, it’s a very big deal.

Some resellers shifted their focus to other channels to compensate. The hospitality vertical is one of these, specifically the restaurant delivery business. Frank Hoard, Director of the Facility Supply Channel at Independent Suppliers Group (ISG), explains: “Restaurant delivery saw its peak in the US market in 2020. It meant a real shift in thinking, but customer behaviour over the past 15 months or so has changed – it had to. Legislation passed at state and local levels now even allows for alcohol delivery by independent suppliers.”

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COFFEE CHALLENGES The coffee market in particular is one that completely collapsed in the office space. Mark Leazer, Executive Director of independent reseller network AOPD, says: “I recently spoke with one of

our dealers who is heavily involved in coffee service in a large city. He said he was at 28% of 2019 sales levels. I’m hearing from some major suppliers that their office workers are looking to come back from their home offices in September. Others are slowly returning now, but demand in this category may not show robust results until Q4 or even Q1 2022.

“In a worst-case scenario, one major coffee company was saying they hope to get back to 60% of 2019 levels by the beginning of 2022, but that it could take eight years to achieve 100% of pre-pandemic levels. Eight years! This would be dreadful and I don’t really subscribe to it.”

Nestlé Professional is among the many suppliers that have taken a hit. Tony McGinn, Head of Sales – Alternative Channels, elaborates: “Nestlé’s breakroom business has historically been a growth driver for us. The pandemic quickly halted this progress. And we know the traditional breakroom will not be a growth market, even post-pandemic.

As such, supporting our dealers to reach the work-from-home employee, providing sanitary and touchless solutions for the office, and leveraging our brands in emerging micro markets is an opportunity to offset the population decrease in this space with innovative programmes.”

As employers everywhere are trying to work out future in-house staffing, renewed importance is placed on this part of a company’s facilities.

RESTOCK, RETHINK, REVISIT US wholesaler Essendant believes the renaissance of the breakroom will unfold in three stages: restock, rethink, revisit.

The initial need will be around restocking. This will likely happen over the course of 2021 as a sizable proportion of the workforce is expected to return to their traditional workplace. As Armin Mehic, Director of Category Management at Essendant, says: “We expect to see more mini fridges and smaller break areas with single-serve coffee units throughout the workspace in order to minimise the number of people using communal spaces. Coffee and its accessories will be portion-sized for individual use. There will be foot slots to open larger fridges, and wrapped, disposable cups, lids, bowls, plates and cutlery.”

According to ISG’s Hoard, more people will eat at their desks, while outdoor spaces, where made available by employers, will also be very popular.

“In addition,” he adds, “there could be a real shift to people leaving the workplace for lunch.”

The second phase, Rethink, will begin with planning in 2021, but execution will mostly commence in 2022 as employers have had time to invest in new workplace layouts or refits. The premise is that employees have got used to the benefits of working at home and companies will need to offer added incentives to pull them back into the office environment.

The focus of the breakroom will also change, shifting to being an area for collaboration and Nestlé’s NESCAFÉ touchless teambuilding. Employers will need to create bean-to-cup machine

spaces that allow social distancing between groups while at the same time encourage interaction and collaboration.

Sara Johnson, Merchandising Product Manager at Essendant, says: “Bean-to-cup coffee machines that can be operated by an app will become more prevalent along with touchless vending machines and strategically placed micro markets.”

On that note, Nestlé Professional’s National Account Manager Thea Thanas adds: “We offer our customers office coffee options like NESCAFÉ bean-to-cup machines or the individual NESCAFÉ Dolce Gusto brewer. In an effort to address COVID-19 concerns, Nestlé has developed machines using touchless technology – where you can hover over a button for dispensing a beverage or scan a QR code using your smartphone to order a custom drink.

CATEGORY UPDATE Breakroom

One thing is certain, the breakroom post-COVID will look somewhat different. Rather than the relaxing, social, open plan collaborative spaces that we were talking about just 18 months ago, they will likely be areas of relative solitude and utmost efficiency, certainly in the early stages.

Health will be top of mind for facilities managers and company bosses alike, but it will be a different type of wellness, all in the name of minimising the spread of germs, viruses and the like.

Typically a hotspot for sharing spaces – from chairs and tables to coffee pots and condiments – the breakroom for the foreseeable future will be spotlessly clean, temperature-checked, fully masked, socially-distanced, single-use and as touch-free as feasibly possible.

Breakroom is a category that disappeared for a year “These options are available on new machines, or we can retrofit some existing equipment.

Touchless solutions are a trend that will continue post-pandemic, so we feel well positioned.”

In terms of innovation, air purification is another hot topic right now and although no air purifier can currently claim to capture and eliminate COVID-19, products like Fellowes Brands’ AeraMax Professional are definitely being considered as part of a broad and proactive hygiene strategy.

As breakrooms are restocked and rethought, other priorities will be revisited. One of them is sustainability, a topic that seemingly moved to the bottom of the agenda at the height of the pandemic (see ‘The green breakroom’, page 36).

May/June 2021

FEELING SAFE AND SECURE In the short to medium term, however, one of the core focus areas will be on creating a breakroom that is as safe and clean as possible: making employees feel looked after is paramount. As such, social distancing products of all kinds will continue to be in high demand.

Cleaning, meanwhile, has never been more in the spotlight, as vendors such as Greenspeed can attest to. The company’s Commercial Director Johan Tops says: “The world has become cleaning obsessed. Jan/san and hygiene products are used in every office and that includes the breakroom. Growth rates – and the supply chain – have been very unstable to an extent we’ve never seen before in the past 20 years, but it’s been an extraordinary year for Greenspeed with more ups than downs.”

Category Manager Wayne Darrall at UK wholesaler VOW adds: “We are seeing an increase in items that are Microban-treated as well as demand for Microban itself, so customers can treat their own surfaces. This trend will continue as long as the public feels a need for these items and then subside again.”

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Breakroom CATEGORY UPDATE

It is the combination of products currently needed in the breakroom which is making the overall picture bearable, if not positive, for many operators. It’s also a question of customer demographics, as Dennis Albers, Head of Purchasing and Category Management at Dutch wholesaler/dealer group Quantore, points out.

