OPI APP APRIL/MAY 2022 B

BIG INTERVIEW

Mike Maggio & Yancey Jones, S. P. Richards April/May 2022

INSIDE THIS ISSUE l GSA relents l Dealing with war l HP Inc to acquire Poly l Vendors: in pursuit of the customer l Viscom success in a hybrid world l Paper crisis l OPI Global Forum preview l Drone deliveries: pie in the sky? l EOPA winners revealed l Monetising marketplaces

CONTENTS 14 Big Interview At last, there’s light at the end of the tunnel as the new world of work begins to take shape and S.P. Richards pursues its vision with renewed vigour 22 Hot Topic Going where the customer is – vendor strategies are on the move 26 Category Update Global woes are throwing the paper sector into chaos 30 Advertorial In a tough environment, Sylvamo is keeping a sharp eye on the customer

Big Interview: Mike Maggio and Yancey Jones, S.P. Richards

Little did Mike Maggio and Yancey Jones know when they bought S.P. Richards in June 2020 that what was happening at the time would turn out to be so much more than a temporary global health crisis. To say they had their work cut out dealing with the many and varied pandemic challenges over the best part of two years would be an understatement.

But now, the pace of transformation at the wholesaler is finally quickening, and Jones and Maggio’s ‘vision’ – to be the preferred wholesale distributor for all resellers and manufacturers in the business products space – is taking centre stage again.

HOT TOPIC: PULLING IN THE CUSTOMER

36 Advertorial SI MASS: consolidating its leading position in our sector 38 Preview: Global Forum Back on Chicago soil: what’s on offer at the upcoming OPI Global Forum 40 Review: EOPA OPI takes a look at the class of 2022 – this year’s European Office Products Awards winners 44 Review: City of Hope Tour & Hall of Fame Dinner The 2022 Restoring Hope fundraising campaign officially got underway in late March at City of Hope 46 Research Drones: tackling the last mile from the sky

REGULARS 5 Comment 6 News 48 5 minutes with...

Gareth Farrell 50 Final Word OPI Insights: Monetising marketplaces

April/May 2022

Some of the big resellers across Europe, including Lyreco and what was Staples Solutions and Office Depot Europe, have had a very difficult time during the pandemic.

Not being able to knock on the doors of existing or new customers, not having that physical contact or a solid plan B to cater to the wants and needs of all the people suddenly working at home has been devastating. These players simply weren’t considered to be the place to go.

It led to this enormous shift in demand for products in the e-commerce space as well as B2C retail where so many manufacturers – including Bi-silque – now have a huge stake.

32 Category Update Viscom poised for continued success in the new collaborative workplace

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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

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Good (and bad) vibrations!

ovely! It’s not a word you’ll typically find in the dictionary of business terminology, but I’m going to use it anyway.

Because it was just lovely to see so many of our readers at the recent OPI Partnership event in Amsterdam, as well as at the European Office Products Awards (EOPA) dinner in the same location (page 40).

Partnership was OPI’s first large-scale, face-to-face event in two years and, clearly, Europe’s senior executives were keen to get together again for strategic discussions. Vibes were equally excellent at the EOPA evening where even more industry peers celebrated all that is great about our sector – from products and initiatives to companies and individuals.

Another successful event was the annual City of Hope Tour and Hall of Fame Dinner (page 44). It too marked a return to in-person gatherings. Importantly also, it welcomed OPI’s very own Steve Hilleard into the prestigious Hall of Fame, alongside HP Inc’s David Lary. Congratulations to both Steve and David – well-deserved and apt recognition of their long-standing and continuous support of this amazing cancer and diabetes research and treatment organisation.

The pandemic has irrevocably shaped – or at least accelerated – customer buying behaviour It’s not all good news, sadly. Most worrying of all, of course, are the tragic events happening in Ukraine. Aside from the unforgivable human strife to so many innocent people, the war is also having an impact on countless businesses in our sector (page 8).

Then there’s the wider fallout from COVID-19 which will long outlast the health crisis. The paper industry is a good example of a category seriously affected by both scenarios (page 26).

Overall, the pandemic has irrevocably shaped – or at least accelerated – customer buying behaviour. As a result, it’s altered the way vendors in our space go to market – to the detriment of the traditional OP channel – as we explore in this issue’s Hot Topic (page 22) and our Final Word (page 50).

Addressing the myriad of challenges that exist today – and offering some real solutions and best practice takeaways – will be the forthcoming OPI Global Forum which, once again, will be held in Chicago in May (page 38). It would be just lovely to see HEIKE DIECKMANN, EDITOR many of you there!

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

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He continued: “The government cannot expect contractors, especially small business contractors that the Biden Administration seeks to nurture and support, to continue experiencing percentage losses in the double digits without an impact on service, product quality or delivery.”

Analysis: GSA eases pricing restrictions

The US federal purchasing agency reacts to industry concerns over contract terms The US General Services Administration (GSA) has given government suppliers more flexibility to implement price increases due to the unprecedented level of inflation. The agency said it had recognised that many factors were impacting the global economy and disrupting supply chains, leading to product shortages and delays as well as price volatility.

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The government cannot expect contractors […] to continue experiencing percentage losses in the double digits without an impact on service, product quality or delivery

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As a result, it had been seeing an increase in requests to raise prices on its all-important Multiple Award Schedule (MAS) government-wide contract vehicle. Normally, suppliers are restricted in terms of how often and by how much they can raise prices – known as ‘economic price adjustments’ (EPA) – because of strict MAS terms and conditions.

However, in the current inflationary environment, GSA had been accused of “dictating” pricing, with some suppliers even removing items from their federal supply schedules rather than selling them at a loss.

In February this year, the Coalition for Government Procurement (CGP) wrote to GSA urging it to take action on what it called a “no-win situation” for suppliers and purchasers, calling into question the long-term viability of the MAS programme.

“Allowing market forces to operate in the government space is key to providing a stable and economically hospitable environment,” said CGP President Roger Waldron. “The alternative is catastrophic: either vendors will leave the space, reducing government access to the benefits of innovation and competition, or they will remain and performance will suffer.”

Roger Waldron

TAKING NOTE GSA appeared to take notice of the CGP’s concerns. “While EPA clauses normally act to protect GSA’s interests, in the current marketplace, they make it harder for federal agencies to acquire needed goods, services and solutions,” the agency wrote in a 17 March letter to its contractors.

“To ensure that GSA is able to continue offering a full range of products, services and solutions, [it] must be flexible in how it applies these EPA contract clauses.”

Therefore, GSA has now waived some of the limitations on price increases and introduced a moratorium on the enforcement of certain restrictions in its EPA contract clauses. The temporary amendments will remain in place until at least 30 September 2022. Specifically, during this time, the policy moratorium: • eases time limitations on EPA increases; • relaxes the limit on the number of EPA increases a contractor may request; • allows a lower level of approval, to one level above the contracting officer, for price increases above the EPA clause ceiling; and • clarifies that, if a contractor has removed an item from its MAS contract, the contracting officer may add the same item back at a higher price if this can be determined “fair and reasonable”.

“These changes empower [federal] contracting officers awarding and administering MAS contracts to respond to current market conditions,” GSA noted. “This flexibility makes it easier for firms to do business with the government through the MAS programme as it provides more choice, competition and value for our federal customers.”

Waldron welcomed GSA’s response to the situation. “Recognising the reality that rising inflation is causing price increases across contractor supply chains, GSA is taking positive steps to promote stability in its industrial base,” he told OPI. “We feel privileged that GSA heard Coalition concerns expressed not only in our letter, but also in an exchange with our members.”

He added: “GSA should be applauded for attempting to act with agility to sustain its contractor partners to ensure an uninterrupted flow of goods and services to agencies during these challenging times. Equally as important, the agency is maintaining ongoing dialogue to assure it can respond as the market changes.”

The MAS programme is a key component of US federal government purchasing. In the most recent fiscal year, it accounted for almost $40 billion of spend, with about $14 billion of that conducted with small businesses. Clearly, it is not in GSA’s interest to back its suppliers into a corner and further disrupt product availability and supply chains.

NEWS

Analysis: Dealing with crisis

Business products companies respond to Russia’s attack on Ukraine The appalling aggression by Russia on Ukraine has been dominating the global news since Vladimir Putin ordered troops over his neighbour’s border on 24 February. A major part of the response to weaken Putin’s regime since then has been the imposition of sanctions on Russia and its ally, Belarus. This has been accompanied by an increasing number of high-profile global companies halting or suspending their operations in Russia.

TAKING A STANCE In the business products world, firms began taking a stance on Russia on or around 2 March. One of the first organisations to issue a statement was HP Inc. CEO Enrique Lores wrote: “We are deeply disturbed by the escalating images of war and unfolding humanitarian crisis in Ukraine. […] We are

Greg Liénard

acting with urgency to support HP employees, their families and our partners in Ukraine, Russia and neighbouring countries. From a business perspective, we have suspended shipments to Russia and paused all Russian marketing and advertising activities.”

Another business to proactively make an announcement was the UK’s EVO Group, which includes Banner and VOW Wholesale. On 4 March, it said it had severed trading ties with Russia. A review showed no group company had any direct trading links with Russia, but it did identify some paper products, sourced from third-party paper wholesalers, that were manufactured in Russia.

“No further orders will be placed with the paper mills identified and existing orders have been cancelled,” confirmed EVO CEO Steve Haworth.

“While we appreciate this will increase the challenges in sourcing paper and lead to further cost inflation, we are strongly of the view that this is the right and responsible thing to do.”

It was a decision “wholeheartedly” supported

by Commercial, one of VOW Wholesale’s top customers. “We will continue to perform ongoing and stringent due diligence on our supply chain, and we will maintain contact with all suppliers to ensure they are trading to our ethical standards during this uncertain time,” the reseller wrote on social media.

OPI INVESTIGATES Shortly after the invasion, OPI contacted a wide variety of leading companies in our industry to gauge their reaction. Several declined to comment on the record, stating they were not in a position to communicate publicly on the situation. The overall message, though, was that they were monitoring developments closely and looking how to align the situation to their company values.

One of the first to respond, however, was Lyreco, with CEO Greg Liénard contacting OPI shortly after returning from a trip to Poland. “I took the opportunity to meet with the Ukrainian colleagues we have there,” he said. “They are going through extremely difficult times – it is one thing to see the events on a screen, but

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UKRAINE RESPONSE TIMELINE: HOW BUSINESS PRODUCTS COMPANIES REACTED

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2 March • Messe Frankfurt says it is suspending events run by its Russia-based subsidiary until further notice.

• The Polish subsidiary of software company PBS Connect announces an indefinite boycott of training, integration and events involving companies that are backed by Russian capital.

• Stora Enso halts all production and sales in Russia, where it has five facilities employing around 1,100 staff. It is also to stop all import and export activity with the country for an indefinite period.

3 March • UPM says it is ceasing all deliveries to Russia “for the time being”. A week later, following announcements by certification bodies PEFC and FSC, it halts the buying of wood from Russia.

• Cleaning association ISSA withdraws its participation in and support of the CleanExpo Moscow trade show due to take place this November.

4 March • Pritt brand owner Henkel announces a freeze on all future investments in Russia and a stop to advertising and sponsorship activities.

• PEFC declares that wood originating

from Russia and Belarus is ‘conflict timber’ and therefore cannot be used in PEFC-certified products.

• Canon’s EMEA subsidiary confirms all product deliveries into Russia have been suspended.

7 March • Papermaker Sylvamo commences “an orderly suspension” of its operations in Russia, which accounted for 15% (approximately $525 million) of company revenue in 2021.

8 March • Amazon suspends shipments of retail products to customers located in

NEWS

another to meet face to face with people who are experiencing the horrible moments first-hand.”

Liénard confirmed that Lyreco had suspended the purchasing of products made in Russia, but the company’s focus was clearly also on providing humanitarian support. It has implemented a number of initiatives. These include collections for refugees, matching donations by staff and working closely with its long-time NGO partner CARE. He added: “We’ve also asked everyone who has an impacted teammate to provide help and support. A visit, a phone call, lunch, coffee, or some time together to make sure they are not left alone. It is a simple gesture, but an important one.”

ACCO Brands CEO Boris Elisman called the war in Ukraine a “human tragedy”. “ACCO Brands suspended all shipments to Russia, where it operates a very small business,” he wrote in

No further orders will be placed with the paper mills identified and existing orders have been cancelled a statement. “[We do] not conduct any local business in Ukraine and don’t expect any material impact on our sales, unless the war extends beyond Ukraine.”

He continued: “In response to the humanitarian crisis caused by the war, ACCO Brands and its employees around the world are donating food, clothing, time and money to refugee aid organisations to assist those in need.”

Durable was another vendor advising OPI that it had “suspended all deliveries to and business with Russia”. It clarified its links with Russia, stating it does not have a production site in the country, nor does it distribute any products sold or manufactured by Russian companies.

“Durable is aware of the high legal responsibility to comply with […] sanctions against Russia and the occupied Ukrainian territories,” it stated. “We are carefully monitoring

Russia and Belarus, and will no longer accept new Russia and Belarus-based AWS customers and Amazon third-party sellers.

• FSC withdraws certification for materials and controlled wood originating from Russia and Belarus.

HUMANITARIAN RESPONSE The business products industry has a proud history of supporting charitable causes, and its response to the Ukraine crisis is no exception.

The examples of company donations and staff efforts are too numerous to mention, so kudos to all those who have been involved.

One interesting initiative to single out is a fundraising project called education4peace started by the directors of Germany-based manufacturer SI MASS (see page 36 for more on SI MASS). The company has been mobilising industry stakeholders to make donations of educational products; it has also brought onboard a merchandise partner, with all proceeds going to the fund.

“If we enable children to get a good school education, we create the basis for a future in which people treat each other with respect and set out to tackle global challenges together,” said SI MASS co-CEOs Jan and Benni Schaefer.

10 March • TD SYNNEX suspends business in Russia and Belarus, including shipments to entities and individuals there.

• Avery owner CCL Industries suspends future financial support to its investment in Russia, where it has a 50% interest in CCL-Kontur.

