On Thursday, January 12th, Gordon Christiansen, Partner of Highlands, joined a panel of senior executives assembled by OPI to share their insights on the year ahead for the US Business Supplies Industry, including the recent sale of S.P. Richards. The webinar was hosted by Steve Hilleard, CEO, of OPI and Andy Braithwaite, News Editor, of OPI.
The panelists also included:
- Dave Bent, VP Operations – Distribution Division, ECI Software Solutions
- Mark Cooper, President North America, Avery
- Betsy Hughes, National Healthcare Sales Director, AOPD
- Jordan Kudler, President, Legacy Office Solutions & Chairman, ISG
- Mike Rowsey, CEO, Harbinger International
The topics the panel tackled:
- SP Richards’ sale to Central National Gottesman Inc. (CNG)
- The future for Staples and Depot
- The opportunities for further mergers and acquisitions (M&A) activity in the Independent Dealer Channel (IDC)
- The impact of work-from-home (WFH) and office occupancy rates on the IDC
- Data and content available to the IDC, and the role the wholesalers play
- Developments in the national accounts space
S.P. Richards Acquisition
Most of the panel said they were surprised by the SPR acquisition. Gordon said he thought, like many others, SPR was going to be acquired by Office Depot. However, he believes it’s a great deal for SPR.
“Nobody knows exactly what’s going to happen; if we knew, we wouldn’t be on this webinar today,” said Gordon. “If you look at CNG’s record with acquisitions, it’s actually really good. They tend to do a great job in terms of bringing them into the family business. Seems to be well-funded, self-funded, and takes the pressure off the financing deals that S.P. Richards needed to make the acquisition happen when it was spun out of Genuine Parts. I think CNG has different drivers than the Sycamore group has with Essendant and Staples.”
M&A Activity and the IDC
It was mentioned that M&A can create healthier dealers by giving them more resources. However, it’s also a good sign of the continued health of the IDC that ISG members are not just being acquired by Staples or Office Depot.
The panel agreed they fully anticipate Office Depot will continue to look for acquisitions. And that Office Depot’s ‘Federation’ strategy is a successful part of their business.
Gordon agreed with supporting brands, saying “We always encourage, when working with our brands to diversify their downstream account portfolio as much as possible. A healthy Independent Dealer Channel is really good for the brands we represent. So is a healthy Amazon, Grainger, Staples, HD Supply, etc. The IDC is an important part of the fabric. They spend billions of dollars every year as a collective. Yes, it is spread out, it’s not necessarily consolidated but it’s still real business and an important part of the manufacturers’ (that we represent) portfolios.”
Data and Content Available to the IDC
Last year, ECI Software Solutions acquired ES Tech. This prompted conversations at last year’s OPI Global Forum around the issue of data and content that is available for the IDC. The panel was asked if they thought the dynamic would change.
The panel discussed the need and desire for data and content throughout the supply chain for both dealers and wholesalers. The problems are that instead of 2,000 SKUs, there are 15,000 SKUs and instead of one category (i.e., traditional office supplies), there are multiple categories (like package supplies, tech supplies, Jan/San supplies, hospitality supplies, etc.). Some on the panel believe a content provider will eventually emerge that can supply the technology to handle all of these different facets.
Gordon said “I think the challenge for ECI is, do people really want to put all their eggs in one basket? How can you create an environment where people can work independently and not be all in? Because then they’re just going to be stuck with the same problem they have today, with their catalogs being controlled by wholesalers. For a lot of dealers, that’s okay because they don’t have the infrastructure to support it, but for others, it’s a real problem.”
National Accounts Developments
The panel discussed recent shifts in contracts and the opportunities available to independent dealers. There was also debate around the impact of WFH and Hybrid working models.
“I think the three- or four-day week will remain,” said Gordon. “The other thing is that less than 50% of the US workforce are able to work from home. If you work at a manufacturing plant or drive a taxi, you can’t work from home. So, there is still plenty of opportunity for the Independent Dealer Community that exists away from an office environment.”
As the webinar wrapped up, Gordon shared one final point on the future of the IDC:
“Independent Dealers will always survive because, by nature, they are entrepreneurs. They’ll always find something to sell, someone to sell to, and somewhere to buy it from. Will it continue to change? Absolutely, but it will survive.”
OPI members can log in to view the webinar recording: https://www.opi.net/eventer/us-industry-outlook-2023-webinar-panel-discussion/