“For us, the breakroom is a very broad category and we’ve seen good growth over the past 12-18 months. We mainly deliver to SMBs and have seen steady sales of hot and cold drinks, surges in demand for takeaway products and disposables, and good results for slightly adjacent items such as signage, viscom and, of course, cleaning. We have even launched our own coffee brand during the pandemic – called Biaretto – and we have experienced major success in developing this despite having strong local brands as well.”

For more feedback on the breakroom sector, including opportunities to service a hybrid workforce, look out for Xtra content in the May/June 2021 issue on opi.net

From a US perspective, AOPD’s Leazer offers this overall conclusion: “Breakroom demand is starting to come around, albeit very slowly. It will probably be one of the slowest categories to fully return, but as evidenced by what we are seeing from new relationships with suppliers in our space, they are being very sensitive to the current trends and are creatively working on ways to stimulate demand as soon as possible.

“This category won’t be getting the attention that PPE received last year, but I think there will be plenty going on. Breakroom has been one of the key growth categories for office products dealers over the past decade – that cannot be allowed to just dry up without a good effort. Suppliers engaging with dealers through promotions, social media, sales force training, etc, should also have an impact.”

THE GREEN BREAKROOM To say the coronavirus pandemic has created an environmental setback would be an understatement – just think disposable PPE. The breakroom, per se, is not fundamentally guilty of contributing to this setback, as so many offices have been closed over the past year. But what has remained of a battered hospitality sector is certainly telling: takeaway containers; single-use condiment sachets, disposable cutlery and crockery. They all point to one conclusion: more waste and, very likely, environmentally unsustainable waste.

As employees slowly return to their traditional workplaces, the scene is set for a similar situation in the corporate breakroom. However, speaking to a number of industry peers, there’s broad consensus that, no, sustainability hasn’t been top of mind over the past 15 months or so but, with demand for environmentally-sound products having already ramped up pre-COVID, this will likely see a real resurgence.

OPI spoke to Ralph Bianculli Jr, Managing Director of sustainable products manufacturer Emerald Brand, about the importance of this happening.

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OPI: The breakroom – in the short term – will undoubtedly be dominated by a lot of single-use products. Do you believe awareness of how sustainably these products are made will return along with the workforce coming back?

Ralph Bianculli: There’s no question the environmental impact of single-use products is a primary concern for corporations and their consumers, particularly with the elimination of all reusables such as mugs, plates and cutlery in the workplace.

This bodes well for a brand like Emerald because we can offer solutions with a quantifiable environmental impact and replace the use of petroleum and tree-based products with plant-to-plastic and tree-free alternatives. Communicating this to end consumers will be extremely important.

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OPI: So what are you seeing in terms of demand, and I mean for your company in particular?

RB: Good question. The biggest challenge all manufacturers will have – and it’s already happening – is forecasting.

Industries including cruise lines, hospitality, business and manufacturing, leisure sectors such as arenas and theatres, etc, are coming back faster than expected here in the US. We are well positioned for this – better than many of our competitors I would say, even non-environmental brands – for two reasons. Firstly, 70% of our portfolio is now made in the

US which means faster turnaround times, no port issues, and so on. The second one relates to the unique alternative materials we use, specifically our tree-free pulp capacity. We do not have to rely on major players to provide raw material of plastics and virgin/recycled fibre.

There are major capacity and supply issues related to these traditional materials that most brands are at the mercy of. Right now, inflation and, potentially, hyperinflation is everyone’s problem, all the way down to the individual consumer. Most companies’ biggest concern is obtaining products through a very difficult freight and supply channel (see also Hot Topic, page 22).

OPI: Is there legislation as regards more sustainable products in this particular category?

RB: Yes, quite a lot of legislation has passed, but it has been overshadowed in the news by COVID. OPI: How big is the connection that people now make – as we slowly emerge from the COVID crisis – between health/ wellness and sustainability?

RB: It’s a very significant connection. Consumers want more traceability and accessibility on all things they are consuming and using. That’s why our Made in USA story is resonating so strongly here in the US. What you refer to is in fact our trademark: Sustainability = Health + Wellness.

CATEGORY UPDATE Already suffering from secular declines, the paper industry is facing many more issues, thanks to the coronavirus pandemic – by Michelle Sturman

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o say the uncoated freesheet (UFS) paper industry had a dreadful 2020 would be an understatement. Already struggling with a long-term downward trend in office paper use, last year saw the pandemic turbocharging the contraction.

Results from European paper industry consultants EMGE’s Cutsize Monthly Monitor report reveals that in February in Western Europe, demand, deliveries and capacity continued to fall compared to the same month last year. Eastern Europe fared much better with above-trend demand growth.

Overall, demand for uncoated woodfree cut-size paper on the continent fell by just under 12%, with shipments decreasing over 7% and capacity falling more than 10%, resulting in an improvement in operating rates.

The good news is industry feedback was largely optimistic for March 2021 as Monitor respondents rated demand for the month as the least weak since the full effect of COVID-19 began to be felt across Europe.

Globally, EMGE reports that demand was still negative at around -12% during Q4 2020.

Meanwhile, the Confederation of European Paper Industries indicates printing and writing papers production fell by 18.4% last year.

According to Paper Trader (March 2021), published by cross-commodity price reporting agency Fastmarkets RISI, UFS demand in 2021 should be +1.5% in the US. In addition, Q3 will mark a positive turning point due to the anticipated reopening of offices and educational facilities. As such, demand is forecast to recover just over 60% of the decline from Q2 2020.

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OFFICE AND LEARNING-DEPENDENT Given the work-from-home mandates espoused by many governments over the past year or so and the relative dearth of employees working in offices, these figures are hardly surprising.

As Antalis Office Divisional Director Tim Percival notes: “In 2020, COVID-19 hit the UK office paper

market significantly, with year-on-year volumes impacted by -32%. Globally, this number is reported as -17%. We see a direct correlation between demand and lockdowns, and as restrictions ease, there will be a direct pickup in volumes.”

