A Bright Future
After a tough 2017 for many in the UK OP industry, 2018 will be the year of consolidation as acquisitions and mergers across all sectors of the industry rise. It seems clear to me that the largest players will be aggressive, especially if cash rich, to invest in small to medium size enterprises in order to build sales and realise new customers and opportunity. That said, it would seem that diversity will be the key rather than buying more of the same traditional companies that are struggling.
Last year was period where the decline in core sales started to hit home, masked perhaps by the impact of increased inflation, and the need to offer a broader mix of products and services. MPS is taking hold in many of the larger businesses and the impact on the printing industry noticeable, as it is on consumables and paper sales. The declared and open activity of THE major player in supplies in general - Amazon - of course stimulates as much debate as it does for the decline in sales and margins for the resellers.
It’s an interesting thought as to how many people in our industry really understand how the changes we all talk about are manifested in not only their planning but also their day to day activities.
The industry is split into sectors and players who appear to have strategies that are at odds with the direction the OP industry is heading in. That’s not to say that heated debate isn’t taking place or changes in nearly all channels. My experience is that we are an industry that does encourage debate but isn’t keen on a wider industry concerted coming together for the benefit of all. For example, just imagine 1 great unified set of data, with 1-part number and descriptions that every channel and player could focus on. I know, a simplistic view, but how much money, time and stress have we wasted on this single issue?
Partnership, cooperation, acquisition, consolidation - words that have been around for years and yet it’s still attracting new players into the market.
The UK market for business supplies has a new ‘threat’ or opportunity depending on your take, but Amazon are here to stay and will dictate how the supplies side is driven. As an industry some will adopt them as a partner and good luck to them but it’s not for all and I feel many traders will get their fingers burnt - am I being a Luddite here?
Where we talk about personalisation then I think that’s the key. The question is ‘what have you got to offer your customers that no one else can’. I guess we’re all citing great customer service and delivery but there are limits to what can be truly distinct.
From where I’m sitting there doesn’t really seem to be too much innovation in the market place. Re-sellers are still beholden to the major distributors and wholesalers. Manufacturers are looking for the holy grail to reduce costs and narrow channels but wherever they look doors that appear to open nicely of-ten become trapdoors instead.
Just who is doing something really different?
Alex (Tatham) and his team at Westcoast is driving cloud based distribution sales solutions, Spicers are building another stock less option (other than the one partnering with Advantia) and other than that what would excite any investors? Wild 2017 claims of a new major player in the market appear to have rescinded and the rumours quieted.
The big sheds are filling up with expensive and slow-moving lines whilst the nimble and humble smaller reseller appears to be squeezed on credit and declining volumes and margins. No change there then. One thing that has always bemused me, and that’s even been when I sat on the other side of the channel fence, is the belief that resellers are very inefficient in handling problems. I don’t get that. It’s always seemed to me that the “supertankers” whilst having massively invested in systems don’t always under-stand the process is often clogged up by their own inefficiencies.
So far, I don’t seem to have painted a pretty picture and I'm generally thought of as an optimist. So, with that intro here's some things that can provide hope and uplift.
I think systems and IT within our industry will need a shakeup and build better encapsulated solutions that deliver real selling opportunities and impressively designed customer facing detail. There is a great deal of talent and knowledge of platforms but often a disconnect with the customer in service and after sales provision. One of two companies will get this right in 2018 and take advantage here.
We should stop trying to be Amazon and rather focus on being great with our customers and use technology to allow those relationships to flourish. We need to be creative in welcoming businesses to buy through us and understanding of their needs, NOT the ways we can make it easier for us. That message needs to be driven to our distributors too because often it seems the resellers are a complication to them rather than a genuine partner in profitable sales creation.
There is a particular message coming from the dealer community loud and clear. They need help, support and ways to increase their customer acquisition. The Groups have a positive role to play in my opinion and each needs to distinguish itself and move away from a vanilla approach - one size/style fits all and into a truly personalised set of service solutions. Again, resellers need to become more thoughtful, organised and professional in their routes to market and build good plans for IT, marketing and services. There is some cost to this and whilst we all need to deliver value for money, its essential, in my view, that we deliver measured quality with a longer-term view.
Emerging market opportunities are there and many resellers are cognisant of them but lack the support and thus confidence to drive their business into new areas. We need to see more engagement from manufacturers and supply partners during 2018 in finding supply solutions that are acceptable to consumers and profitable for resellers. We also need those resellers to acquire some desire to invest in new opportunities, especially people and technology, that will stimulate new growth. At the moment we can see shoots of ideas but little cohesion in how areas such as PPE, ergonomics and business services can be better delivered.
Furniture, PPE, Business gifts, janitorial & catering supplies - or the ubiquitous and industry made up ‘facility supplies’ - are a few other categories are often cited as margin rich growth areas that we all must strive to move into. Over the years I’ve seen that initial enthusiasm tempered by real lack of investment by those driving us into those areas on the back of an albeit strong logistics offering. Clearly if proper research and market understanding had been undertaken then success would have been improved.
However, we can learn from earlier mistakes and move in other diverse directions, as an industry we’ve been on a journey since the first days that man could write and needed to keep records. Yes, our core is under threat but as an industry I guess I’m saying we’re durable, adaptable and whilst there’s a dearth of youthful talent coming through it’s still a great industry to work in and build a career. 2018 doesn’t promise to get any easier - just ask the PM - but opportunity is out there and we need an open mind to go out and grab it.
By Steve Harrop at 21 Feb 2018, 10:55 AM