Big Interview

‘Buy and build’ has been Wulff’s mantra for decades. Doubling its sales with the addition of Staples Finland last year was just the beginning of a concerted M&A strategy, says CEO Elina Pienimäki FLYING THE Nordic flag

Wulff Group is a publicly listed company – the only one in our industry in the Nordics. As such, it’s not difficult to get a broad overview of this Finland-based reseller that has been in existence for over 130 years. What’s much harder to find is a real insight into this B2B player which, since 2019, has been woman-led and in May 2021 caused a stir when it bought Staples Solutions’ Finnish operations for what seemed like a bargain price.

OPI’s Heike Dieckmann had a rare – and very welcome – opportunity to speak to Wulff CEO Elina Pienimäki and get that insight.

OPI: Some of our readers may recognise you from a previous stint at Wulff a few years ago. Tell me a bit about your background before you rejoined as CEO in September 2019?

Elina Pienimäki: Sure. Before I took over as Wulff Group CEO, I was leading a company called Aallon Group which is a financial services provider in Finland. My CEO role there was focused on building a new group of companies in that industry, mainly through M&A. While I was there, we also took the group through an IPO. The firm has been growing very nicely ever since.

Prior to this, I worked as CFO for an organisation called Ahlsell Finland. The parent company is Swedish and a distributor of technical tools and supplies for the construction space. It’s quite well known in the Nordics.

As you mentioned, I was at Wulff in the past – from 2014 to 2017 as CFO – so I knew the firm, many of its people and its culture well when I rejoined. It was an easy decision to go back. Although it’s a public company, it’s a very family-orientated enterprise – it’s also agile and M&A focused, both factors that really appealed to me.

OPI: What did you find when you joined, just a few months before COVID hit?

EP: Wulff is hugely sales driven and had put considerable efforts into expanding its product and service range in the prior years through a strategic project called the Wulff Lab. Everything the company did had to contribute directly to sales growth and profitability.

Cleaning and healthcare products were a big part of that category expansion – as were, on a side note, sustainability items. With the former in mind, we were incredibly well placed when in 2020 the pandemic really kicked off. We had the products, relationships with the channels to buy from and the organisational capabilities to make it all work – quickly.

OPI: Did that category include PPE?

EP: Yes, we were pretty well equipped in this area too. Of course, there were challenges and we had to adapt, finding even more new channels of buying and sourcing these products. But it benefitted us that we had a strategy as regards category expansion well before COVID.

We’d been building our assortment outside the office supplies segment for some time, so we were in a good place. In fact, rather than limiting ourselves in any way, we refer to Wulff as a Nordic multichannel sales company for a wide

We refer to Wulff as a Nordic multichannel sales company for a wide range of workplace products and services

range of workplace products and services. Our goal is simple: to enable customers to have the perfect work day.

OPI: You are one of the founding members of Interaction, the alliance of European resellers and distributors founded in 1997. How important is that collaboration for you still, after 25 years, particularly from its private label, Q-Connect point of view?

EP: It’s important. Interaction has a purchasing power of €2 billion ($2.1 billion) and Q-Connect represents a considerable share of our sales in the divisions where it’s relevant. And we aim to make that percentage larger.

Sustainability is playing an increasingly vital role for us and more Q-Connect products are currently being developed under this umbrella (see also Green Thinking News, page 14). We want to grow the share of our sales in this particular category.

OPI: What was your remit in 2019?

EP: M&A was high on the agenda and while COVID impacted our plans a little and some scheduled activities didn’t come to fruition, you know we bought Staples’ Finnish operations in May 2021. It was a logical and obvious purchase, but I’m sure we’ll talk about this later.

Since then, it’s been about integrating the company, creating synergies and making our joint organisation stronger.

OPI: I’ll definitely come back to that. But just going back in time a bit further for a couple of questions… The Staples acquisition brought your 2021 revenues to a total of €90 million I think. Had Staples been factored in for the whole year, the figure would have been well over €100 million, effectively doubling sales. We had a Big Interview with then CEO Heikki Vienola in 2011 and at that time he said sales were €93 million. How come, over the course of ten years up to May 2021, Wulff’s revenues went down by €40 million – I believe you were trading at €52 million pre-Staples? Were there major divestments?