Over in the US, Domtar Customer Marketing Manager John Parke believes the UFS sector will bounce back relative to the percentage of workers that return full time to the traditional workplace and live school attendance.

But, he adds: “Even when the virus is behind us, it’s not likely we will see pre-pandemic demand levels. Working and learning from home will remain permanent options to some degree. There is less paper consumption when folks are not assembled at work or in schools.”

Derek Mahlburg, Director of North American Graphic Paper & Packaging at Fastmarkets, agrees with Parke. He also believes that demand is unlikely to revert to pre-pandemic levels, even as vaccinations progress and we witness a return to travel, face-to-face learning and work.

“There will be about two years’ progression of the ongoing structural decline by the time this all happens, and the slump had already shown signs of accelerating prior to 2020.

“Additionally, the corporate acceptance of remote work as a major force will reduce the extent to which offices rely on paper. At schools and workplaces alike, the pandemic spurred heavy investment in digital technologies that will have lasting effects.

Digital habits are rarely unlearned, ” he says.

Mahlburg’s European counterpart, Alejandro Mata, concurs with this assessment. However, he adds the caveat that recovery on the continent will take longer to commence because of a slower vaccination rollout, less generous incentive programmes than in the US, and the deep impact from reshaping the behaviour of consumers and companies towards more flexible environments.

This latter point alone, says Mata, will keep office paper demand from returning to pre-COVID levels.

“Another key threat emerging from the pandemic might be the redefinition of learning methods.

Paper CATEGORY UPDATE

Education has not changed in centuries. Now, with the introduction of virtual environments and the push to explore them more than ever before, we are at risk of seeing institutions retaining a mix of online and face-to-face learning platforms, just as it’s happening in places of work,” he warns.

Parke, on the other hand, is optimistic as regards the onset of the paperless office. “Does the use of digital communication continue to grow? Yes, there is no denying this particular trend and the post-pandemic world will be further ahead in the transition. But I certainly don’t see paper ever becoming obsolete.”

Liz Wilks, European Director for Sustainability and Stakeholder Relations at Asia Pulp & Paper (APP), concurs. “We still process information in a different way when it is printed, and with the constant need to be online, the use of paper represents a refreshing change.

“One of the leading factors contributing to the rise in demand for paper products is ‘screen fatigue’, as individuals look to break away from intaking information via digital displays,” she adds.

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NOT PULP FICTION The true decline in paper usage now that hybrid working and online learning are expected to become more commonplace is, as yet, unknown.

But this is only one issue the industry faces.

The pulp sector is currently very tight which, according to pulp and paper market intelligence consultancy Brian McClay & Associates, is due to a combination of factors. These include: purchasers buying as much as possible to beat pending increases, a faster-than-expected economic recovery in China, planned outages, a high need in sectors such as at-home tissue, government stimulus and supply disruptions, and logistics issues.

On this final point, a shortage of containers, trucks and railcars has ramped up logistics costs and created supply chain bottlenecks globally, leading to delivery delays.

For NORPAC VP of Sales and Marketing Tom Crowley, the steep rise in freight costs and shortage of equipment means it’s more difficult and expensive to ship copy paper anywhere. As a result, the US market, for example, has become more regionalised, and he expects it to remain that way for the foreseeable future.

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opi.net poll

Will office paper sales return to pre-COVID levels? n Unlikely n Definitely not n Probably n Definitely

8% 15% 54% 23%

It has put a strain on paper manufacturers exporting into the US because of skyrocketing costs combined with a weakening dollar, and resulted in the implementation of a round of price increases already.

One industry expert believes non-US-based mills will raise prices on subsequent production cycles as North American producers continue to deal with machine closures, conversions, and finding buyers on assets not deemed to be part of medium to long-term business strategies. This will ultimately close the gap between foreign and US domestic prices.

Richard Hoyland, Purchasing Manager for UK-based wholesaler VOW, told OPI that a price increase is already confirmed for Q2. He expects this will just be the beginning, adding: “We have already heard from several mills of a further increase in the summer.”

Antalis’ Percival agrees: “Against the backdrop of an inflationary cycle, caused by escalating costs – pulp being the most significant which has seen increases on the commodity markets of 25% since Q4 2020 – we can only anticipate paper prices to rise as supply and demand become more balanced.” (For more on global logistics issues and price rises, see Hot Topic, page 22).

MANUFACTURING SHIFT Just as the sector had adjusted to the removal of an estimated 500,000 tons of copy paper from the marketplace following the shock exit of Georgia Pacific at the start of 2019, the pandemic struck. Understandably, paper capacity has been cut drastically over the past year and US paper vendors in particular are shifting out of UFS and towards containerboard. (Visit opi.net for the latest updates on capacity withdrawals, acquisitions, and paper business spin-offs from key manufacturers).

As Mahlburg explains: “A major driver of this trend is the fact that corrugated box markets posted exceptionally strong growth in 2020, encouraging copy paper mills facing poor market conditions to pursue conversions to containerboard. Thus, much of the capacity removed last year was actually for large-scale, low-cost commodity copy paper.”

A SUSTAINABLE MARKET Across Europe, but especially in the UK, not only have Brexit and the COVID-19 pandemic contributed to increased strain on the sector, according to APP’s Wilks, but so too has a growing focus on sustainability. She says: “The requirement for pulp is rising with the need to find well-managed substitutes for packaging – this includes pressure on the need for paper packaging as a plastic alternative.”

Indeed, the necessity to provide environmental credentials has become an even hotter topic in the paper industry. As Wilks points out: “Purchasing paper products on behalf of a business has been further complicated by the sustainability debate.

“As the climate emergency continues to accelerate, dealers need to align with these expectations and ensure they are purchasing from a sustainable supply chain.”

NORPAC’s Crowley believes that while sustainable copy paper is “definitely in vogue”, the conversation surrounding sustainability has subtly changed: “Firstly, the product itself must have a good environmental pedigree, with low carbon gaining traction as a desirable attribute as opposed to recycled content.