Its financial exposure to the venture is estimated at around $55-$60 million.

• Mondi confirms it is “assessing all options” for its interests in Russia, a market where it generates around 12% of its sales and a fifth of group profits.

13 March • Xerox says it stopped all shipments to Russia at the onset of the conflict and is “complying with all applicable government-issued sanctions”.

• International Paper reveals it will explore the possible sale of its 50% stake in Ilim, a leading Russian pulp and paper producer.

14 March • TAKKT subsidiary Kaiser+Kraft declares it is stopping all business in Russia with immediate effect. It confirms that staff impacted by the decision will be offered employment in other group companies.

April/May 2022

9 March • After “reassessing” its business in Russia, 3M suspends all operations there.

• Edding Group says it stopped all deliveries to Russia and Belarus the moment fighting began.

• Epson suspends exports of its products to Russia and Belarus.

Boris Elisman

the current regulations in all transactions and are implementing them consistently.”

One entity that does have a presence in Russia with its own subsidiary is TroGroup, owner of stamping business Trodat. While its operations have not been suspended, a TroGroup spokesperson said the business had come “more or less to a standstill” due to the impact of sanctions on the country.

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HP Inc to acquire Poly

HP Inc has made a significant move in the workplace peripherals category by agreeing to acquire Plantronics brand owner Poly in an all-cash deal worth $3.3 billion.

“The rise of the hybrid office creates a once-in-a-generation opportunity to redefine the way work gets done,” said HP CEO Enrique Lores.

“Combining HP and Poly creates a leading portfolio of hybrid work solutions across large and growing markets.”

Poly is set to help drive the growth and scale of HP’s peripherals and workforce solutions businesses. Respectively, they are seen as $110 billion and $120 billion opportunities by 2024 and are growing in the strong single digits. Within these segments, meeting room solutions and personal audio and video for at-home workers have a combined addressable market of around $13 billion.

Poly’s annual revenue is approximately $1.7 billion, with a gross profit margin of 46%. The company – which is based in California – employs almost 6,000 staff in 32 countries. HP expects the transaction to close by the end of this calendar year.

Imperial Dade moves into Canada

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US-based jan/san distributor Imperial Dade has made a statement acquisition by buying Veritiv Canada. On 17 March, it entered into a definitive agreement to acquire 100% of the share capital of Veritiv Canada for $190 million.

The deal includes the company’s headquarters in Toronto and 11 other locations throughout the country. Veritiv Canada’s approximately 900 staff are set to become Imperial Dade employees once the transaction closes – which is expected to be before the end of June.

Veritiv said the sale aligned with its strategy to “focus on higher growth and margin businesses and geographies”. In 2021, Veritiv Canada “did not materially impact” the group’s adjusted EBITDA or earnings, regulatory filings show, although it posted sales of $722 million.

If Imperial Dade’s recent track record in the US is anything to go by, it will now use Veritiv Canada to roll up local distributors. This latest deal is the 47th acquisition since CEO Bob Tillis took over the company in 2007 – and the 25th since Imperial Dade was acquired by Bain Capital less than two years ago.

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Buffetti buys software company

Italian school and office products group Buffetti is continuing to invest in digital solutions after acquiring Madisoft, a developer of software for the education sector. The move will provide Buffetti with a complementary digital and physical offering for schools, where it is already widely recognised through its Pigna brand – acquired in 2019.

This is not the first investment in the digital space for Buffetti in recent times. At the end of 2021, it took a 70% stake in E-Fil, a provider of cloud-based payment solutions for the public sector. Before that, in 2019, it entered the share capital of online training company Directio.

Buffetti’s Vice General Manager Francesco Villa also told OPI that an in-store service to help Italians set up their online public digital identity (known locally as SPID) was proving successful.

So far, more than 500,000 customers have paid €30 ($35) for this service.

Plate’s Dieter Schmidt passes away

Dieter Schmidt, former Managing Director of leading German independent dealer Plate, died unexpectedly on 22 February, aged 76.

Schmidt had stood at the helm of Plate for almost 50 years, having finally handed over the reins to his son Ingo at the beginning of 2021.

The roots of this Northern German player go back much further, however, to 1871 when Schmidt’s great-grandfather founded a small retail outlet in the city of Bremen.

With the retail part of the company long discontinued, under Schmidt’s leadership, Plate, through acquisitive and organic expansion and growth, developed from a small regional player into one of Germany’s largest independent B2B operators. It now works from eight sites in the country and has revenues of approximately €90 million ($98 million).

NEWS

Office Centre fails to get creditor support

There was further bad news for troubled European office supplies retailer Office Centre in March. A few weeks after saying its Netherlands-based entities – New Office Centre Beheer (NOCB) and New Office Centre (NOC) – were entering into a local form of creditor protection (a WHOA), these businesses have now been declared bankrupt.

NOCB CEO Marc-Derek Schönberger confirmed to OPI that the WHOA process had ended and that a receiver had been appointed for NOCB and NOC. “The receiver has decided to continue operations for [several weeks] and will investigate if a buyer for the business can be found,” he said.

It transpired that key stakeholders had withdrawn their support for the WHOA, forcing the move into receivership. It is a similar situation to that of Office Centre’s Staples branded stores in Germany, which entered bankruptcy proceedings in February. Office Centre has around 30 stores in the Netherlands, plus just over 50 Staples outlets in Germany.

Aussie regulator reviews office supplies acquisitions

April/May 2022

The Australian Competition and Consumer Commission (ACCC) has conducted a review of two key transactions in the country’s office products channel.

As part of a programme to improve its merger investigative processes and decisions, the ACCC looked at six recent M&A deals. These included the Platinum Equity/Winc acquisition of OfficeMax Australia at the end of 2017 and COS’ purchase of Lyreco Australia the following year.

The OfficeMax transaction had raised eyebrows at the time because it was a combination of the number one and two players in the office supplies contract market with large public and private sector customers. COS/Lyreco, meanwhile, brought together the third and fourth largest resellers, leading to a structural shift from four to two national suppliers in the space of just a few months.

The ACCC said it would normally expect to see some degree of competitive harm as a result of these developments, but this had not been the case. It pointed to “sufficient constraints” on both Winc and COS, including each other’s presence, smaller suppliers and the opportunity for customers to easily make ad hoc purchases from the likes of Officeworks and Amazon – thereby justifying its original decisions not to block either acquisition.

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IN BRIEF

Long gone are the days when procurement’s [main] role was about cost savings. Today, there is a wider range of objectives [such as] supplier diversity, sustainability and managing supply chain risk Miguel Cossio, Research Director Analyst at Gartner, speaking at the Amazon Business Reshape event, March 2022

$35 million

Investment in G B2B marke ermany-based tplace by private e Profishop quity firm Tiger Globa l

Insights-X adds licensing component German stationery trade show Insights-X has teamed up with Licensing International to launch Licensing-X. It will be held at the same time as Insights-X, which takes place from 5-7 October 2022 in Nuremberg.

$24-$30 million

IPO fundraising target for Planet Image, the holding company of Chinese aftermarket toner supplier Aster

Amazon closing locations

Rebrand for Supplies Network

North American distributor Supplies Network and its e-commerce fulfilment sister company DM Fulfillment will rebrand later this year under the name of parent group Distribution Management.

Amazon is to shut 68 retail outlets that operate under the Books and 4-star banners. The company opened its first bookstore in Seattle, Washington, in 2015.

n n n n

Very Somewhat Not very (0%) Not at all (0%)

opi.net poll

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How concerned are you about the impact of the current inflationary environment on your trading results?

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40% 60%

56%

Amazon’s share of 2021 total e-commerce spend in the US

PICTURE OF THE MONTH Australian dealer Dolphin Office Choice has vowed to rebuild after suffering extensive damage in recent floods. The Office Choice group has set up a disaster relief fund to assist Dolphin, and made a contribution of its own of A$20,000 (US$15,000).

BIG INTERVIEW

SPR’s VISION:

A work in

PROGRESS

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Almost two years into the momentous acquisition of S.P. Richards, the pace of transformation at the wholesaler is finally quickening, replacing a period of pandemic-induced firefighting

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ittle did Yancey Jones and Mike Maggio know when they acquired S.P. Richards (SPR) from Genuine Parts Company (GPC) in June 2020 that what was happening at the time would turn out to be so much more than a temporary global health crisis. To say they had their work cut out dealing with the many and varied pandemic challenges over the best part of two years would be an understatement.

As such, their vision – to become a distribution company to all customers offering all products they might feasibly want – had to be put on the backburner. Surviving and facilitating their customers’ survival became paramount.

Jones and Maggio need no introduction as regards their credentials to meet the obstacles they faced.

But as Executive Chairman and President/CEO respectively of SPR, they’ve certainly required their combined 90+ years of industry experience to steer the wholesaler into calmer waters. In the process, their vision didn’t get blurred, however, as OPI CEO Steve Hilleard found out when he caught up with these two unflappable industry veterans.

Coupled with a sharp appreciation of what was important at any given point during an intensely difficult period, that vision became even more focused. And finally now, there’s light at the end of the tunnel as the new world of work is beginning to take shape, with all the repercussions it will bring to SPR, its customers and the industry at large.

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OPI: When you entered into this transaction with GPC to buy SPR, you can’t have imagined in your wildest dreams the dramas to come?

Yancey Jones: Absolutely not. In June 2020, just before the transaction closed, we had seven banks that were all very excited about the future. So were we. We thought COVID was over. Sales were good in July and August. But then September came,

COVID was back. All the schools – in fact, almost everything – shut down again.

Overall, 2020 was not a banner year for us, with some areas down 40%. Luckily, we also had some categories that were up 30% – our jan/san business was booming and helped us through the second half of 2020, and the same was the case for PPE. We certainly didn’t expect to sell millions and millions of dollars worth of face masks overnight when we first invested in SPR. We were in the same boat as everybody else – supply chain issues and difficulty getting products. There was plenty of inventory, just not the right inventory.

OPI: Mike, those pandemic issues aside, what else would you highlight that perhaps you hadn’t anticipated following the acquisition?

Mike Maggio: As you know, we had significant plans to change the way we go to market and also how our customers and the manufacturers look at us as a partner. COVID got in the way of those plans. The attitude was: let’s get through this, survive and then start again.

We always knew it was going to be difficult to wean ourselves from GPC, not for Yancey and I, but for the organisation, and that turned into an even bigger challenge because the pandemic has lasted for so long.

BIG INTERVIEW Yancey Jones & Mike Maggio Left: Mike Maggio Right: Yancey Jones

We’re not a manufacturer, a business consultancy or a marketing agency. We’re most definitely not a bank. We’re a partner But we believe we’re on track again. In the last quarter of 2021, we finally started to put it all together in a format that made sense for us. And January and February this year were both good, solid months. In fact, we went into 2022 with a very different view of the world than in 2021 and we’re now heading in the right direction.

OPI: Is there really such a major difference between the old and the new SPR? YJ: Yes, there is. We’re not looking at what’s in our catalogue anymore – which is typically how things

April/May 2022

OPI: You sort of rebranded last year with a tagline of ‘Not just wholesale – the whole package’? Are people interested in hearing that message now?

MM: First of all, we think it’s a great message.

But it hasn’t fully resonated yet, certainly not to the degree we had envisaged. Everybody’s been in survival mode. When we talk to individual customers or our key vendors, there’s no disputing what we say, but by the same token there’s still an attitude of “Yes, it’s all well and good, but we’re just trying to get through the day”.

OPI: Here’s your chance to put forward the message and your vision again.

MM: (laughs) Thanks Steve. It starts with the simple statement that we want to be the preferred wholesale distributor for resellers and manufacturers in the business products space.

What does this actually mean, you may ask? It means we provide market-driven product. We stock what our customers and the vendors want wholesale support on, but we further give resellers access to every product a vendor sells. And we do this competitively so our customers can compete in the marketplace.

This vision also means a bunch of things we’re not. We’re not a manufacturer, a business consultancy or a marketing agency. We’re most definitely not a bank. We’re a partner and a very good and reliable one at that. And we’re going to get even better.

Any reseller is a customer, we’ve said this multiple times before. We’re not going to treat them all the same – of course not. If you do more business with us, you’ll get a better programme, simple as that. But we’ll do business with anyone.

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Yancey Jones & Mike Maggio BIG INTERVIEW

have worked with both the major wholesalers in the US. We’re not saying to customers, “This is what we have, that’s what you can buy”. Instead now, we’re saying: “What are you selling?”

We’ve also changed quite a bit internally, as an organisation. Because we’re independent, we are more flexible and agile enough to listen to our customers and supply them with what they need to grow their business rather than what we want to shift from our warehouse.

Photography by Steve Mauer – www.stevemauer.com

OPI: What is the footprint of your distribution facilities now?

MM: We’ve recently closed our Pittsburgh facility and now have 29 distribution centres in about as many US states. We also have two furniture-only DCs – one in the North East, one in the South East.

We don’t stock the same product in every single facility because, in Florida, they don’t need the same things as they do in Colorado. But they all hold the basic product range and then we expand from there.

We are committed to increasing our use of technology in the DCs. It could be as simple as the apparatus our order fillers use to pick orders. Right now, for example, we’re moving to a heads-up display along with pick-to-voice versus the handheld pick-to-voice we’re doing today.

In our Atlanta DC, we have two new operational items. One is called a three-tier pick module that is more suitable for picking cartons. We also put in AutoStore which is a robotic system that picks a tote filled with product, brings it to the picker who then selects what he/she needs, puts it in a box and sends it on its way.

It’s all about understanding and implementing the most cost-effective way of doing what we do.

YJ: Mike and I have so far invested about $15 million to make our processes more efficient. All this kind of stuff hadn’t really changed for years under the previous ownership situation, but we’re reinvesting to build stronger capabilities.

www.opi.net

I don’t see how we can be the kind of wholesale distributor we want to be without offering product that’s in every office in the world

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OPI: Becoming more efficient often takes a toll on headcount. What have you initiated in that regard since you’ve been in charge?

MM: This obviously is closely linked to COVID too, so I’ll start with that aspect of it. We essentially tried to weather the pandemic without any staff reductions which was a mistake, quite frankly.