EP: Yes, there were some divestments. For example, in 2015 Wulff sold the business gifts side of the company – that was one thing. The market has changed considerably too and we are a much

more profitability focused operation now. Still sales driven – very much so – but it’s not just the top line that matters. In order to be a responsible company doing good things, you have to make a profit.

OPI: Another question about the past is Wulff’s history. I actually thought the company was still relatively young – going back no more than 40 years. Preparing for our chat, that’s clearly not remotely true. Can you tell me a bit more?

EP: I’m very happy to, as I think it’s really interesting and quite intriguing. Wulff was founded in 1890 by Thomas Fredrik Wulff. It was a small paper shop in the heart of the capital Helsinki.

Curiously, another company – Oy Lindell – was founded by Hermann Lindell in the same year. That firm was acquired by Staples in 2010.

Thomas and Hermann were apparently rivals as well as good friends in those early days (see picture, page 23). With Wulff buying Staples Finland last year, it almost feels like going full circle with, after 131 years, both organisations’ histories coming together.

Going back to your question though about the overall history and what happened, Wulff remained a family-run business for many years. In fact, the company became one of the few enterprises in Finland to pass from generation to generation.

This ended in the 1980s, probably the time you were referring to. In 1987, a firm called Sponsor bought Wulff, followed in 1992 by the Helvar Merca Group. In 2002, Wulff was acquired by Beltton Group, which was a company established by Heikki Vienola. The Beltton brand was changed to Wulff Group in 2008.

Heikki still has the biggest stake in the company – he owns about 36% of all shares. I’m also a shareholder and I own 40,000 shares which equates to an ownership of 0.6%.

OPI: Since 2008, it appears then, Wulff has typically been the acquirer rather than the entity being bought.

EP: Correct. We have a history of growing through M&A, for instance with Strålfors Supplies in 2009. This is now called Wulff Supplies and is our contract sales business in Sweden, Norway and Denmark. It’s growing and performing well and we are very happy with it.

OPI: So your current footprint is Finland, Sweden, Norway and Denmark. How is that split in terms of sales percentages?

EP: 71% of sales come from Finland, 23% from Sweden, 12% from Norway and 1% from Denmark.

OPI: I seem to remember you had a presence in Estonia at some stage too, is that right?

EP: We did, but gave it up a few years ago. To give you a few more facts, we have approximately 280 staff right now – 76% of them work in Finland, 19% in Sweden and 5% in Norway. We’re based in Espoo which is part of greater Helsinki where a sizeable percentage of the entire population lives – over 25%. The population of the whole of Finland is only about 5.5 million people.

OPI: You briefly referred to your customer base when mentioning Wulff Supplies and the Swedish contract business. How would you summarise your target audience?

EP: We have what we call a Contract Customers and an Expertise Sales division. Contract is all about delivering a wide range of workplace products to customers.

Was [Staples Finland] a bargain? It was the price we were willing to pay for that company and the price Cerberus Capital was willing to sell it for

The focus here – though not exclusively – is the larger customer where we have annual contracts and deliver to multiple locations. Large corporate customers, government and public sector companies – those kinds of operators.

Expertise Sales, on the other hand, is more about our active and strong sales force and a sales channel that operates locally. Typically, the products are higher quality and the service is increasingly bespoke. Customer size is not as specific in this division either – it goes all the way from SMBs to very large organisations.

The big distinction – as the name suggests – is that further expertise is needed in servicing these customers. In addition, they are slightly less transactional and instead more service and solutions orientated.

These two divisions complement each other very well, with product portfolios being different as a general rule too.

OPI: Which is the bigger part?

EP: Contract by far – it’s about 80/20. But both divisions, if you look at our 2021 financial results, have been performing very well from a profitability point of view.

Another component of the organisation is our trade fair business which we refer to as Wulff Entre. From a reporting point of view, Wulff Entre feeds into the Contract Customers division. It’s been part of the group for approximately 15 years. We have extensive knowledge of international, big trade fairs and help our customers attend these shows, sell their products, launch new ones, etc.

OPI: That business must have taken a real knock over the past couple of years.

