The Challenges of New Opportunity

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January 18, 2017

We all see what’s happening.  The merger that wasn’t (Staples and Office Depot), Newell grows larger, Safco buys Mayline, WalMart acquires Jet (to take on Amazon), Amazon surpasses $1B in B2B sales - in under ONE YEAR!  Add in Brexit and Donald Trump and we see a category in full transformation.  Some will survive and thrive.  Others will not.  

Looking forward in 2017, we see large suppliers aggressively looking to acquire (more consolidation), buyer groups merging, large accounts looking to acquire (fewer resellers), product diversification, and further migration to Amazon.  These are tough times and it will not be easy for any of us.

That said, let’s consider the broader market.  The collective opinions of CBRE, JLL and NREI (National Real Estate Investor) show tight commercial vacancy rates within the US office sector through 2017.  Leasing rates continue to rise, albeit at a slower pace, and new inventory is expected to come online.  This dynamic likely exists in Canada and Europe as well.  The office sector is poised to grow, and will need our goods and services!

It’s just that traditional sectors no longer drive the economy.  According to JLL (http://bit.ly/2jIleET), tech remains the largest contributor to office leasing activity (24% of the market) -- larger than the next three sectors combined (finance, government, law)!  This dependency on technology, both personally and professionally, exists for all western economies.  It’s incumbent upon us (suppliers) to accurately meet their needs, and to abide by the new methods by which they shop and buy.

It’s also important to understand the issues driving or impeding their success.  There is no shortage of new, breakthrough technologies across every sector.  One big problem is a limited supply of qualified employees to bring these technologies to life.  Qualified employee acquisition and retention is a tech firm’s #1 priority (just visit any tech job board).  Couple that with dwindling employee supply (boomers retiring faster than new employees replace them) and you get a tight labor market and rising wages.  

My point is that old approaches and structures are less and less effective. New technologies offer better and more cost-effective solutions, but traditionalists create obstacles that block our ability to move in this direction.  As a supplier to this sector, we must adjust to the market and help end-users succeed.  Those that lead will reap the rewards.  Those that wait will experience tough sledding.

Seismic change always brings challenges.  Change is hard.  But opportunity remains.

Bob_Ogara
Bob O'Gara
Highlands CEO


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