We also made some other moves that were not as effective as they could have been.

Ultimately, we had a reduction in our workforce in January of this year. We streamlined and reorganised some of the departments at headquarter level, including finance, merchandising and supply chain, and eliminated a number of outside sales positions. Perhaps this

could have been done sooner. We reorganised our marketing team and are more focused on digital marketing versus print, including using social media effectively as a tool to both reach our customers and for them to use as well.

We will be discontinuing our general line catalogue for 2023, for instance, so that will be the end of an era. These things better reflect the way the world works today versus 10-15 years ago.

OPI: Diversity is another big topic today, and you’ve been pretty intent on creating more of it at SPR I believe.

MM: You’re right. One of the first things we did was create a diversity and inclusion group at SPR. Again – and I don’t mean this to sound like an excuse – we’ve had a tough time with it because everything outside sheer survival has been difficult to get engagement for.

But we’re committed to it and are making progress. Very recently, for example, I visited an organisation that works with the blind and visually impaired, and we’re planning on getting involved with the people there to bring in some diverse candidates. Our goal is to make SPR as inclusive and as diverse an organisation as possible – not just within the stock room and the different departments, but at the highest levels.

YJ: As you’ll have seen from our communications, we’ve also promoted a number of women to more senior positions in several major divisions.

OPI: Let’s talk about product. What does the business look like in terms of areas of growth?

You’ve mentioned jan/san and PPE before.

OPI: It’s always been the argument – margin percentage versus margin dollar.

MM: Exactly. We recognise we need to be in that space and this is one way of doing it.

We have also built our own in-house MPS platform – it’s something we did not have and we have just rolled this out and it’s been very successful so far. Again, it’s recognition of what we have to do and where we need to go.

MM: The two biggest growth opportunities for us right now are furniture and cleaning. But in the long term, we’re also looking at technology as having significant potential and we’re examining a number of other categories too. For the next 12-24 months, we expect OP to grow again which is no surprise given the drop over the past two years.

We’re expecting sustained growth out of all categories for at least a short window. Cleaning, we’re confident, is going to stay important long-term. Breakroom, on the other hand, has not come back yet, but when it does, it will be a source of growth and one of focus for us.

YJ: Another category could be packaging and shipping supplies – we see big potential here too.

OPI: What do you predict for the coming year or two as the full after-effects of the pandemic are laid bare before us?

YJ: First of all, we are optimistic that sales will come back to resellers as staff return to the office.

And they will return in some fashion, although it might take a year or two, but it’s going to get back up to over 90% of where we were pre-pandemic.

We’re beginning to see it, but it will take time.

MM: You talked about consolidation. There’s a lot of dealer activity now and by that, I mean dealer to dealer, rather than the big players getting involved.

We facilitate those conversations where we can.

OPI: You said earlier your role is not to provide consultancy. But do you in actual fact get involved in facilitating and brokering deals?

MM: We provide a clearing house as best we can.

You know Charlie Cleary has been working with us for a number of years now. He does a terrific job working with resellers to help them evaluate their

April/May 2022

OPI: I’m interested in your comment about technology. For as long as I can recall, we’ve talked about the convergence of the OP and the technology sectors. But it has never happened in a meaningful way, not from an independent reseller nor a wholesaler perspective. Why do you think you could take a shot at it now?

MM: I don’t see how we can be the kind of wholesale distributor we want to be without offering product that’s in every office in the world. It’s a significant gap, as you point out, and one of the problems we need to overcome is to work more closely with our suppliers.

We also have to be willing to look outside the normal distribution channels to bring in the product, and so we’re partnering with some folks you might consider competitors. But they don’t think of it that way and nor do we.

OPI: I guess expanding into categories like technology will open up a broader set of customers for you. But as a result of COVID as well as consolidation, you’ve also had some shrinkage in terms of your customer base.

What does that base look like now?

MM: The growth is coming out of the e-commerce segment, no surprise there. And it’s not Amazon, but smaller and new e-commerce operators. We are a perfect solution for a stockless e-tail type of business, and we’ve changed our formula in that regard. It’s not about going for revenue for revenue’s sake. It’s about profitable customers that make sense for us. We’re very happy with the way this piece of our business is going.

The IDC, what we consider our traditional OP side, is about 50% of SPR’s business. And that’s actually held really well. The shrinkage has come from the mega side. Depot, for example, while still a very important customer to us, contributes a much smaller percentage to our overall sales than it did two years ago.

BIG INTERVIEW Yancey Jones & Mike Maggio

OPI: Such as?

MM: TD SYNNEX has been a partner of ours for some time. We’ve done business with this organisation over the years and we’re expanding this partnership, much to the delight of both parties.

In the long run, I don’t know if it’s the right way to do it but short-term, it puts us in a better position to offer the types of products customers need.

The biggest hang-up our channel has always had with this category is margin. But maybe you have to look at it differently – at the dollars I mean.

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Yancey Jones & Mike Maggio BIG INTERVIEW own company as well as that of the business they are looking to buy. So in that sense, yes, we do provide a level of service.

OPI: When you took over SPR, you inherited some investments which had been made in certain dealers. Can you comment on that?

MM: We’ve been working very closely with this group of dealers we own a percentage of to figure out precisely what the benefits are for them. As you say, we inherited this situation and it was kind of an incomplete strategy to begin with and certainly defensive in nature.

Dealers are very vocal about it and we have put together some better communication strategies.

They’ve elected a chairman of their group and there’s now a single point of contact, for instance, so I think we’re heading down the right path.

OPI: What’s the size of this group? How many resellers do you hold an investment in?

YJ: I can’t tell you that I’m afraid.

www.opi.net

OPI: OK, a secret then. What’s not a secret, however, is that you own a stake in Source Office & Technology and, of course, this business was recently sold to The Supply Room (TSR). Can you elaborate?

MM: We’ve maintained our percentage of ownership in Source when TSR bought it. And I believe it’s gone very well for both parties.

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OPI: It must be a delicate situation Yancey, given your TSR family connection?

YJ: I did not have anything to do with it. The TSR management made that decision on their own.

OPI: So you’re distancing yourself from it?

YJ: (laughs) As much as I can, yes.

OPI: OK, let’s move on to another potentially touchy topic. You launched a last mile delivery solution last year. Is this still going? Or is this new Supply Chain Investment Group (SCIG) initiative going to usurp it?

MM: We’ve always said we support SCIG’s initiative and do whatever we can to help these dealers from a wholesale perspective. We’re not investing in it – that’s something they are doing and hopefully they’re doing it right.

The Reseller Delivery Network you mention was an attempt to put dealers together which either want to provide or need delivery services. Our goal was to create a platform – a website effectively – where they could contact each other, and we’ve done it. We also provide wholesale support. But apart from this, we don’t tell them what to charge each other.

So far, there has been some level of adoption and we have no intention of not continuing it, but we’ve done everything we need from our side. We remind dealers of this option because freight has become a real challenge and it’s a cost-effective way for independents to ship product.

It’s probably going to take more price increases to accelerate uptake of the initiative. But these increases are coming, we all know it.

OPI: Your old organisation, Mike – Independent Suppliers Group (ISG) – has had an RDC model for years now and SPR recently took over the running of that programme. How is this going?

MM: As of 1 July, we will no longer participate in the RDC. It hasn’t worked for us how we had hoped.

Essendant customers have continued to buy through its carton programme, and our resellers still support Advantage Carton Direct (ACD), which is our equivalent programme. ACD will continue to flow through ISG; we will pay rebates, it will still be central billing through the group and we will pay a management fee for the ability to do all that. But we will no longer be part of the RDC piece.

As of 1 July, we will no longer participate in [ISG’s] RDC. It hasn’t worked for us OPI: Where does that leave the RDC initiative?

MM: That’s a question for Mike Gentile. I don’t know, but as far as we’re concerned, we’re out.

OPI: What about other programmes like EPIC Business Essentials?

MM: It’s the best solution right now for dealers to utilise other resellers to help them with satellite business and we’re certainly supporting it from a wholesale perspective.

OPI: You talked about your ambition to offer many more SKUs, not just 50,000 to 60,000.

With that comes the need for data and content, which is something the industry has been battling with for a very long time.

OPI: You say you’d rather not be in the content game. Is there an opportunity for an independent organisation to pick up that ball?

In the UK, for example, we have an organisation called FusionPlus Data which is pretty much the industry-wide repository for content now.

MM: If we had to start from scratch today with content and search engines, we wouldn’t be able to afford it – it’s absolutely enormous. What we have created has been developed over a number of years and we’re very proud of it.

We had an independent and industry-agnostic third party take a look at what we’re doing and it rated us very highly across all the key metrics when it comes to both search and content.

YJ: Our search engine was rated number two behind Amazon – it’s pretty stalwart.

OPI: Before we wrap up, I want to ask you about Staples and Depot. I’m mindful of the fact one of them is a significant customer of yours. but what’s your view on how that whole situation will likely play out?

YJ: I have no clue. I’ve been in the business 47 years and I long ago stopped making predictions.

It’s going to be interesting for us however it shakes out, and I’m confident it will be a positive outcome.

We sell to both of them. Depot is the largest, but Staples is one of our top 50 customers too.

OPI: On a final note, gentlemen, what do you see yourself doing in five years’ time or so?

We don’t always ask that question, but I don’t think I’m being too rude when I assume you guys are probably heading towards the end of your careers.

YJ: What a nice way of pointing out how old we are! When Mike and I bought SPR, we wanted to build the strongest, most efficient wholesale distribution company in the US. It’s still our goal.

We want to have the product that help our customers to grow, we want to add more customers to our portfolio – and we’re doing that every month, be those customers small or large.

We’re going to add hundreds of new accounts this year. And they, combined, will help us to grow as well.

OPI: I wasn’t really asking about the company Yancey, but more about you two.

MM: I don’t think we want to answer that. We have a lot of things yet to accomplish which we set out to do when we bought the business.

Now is not the time for a succession plan. We’re currently behind where we wanted to be thanks to COVID, but we’re still committed to the same things. You’re going to be stuck with us for a little while longer I’m afraid.

OPI: Given all that’s happening in the world at the moment, this is certainly the best news I’ve had for some time. Thank you both for your time and insights.

For more from the interview with Yancey Jones and Mike Maggio, such as relationships with vendors and their view on the post-COVID world of work, see our Xtra content in the April/May issue on opi.net

April/May 2022

OPI: In many parts of Europe, we have so-called hybrid wholesale organisations.

EVO Group in the UK now owns Staples.co.uk and Staples Advantage. And it owns Banner, which is a sizeable reseller to government and large corporate entities. But it also has a considerable wholesale operation. Can you envisage a situation where the North American market allows you to be that type of operator?

MM: You never want to say never, but right now and based on the current players in the market, I don’t see a path for this. As we talked about, we own a percentage of some dealers, everybody is aware of that. We’re still not sure strategically how this is going to play out. To develop it to the extent EVO has, for instance, I can’t see it at the moment.

But who knows what tomorrow might bring.

BIG INTERVIEW Yancey Jones & Mike Maggio

MM: We’re 100% committed to it. I was beating that drum way back when I was at TriMega.

And the day Yancey and I got here, we made a commitment to our manufacturer partners, assuring them we wanted to represent all their products, regardless of whether they are in the building or not.

I would love to not be in the content business but, quite frankly, there isn’t anybody else out there – it’s either Essendant or ourselves and we are both on the same page about the products we want to sell.

Our goal is to add every SKU into our content feed. We introduced a new product information management system last year, with the specific aim of streamlining this process. We’ve added about 30,000 or 40,000 extra SKUs already and are at over 100,000, but we’ve got a way to go.

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HOT TOPIC

Some business models in our industry need to change, it’s a fact. One of the reasons is that OP vendors are increasingly taking their products elsewhere – where the customer is.

OPI’s Heike Dieckmann finds out more…

www.opi.net

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ur industry has been operating in a pressure cooker environment for the past couple of years. The issues are multifold and well documented: shortage of (the right) products, disrupted supply chains and soaring prices are just some of the challenges incurred, many of them ongoing.

For the traditional OP channel – vendors, wholesalers and the reseller community made up of independent dealers, contract stationers and some very large operators – these macroeconomic obstacles have been exacerbated by the fact that large swathes of their end customer base disappeared, almost overnight, from their usual place of work – the office.

Gone are the days when resellers like WB Mason or Lyreco would drop off a shipment of business supplies worth thousands of dollars (or the equivalent in another currency) at a large office block housing many different customers.

Occupancy rates in these destinations vary now, but suffice to say numbers are still significantly down and they will likely never come back to pre-COVID levels.

This is forcing all channel operators to reassess their business models. Starting at the beginning of the food chain, so to speak, OPI takes a look at the vendor community and how it has expanded its routes to market in search of those elusive customers, wherever they might be.

For many manufacturers, the past couple of years have merely accelerated a journey which started long ago, but perhaps was in need of a jumpstart. Needless to say, Amazon is the first company that springs to mind in terms

of broadening the selling horizon, and all the vendors OPI spoke to for the purpose of this article admitted how important that operator has become. For many, it’s now the single biggest customer. No surprise there.

AMAZON: TAKING SHARE What is scary, however, is that the growth vendors are seeing with Amazon and other marketplaces is not incremental (see also ‘Monetising Marketplaces’, page 50). Instead, in a declining market, it’s share taken from someone else and, most likely, this someone has its roots in the traditional OP space.

All vendors were quick to add that this channel remains critical to them, with sizeable percentages of business still going through those operators.

Figures typically play in the 40-60% ballpark.

However, there’s often a big ‘but’ because, only two years ago, those percentages were much higher. A pandemic reality.

As Fellowes Brands’ VP Americas Beth Wright asserts: “The traditional OP channel is critical for us, it’s still 50% of our sales, but it cannot be the only sector we’re investing in as we come out of COVID and look for growth.”