EP: Well, yes, from early 2020 when COVID hit, we couldn’t get our customers to events anymore because none were happening. It’s when we started developing a new service named My Remote Studio.

What this is and involves is that we essentially built a very high-quality visual as well as sound studio. From this, our customers can effortlessly and conveniently demonstrate their products and services to their clientele.

OPI: And this is hosted at Wulff?

EP: No, we physically go into customers’ premises where everything is set up for them and where they can use that facility for whatever purpose they want. It’s a completely different experience from having a desktop-based Zoom or Teams meeting because it is such high quality.

During the pandemic in particular, we at Wulff used it for the same type of service – to get access to our clients.

OPI: I can see the benefit of some bolt-on selling here too, as regards viscom and all manner of tech accessory products.

EP: Absolutely.

OPI: Is this something you offer only in the Finnish market?

EP: No, we’re selling Wulff Entre in all our locations and, in fact, have some far flung customers in Central Europe and Ireland.

We’re becoming more international all the time with it and although – as we started from zero – it’s not a huge part of the business yet, it’s been growing really nicely. And it’s very much part of our strategy going forward.

We have fantastic knowledge in this area and also some great customer relations, and we are finally very busy with physical trade fairs again as people are travelling once more.

OPI: Another ‘adjacency’ you’re in I believe is financial services since you bought Carpentum earlier this year?

EP: That’s correct. It also goes back to our strategic decision to grow the business services part of the company, in this case financial services. Carpentum is a profitable entity which operates in Espoo and Tampere with 15 to 20 highly professional people who have outstanding customer relationships – the same customers we deal with.

Yes, it’s different from workplace products and services, but it’s complementary to our services component and it aligned well with our M&A plans.

Elina Pienimäki with Wulff Group CFO Atte Ailio

OPI: On this M&A note, let’s talk about the big acquisition you made last year – Staples Finland. Only it wasn’t such a massive purchase in financial terms, one might argue, as you bought Staples for a mere €6 million. Would you agree that was a bargain price?

EP: It was €6 million, including €1 million in cash. Was it a bargain? It was the price we were willing to pay for that company and the price Cerberus Capital was willing to sell it for.

Naturally, with all the disclosure we have to give as a public entity, it attracted a lot of press attention as we paid considerably less than the value of the company’s net assets, in other words negative goodwill, which is really rare with M&A.

Staples Solutions clearly wanted to exit Europe, divesting the various operations piece by piece. Wulff, with its M&A strategy and core capabilities in this area, was the right partner. And the two companies are an excellent fit and I’m really happy that we came together.

OPI: How is it a good fit? Geographically, from a customer point of view, culturally? And how is the integration going?

EP: When we bought Staples, we gave ourselves a target of being fully completed, with integration at all levels, within 1,000 days, which is the end of 2023. We are well on track for that and are currently working ahead of schedule.

We started immediately, of course, and the first thing to do was to get rid of Staples Solutions’ IT infrastructure. We integrated our CRM in six months and since then have been following this up solution by solution, system by system. We are not done yet, because there’s a lot to do and we want to do it carefully and well.

Product assortment is another component where we had a lot of similarities and we’re pretty much done with that part too.

In terms of geography, since you asked, Staples was based very close to us so it’s been easy, albeit with sadly some inevitable redundancies.

As regards customer bases, all of Staples’ customers fall under our Contract Customers umbrella, but there was no overlap – we simply didn’t have the same clients – so that’s a true one plus one makes two rather than 1.5.

OPI: I can only assume the culture bit is a work in progress?

EP: It’s clear our two companies have very different cultural backgrounds. Our Staples employees for a long time were part of this American-owned or certainly international background, with distinct milestones as to how the operation was led. Different leadership teams, different priorities and so many organisational layers. Wulff, by contrast, is very lean and efficient with hardly any layers.

We, from the word ‘go’, decided that these two companies need to be led as one, so everything was joined up. Work in progress, as you put it, is a good description.

OPI: You talked about M&A as being a big part of Wulff’s strategy. How much of that strategy relates to Finland rather than the other markets you’re in?

EP: It relates to all the countries we are currently in which presents us with some great opportunities.

OPI: Can you say anything more specific?