“Secondly, customers are now looking at mills and wondering f they are sustainable operations, and can they count on them to continue to supply paper in the medium and long term? The recent closures have turned the industry upside down and are causing people to ask this question in a way they simply didn’t have to in years gone by.”

For more insights into the paper industry, including the paperless office, new sales channels, product developments and sustainability, look out for Xtra content in the May/June issue on opi.net

CATEGORY UPDATE Paper

He continues: “So much capacity has left the domestic UFS industry, we expect there to be significant upward pressure on pricing in 2021 – almost regardless of the demand outcome. Prices will also be pressured by intense cost inflation that began to emerge at the end of 2020, mostly in the areas of pulp, chemicals and transportation. It would not be surprising for prices to regain their 2019 peak this year.”

The upshot of continual rises in raw materials and logistics costs, coupled with further mill closures and conversions, is the reduction of overall UFS capacity and the potential for a tight paper marketplace this year.

We can only anticipate paper prices to rise as supply and demand become more balanced In terms of other sustainability trends in the copy paper market, Mondi Marketing and Sales Director Uncoated Fine Paper, Johannes Klumpp, notes that consumers are increasingly paying attention to certifications like FSC and PEFC, and processes that produce totally chlorine-free or optical brightening agent-free papers.

“Moreover, we see an increased interest in office papers made fully or partially from recycled fibre, as well as an elevated demand for CO2 neutral printing products,” he says.

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HOW TO...

Buy online pick up in-store, and contactless ordering, payment and deliveries have accelerated over the past year. In this How To… guide, OPI takes a look at Rakuten Ready’s Playbook for Creating Contactless Experiences

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epending on where you are in the world, ‘contactless’ probably means something slightly different. In the UK, for instance, most people currently recognise the term as paying for an item by ‘tapping’ their bank card against a payment machine. In the US, it is more likely to be used as a reference to e-commerce.

However you interpret the word, contactless – in all its guises – is becoming imperative for businesses to adopt across the purchasing chain.

Leader in order-ahead technology, Rakuten Ready (formerly Curbside), has released the Playbook for Creating Contactless Experiences, a guide to building and developing a contactless strategy.

The company carried out research in April 2020 and found 76% of consumers had already started using buy online pick up in-store (BOPIS) at the onset of the pandemic; significantly, 73% expect to continue it after the crisis eases.

While the Playbook is written primarily for the retail, grocery and restaurant sectors, the advice can be used within any business. Also, there is a lot to be learnt, particularly from the restaurant trade, in terms of deploying rigid health guidelines.

As Rakuten points out, while the technology to support e-commerce – whether for collection or delivery – is nothing new, safety and hygiene requirements are, and many shoppers are keen to decrease the time they spend in-store.

After enduring numerous lockdowns and stay-at-home mandates, pretty much forcing people to buy online, along with the enhanced requirements for shopping in physical retail outlets, it’s hardly surprising that a contactless journey has become a priority for many purchasers.

Rakuten describes contactless as “the method in which businesses provide their goods and services to customers by eliminating human contact, throughout the customer journey, from ordering to fulfilment”. The Playbook outlines three pillars: digital first, customer-centric preparation and contactless handover.

1. DIGITAL FIRST

A key question is whether your digital strategy is contactless from end to end. According to Rakuten, businesses today need to provide a seamless digital experience. In a May 2020 Rakuten Ready Contactless Consumer Survey, 73% of respondents stated that, when buying goods online, knowing when an order is ready is important. This was followed by pickup availability on offer (65%), clear details on how to pick up a purchase (62%), and contactless payments (58%).

E-commerce ordering Is your inventory linked in real time to all mobile/ website purchasing channels and optimised to drive demand?

BENEFITS OF CONTACTLESS • Lowers risk by limiting human interaction • A seamless online to offline order experience • Increases employee and customer protection • Builds trust with defined social distancing and safety measures

HOW TO... The Contactless Experience

e en

Contactless payments If you already offer mobile and web commerce, then contactless payments should be part of the service. With increased demand for this purchasing method, it is time to consider accepting apps such as Apple Pay, Samsung Pay, Google Pay, PayPal, Venmo, etc.

Marcomms Currently, one key element to successful digital marketing is providing details on touchless pickup systems during ordering, especially as demand from consumers for more frequent, honest and engaging communication rises. In addition, you should be leveraging social media, email, texts, direct mail and all other contact points.

2. CUSTOMER-CENTRIC PREPARATION

An essential question to ask is whether contactless processes revolve around current business operations or your customer. To successfully execute a holistic experience, order preparation requires the purchaser to be at the centre of how and when goods are prepared. It also means maintaining employee welfare.

how each step can be undertaken in a non-contact manner is key.

It’s hardly surprising that a contactless journey is a priority for many purchasers Safety is imperative When preparation is running efficiently, there is time to stage orders and be prepared for safer fulfilment – whether in-store/kerbside pickup or office/home delivery.

NEW NORMAL CONTACT

The new normal represents a buying landscape that has substantially shifted over the past year into an evolving set of customer rules and behaviours which favour a contact-free encounter from beginning to end.

The increasing use of technology in the ordering and delivery process will accelerate and improve the no-touch journey. Rakuten Ready asked May 2020 survey participants the following question: what technology are you willing to adopt in the future if it lowers your risk?

In response, 65% said predictive arrival technology – this gives businesses insights into when a customer is approaching so goods can be available on arrival. 43% of respondents said drones, followed by autonomous vehicles (40%) and smart robots (37%). The latter technology will deliver to a car or address for contactless buying with automated fulfilment.

Timings By adopting the appropriate technology, collection can be timed to perfection, based on when you know buyers will arrive.

3. CONTACTLESS HANDOVER

COVID-19 has accelerated contactless handovers, but unless customer-centric preparation is already in place, this third pillar often falls short.

In the May 2020 consumer survey, Rakuten found that 78% of respondents believed it’s crucial to have their items ready when they arrive, followed by social distancing protocols (69%). Allocated parking or collection areas were important to 41% of those participating in the study.