ACCO Brands President/COO Tom Tedford concurs: “I want to be clear that our core business

CHANNEL MONITORING Fellowes, says Wright, monitors its channel focus very carefully in order to avoid disruption and cross-cannibalisation. “Our core mission is to help professionals be their best. And we go to market in the most suitable way that allows us to accomplish this. With air treatment, we are predominantly reaching a completely different buyer. It’s still all B2B, be that in offices or educational settings, but it’s another conversation and a different person to selling a Bankers Box, office furniture or technology accessories.”

If you still have to adapt your business model in 2022 towards online, I would argue you are too late

THE NEED FOR SPEED This slow speed to market is another common complaint. There are exceptions, of course. In continental Europe, Ratzenberger and several of his peers frequently point to operators that have excelled. Böttcher, for instance, the phenomenally fast-growing German online reseller, or OTTO Office, part of the Printus stable, which has done an outstanding job in shaking off its historic mail order shackles, in the process fully embracing e-commerce as the sales channel of the future.

There is no doubt whatsoever that e-commerce has been the biggest winner of the pandemic – even for B2B which was behind the B2C curve.

As Bi-silque’s European Sales Director Danny Berendsen soberingly asserts: “If you still have to adapt your business model in 2022 towards online, I would argue you are too late.”

Bi-silque has long been in the Amazon game, with Berendsen spearheading its European efforts since joining the vendor in 2017. He says: “In 2017, our revenues through Amazon across Europe stood at just under €1 million. In 2021, we closed at €6 million, with Italy and Germany being the leading countries. We have done this

April/May 2022

Air treatment, incidentally, has been the vendor’s best performing category in every route to market over the past couple of years. But the traditional channel only commands a third of this pie.

The success of the segment didn’t fall into Fellowes’ lap. It was a result of John Fellowes’ decision to enter the air treatment and, more broadly, the wellness category in 2013. Little could anyone have predicted that coronavirus would become the lightbulb moment for indoor air quality.

Foresight as well as diversification are certainly playing a crucial part in navigating these difficult times. With product diversification come new customer prospects and routes to market. In retail, for instance, the DIY, home décor or arts and crafts industries all offer vast possibilities in the form of Screwfix, Home Depot, Michaels or Hobbycraft among many others.

Mass market operators, supermarkets and discounters are other avenues where vendors have increasingly ventured with their products, especially in the early days of the pandemic when only essential shops were allowed to open. In Europe – and regions vary considerably here in terms of their dominance – players like Aldi or Lidl have really upped their non-food offering. Writing instruments, school supplies and arts and crafts sit particularly pretty in the ‘middle aisle’ environment.

Executing product diversification with traditional partners can be trickier and this is where vendors often have an axe to grind.

COLOP is a manufacturer in a mature category.

And for traditional stamping products, the OP reseller channel remains hugely important. But the vendor has also recognised the need to expand beyond this traditional product and has done so very successfully as part of its COLOP Digital component. The e-mark, launched in 2019, is a portable printing device that has won several prizes for its innovative concept and design.

However, sales via the traditional channel were not as rapid as expected, says Franz Ratzenberger, Head of International Sales & Marketing. “With some products you have to be very quick to market. We experienced reservations and conservative behaviour among our existing partners. Admittedly, this was also due to the general economic situation, but not only. We found that other industries, including electronics, were faster and more open to product innovations.”

HOT TOPIC Vendor Strategies

is very important. It is vital our traditional customers remain competitive in the evolving marketplace.

But ACCO Brands is an evolving business and the new areas we’re focusing on are very exciting.”

The role of the traditional reseller channel remains essential, agrees Stewart Superior’s Managing Director Geoffrey Betts, adding: “It’s extremely important because we need a different customer other than Amazon. We need to make sure all our customers survive – not just one of them. But if you ask me, has that reseller channel reduced in importance as regards the percentage of our sales, then yes, significantly.

“We see a decline in the number of orders from our traditional customers. The size is different too, with minimum order values becoming very difficult.

The days of an office supplies catalogue landing on your desk and customers choosing from it are gone, although I do believe they still have a place, if only in terms of brand recognition.

“In the past, if you had your lighting in a direct mail catalogue – as we did – you were guaranteed instant access to, say, 750,000 customers in the UK. And every customer wanting a light would buy it from you. Now they buy their lights online and have immediate access to 150 suppliers offering them.

“Viking, for instance, is doing a good job with its online business, but the number of said lights it now sells is a lot lower than it used to be. We have customers requesting private label on 250 items sold per year. Who would make that number for us in China? We, as a manufacturer, can only survive if we have critical mass and volume. The traditional channel has to radically change or accept a different supply chain.”

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Vendor Strategies HOT TOPIC

through a clear SEO and SEA strategy and a close partnership with Amazon Vendor Support which basically provides us with a dedicated Amazon person in our own trading team.

“Some of the big resellers across Europe, including Lyreco and what was Staples Solutions and Office Depot Europe, have had a very difficult time. Not being able to knock on the doors of existing or new customers, not having that physical contact or a solid plan B to cater to the wants and needs of all the people suddenly working at home has been devastating.

“These players simply weren’t considered to be the place to go. It led to this enormous shift in demand for products in the e-commerce space as well as B2C retail where so many manufacturers – including Bi-silque – now have a huge stake.”

But even in retail, a multichannel presence has become vital, says Mark Daisley, Managing Director of Exaclair in the UK. “We are constantly asking our retail stationery partners what we can do to help increase their sales. We lost about 200 retail accounts during the pandemic and I guarantee none of them had an online presence – and it’s become absolutely essential.

“We kept talking to them, saying we can help as our data is very good – we run CommerceConnect – and direct consumers to them. A couple were willing to go down that path, but many weren’t.

I would argue they won’t make it.”

www.opi.net

We do a lot of test marketing and pilot launches on Amazon [...] because it’s a great platform to see how a product evolves

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TRIAL AND ERROR Ratzenberger already alluded to speed to market and this is where e-commerce shines the most.

As one vendor told OPI, by the time you've taken a taxi back to the airport following a meeting with Amazon, the product is online. The long-winded process so common in our channel couldn’t be a starker contrast.

Combined with often being a real testbed for new items makes for a compelling proposition, according to Mark Cooper, President of Avery Products in the US. “We do a lot of test marketing and pilot launches on Amazon – and other marketplaces – because it’s a great platform to see how a product evolves. We can then determine if Amazon will stock the product directly or whether we do the fulfilment.

“It’s a very easy way to make items visible to consumers and see what demand they generate.

If they sell well, they can be placed directly in Amazon DCs and presented to other customers, knowing they have viable consumer demand. If they don’t sell particularly well, we haven’t invested in massive amounts of inventory. I believe it’s a model everybody should pay attention to.”

“One of the major differences between Amazon and our traditional channel is that resellers and

For more from OPI’s interviews about vendor strategies, including the topic of going direct, see our Xtra content in the April/May issue on opi.net

wholesalers are still the merchandisers. They decide what’s listed and what’s not. Amazon isn’t like that – it doesn’t make the listing decision.

That’s up to the brand owner.”

It’s an argument that’s been raging for years and one our industry’s incumbents are only too aware of. S.P. Richards, since its acquisition by Mike Maggio and Yancey Jones, has been making small steps in the right direction with its “wholesale distributor for all resellers and manufacturers” vision and the promise to “stock what our customers and the vendors want wholesale support on” (see Big Interview, page 14).

Of course, the discussion is not just about the importance of the traditional channel to vendors.

It also works the other way round as resellers are widening their portfolio of products too in an attempt to diversify. As such, their dependence on traditional OP – lever arch files, labels and stamps to name but a few – has also changed substantially. Food for thought.

REDRESSING THE BALANCE Will reseller revenues bounce back to pre-COVID levels as working patterns become more established again, especially for those operators so affected by decimated office locations and for which home deliveries are financially not viable?

Unlikely, but some of the imbalances of the past two years will likely be redressed.

The large corporate sector, served well by the likes of Lyreco and several others, will see a renaissance. And this, according to many vendors, is in fact a segment that is still most accessible through the traditional contract channel.

As regards the independent dealer community, Fellowes’ Wright says: “Dealers need to find target categories where trust is a key factor in what the customer is looking for. Commercial air treatment is one of those categories. But they have to invest in updating their selling model, implementing vertically focused digital marketing strategies which are directed at a particular set of customers.

“Several resellers – not just independents but also Staples and Office Depot – have really latched onto air treatment and those that have done well have been very focused on where they had existing relationships. They have become trusted partners and upskilled themselves to be experts in selling this category. Working alongside our national field sales teams, in my opinion, is the way to go.”

CATEGORY UPDATE

Just as the paper industry was enjoying a glimmer of hope, 2022 has gotten off to a rocky start with labour shortages and an energy crunch compounded by mill strikes and a war.

OPI looks at the ramifications – by Michelle Sturman

www.opi.net

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espite the struggling global supply chain, labour shortages and economic difficulties as the world tries to bounce back from COVID, global demand for uncoated freesheet (UFS) grew last year.

According to the Cutsize Monthly Monitor, January 2022 report from paper sector consultants EMGE, cutsize paper demand across Europe in 2021 rose by just over 2%, shipments increased about 8%, while capacity dropped 7%, drastically improving operating rates versus 2020. Worldwide demand for cutsize paper, meanwhile, grew 2.3%.

EMGE says industry feedback in January 2022 revealed the cutsize market index in Europe fell because of weaker apparent demand – due to buyers facing difficulties obtaining paper – and worsening short-term business prospects. This was regardless of delivery lead times and prices attaining their highest levels since EMGE’s survey started in 2011.

In addition, buyer inventory levels dropped to their lowest in more than a decade. Opinions canvassed in January revealed that although market conditions remained positive, the index slipped slightly compared to the previous month.

Domtar Customer Marketing Manager John Parke believes the US market for office paper had a slight recovery versus 2020. “The sector has been declining annually by about 4%. So, to see growth in 2021 represents recovered demand lost during the beginning of the pandemic.” He adds that there is the potential for additional demand recovery when more corporate offices reopen.

TOPSY-TURVY For the full year of 2021, Mondi reported year-on-year revenue growth of 11% for its Uncoated Fine Paper segment. Sylvamo – formerly International Paper’s Printing Papers division – reported sales that were almost 17% higher.

There is the potential for additional demand recovery when more corporate offices reopen Portugal-based Navigator benefitted from a surge in demand for its uncoated woodfree (UWF) paper, with sales increasing 23%, while those for the Communications Paper division at Finnish manufacturer UPM grew by 8%.

However, although taking advantage of higher pricing, sales at Packaging Corporation of America’s Boise division fell as it was unable to offset rising energy costs.

Finland-based Stora Enso reported a decline in revenues for 2021, although paper remains a diminishing concern as the company continues its transformation into a renewables packaging firm. The net result is the closure of several mills in Sweden and Finland and the conversion of another to kraftliner production. It has also put four of its five remaining paper mills up for sale.

But Stora Enso is by no means the only manufacturer to shut down mills or convert machines. This scenario is being repeated by

Sanctions on Russia are putting further pressure on wholesale energy prices

INDUSTRY IN CRISIS Indeed, the energy crunch has led the Confederation of European Paper Industries (Cepi) to write a letter to the European Commission to “express [its] grave concern about the devastating and long-lasting impact of unprecedently high energy prices on [the] industry’s ability to continue operations in Europe and to stay competitive in a global market.”

In an accompanying statement, Cepi said: “Our sector is particularly hit by the spike in energy prices. At the time of writing [23 March], many paper mills across Europe were forced to stop production or to introduce temporary downtimes […] We are now calling for our sectors to be recognised as essential suppliers in several critical European value chains and to be eligible for state aid and preferential gas deliveries.”

Macro environment factors also continue to affect the pulp market. Trade credit insurance firm Euler Hermes reports that, as of the end of

September 2021, pulp prices in Europe have risen by 53%, while in Asia, they rose by 47% year on year. Initial projections for 2022 were for a slight price easing, but increasing energy costs plus the war in Ukraine place this in serious jeopardy.

With the recent sanctions on Russia and its status as a major pulp producing country, market intelligence consultancy Brian McClay & Associates believes that in the short term, this will hurt already fragile supply chains and increase demand for non-Russian softwood pulp. Moreover, there’s a material risk of capacity curtailments within the country which would exacerbate the current tight global pulp stock.

Furthermore, several paper manufacturers have been invested in Russia for a number of years and are now having to deal with the sanctions.

Mondi, for example, says its Syktyvkar mill is still operational – and is legally required by the Russian authorities to provide part of the local area’s energy supply – but was starting to see constraints which may impact mill operations.

Sylvamo also has a significant interest in Russia and announced on 7 March that it was suspending operations there. UPM and Stora Enso have ceased imports and exports to the country and shut down mills and plants.

Adding fuel to the fire – or not as the case may be – PEFC has said all timber originating from Russia and Belarus is now considered conflict timber, while FSC has suspended all trading certificates and blocked wood sourced from both countries. For an in-depth analysis of the impact on our industry due to the war in Ukraine, see also News Analysis, page 6.

Further aggravating the situation is an ongoing strike at UPM’s mills, imposing more pressure on paper capacity. The Paperworkers’ Union strike began on 1 January 2022 and, at the time of going to press, had been extended until 30 April.

According to one well-informed industry insider – speaking to OPI on the condition of anonymity – the current crisis means it is likely we will continue to see machine conversions, mill closures and even manufacturers closing their doors permanently this year.

April/May 2022

MARKET CONSTRAINTS This perfect storm is exerting unprecedented strain on paper volumes in Europe. Stephan Sweerts-Sporck, Head of Investor Relations and Corporate Communications of industry newcomer Mayr-Melnhof, says although the market has picked up, the drop-out of supplies from Russia plus low imports from Asia has constrained European supplies.

He adds: “There is lower production capacity and availability, with further substantial price hikes due to rising energy and raw material costs.”

The aforementioned industry insider revealed that global inventory levels are already in a dismal state, with all producers on some form of internal moratorium or allocation across the board with their customers. If this situation persists, there will likely be other cutbacks on trade, making paper even more scarce and difficult to source.

CATEGORY UPDATE Paper

vendors globally and has already eliminated almost two million tonnes of paper from the supply chain in recent times.