EP: Let’s just say you need to have a strong pipeline, be alert and active, and know what to do when and for what price. We tick all those boxes.

OPI: You stated in one of your financial releases that you aim to reach €200 million in sales by 2026. This is more than doubling your current sales and seems highly ambitious. Will it mostly be achieved through M&A as opposed to organic growth?

EP: Of course we are developing our existing businesses by adding new products and we have a strong drive to acquire new customers, but yes, M&A will be a core part. To reach our goal equates to an annual growth rate of 15-20%. I believe we can do it.

Even before the pandemic, these [logistics] partners delivered to wherever products were needed, not just company premises

OPI: With Staples out of the equation, what does the reseller landscape look like in your markets – who do you compete with?

EP: Lyreco is in all the countries we operate in. It’s also a very substantial player in Finland. Here, we are roughly the same size.

Aside from Lyreco and us, the next biggest operator is RCK Finland which has revenues of approximately €30-€40 million, so considerably smaller but still sizeable.

OPI: Lyreco bought Staples’ businesses in Norway, Sweden and Denmark, so is a mighty player all over the Nordics I guess.

EP: It’s a significant competitor, no doubt.

OPI: You used to have a strategic partnership with Office Depot in Finland that, I believe, came to an end when you bought Strålfors in Sweden and became rivals. Office Depot Nordics was bought by its CEO Frank Egholm in an MBO a couple of years ago. How is that operator doing now in your opinion?

EP: We don’t see much of it these days.

OPI: The mighty Amazon only has a direct presence in Sweden to my knowledge, but services Norway and Finland from there. How big a deal is this player to you?

EP: Amazon is B2C and we are B2B – we are in a different business. That said, Amazon is an opportunity for us as well.

OPI: Residential deliveries have often been a real challenge for resellers during the COVID period when we had the mass exodus to the home office?

EP: As an omnichannel sales company, we delivered to homes well before COVID through our open online store – wulffinkulma.fi – which is hugely important to us. We had strong growth through that channel during COVID and this remains the case to this day.

We have very strong logistics partners in all the countries where we have a presence and even before the pandemic, these partners delivered to wherever products were needed, not just company premises.

This being said, home deliveries aren’t a substantial part of what we do. Yes, there is remote and hybrid working, but we also have many customers, manufacturers for instance, where everyone is on site.

Aside from this, we’ve found that, when people do work from multiple locations, they buy more because they are quite simply doubling up their workplace supplies in many cases. As such, the fact there are more workplaces now has been a growth factor for us. And companies which take care of their employees typically provide the tools for working from home.

OPI: One of my final questions is more macro-related than specifically about the business supplies industry. Finland is geographically very close to Russia. Does that – and Russia’s war with Ukraine – have a perceptible impact on the country?

EP: Based on the statistics we see here, consumer confidence has dropped since the war started and that clearly has had an effect on businesses in Finland. From a Wulff point of view, we haven’t noticed a direct impact – we don’t buy from Russia or sell to Russia, Belarus or Ukraine.

At a broader level, of course this war impacts a whole range of things, from supply concerns and inflation to price rises and this, in turn, comes back to our business. All we can do is stick to our strategy, be as agile as possible and focus on growth and profitability.

One thing I am very proud of is that I know many ‘Wulffians’ value our concrete engagement to bring back peace. We have acted and I think we can have a good corporate conscience.

OPI: We typically finish these interviews with a question about the future direction of the company. We’ve talked a fair bit about your plans and particularly M&A. What is the feedback you’re getting from your board – and your biggest shareholder Heikki Vienola? I believe his children are on the board too.

EP: Heikki is a senior advisor to us and, yes, two of his children have seats on the board as well and have had them for several years now. Kristina and Jussi both have interesting careers outside Wulff; as such, it’s always good to get their fresh and from-the-outside-looking-in views.

Heikki and his family are completely aligned with our strategy. They also make sure that the rest of the board has the relevant knowledge and expertise Wulff can benefit from. I believe the board is very satisfied with the work we do and the results we produce.

Importantly, we get great support from all the individuals we work with. I am 100% happy to have their continuous, refreshing perspectives as well as their commitment to a long-standing family business that is over 130 years old and has truly stood the test of time.