Designated in-store or outside pickup areas Like kerbside pickup, it’s vital to let customers know what to expect. Communicating precisely where they need to go to pick up purchases and

RAKUTEN READY Founded in 2013 by leaders of location innovation at Apple, Jaron Waldman and Denis Laprise, Rakuten Ready (formerly Curbside) provides mobile technology that powers fast, easy mobile commerce at bricks-and-mortar sites. The company enables brands to deliver online-to-offline experiences that give time back to customers.

For more information on the Playbook for Creating Contactless Experiences, visit https://pages.rakutenready.com/contactless.html

May/June 2021

Kerbside pickup This method of buying has grown exponentially over the past year, and when scheduled perfectly to match a buyer’s arrival time, businesses can execute the fulfilment with zero contact.

Social distancing Even post-COVID, it is expected that some social distancing and hygiene systems will remain commonplace. Rakuten recommends auditing your handover experience across all locations and touchpoints to ensure suitable physical spacing is maintained and determine where it’s appropriate to follow hygiene and safety rules such as wearing a mask and gloves.

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RESEARCH

Location, location, LOCATION Cities are incubators of innovation and knowledge-sharing, boosted by the daily influx of commuters heading to offices. As workplaces in most urban areas remain closed or operating well below capacity, what does the future hold for our metropolises? – by Michelle Sturman

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ities are the primary driving engine of economies – more than 80% of global GDP is generated in cities, according to the World Bank – and hubs of ingenuity, social interaction and culture. In existence for thousands of years, many have risen and fallen, while others have been rebuilt time and again following fires, invasions, plagues, famine and war.

The advent of the most recent global pandemic – COVID-19 – has turned vibrant cities into relative ghost towns in many areas of the world over the past year. Disease and viruses have always thrived in high-density locations, and in the 21st century, this has been exacerbated by mass transportation.

Currently, work-from-home (WFH) mandates and retail closures are being rolled back across many countries as vaccination programmes make progress. However, expectations for a return en masse to the office are slowly diminishing.

The continued prevalence of hybrid working and the slow reopening of workplaces continues to affect the liveliness of cities as, certainly during the working week, office-based employees are significant contributors to their economy.

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BACK TO REALITY Thought leaders on post-COVID cities are broadly divided into two camps: those who believe we have short memories, and that everything will return to the way it was pre-coronavirus as opposed to others who expect a radical rethink of the way cities operate. The reality is likely somewhere in-between.

An excellent report for a broad and balanced overview is Arup’s Future of Offices: In a Post-pandemic World. Arup is a professional services company focused on the built

environment. The study investigates some of the themes and thinking from its property teams around the world, revealing experiences, insights and variations from each global region.

As with the majority of pre-existing trends, the coronavirus crisis has exacerbated and accelerated them. Cities are in a perpetual state of metamorphism, but the pandemic exposed their lack of resilience.

Under the moniker of “green recovery” and “build back better”, governments are seeking to ramp up sustainable practices believed to not only help fortify cities against future virus outbreaks but also expedite the race to net-zero.

This goes hand-in-hand with existing strategies including the reduction of traffic pollution – for example, the introduction of low-emission zones and car-free streets. Processes adopted over the past year such as reclaiming roads for pedestrians, social distancing and the increase of cycling routes will remain. The rise of electric modes of transport is also expected.

There is an upswell in commitment from major centres around the world to become more sustainable and reach net-zero. As of April 2021, more than 700 cities have signed up for the Race to Zero campaign, while concepts such as the 15-minute city (see page 46 for more information) are also gaining acceptance.

At a recent meeting between leading mayors, Chair of C40 Cities Eric Garcetti and UN Secretary-General António Guterres, the latter said investment in recovery [from the pandemic] is a generational opportunity to put climate action, clean energy and sustainable development at the heart of cities’ strategies and policies.

Speaking to OPI, KPMG Chief Economist Yael Selfin comments: “I expect that business life will continue to inject vibrancy into city centres. The pandemic has transformed the way we work, with hybrid working becoming a reality for many professions. But the focus on collaboration will only increase, with people travelling to workshops and business gatherings more frequently than before to cement relationships and exchange new ideas. That could see a larger share of interactions expand beyond the traditional office space, creating more dynamic city centres.”

THE OFFICE IMPACT To ascertain what the post-pandemic city will look like is complicated, and much of it is related to offices and those working in them. Office workers represent the beating heart of urban areas during weekdays, and the rise of hybrid working will translate into fewer commuters.

Increased WFH means many businesses, notably large corporates, are already planning to reduce office space post-COVID. The Global Office Impact Study & Recovery Timing report – part of the New Perspective: From Pandemic to Performance series – by commercial real estate services firm Cushman & Wakefield suggests that worldwide vacancies will rise from 10.9% pre-pandemic to 15.6% in 2022.

Rents are forecast to decline 10.9% peak-to-trough from Q2 2020 to Q1 2022. It is not until 2025 that both office vacancies and rents are expected to return to pre-crisis levels.

Some impact will be offset by economic and population growth and office-use penetration, resulting in an overall increase in demand over a ten-year forecast. Equally, ‘de-densification’ of office space due to social distancing may also disrupt the negative WFH trend.

KPMG’s The Future of Towns and Cities Post-COVID-19 research indicates that the availability of more affordable prime commercial property will attract different tenants, enabling cities to serve their inhabitants differently. The professional services network says possible newcomers could include universities helping to support workers acquire new skills or privately-sponsored incubators.

REPURPOSING OF SPACES A reduction in traditional office premises may result in the decentralisation of the CBD as demand for space changes. But it won’t stay empty for long as it will be repurposed for other uses, including housing, cultural and social amenities.

In fact, as this article was being written, the City of London Corporation published a report stating how the Square Mile (meaning the financial district) must adapt to post-pandemic economic and social trends.

A few key themes stand out. One is working with the property sector to promote sustainable, flexible and adaptable buildings and explore new ways to utilise vacant space (ie offices), such as change of use to residential units.

RESEARCH The Future of Cities

Guterres continued: “How we design power generation, transport and buildings in cities – how we design the cities themselves – will be decisive in getting on track to achieve the Paris Agreement and the Sustainable Development Goals.