Sustained gas and electricity price rises, as well as those related to logistics, resulted in subsequent paper price hikes from vendors during 2021, and the situation has now worsened due to the invasion of Ukraine by Russia. Navigator, for example, has implemented several increases this year so far. The latest, in the form of an energy surcharge on all UWF products, equated to $120 per tonne in the US and $115 in EMEA. Says Liz Wilks, European Director for Sustainability and Stakeholder Relations at Asia Pulp & Paper (APP): “The requirement for paper has been improving steadily with the return to the office, the reopening of schools, and a resumption of business travel.

“However, supply is constrained due to disruptions in Europe and Asia as well as tight shipping conditions mainly because of limited container availability, higher freight costs and port congestions. These elements and the sharp rise in energy and input costs are contributing factors to price increases.”

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Paper CATEGORY UPDATE www.opi.net 28

As it stands, leaders of two European office supplies companies – both of whom wish to remain anonymous – told OPI that sourcing paper has become a grave issue.

One confirms: “The fact of the matter is, the shift by producers from paper to packaging, and now the UPM strike and the war in Ukraine mean European paper volumes are in very short supply.

We’re struggling to source paper, even from companies we’ve worked with for a long time. If the situation doesn’t revert back to normal soon, we may have to look outside Europe and import paper from the US, South America or Asia.”

The second anonymous contributor agrees that his firm is facing the same troubles as the rest of the business supplies channel – rapidly increasing prices and tight supply – sometimes down to 30% of normal demand. “Due to high freight rates, sourcing paper from overseas was previously not an option, but this might be reaching a turning point now as continental mill prices keep on increasing and shipping costs are coming down, albeit only slightly.”

Sébastien Tréguier, Head of Marketing and Communication at France-based reseller Bureau Vallée, fears paper is gradually becoming a luxury item. “For Bureau Vallée, while paper consumption is trending the same as last year, availability is increasingly being reduced. Some product ranges will disappear because of this,” he says.

Industry woes are not restricted to Europe. In the US, says Domtar’s Parke, the supply of UFS is now lower than pre-pandemic. To help with reduced inventory levels of office paper, Domtar has reopened a machine that will add extra paper production in 2022. Furthermore, its Lettermark collection of office papers has grown to include an array of pastel colours.

Handling paper for US wholesaler S.P. Richards (SPR), Merchandise Manager Jeff Harmon hopes the supply chain issues and soaring prices do not escalate the demand decline. “SPR has strong and well-established relationships with nearly every paper mill in the world. None are immune to the myriad of challenges facing the sector, which are ultimately wreaking havoc on the supply and demand dynamics of the market.

“I have personally been involved in the merchandising of copy paper for over 20 years, and have led SPR’s efforts for the last 12. I have never seen anything like this,” he says.

A SUSTAINABLE FUTURE Putting the current chaos aside, there are a few trends worth mentioning, namely hybrid working and sustainability. Paper continues to play a vital role in our lives at work, as APP’s Wilks notes: “Important or long documents are still printed, notebooks are used in meetings, and digitisation has made it possible to print on increasingly niche, purposed and personalised paper.

“In addition to this, it has been shown that writing by hand encourages creativity and boosts retention of information.”

Mondi Uncoated Fine Paper Marketing and Sales Director Devan Naidoo, meanwhile, says

Mondi’s Syktyvkar mill in Russia

with hybrid working agreements in place since the pandemic, there has been a higher demand for smaller packs of printing paper that is optimised for inkjet printers often used in home offices.

Industry players confirm the issue of sustainability as increasingly important to consumers and they are acting accordingly. Wilks strongly believes the younger generation will make a major difference in the way brands embrace environmental action. Generally, they are more invested in the impact of being greener, and these are the people who will lead the companies of the not-so-distant future.

European paper volumes are in very short supply There’s a serious business case for environmental and social governance. “People think it’s going to cost money, with no business benefits,” she notes. “However, to be sustainable, you also have to be economically viable. It’s a collaborative effort along the supply chain.”

Although magnified by the pandemic, Naidoo says sustainability has been visible for years.

Mondi’s commitment was recently recognised in late 2021 when the company received the Cradle to Cradle certification at Bronze level for its uncoated fine papers produced in its European mills.

Meanwhile, Bureau Vallée – renowned for its focus on sustainability – is excited about the development of its Jet’up Green paper. “It is a 100% recycled paper made in France and it has animated the category. Clients have quickly become fans and we are going to keep developing this range with ecological and economical products,” says Tréguier.

ADVERTORIAL

In a tough macro as well as industry environment, Sylvamo has knuckled down and created a strong independent entity, says Gerald Demets, the company’s Director of Sales, Marketing and Innovation EMEA. All the while, it’s kept a keen eye on the customer

With a razor-sharp CUSTOMER FOCUS

OPI: What has been the early feedback from your customer base since the spin-off in October 2021?

GD: It’s been very positive. We have always had a very strong partnership with customers and they appreciate working with us. We are now an independent, publicly traded company that is highly aligned with its strategic channel partners.

This is hugely important to us.

We have extremely positive cross-regional synergies and also best-in-class commercial and operational teams. Overall, we are confident we can generate a robust cashflow and create long-term value for our customers.

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PI: It’s been about six months since International Paper’s global papers business became Sylvamo. Can you tell me a bit about this new entity and what it stands for?

Gerald Demets: Sure. We think of Sylvamo as ‘The World’s Paper Company’. We believe in the promise of paper to educate, communicate and entertain and our purpose is to produce paper that customers need in the most responsible and sustainable ways.

We operate in Europe, Latin America and North America. We have a mill in Saillat, France; and export from Brazil to serve our European customers. Our regional headquarters is in Brussels, Belgium.

In terms of products, we focus mainly on our REY and HP brands in Europe. Rey is what we call ‘The Conscious Choice’. It’s sold in more than 40 countries and perfect for customers that value sustainability and social responsibility, both topics which are becoming increasingly important.

Our HP Papers, meanwhile – we are HP’s global supplier of those – are distributed to 75 countries.

It’s an ideal brand for the e-commerce and retail channels and we work very closely with HP to link this range to the complete HP value proposition of printers, toners and papers.

OPI: You have one operational mill in Europe.

What can you say about your current footprint and how well it serves your customer base?

GD: We are a global paper company and we believe we can leverage our international footprint to serve our customers in an efficient way.

OPI: So there’s enough flexibility in terms of getting the product you need when you need it?

GD: It’s something that differentiates us from other players – the multi-mill system and the fact we operate across different continents.

Gerald Demets

OPI: There have been secular declines in paper consumption over a number of years. How do you address this situation?

GD: In Europe, we have a comprehensive focus on uncoated woodfree papers and those include cut-size brands for the office. This segment has been much more resilient than others.

OPI: One area where your partner HP is very strong is in the printing-from-home market.

What’s your perception of home, office or hybrid working as we come out of COVID? GD: We believe there’ll be a mix of home and office working for some time in the future. We are extremely confident that we have good solutions for both environments.

Just to give an example, we have launched a three-ream box for smaller usages of paper as part of our HP Papers range. And we continue to investigate any opportunities that allow us to better cater to the needs of all customers.

Subscription models for paper is something we’re looking at, for instance. Similar to what HP is doing with HP Ink. OPI: How has the shift in customer purchasing patterns impacted you?

GD: We respect the different channels and the value they add, and I’m convinced we can reach all customer demographics. We definitely saw a surge in online and retail when the pandemic hit, but we have since also seen a rebalancing of those channels.

OPI: Talking of channel changes, plenty has been going on in Europe over the past couple of years as regards some big operators. Has the demise of Staples Solutions and Office Depot Europe in their previous incarnations affected you substantially? I guess there are now new customers and relationships?

GD: Yes to all of that. I’ve been in the paper industry for about 17 years and there have been a lot of changes across the European landscape.

We have to adjust, that’s all. It’s a people business after all, and we are always in the process of creating and reaffirming relationships based on mutual trust.

OPI: As a global operation, you can probably appreciate how difficult it is to operate in a market like Europe. It’s one region, of course,

ADVERTORIAL Sylvamo

We concentrate on the many different applications in this sub-category, including in verticals such as healthcare, education, government, finance or insurance.

but it certainly isn’t one market, as the likes of Staples and Depot have painfully found out over the years. How does Sylvamo deal with this particular issue?

GD: Like you say, as a global company, we are dealing with a number of customers that have a presence across different countries in Europe.

As a general rule, experience tells us that the best approach is a combination of local and pan-European.

Local is important to really understand and cater to the needs of customers which can vary significantly between different countries or even channels. But central is appropriate and makes sense for certain functions too. I believe matching the two is an area Sylvamo is especially strong in.

OPI: I’d like to go back to the topic of sustainability. You alluded to this earlier when you mentioned your REY range and the fact this issue has moved very high up the agenda again. In a nutshell: why is paper sustainable?

GD: Well, the majority of the components in paper are fully renewable resources and the manufacturing processes used are extremely environmentally friendly too. I feel passionate about the fact that the paper industry overall and Sylvamo in particular are making considerable efforts – and investments – towards minimising our all-round environmental footprint.

Our choice of new company name – Sylvamo – as well as all our communications highlight that we hold the environment and the social responsibility we have as a company in the highest regard.

OPI: Let’s finish up with Sylvamo’s priorities for the next few months. What are your plans?

GD: Certainly a continued focus on our customers, that’s very important. We want to provide them with the right services and help them achieve their objectives. Our whole industry is facing a myriad of challenges, and it’s vital for us to add value to our customers.

From a slightly inward-looking point of view, you’ll see a definite step change in terms of innovation and business development.

April/May 2022

OPI: Where exactly can innovation go in the paper segment?

GD: There are lots of opportunities in terms of service aspects, routes to market, end-user convenience, etc. CSR with all it entails is a big topic. We are excellently positioned in these areas.

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CATEGORY UPDATE

Visual CUES The viscom sector is well-placed for success as collaboration becomes paramount in the hybrid working world – by Michelle Sturman

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here’s no denying the considerable effect the pandemic had on the viscom industry as offices closed – drastic declines for certain products, while others experienced a significant upswing.

According to Danny Berendsen, European Sales Director at Portuguese vendor Bi-silque, the past two years of disruption saw buying patterns completely change.

There was a huge uplift for display and signage, for example, due to the need to communicate COVID rules. Unsurprisingly, protection screens, particularly for counter purposes in retail and public areas, also rose considerably as health and safety requirements enveloped the viscom industry too.

Demand for smaller sizes of boards for the home office, meanwhile, meant Bi-silque had to adapt its manufacturing facility and production line. “Simultaneously, there were massive declines in large mobile boards such as revolver boards, easels and flipchart pads.

“This was driven, of course, by the lack of collaboration in the workspace. However, we see that these products are picking up as soon as lockdowns lift and people are allowed to go back to their offices,” notes Berendsen.

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NAVIGATING HEADWINDS The ongoing and gradual reopening of society is undoubtedly a boost to the viscom sector as people return to their traditional workplace. That said, despite the upbeat tempo reported by vendors as the pandemic wanes, the turmoil it has caused is nonetheless still being felt.

The war in Ukraine is adding further pressure on an already strained global economy, pushing up inflation, energy and fuel prices.

As Kevin Taney, General Manager of Sales at US-based viscom vendor PolyVision, remarks: “From an order perspective, the industry is rebounding well and should maintain this momentum through 2022. Vertical markets such as education, corporate and healthcare are enjoying strong growth.

“However, I foresee continued headwinds with supply chain, inflation and labour shortages further impacting our sector this year.”

Communication has never been as important as it is now in all vertical markets ACCO Brands EMEA VP of Product Marketing – Visual Communications Steve Keen agrees with this forecast: “As the world gets back to normal, there will be many opportunities for the visual communication sector. Insight and research tell us people are looking to go back to the workplace to see each other in person and collaborate.

“Given the current economic climate and global supply chain issues, it’s obvious these will throw up additional challenges. However, we have a strong team that is well-positioned to ensure these headwinds are overcome.”

Other manufacturers from within the industry say they are also well-prepared to weather the current storm.

Suzanne Tiernan, Head of Sales UK & Ireland at Dutch mounting specialist Neomounts, told OPI that the company’s stock levels in Europe are “extremely high”, and the expectation is for a strong year as the market recovers.

Beaverswood’s Modulean shadow board

EFFECTIVE ENGAGEMENT The return to the workplace and hybrid working pave the way for closer cooperation and teamwork in the work environment. As Berendsen says: “The need and want to collaborate and work together is stronger than ever – in the office, the industrial, hospitality or educational sectors.

Visual communication is required everywhere.”

For PolyVision’s Taney, the workplace transformation presents both opportunities and issues. “There continues to be a strong shift towards more work-from-home options, increased flexibility and collaboration, and the requirement to quickly redesign the workspace. These themes will substantially influence and challenge our industry as we enter the post-COVID era.”

To this end, he expects a transition to flexible and mobile product offerings, and better support technology to encourage engagement.

For ACCO Brands, the viscom category is split into three areas. The first is collaboration,

with stylish and contemporary products to aid meet-up activities. The second is communication, including items supporting clear and easily updated correspondence and discussion. The third is personal working, offering design-led equipment that facilitates individual focus work and planning.

Keen explains: “We see a need for teams to have planned or impromptu meetings in different locations. Mobile and portable items will be relevant to help them operate in this way, including equipment such as mobile whiteboards, flipchart easels and the New Nobo Move & Meet Collaboration System.

“However, traditional wall-mounted whiteboards and noticeboards are still current and will be very much part of the return to the workplace.”

Still, hybrid working throws up a conundrum with staff split during get-togethers, raising the issue of true engagement. GMi’s Claus says it is a topic the manufacturer has explored for several years within its own office. “With not all team members together in the same location on a daily basis, the subject of meeting experience equality needs to be addressed.

“Communication has never been as important as it is now in all vertical markets. Employees are craving face-to-face contact and brainstorming in person. A whiteboard ensures ideas are retained and helps engagement on multiple levels.

“Last year, at NeoCon, we debuted a partnership with Lifesize Kaptivo to turn an in-office dry erase board into a digital solution.