“We need a revolution in urban planning and urban mobility: including better fuel efficiency; zero-emission vehicles; and shifts towards walking, cycling, public transport, and shorter commutes. Cities stand to gain most from phasing out coal: clean air; green outdoor spaces; healthier people.”

The focus on collaboration will only increase… That could see a larger share of interactions expand beyond the traditional office space

May/June 2021

The City hopes to have a successful 5G deployment by the end of 2022 and work with the private sector to provide workspace, digital skills, etc, to curate an ecosystem of high-potential, tech-led businesses not traditionally located in the Square Mile. It also wants to enable cultural and creative industries, which may include low-cost, long-term lets in empty and low-use spaces.

City of London Corporation Policy Chair Catherine McGuinness says: “We have listened to businesses of all sizes in the City to understand how the pandemic has affected their ways of working and their needs going forward. Firms have told us they remain committed to retaining a central London hub, but how they operate will inevitably change to reflect post-pandemic trends, such as hybrid and flexible working.”

Research by professional services firm JLL reveals four key factors that will play a role in the future of workplace requirements: remote working, office design, technology and commuting plans.

In its Future Office Demand study, JLL points to the importance of the spatial patterns of office demand, which will evolve as digitisation, new living and workplace preferences, sustainability, and a resilient urban model taking hold.

The rise of the hyperconnected city region, says the firm, will shift the spatial format of office

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The Future of Cities RESEARCH

demand, making it more diverse and driven by three prime factors: an increased desire for liveable, well-connected suburbs and smaller cities; a multi-use urban core; and clusters of innovation-based activities. This ‘distributed urbanisation’ trend has the advantage of regional scale with local proximity and reduced commuting, flexible working and micro-mobility.

So where does all this leave the office? While the true extent of any upheaval and demand for city-based workplaces won’t be known in the near term, Cushman & Wakefield believes the ecosystem will be a mix of traditional office space, home offices and semi-public areas.

The pendulum is unlikely to swing too far in any one particular direction. This is especially valid for companies that rely on innovation, knowledge and creativity to generate value and sales – the city will remain the epicentre of this.

THE 15-MINUTE CITY Developed in 2016 by Carlos Moreno, Scientist and Professor at the University Paris 1 Panthéon-Sorbonne and Special Envoy for Smart Cities for Paris City Hall, the so-called 15-minute city is one which puts access to amenities within just that – a walk, bicycle ride or trip on public transport of just 15 minutes.

In a video, Professor Moreno sums up the 15-minute city as this: “It’s putting the hearts of women and men in the heart of the city. It’s local services, accessible to everyone, less than a quarter of an hour away on foot or by bicycle. It’s nature and biodiversity very close to us, [with] pedestrian streets, green streets and less traffic.

“The 15-minute city is one location, several uses. It’s saying hello to everyone. It’s services that contribute to making a peaceful city. It’s being able to live more freely in the city by enjoying our neighbourhood. It’s the city for everyone.”

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TIMEKEEPING Urban and city planning has for years focused on getting as many people as far as possible in the shortest period of time.

Moreno, meanwhile, uses the concept of chrono-urbanism with a focus on time and accessibility rather than distance.

The premise of the 15-minute city is that people should be able to enjoy a better quality of life if they can fulfil several social functions: living, working, commerce, healthcare, education and entertainment. This can be attained through a restructured urban area based on proximity, diversity, density and ubiquity.

Moreno reimagines cities that are no longer separated into distinct districts of home and work. COVID-19 has brought this thinking to the fore. In a recent white paper – Introducing the “15-minute City”: Sustainability, Resilience and Pace Identity in Future Post-pandemic Cities – Moreno et al offer a modified version of the 15-minute city, identifying density, proximity,

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diversity and digitisation as the key components to managing pandemics within a flexible framework.

As the call for more sustainable urban areas grows more insistent, encouraging human-powered and public transportation and becoming a ‘smart city’ within the backdrop of the 15-minute concept is one way in which to meet climate change goals. Naturally, the 15-minute mantra cannot feasibly be accommodated by all, but adaptations are already underway in locations such as Melbourne, Australia, and Detroit in the US, where the idea of the ‘20-minute neighbourhood’ is being worked on.

MOVING CLOSER A revealing survey undertaken by Arup, a professional services company focused on the built environment, suggests the reality of the 15-minute city is ever-closer due to COVID-19. The City Living Barometer questioned over 5,000 residents across London, Paris, Madrid, Berlin and Milan to assess the liveability of each city.

In London, 47% said amenities were too far away. 52% used their local shops more than ever during lockdowns, and 77% expect they will continue to do so after the pandemic.

Overall, responses from all participants stated improvements to their city life throughout the crisis with less traffic (37%) and the reduction of air pollution (30%).

With Londoners complaining of services not being close enough, it will come as no surprise to discover that they were the largest number of people (59%) who had considered leaving the city during the coronavirus crisis and the highest (41%) that had moved out temporarily.

Talking about the results, Arup Masterplanning and Urban Design Fellow Malcolm Smith notes: “The pandemic has brought us closer to the vision of the 15-minute city as, for many, it has cut out the commute. It has shone a light on the importance of developing cities in smaller modules, with essential services concentrated around community hubs.

“I hope COVID-19 will lead to lots of smaller scale but widespread interventions – bringing green spaces to grey places, the prioritisation of cycling and walking, and the re-evaluation of local amenities. The move to the 15-minute city will help us hold on to the things we’ve gained temporarily – less traffic, cleaner air and, for many, more time with family.”

For more information on Carlos Moreno and the 15-minute city, visit: www.moreno-web.net

RESEARCH the state of the industry report

MEASURING change

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t’s out – the State of the Industry 2020-21 report, the eighth edition of the annual market research study by Martin Wilde Associates (MWA) and OPI. And it’s more pertinent than ever, as 2020 was such an unparalleled year for the global OP industry and 2021 is likely to be just as unpredictable.

With offices and indeed entire economies practically shut down, the OP demand that remained switched rapidly away from products that were driven by ‘normal’ office working towards categories that were either suited to homeworking or protected workers and their customers from coronavirus.

During such periods of upheaval, it’s vital for senior industry executives to have a firm perspective on what is happening – and will continue to happen – in the sector. What has been the effect on core OP demand? Where is the market going in terms of products and distribution? What are the underlying trends and which new factors are coming into play? Most of all, where is the industry headed as life gets back to something resembling normal?

FASCINATING FINDINGS It is these types of questions the study aims to answer. This authoritative sourcebook for the OP industry is the result of 55 in-depth interviews with senior executives in Australia, Benelux, Canada, France, Germany, the UK and the US. Overall, the research unearthed some fascinating findings across these seven countries:

Distributor respondents were more likely to report margin increases in 2020.

As many as 46% confirmed a rise in margins, while only 26% claimed they had decreased.

More details on average gross margins achieved and expected figures for 2021 – and the reason for them – are revealed in the report.

The product categories that were most widely referred to as growing in 2020 were, somewhat unsurprisingly, PPE/workwear/signage products, cleaning and janitorial supplies, and COVID protection screens.

Declining segments, meanwhile, continued to be traditional stationery products and cut office paper. In addition, business gifts and catering/ breakroom supplies were on a downward trajectory. The study sheds further light on the categories likely to be in decline in 2021 on a country-by-country basis.

During such periods of upheaval, it’s vital for senior industry executives to have a firm perspective on what is happening – and will continue to happen – in the sector Amazon (Business) and other internet-only OP resellers headed the list of channels that took the most share during 2020.

Mass market retailers have also benefitted from global lockdowns. Conversely, national contract stationers, small dealers and OP wholesalers were at the top of the ‘losing share’ table in 2020.

Predictions for the key growth channels for each country in 2021 are included in the study.

www.opi.net

The historic rate of decline in core OP demand rapidly deepened in 2020.

As many as 86% of respondents reported a core OP market decrease in 2020, with 57% stating that the value decline was more than 10%. The full report elaborates on expectations for 2021.

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While survey respondents’ overall sales also diminished on balance in 2020, they still outperformed the core OP market.

56% reported a decline in sales in 2020, but for 41%, revenues actually grew. The study explains how respondents in each country achieved increases in 2020 and provides estimates for expected growth in 2021.

The State of the Industry 2020-21 is now available. To order your copy, visit www.opi.net/ SOTI2021

WHERE WILL SALES COME FROM? Other highlights from the survey include details on the share of distributors’ sales accounted for by MPS, jan/san and breakroom items – all of which are projected to increase again in 2021. Workwear, PPE and signage, meanwhile, are expected to fall back from the boom experienced last year.

Finally, the State of the Industry 2020-21 report offers insight into respondents looking to acquire or partner with another business in 2021.

EVENT

T

A VIRTUAL

MEETING of minds

OPI GLOBAL FORUM ONLINE REVIEW

www.opi.net

he 2021 OPI Global Forum may not have been quite the event we had all hoped would happen in terms of being able to meet up in person, but the Online substitute more than delivered.

A truly global platform this year, 300 attendees registered for the virtual event from as far afield as Mexico, China, Egypt, South Africa and Australia, as well as a large contingent from North America and Europe. A significant proportion of these were from the reseller community – an impressive 50%.

Overall, despite the unique challenge of covering so many different time zones, the Global Forum Online was hailed a great success, with 94.3% of delegates saying it was ‘Excellent/Good’.

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SHAPING THE FUTURE Taking place on 5-6 May, the forum was highly interactive from start to finish, with nary a PowerPoint presentation to be seen. Instead, the event comprised in-depth interviews with keynote speakers, panel discussions, breakout sessions, roundtables and plenty of networking opportunities. The latter included a one-to-one option, aka speed dating for businesspeople.

This year’s tagline was ‘Embracing the Future’ and the jam-packed agenda did just that – covering everything business supplies executives need to know to thrive in the so-called ‘new normal’.

One of the key themes running throughout the event was the focus on the changing nature of the workplace. Indeed, the programme kicked off with international workplace consultant Andrew Mawson, Managing Director of Advanced Workplace Associates. He reiterated that while the notion of hybrid working has been around for some time, the pandemic has shown what’s possible.

Mawson added that heading back to the office will require selecting appropriate models of working designed to suit all employees. Ultimately, it will mean moving to a more flexible – and likely smaller – workspace for many companies.

The ‘Future of the Workplace’ panel which followed delved into this topic even further, examining the reimagined workplace and what it may entail. Discussions included everything from cleaning, hygiene and well-being, to the products being bought to make the post-pandemic office

safe, with the required technology in place to create a cohesive hybrid workforce.

Later on, a wide range of intimate and interactive roundtables allowed delegates to pick the brains of subject experts and find real solutions during discussions with industry peers. Topics, again, covered the evolving workplace, but also included B2B e-commerce and marketplaces, the importance of jan/san, the future of sales, a potential Staples/Office Depot merger, and the supply chain crisis (see also Hot Topic, page 22).

To download videos taken at the OPI Global Forum Online, go to: https:// na.eventscloud.com/ gf2021videos

There is certainly a sense of survival, optimism and adaptability within the industry The next day, John Ghiorso, CEO of Orca Pacific, a full-service agency dedicated to helping consumer product brands achieve success on Amazon, delivered a tour de force into the online giant’s inner workings.

Despite COVID-19 and the havoc it has created, there was an upbeat atmosphere among speakers and delegates alike as regards the future – perhaps even more so than during previous events. The overall sentiment was one of light at the end of the tunnel.

As OPI CEO Steve Hilleard said: “What came through loud and clear and really struck a chord was the sense of resilience. If nothing else, the past year has shown us that no matter how big or small you are, any company can be agile. There is certainly a sense of survival, optimism and adaptability within the industry, and this really shone through at the event.”

OPI GLOBAL FORUM ONLINE 2021 KEY TAKEAWAYS • Focus on and adjust to customers, servicing them with what, where and how they want their product.

• Businesses need to be nimble and agile.