Inclusivity in this form helps with employee engagement and retention, so nothing is lost during meetings.”

April/May 2022

NEW SECTORS There have been pandemic-induced boosts for other viscom areas too; safety management, for example, where visual aids such as floor marking and magnetic strip tape can be used for a range of applications.

According to Gentle, colour-coded shadow boards such as those from the Beaverswood Modulean range not only ensure safe hygiene practices at work, but also provide excellent safety stations for fire, first aid, hand sanitiser and other PPE items.

With the massive surge in e-commerce over the past couple of years, warehouses have been busier than ever, resulting in a boom in the materials handling and logistics sectors.

This, notes Gentle, has driven great demand for viscom products to ensure employee safety and easy access to critical information.

Education is another vertical mentioned by most vendors as ramping up. Taney reports that, in the US, education-based construction builds are nearing completion this year, leading to an increase in quoting activity.

Keen says sectors such as the furniture channel and specialist distributors represent a growing opportunity for ACCO. Meanwhile, Neomounts’ Tiernan points to the burgeoning opportunities within the gaming industry.

CATEGORY UPDATE Visual Communications

Steph Gentle, Marketing Director at UK-based Beaverswood, concurs, saying: “British manufacturers are producing a comprehensive visual communications range, therefore shortening and de-risking the supply chain.”

Over in the US, GMi Companies Director of Marketing Susan Claus is feeling similarly positive about this year: “We have an aggressive sales target, but with our lead times and inventory in a relatively stable position, there is every reason to believe we will succeed.

“Because of both domestic and international sourcing capabilities, plus the manufacturing plant in Ohio, our customers’ needs are being fulfilled, with no impact on their install dates.

We’re keeping an eye on current world events, as many of the raw materials used in our products rely on wood, aluminium and, of course, fuel to make it to our facility.”

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Visual Communications CATEGORY UPDATE

A BRIGHT FUTURE: WHY THE VIDEO WALL INDUSTRY IS ON AN UPWARD TRAJECTORY Piet Vanhuyse, Segment Marketing Director of Large Video Wall Experience at Belgium-based digital visualisation technology firm Barco, takes a look at the evolution of video wall technology, its place in the corporate landscape, and the next steps for the category.

MULTI-FACETED TECHNOLOGIES As staff return to the office and navigate the dynamics of hybrid working, video walls present a creative opportunity to engage with employees, clients and partners. As a result, it is vital to understand the effect they can have on a business, but also which solution is right for each situation and company.

With more people realising the significance of video walls, the future – fuelled by technological evolution – will see digital signage occupy a broader role in the work environment.

There are three dominant technologies in the video wall game: LCD, rear-projection cubes (RPC) and direct view LED. When a workplace lobby needs a video wall with a sharp, scalable image, LCD is often the go-to option, while RPC continues to be used primarily in control rooms. Robust and resilient, LCD technology provides an excellent solution to 24/7 mission-critical monitoring situations throughout its long life.

Due to its crisp colour, bezel-less design, and uniformity across viewing angles, LED, meanwhile, is the primary choice for creative scenarios where images need to make an impact. It’s the de facto selection for use in broadcast environments.

As each of these technologies has its specific strengths, it’s important that, as an industry, we smartly articulate the value of multiple solutions to support the end user in making the right decision. Strategic considerations like longevity and maintenance must be discussed to move beyond the instant gratification of stunning images and shiny tiles.

www.opi.net

FUTURE TECHNOLOGY LED is where the major innovations are in terms of technology. The narrow pixel pitch era has brought continued movement towards finer pixel pitches, with decreased optimal viewing distance and increased resolution constantly

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Piet Vanhuyse

pushed further. Certain pain points throughout the customer journey are yet to be resolved, with the inherent fragility of the hardware, as well as replacement batch compatibility next in line.

In terms of LCD, we will witness the main fulcrum of innovation coming from the rivalry between LCD and OLED consumer technology which will, in turn, come to the industrial sphere.

The strive for 8K resolution and an improved colour spectrum resulting from the enhancement of colour gamuts are just some of the numerous things we can expect to see here. Finally, for RPC, ergonomic innovations in imaging quality will drastically reduce operator eye strain.

CHANGING PERCEPTIONS One of the most exciting aspects of video walls is peoples’ changing perceptions about them.

Video walls are not just simple signage, they’ve come to be thought of as having a critical influence on a company’s functionality through their transformation of space.

A few years ago, Barco worked with a London-based company that wanted to develop an internal meeting area to facilitate cross-collaboration across 120 countries.

Through the installation of a touch screen, 18-panel LCD video wall in collaboration with our partners, we created a centrepiece for the organisation and radically enhanced the space the firm inhabited.

Video wall technology has a bright future By providing a focal point that enabled employees to visibly be more together, the video wall became a part of the company’s overall business journey and reflective of its brand.

Video wall technology has a bright future. A robust plethora of technologies will underpin a category working to realign itself with customer needs, as well as business-critical leverage of digital signage in the workspace.

The potential of video walls is currently being written in crisp colour, and I’m excited to see where it will go next.

ADVERTORIAL

Last man

STANDING

European manufacturer SI MASS is further consolidating its position as the leading provider of private label polypropylene (PP) products in the office supplies and stationery segments

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ven in declining paper-based categories such as filing, archiving and document storage, there will still be a demand for products for the foreseeable future. The advantage will go to those suppliers that achieve economies of scale, ensure good quality at the right price, have robust and reliable supply chains, and possess solid environmental and CSR credentials.

In the area of PP supplies for office, home and school use, a leading player for private label products that ticks these boxes is SI MASS. The company – originally known as Loer & Schaefer – was founded in 1984 near the city of Paderborn in central Germany by Bruno Loer and Johannes Schaefer. The goal of the two entrepreneurs was to replace PVC with cheaper and more environmentally friendly PP. They achieved early success with a number of German supermarket and discount chains, mainly with their report covers and desk mats.

Over the years, the manufacturer expanded its product ranges and developed international markets, thanks partly to several acquisitions. In 2020, the Loer family decided to exit the business, which led to second-generation brothers Benni and Jan Schaefer taking over the reins and rebranding the company as SI MASS. Today, SI MASS has a dominant position in the private label soft plastics category among mass retail customers. With annual revenue of around €40 million ($44 million), it supplies clients in markets as far afield as the US, Japan, New Zealand, Korea and Latin America. Its position has been strengthened by the recent acquisitions of GERA Folien in Germany and Poland-based

Inter-Folia, as the Schaefer brothers pursue their strategy of being the ‘last man standing’ in their product categories.

OPI spoke to CEO Jan Schaefer to find out more about this strategy and what makes SI MASS tick.

OPI: Jan, can you summarise your main production locations, what they produce and give an idea of their output?

Jan Schaefer: We have four factories for PP stationery and office supplies. At our headquarters facilities near Paderborn, we produce report covers, clip files, desk mats, punched pockets, L folders and all kinds of book covers. The GERA Folien plant specialises in punched pockets and L folders, but is also equipped with machines for special orders or different product sizes. From here, for example, we supply customers in the US and Japan.

Our entire production of indexes and dividers has been relocated to the city of Most in the Czech Republic. There, we make the full range of PP, manilla and mylar dividers. The latest acquisition – Inter-Folia in Lodz, Poland – adds further capacity for punched pockets, L folders and flat files. What’s special is that we extrude our own film and have recycling machines so we can reuse our own waste.

In total, this provides us with the capacity to produce more than two billion punched pockets and L folders, 100 million report covers, and 250 million sheets for indexes and dividers a year. This gives you an idea of some of the core items.

OPI: What are your key markets and where do you see the potential to expand?

OPI: What is the advantage of working with SI MASS versus sourcing these items from other markets such as Asia?

JS: SI MASS is actually cheaper when compared with China-made products. We run a sourcing office in Hong Kong and have a good handle on prices. And then you have to factor in import duties and ever-increasing shipping costs.

We are very flexible, with extremely low minimum order quantities and short lead times. The sustainability topic speaks well for us as well.

OPI: You produce 100% for private label. Why have you not developed your own brands?

JS: We recognise that we are not good at things like marketing and design. We are a large-scale manufacturer and our focus is to always make productivity improvements with our machines.

We do not have an own brand because we do not want to compete with our clients The small number of brands which still exist might have a future, but the main volumes in our categories already come from private label. And, as we produce for other well-known brands, it would make us a competitor to our clients. We don’t want that to happen.

For more information on SI MASS, visit www.si-mass.de

OPI: How has the market for PP school and office supplies been evolving over the past few years?

JS: School supplies are still growing for us, in line with higher birth rates in Europe. This segment will not disappear – children will continue to learn how to write with a pen and paper.

Office supplies is different. Some accessories like indexes and dividers can only be used with lever arch files or ring binders. As they are declining, then so are indexes and dividers.

But other items are developing well for us as they can all be used standalone. So, while the overall market is shrinking, we have been growing share for the past five years.

OPI: Tell us a bit more about your ‘last man standing’ strategy?

JS: We are absolutely convinced many of our core items are here to stay. We may have to adapt the production materials at some stage, but that’s it.

As I mentioned, pens and paper will always be used at school and we also believe that comprehensive digitisation in offices will not happen as quickly as everybody thinks. The paperless office is not going to happen any time in the next 20 years.

ADVERTORIAL SI MASS

JS: For school supplies, our biggest markets are Germany and France, and we have a very good position there. In office supplies, much of our sales are from across Europe and there is still plenty of potential to grow. Internationally, we are aiming to expand our presence in the US because the country still gets 95% of products from China.

OPI: Why do you believe the ‘last man standing’ will be SI MASS? JS: A number of reasons: we’re a family business with a brilliant team; we have by far the most modern machines in the market; our flexibility and sustainability policies will contribute to us being the last relevant player within private label; and finally, we are totally focused on producing soft plastics made of PP. As I said, we do not have an own brand because we do not want to compete with our clients. Our only relevant remaining competitor has a different strategy which, in our view, makes things complicated.

OPI: You referred to sustainability. What are the key initiatives you have implemented?

JS: Our German facilities will both run with 100% solar power starting from 2023. We have more than 20,000 sq m (200,000 sq ft) of solar panels on our roofs and have installed some of the largest industrial battery packs in our region. We are also investigating whether we can use solar panels in the other countries, and have invested in Africa GreenTec, which installs solar panels and small grids in Africa.

In Poland, our new recycling capabilities will enable us to process 100% of our PP waste to make new products, and we plan to expand this across the group. In our view, this is the only way forward. Unlike paper, PP can be recycled an infinite number of times. I also question the claims of so-called biodegradable products. These, in fact, do not disappear altogether, but break down into micro plastic particles, which will cause even bigger problems in the long term.

None of this is greenwashing. This is about us taking action in something we passionately believe in.

April/May 2022

OPI: Is there a prospect of further acquisition activity in 2022?

JS: There are a few specialised players making single product groups. We are not proactively searching for further targets, but if an opportunity arises, we are prepared and could act quickly.

This is one of the big advantages of being a family business – we can make strategic decisions in just a few minutes.

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EVENT

OPI GLOBAL FORUM 2022 PREVIEW

It’s GOOD to be BACK

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inally. After a two-and-a-half-year hiatus, the OPI Global Forum is back on US soil – Chicago soil specifically.

The tenth edition of the event will once again bring together an exceptional audience of senior executives from North America and around the world for an outstanding conference and networking programme.

Designed to stimulate thought, generate dialogue and explore the future of the business supplies sector, the highly interactive forum will feature keynotes, panel discussions and a series of roundtables. Practical takeaways will enable informed strategic decisions to succeed in whatever is the ‘new normal’.

Over the course of two days, Global Forum topics will include a close examination of the state of our sector. Experts will tackle the impact of inflation, new sales models, remote working and the workplace of the future, while an audience with tomorrow’s dealer leaders plus a vendor-led strategy review will put the spotlight firmly on industry peers. Setting the tone and getting the conversation going will be this year’s keynote which dives deep into The Age of Entropy – How Do We Plan In Chaos?

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TIME TO TALK Following the unprecedented upheaval of the past couple of years, this is a critical must-attend event.

The Global Forum brings together senior leaders from all channels – manufacturers, wholesalers, resellers and independent dealers from both traditional and non-traditional business products categories – to understand and analyse the transformation our sector is undergoing. And then plan for the future.

All under Chatham House rules, there will also be ample time to discuss these topics with peers during informal networking opportunities.

There is a lot to consider, learn and debate, and this forum is a unique opportunity to do just that

MARK THE DATE The OPI Global Forum takes place from 22-24 May 2022 at the Sofitel Chicago Magnificent Mile in Chicago, US.

OPI CEO Steve Hilleard says: “To say that the world has changed considerably since the last OPI Global Forum in November 2019 would not be an exaggeration. As such, our next event in May cannot come soon enough for our senior executive audience which urgently needs to understand what the chaos of the past two years means for the future of the workplace products industry. There is a lot to consider, learn and debate, and this forum is a unique opportunity to do just that.”

For more details about the OPI Global Forum, visit opi.net/gf2022. If you would like to attend, please email OPI Chief Commercial Officer Chris Exner at chris.exner@opi.net.

B2B End-User Research On

The ‘New Normal’

Workplace COVID-19 and Beyond: IMPLICATIONS FOR THE US BUSINESS SUPPLIES INDUSTRY

By MWA & OPI

COVID-19 and Beyond is a new research report by Martin Wilde Associates and OPI that takes an in-depth look at what is happening in US workplaces today – and what will likely occur over the coming year.

· What have been the changes in

business operations in the past 18-24 months as regards sales volumes, office closures and adaptations, staffing, homeworking and COVID-security? And what’s to come in the next 12 months?

· What type of OP items have been

purchased since 2020 and what are the current and likely future trends?

· Who has been supplying these

products, how has that supplier base changed and what can we expect in the year to come?

COVID-19 and Beyond will be published by the end of August 2022.

For orders received by 30 April 2022, the cost of this guide is only $2,995 ($3,750 thereafter).