• The world of work is not going back to the way it was pre-pandemic – it’s about the ‘re-work of work’. The future is hybrid.

• The business supplies industry has more than proved its resilience and adaptability over the past year.

• Investment in the industry by the industry is a positive step forward.

• There are many opportunities in new and existing categories and channels.

5 MINUTES WITH...

CAREER Q&A

Dan Fati

Describe your current job.

I’m the co-founder and CEO of Dacris in Romania.

If you weren’t doing your present job, what would you like to be doing?

Years back, it would have been a professional football player. Now, at my age, manager of a football team.

What’s your life philosophy?

Carpe diem. I always try, but it remains a work in progress.

Describe yourself in one sentence.

I am very loyal.

What scares you?

Not living in the moment.

What makes you happy?

Reading and having enough time to do so.

Favourite book?

Delivering Happiness

by Tony Hsieh.

If you could change one thing about yourself, what would it be?

I would like to be more relaxed.

Best compliment you’ve received?

My children hugging me and cheering “Bravo Dad!” when I told them that I was voted Professional of the Year at the European Office Products Awards.

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

One of the two Romanian football players that missed the penalty kick during the Romania/Sweden game in the 1994 World Cup, so I could score! But instead of just a day, I would have wanted to stay on for another four days in order to play in the semi-final against Brazil.

Favourite time of the year?

Springtime in Romania because of the blooming magnolias.

Dan Fati, Dacris

Best film?

The Godfather is my favourite movie and Al Pacino my favourite actor.

What is humankind’s greatest invention?

Aeroplanes, for sure!

Best moment in your career so far?

Winning the Professional of the Year award at this year’s European Office Products Awards (EOPA).

Your best piece of advice to someone who has just joined the OP industry?

This industry is worth the effort. There are a lot of opportunities that come with it – embrace them.

What’s on your bucket list?

Travel to as many places as possible.

Where do you most like to visit and why?

Greece – 100%. Being there makes me happy, no matter what mood I’m in.

What word do you use the most?

Fabulous!

Your biggest inspiration?

My wife.

If you could change one thing about it, what would it be and why?

I would like to find a better word than OP to describe what we do for our clients. There’s so much more to it than selling stationery products.

Best way to stay motivated and complete goals?

Surround yourself with things and people that inspire you – at work and at home.

www.opi.net

What’s your favourite office product?

Pilot’s FriXion range.

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FINAL WORD

On the rise: B2B MARKETPLACES T he surge of B2C marketplaces has been tremendous over the past 24 months. Whether it’s huge operators like Amazon and Walmart or more local, niche players such as Cdiscount, CDON and ManoMano, much of the growth has been exacerbated – if not triggered – by COVID-19.

The impact of marketplaces on retail and also on ‘regular’ e-commerce is off the scale. Many retail chains in fashion, toys and other industries have seen a massive reduction in sales; they had to change their business models, with a considerable number disappearing from the high street completely. Online shops have also seen their traffic falling and had no choice but to become involved in marketplaces themselves to compensate for the loss in revenues.

Can a similar revolution be expected in the B2B channel? Let’s define the term marketplace first. I refer to it as an “online e-commerce environment on which multiple dealers can list offers”. It provides a platform for content, payment and administration, and dealers make use of it by publishing their wares. Having multiple operators with their assortments is the key element of a marketplace.

www.opi.net

ESTABLISHED CONCEPT The concept isn’t new. Rakuten was founded in Japan in 1997, Mercateo in Germany in 1999.

Today, we see B2B marketplaces emerging for several reasons:

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• Adding B2B services to a B2C offering: many operators such as French marketplace Cdiscount with Cdiscountpro, Walmart Marketplace and eBay have been adding services and targeting companies as opposed to individuals in their marketing.

• Targeting industries: Thomasnet in the US is a leading industry marketplace. Ankorstore, meanwhile, is a wholesale marketplace that raised €20 million ($24 million) last December.

• Web shops: Although there are not many examples yet, it’s to be expected – as we’ve seen in B2C – that web shops will increasingly adopt the marketplace model. MediaMarkt did this in Germany. Although still targeting B2C, a foray into B2B, similar to what’s happening in the web stores, is the next logical step.

It’s not a question of whether B2B marketplaces will revolutionise B2B trade, but when. The drivers behind this expected growth

are simple: changing buying habits, market value and a blurring of B2B and B2C. The current (hyper) growth rates in B2C is one of the reasons that holds back marketplaces to really step into the B2B arena – it’s simply a lack of resources. Other reasons why exceptional growth will still take some time are due to the fact that a number of hurdles need to be overcome first:

• Supply and demand: marketplaces can attract more business customers if the offer is geared towards their needs.

• Interfaces and integrations: larger businesses buy via procurement or other administrative solutions. Without these interfaces, only some maverick buying can be expected.

• Logistics: for efficiency and environmental reasons, consolidated deliveries are key to winning B2B accounts.

• Supply chain and ordering process digitisation: product data, (dynamic) pricing strategies, and track-and-trace are key requisites.

Bob Boekema, co-founder/ Managing Director, TFE Agency & Strategic Business Consultant, PBS Network

GET READY NOW The key takeaway is that, yes, the marketplace growth we’re currently seeing on the consumer side will happen in B2B as well, but not today or tomorrow. I forecast the biggest leaps to take place in about three to five years. That seems a long way off, but if COVID-19 has taught us anything, it’s to be agile and prepared. A sense of urgency now is imperative.

On the vendor side, I expect adoption of the B2B marketplace model triggered by what we’ve seen in B2C. But it’s not simple for them; in most cases they need to become dealers, which is triggering potential channel conflicts.

They need drop-ship capabilities in order to take care of the administration of small orders, but also have the basics such as the correct interfaces and product content.

Resellers, meanwhile, need to be on the ball to ensure they won’t be the next Toys“R”Us. Bob Boekema started his career at Lyreco Benelux, ultimately becoming the group’s Innovation Director. He co-founded TFE Agency, a European marketplace agency specialising in business supplies, in 2019. He also works as a Strategic Business Consultant for European product data hub PBS Network.

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