For more information, visit www.opi.net/NewNormal

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Relish THE MOMENT

Back with a bang – OPI Partnership and the European Office Products Awards return to Amsterdam

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EUROPEAN OFFICE PRODUCTS AWARDS 2022

ong-awaited and highly anticipated, a sizeable contingent of the European business supplies industry gathered in Amsterdam, the Netherlands, in late March. It all kicked off with the eighth OPI Partnership on 21 March, just over two years after the previous Partnership event was held shortly before the long and painful pandemic period began.

And judging by attendees’ feedback, it was certainly time to get together again. The two days of strategic one-to-one meetings which brought together the leading vendors, resellers and distributors in our sector from across Europe seemed to be over in a blink as there was so much to discuss.

Indeed, for many delegates – and definitely for OPI as the organiser – it was the first large-scale, face-to-face event since before COVID-19 hit.

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SOARING SPIRITS If spirits weren’t already high enough at the prospect of finally spending ‘real’ time together again, be it for serious business discussions or more light-hearted networking chatter, the European Office Products Awards (EOPA) celebration dinner that followed the first full day of Partnership made them soar even further.

However, there was also a great sense of solemnity in the EOPA dinner ballroom as PBS Holding’s Dr Richard Scharmann proposed an industry toast. He highlighted not only the great joy of finally seeing light at the end of the

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Dr Richard Scharmann raising an industry toast

long COVID tunnel, but also very poignantly and sensitively referred to the tragic events in Ukraine that are casting such a menacing shadow over so many lives right now and causing so much hardship.

As the ten awards of this year’s EOPA were announced and handed out, there were many occasions of tears and laughter, of slight bewilderment and hilarity, and – right at the end – of rapturous applause and standing ovations.

A NIGHT TO REMEMBER It was definitely a night to remember, said OPI CEO Steve Hilleard, who is also the Chairman of the EOPA judging panel: “Leaders from the European business supplies sector came together for the 21st time to reward the very best of what our industry has to offer. With our milestone 20th EOPA last year having been a downsized, virtual event, I was even more pleased to be back at the Okura in Amsterdam to celebrate innovative products, inspiring campaigns and initiatives, and outstanding companies and individuals.

“The EOPA are always a great reflection of what’s going in our sector. Whether it’s rising to end customers’ new product expectations – air treatment solutions and a renewed focus on sustainability spring to mind – or their evolving purchasing patterns that influence routes to market, the EOPA judging panel was impressed both with the versatility as well as the resilience of all channel operators. So was I, and I’m immensely proud to be a part of this industry and its community.”

EVENT EOPA

Thomas Reinhard from RENZ (l) picking up the Business Product of the Year award

BUSINESS PRODUCT OF THE YEAR WINNER: AIR2COLOR PRO BY RENZ Business Product of the Year was the first award of the EOPA night and it was the category that had attracted the most entries pre-judging. The winning product is from a segment which has gained enormous importance over the past two years – clean air. The judges were looking for evidence of functionality, quality and, above all, commercial success.

All these criteria were more than met and the award went to Germany’s RENZ and its AIR2COLOR PRO air quality meter.

The AIR2COLOR PRO constantly evaluates four important indicators of air quality and clearly shows when a room has to be ventilated. The judges felt this was a product that really stood out, offering excellent value to the consumer in a number of work and education settings.

Highly commended: Exacompta and Pilot Corporation of Europe WHOLESALER OF THE YEAR WINNER: SOENNECKEN LOGSERVE The next award recognised a dynamic wholesaler which is expertly responding to meet the needs of an ever-changing market. And it’s certainly been a tough environment for many operators in this channel, with several heavily investing in their businesses over the course of the pandemic.

The winner – Germany’s Soennecken LogServe – was commended for addressing the challenges of the past two years head on. The judges were impressed with how the organisation’s wholesale operation has continuously invested and delivered considerable improvements to its logistics services in very difficult times. LogServe grew almost 10% over the past year, finishing ahead of expectations.

Highly commended: JGBM

MARKETING CAMPAIGN OF THE YEAR WINNER: SUSTAINABLE DEVELOPMENT BY BIC Marketing Campaign of the Year is always a category which attracts plenty of entries and this year was no exception. Clearly showing the objectives of the campaign, understanding the target audience, and outlining the various marketing activities and methods used, are all part of the criteria that need to be met; as is, of course, demonstrating ROI. France-based BIC stood out among a list of strong candidates. But the judges felt that the vendor’s Sustainable Development campaign was the undisputed winner. They referred to it as highly integrated, well composed and executed through all communication channels, and very engaging. It sent a strong and clear message to its intended audience and delivered impressive results for the vendor.

YOUNG EXECUTIVE OF THE YEAR WINNER: FALKO KÖHLER We need more young talent in our industry to ensure its survival and continued success, there’s no doubt. As one entry nominator in this very popular category said: “We need to push a dusty industry into the digital era. Not just by taking the easy route of e-commerce, but by working together as a team, developing new objectives and ambitions, aligning people and finally pushing for execution.”

The winner of the first of three ‘people’ awards embodies all of the above. Falko Köhler won the Young Executive of the Year accolade amid tough competition. In his role as Customer Experience Director, he impressed the EOPA judges with his enthusiastic can-do attitude and highly participative approach, developing and implementing a holistic digital transformation concept at Lyreco Germany. Judging by his credentials so far, the sky is the limit for this budding future leader.

Falko Köhler: Young Executive of the Year

April/May 2022

Jens Melzer (l) from Soennecken LogServe winning Wholesaler of the Year

Denis Bonnet from BIC winning Marketing Campaign of the Year

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EOPA EVENT The team at JGBM with the Initiative of the Year award

INITIATIVE OF THE YEAR WINNER: SUPERCHARGE PARTNER PROGRAMME

BY JGBM The next award – Initiative of the Year – attracted a diverse array of entries, illustrating that innovative thinking is alive and well in our sector. The winning entry – JGBM’s Supercharge Partner Programme – was not so much about reinventing the wheel, but more about doing something incredibly well.

According to the EOPA judges, with this straightforward, algorithm-based initiative, the wholesaler has created an efficient formula to help office products dealers genuinely fight back against online competition by using Intelligent Street Pricing. At a time when speed to market has become so important, the Supercharge programme has given dealers a real competitive boost. It’s also a win-win for manufacturers, as they now have an alternative to putting all their eggs in the online basket.

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SUSTAINABILITY EXCELLENCE WINNER: PILOT CORPORATION OF EUROPE Since the worst of the COVID crisis has eased, sustainability has moved to the top of the agenda again. But real sustainability excellence remains a tough ask and not many operators in our industry have got to this level just yet.

The award went to a manufacturer with a truly 360-degree approach to this hugely important topic, constantly delivering on its comprehensive strategy that includes the full spectrum of sustainability issues – it was Pilot Corporation of Europe.

Pilot’s commitment in this area started back in 2006 with the launch of BEGREEN – the world’s first range of pens made from more than 70% recycled plastic. The EOPA judges were impressed with how, since then, Pilot has constantly strived to do better. The vendor has gone well beyond mere best practice,

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From left: Raphael Carlioz, Audrey Padovani and Franck Barelle from Pilot with the Sustainability Excellence award

Professional of the Year: Pieter Wolters

in the process reducing the ecological impact of its production while preserving high standards of quality and innovation.

Highly commended: Essity PROFESSIONAL OF THE YEAR WINNER: PIETER WOLTERS The second ‘people’ award of the EOPA night went to an individual with bags of leadership abilities, unfailing professionalism and plenty of direct contributions to the success of the businesses he has worked for over the course of his career so far.

The winner of this category, introduced by former Industry Achievement recipient Jonathan Smith, was welcomed onto the EOPA stage amid a long list of accolades from both the EOPA judges and his peers. Incredibly knowledgeable, highly transparent, very team-spirited and fair, and always displaying the greatest integrity are just some of the words used to describe Pieter Wolters, currently Senior Director and Head of Merchandising & Procurement at Staples Benelux.

Tough negotiator and first-class business brain were two other phrases that described this hugely popular Dutch OP personality who has been active in our sector across a range of channels and companies for many years. Over the past four of these, he’s been instrumental in future-proofing what is now Staples Benelux – in an extremely challenging environment.

RESELLER OF THE YEAR WINNER: BRUNEAU Sales performance, fill rates and delivery reliability; new service offerings and product categories; relationships with trade partners; and digital capabilities – being good at all of the above is no mean feat, especially over the course of a global pandemic.

Thibault Lagrange from Bruneau (l) picks up the Reseller of the Year award

EVENT EOPA

Vendor of the Year: Exacompta From left: Fabien Fauque & Charles Nusse

But the winner of the Reseller of the Year award – France-based Bruneau – has truly stepped up to the challenge.

And succeeded. The EOPA judges were impressed by how this operator rapidly adapted its platform and product portfolio effectively, working closely with its vendor partners. Bruneau’s recent success builds on several years of change as the company has transformed from a France-focused catalogue reseller into a leading European B2B e-commerce player.

VENDOR OF THE YEAR WINNER: EXACOMPTA The penultimate EOPA rewarded a vendor that paid attention to and succeeded in a range of areas: sales performance and market share gains; innovative, high-quality products and service-driven solutions; diversification; supply chain performance; content focus; and brand strength.

Arguably at no time in recent history have resellers needed as much support and agility as during the COVID-19 pandemic. France-based Exacompta provided it in abundance, winning the Vendor of the Year award for its impressive efforts in terms of adapting to the many and varied challenges. Excellent partnerships, good collaboration and strong communication were just some of the terms the judges associated with this worthy winner, combined with continuous investment and product innovation.

Highly commended: Fellowes Brands

Industry Achievement winner for his incredible contribution to the UK business supplies sector and his reach into the wider international OP community.

Betts has not only created and expanded his own manufacturing company Stewart Superior from scratch – surviving several recessions, political upheaval and most recently a global pandemic – but also hugely benefitted our space as a whole through his ongoing involvement in trade associations and industry events.

Sheer determination and an acute awareness of changing customer buying patterns and needs, coupled with unparalleled infectious enthusiasm, make Betts one of the most popular personalities in our industry. His heartfelt and emotional speech upon receiving the award and the rousing standing ovation that followed showed the high esteem he’s held in and how richly deserved this accolade is. His life philosophy likely has much to do with this appreciation: “Treat everyone you meet with respect, enjoy yourself and work hard.”

On a side note, Betts is of course also known for his musical contribution to industry events – many of them organised by OPI – where he has so often entertained the crowds with renditions of famous songs played on the piano or his guitar. It has been our gain and the music industry’s loss – where, at EMI, Betts started his professional career 50 years ago exactly.

THANK YOU TO OUR SPONSORS

INDUSTRY ACHIEVEMENT WINNER: GEOFFREY BETTS The final award of the EOPA night went to a very well-known personality in our sector. Introduced by another great leader who, until recently, operated more on the fringes of our space, RAJA’s Alain Josse announced Geoffrey Betts as the 2022

April/May 2022

The EOPA class of 2022

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EVENT

CITY OF HOPE TOUR AND HALL OF FAME DINNER REVIEW

Restoring

HOPE C

www.opi.net

ity of Hope’s 2022 National Business Products Industry (NBPI) fundraising officially got underway at the Laguna Cliffs Marriott Resort in Dana Point, California, at the end of March.

Spearheaded by Spirit of Life honouree, Staples Inc Chief Merchandising Officer Peter Scala, the start of the Restoring Hope campaign marked a welcome return to in-person events for City of Hope. The two days comprised golf at the renowned Monarch Beach Golf Links and various committee meetings, including the introduction of the NBPI Emerging Leadership Committee, chaired

by S.P. Richards Marketing Director Adam Fox. During the ‘Tour’ on the first day of the event – also held at the resort this year for patient safeguarding purposes – a wide range of City of Hope researchers, physicians and leaders were in attendance to present the latest advancements in cancer and diabetes care. They spoke to a group of more than 100 leading – past and present –

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Matt Dodd

business products executives from across the country, including Jamie Fellowes, Mike Maggio, Yancey Jones, Mike Gentile, Brad Graves, Rick Toppin and Barry Lane.

These executives, over the past 40 years of NBPI support, have helped raise more than $235 million towards lifesaving research and treatment performed at City of Hope, one of the largest cancer research and treatment organisations in the US, and a leading research centre for diabetes and other life-threatening illnesses.

IN GOOD COMPANY The highlight of the second day was the annual NBPI Hall of Fame gala dinner, where two industry luminaries – OPI’s very own Steve Hilleard and David Lary, General Manager of US Consumer and Supplies Sales at HP Inc – were inducted.

City of Hope is an amazing organisation [...] and I am very grateful and proud to join a distinguished group of Hall of Fame inductees From left: Steve Hilleard and David Lary

Photography by Karina Pires Photography – www.karinapiresphotography.com

A fervent and long-time City of Hope supporter, Hilleard said: “City of Hope is an amazing organisation. It has had a profound impact on me and my family, and I am very grateful and proud to join a distinguished group of Hall of Fame inductees. It’s been my privilege to get to know most of them very well throughout my career – they are all great leaders and servants to this industry as well as significant supporters of City of Hope, and I am truly humbled to be among them.”

Matt Dodd, Senior Executive Director of Corporate Philanthropy at City of Hope, said the gathering in California had provided a “momentous couple of days”. He commented: “The past two years have been riddled with challenges that we were able to navigate with the incredible leadership of our past honourees, Stephanie Dismore of HP Inc and Greg Gibson of Sylvamo. I’m so delighted to recognise the significant contributions of this great industry and give a proper kick-off to Peter Scala’s campaign.”

RESEARCH

The use of drones in last mile deliveries is a tantalising prospect, but is it all pie in the sky?

OPI’s Michelle Sturman finds out…

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U

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nmanned aerial vehicles (UAV) or unmanned aerial systems (UAS), better known as drones, are already used in the military, medical, agriculture, construction and media sectors, but their application for last mile deliveries is still in its infancy. However, some of the world’s biggest tech, logistics and retail firms are running trials now.

The widespread adoption of drone deliveries could provide many benefits for businesses, especially in what is often considered shipping’s Achilles’ heel – the last mile.

UAS shipments are typically made in under 30 minutes; are generally operationally cheaper to run than other modes of transport; and can overcome issues such as traffic jams. A narrower delivery window also potentially reduces the number of missed drops.

Gartner Senior Director Analyst Pedro Pacheco says autonomous drones offer higher speeds and a cheaper cost per mile than vans for the last mile, with operational expenses at least 70% lower.

The Potential for Advanced Air Mobility Beyond the Congestion Use Case research, undertaken by strategy firm LEK Consultancy, suggests UAVs could capture around one-third of the B2B express/ same-day delivery market within 15-20 years.

Drones offer a more environmentally friendly transportation option too. A report by Virginia Tech, Measuring the Effects of Drone Delivery in the United States, modelled the impact on three metropolitan areas within five years of launch. The research showed that, by year five, in a single metropolitan area, deliveries by drone could save almost 300 million miles in road travel and eliminate up to 113,900 tons of CO2 per year.

They could also generate up to $208,000 in new annual sales for a participating retail business.

Gartner predicts that, in 2026, over one million drones will carry out retail deliveries, rising from just 20,000 in 2020.

In terms of drone package deliveries, the figures differ considerably. Research firm Facts & Factors, for instance, expects the sector to reach $6 billion by 2026. The Drone Package Delivery Market report by MarketsandMarkets puts a value of $39 billion by 2030, whereas the Global Drone Delivery Market – Analysis and Forecast 2023-2030 by BIS Research suggests the figure will merely be around $5 billion by this time.

Meanwhile, research firm IDTechEx in its Drone Market and Industries 2021-2041 report, expects the drone delivery industry to only reach around $5 billion by 2041.

UAVs could capture around one-third of the B2B express/same-day delivery market within 15-20 years OVERCOMING HURDLES Whatever the market value, there are many hurdles to overcome – the biggest of which is regulation – before we see the skies above us buzzing with parcel-carrying UAVs. As it stands, few countries have approved commercial drone delivery activity. However, this is expected to change sooner rather than later as there are at present several pilots underway across the US, Australia and Europe (see Trials and Tribulations).

UAS delivery applications in cities pose problems for the safe drop-off of packages due to urban densities and the propensity for living in apartments – even those with balconies. One

RESEARCH Delivery Drones

solution for landing difficulties could be to drop shipments at a centrally located locker featuring an integrated “parcel retrieval mechanism” (for more information, read ‘Last-mile Delivery Concepts: A Survey from an Operational Research Perspective’

by Nils Boysen et al).

Drones are required to fly at low levels to bypass other air traffic, which causes its own set of issues because they need to navigate obstacles such as power lines, cell towers, trees, and multistorey buildings, as well as avoid no-fly zones. They are also subject to inclement weather conditions that could halt deliveries for lengthy periods.

Currently, drones have flight duration limitations and are therefore only suitable for relatively short distance trips, with the capacity to deliver one small, lightweight parcel at a time.

One possible solution is to build more distribution centres closer to areas where UAV delivery is anticipated. This, however, may conflict with a host of other issues such as sustainability, land use and escalating costs related to erecting more warehouses, thereby negating any benefits from operating a drone fleet. Another alternative is the establishment of landing zones on existing buildings or surrounding land for clients.

Top: Walmart and DroneUp delivery Bottom: Wing drone in flight with package Right: A drone delivery taking off from a van

TRIALS AND TRIBULATIONS OPI takes a look at three drone delivery trials currently happening.

MANNA DRONE DELIVERY Operating in Galway, Ireland, Manna has already completed over 65,000 drone flights, delivering parcels in under three minutes on average.

Customers order through an app, Manna picks up the parcel from the store, and the aviation-grade, fully autonomous drone delivers it to the designated address and lowers the package on flat and inanimate ground via a biodegradable thread.

Watch (YouTube) or listen (podcast) to an interview with Manna CEO Bobby Healy. Search for ‘TechFirst with John Koetsier – Drone Delivery is Here. Right Now. For Real. And it’s Awesome’.

WALMART Walmart is trialling several drone delivery systems, including Zipline for on-demand shipments of select health and wellness products in the US. Zipline will operate from a Walmart store, servicing a 50-mile radius and delivering goods in under an hour.

A Flytrex pilot in North Carolina, meanwhile, offers grocery and essential household item deliveries using automated drones.

Walmart also partnered with DroneUp in 2020 to trial at-home drop-offs of COVID-19 self-collection kits. Now, after completing hundreds of drone deliveries, the retailer has invested in DroneUp and recently announced the first commercial multisite operations from three drone ‘hubs’ located at Walmart stores in Arkansas.

PUBLIC PERCEPTION Even if regulatory and technical issues are overcome, the technology has to be adopted by consumers. In the US, for example, fears surrounding cybersecurity, the potential for hijacking drones, receiving damaged goods or having parcels stolen makes online shoppers anxious, according to market insight firm Clutch.

Many studies have further highlighted the problem of noise pollution resulting from drone-filled skies. An often-cited NASA study from 2017, for instance, revealed that test subjects found the noise of UAVs to be more annoying than road vehicles. There have also been concerns related to the impact on wildlife, especially birds.

Highly unlikely to ever completely replace other transportation methods, there seems to be a case for integrating drones as a complementary part of future last mile delivery services.

Indeed, McKinsey expects close to 1.5 million parcels to be delivered by UAVs this year – without blanket regulatory approval. The research firm believes that, while progress has been substantial, three catalysts will determine the trajectory of the drone delivery sector going forward: regulation, widespread acceptance and cost. If these criteria are satisfied, the sky’s the limit.

April/May 2022

WING Operational in Australia, Finland and the US, Alphabet’s Wing is flying high, having performed 140,000 deliveries to customers in 2021 – a 600% increase over 2020. Last year, it built the world’s first rooftop drone distribution nest in Queensland, Australia, and has just announced a deal with Coles, one of the country’s largest supermarket chains, formerly part of the Wesfarmers stable.

In the US, the company is preparing to launch its first major metropolitan area drone delivery service in Dallas, Texas. A deal with Walgreens will see Wing at retail locations, with each store deploying a dedicated fleet from its parking lot, roof or small spaces adjacent to the building.

Although Amazon has gone exceedingly quiet over its Prime Air concept (a 2021 report, ‘The Slow Collapse of Amazon’s Drone Delivery Dream’ in Wired magazine is well worth a read), its patent for an airborne fulfilment centre (AFC) is intriguing.

Amazon suggested the AFC could be an airship that would deploy drones to deliver ordered items to user-designated delivery locations (to read the full patent, visit https://patents.google.com/patent/ US9305280B1/en).

The online giant also has a patent for vertical multilevel fulfilment centres designed for cities.

Shaped like a beehive or cylindrical tower, it provides drone accommodation and space for self-service parcel pickup and delivery vehicles (https://patents.google.com/patent/ US20170175413A1/en).

A multimodal operation involving delivery vans coupled with drones represents a potentially viable option for parcel distribution in less densely populated, rural areas. For example, electric vehicles would function as either a static or moving mobile launching platform.

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5 MINUTES WITH...

Gareth Farrell

CAREER Q&A

What’s your life philosophy?

Life is not measured by the number of breaths you take, but by the moments that take your breath away.

What makes you happy?

Travelling to new places with my family – I love a good family adventure. We’ve tackled Costa Rica and Vietnam. Sri Lanka lies ahead this year.

What’s your most prized possession?

I built a bar in the garden just before the pandemic. For me, it’s the perfect spot to have friends and family round and to kick back at the end of a week.

Best way to spend the weekend?

Early walk with the dog on a Saturday morning and some spinning followed by taking my lad to play football for his team.

Then a trip to see the mighty Woking FC – my son and I are long-time sufferers! Friends round in the evening. Sunday is often a chill-out day – reading, catching up on sport and maybe Sunday family lunch in the pub.

Early bird or night owl?

A bit of both. The early hours are for dog walks, exercise and listening to a podcast.

My best work is done late.

Favourite time of the year?

Autumn – the season of leaves, dog walks and roast dinners.

What is humankind’s greatest invention?

Air travel, though not very eco. It’s enabled us to make the world a smaller place to explore.

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What’s on your bucket list?

To do all three British Lions Rugby tours – I have ticked Australia off the list, but New Zealand and South Africa remain to be conquered at some point.

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Gareth Farrell, 3M EMEA

Who is your biggest inspiration?

My mum and dad. For what they achieved and for the sacrifices they made for me to have a great start in life.

Favourite book?

The Beekeeper of Allepo is up there.

Your guilty pleasure?

A mint Aero or Caramac – usually on a Friday afternoon.

What song puts you in a good mood?

Banana Boat Song by Harry Belafonte. Another Friday one – great to sing along to on the way home before the start of the weekend.

What skill would you like to master?

I have Celtic roots and would love to learn to play the uilleann (Irish) pipes.

Your favourite film?

The Godfather trilogy. The second one is my all-time favourite – legendary.

Describe your current job.

My current role is Director of Key Accounts for the Consumer Business Group at 3M in EMEA. I work with a great team spread right across EMEA to support and develop our relationships and our mutual business with our transnational customers. My role spans the different channels of office/business solutions, home improvement, retail and e-pureplay.

What industry figure do you most admire?

I love listening to Brother’s Phil Jones MBE. What I admire most about Phil is his selfless approach to sharing his experience, insights and coaching with others and the fact he is so committed to learning more every day. To me, this is great thought leadership for so many people to benefit from.

Your best piece of advice to people in this industry?

Look out rather than in for inspiration. I think our sector is having to do more of this naturally with the macro environment and pandemic experience. But learning from our customers’ needs and from practices in other industries, and testing concepts in the business solutions space should help us all expand the segment. It’s not office products, it’s business solutions.

What is the best way to stay motivated and complete goals?

It’s the simple stuff for me. To complete goals: have clear objectives, break them down and prioritise on a weekly basis, ticking them off as I go.

Motivation is an interesting one.

What has helped me recently is journaling. I use The Five Minute Journal which lets me reflect on a day or a week. I never thought I would be the journaling type, but I believe it’s a great source of motivation and also helps me to digest the little things I have learned and progressed with.

Favourite office product?

Conscious bias, but it’s genuinely true for me – the Post-it Note, especially the super sticky variant!

FINAL WORD

MONETISING

marketplaces

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ften, it may seem as if Amazon/ Amazon Business is the only online rodeo in town. It’s not. This was made abundantly clear during OPI’s second Insights webinar – Monetising the Online Marketplace Opportunity.

The webinar, held on 3 March, provided a deep dive into how to embark on the journey of selling on online marketplaces, increase efficiencies, and find the right balance between optimisation and price.

Looking specifically at the European online marketplace – worth almost €180 billion ($196 billion) in 2020 – Amazon commands a share of around 25%, or €44 billion. That’s impressive, but it still leaves a sizeable 75% from players such as OnBuy (UK), ManoMano (France), Conrad and Mercateo Unite (Germany), and Bol.com (Benelux).

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HOW TO GET STARTED The one-hour, extremely well-attended discussion was hosted by OPI Commercial Director Chris Exner. It featured guests Bob Boekema, founder and Managing Director of TFE Agency, and Marc Kaashoek, Sales Manager at European office furniture company Sedus.

Being organised, Boekema explained, is key to becoming a successful player in the online marketplace sector, particularly in terms of appropriate pricing and content. Kaashoek added that employing a specialist agency such as TFE helps, as every platform maintains its own way of dealing with these two components and it can be a bit of a minefield to negotiate.

A top-down plan involving all relevant company departments is imperative too. As is managing expectations. Kaashoek revealed that Sedus chose to start in the relatively small Dutch market in order to learn from any mistakes.

The vendor initially concentrated on figuring out which products were feasible to sell via a marketplace. It also investigated aspects such as optimal box sizes for logistical purposes, lead times, and eventually understanding which marketplace would fit best in each country.

Both webinar guests stressed the importance of content, especially concerning language.

Kaashoek explained that traditional industries tend to still use B2B terminology. But this isn’t necessarily the most appropriate choice for the internet as it works through SEO – a different language entirely.

“It’s not how you want to be found, but how your customers are looking for a product,” he remarked. Boekema added that SEO is a

critical success factor as up to 60% of traffic to marketplaces can be sent via Google.

In terms of building the necessary e-commerce infrastructure, Boekema suggested the inclusion of several features: a good product information management system; the proper technology to manage invoicing, admin, ordering, and track and trace, especially if you want to trade directly on a marketplace; and the right customer service and fulfilment facilities. Tying all these together requires a dedicated project leader and team.

To be eligible to attend OPI Insights webinars at no cost, please contact OPI Commercial Director Chris Exner at chris.exner@opi.net for membership and subscription information.

PRICING CONSIDERATIONS Managing pricing online is tricky. E-commerce has no borders and prices need to be policed and checked on a weekly or monthly basis. Kaashoek also stated the importance of setting minimum pricing, including VAT, as consumers expect it. He further urged participants to be prepared to answer questions from existing customers if products are sold cheaper elsewhere online.

Most marketplaces are currently focused on B2C. But tomorrow it will be B2B and you need to be ready Invariably, pricing comes down to the type of company, current strategy and how it is executed. Depending on objectives, it could merely revolve around RRP to build exposure online. Or, as Boekema pointed out, some brands are increasingly looking for a firmer handle on the marketplace business – even building a direct-to-consumer approach – and are getting to grips with content, user experience and pricing.

Marketplace sellers always need to be aware that goods may incur various taxes which vary by country, and the administration of this component should not be underestimated. Then there are logistics costs to consider related to shipping, picking, packing and storage.

Finally, be mindful of the cost associated with returns. In our space, these are relatively low – about 5% – but it’s certainly something to bear in mind. Home decor marketplaces, for example, work with an average returns rate of 20%.

As Boekema concludes: “You’re allowed to make mistakes. If you get a calculation wrong with the pricing, it can instantly be changed. If an order is incorrect and goods are returned, learn from it.

Adapt – it’s not the end of the world.

“Granted, most marketplaces are currently focused on B2C. But tomorrow it will be B2B and you need to be ready. So get involved.”

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