Dealer spotlight: The Supply Room

The Supply Room's recent acquisition of Frank Parsons has given it a strong platform to increase its share of customer wallet.

Making acquisitions is nothing new for US dealer The Supply Room – it has made about 20 of them over the last quarter of a century – but the most recent addition, that of $50 million dealer Frank Parsons in May 2011, is arguably the most impressive.

The Frank Parsons acquisition virtually doubled The Supply Room’s top line overnight and propelled it into the select club of independent US dealers with annual sales in excess of $100 million.

Not that achieving this milestone was a specific goal. “We don’t keep score of where we are in relation to other dealers; we’re just focused on what we do,” says EVP Yancey Jones.

Based in Ashland, Virginia, The Supply Room Companies (TSRC) is made up of three seperate divisions: The Supply Room, Frank Parsons and the Mega Office Furniture division, which was acquired in 1999 and now accounts for 15% of total sales. It is the state’s largest full-service independent office supplies dealer and its territory has expanded to include Washington DC, North Carolina and – following the Frank Parsons deal – Maryland.

The modern history of the company dates back to 1981 when Jones and his wife Jane (who now chairs the board) acquired the Meade & Co business from Yancey’s father, the late Meade Jones. Yancey’s brother Addison bought into the business in 1986 as did current President/CEO Patricia (Pat) Barber when The Supply Room was formed by the merger of Meade & Co with three independent dealers.

“When we were starting the business, we called people and asked them where they got their office supplies from. A lot of them replied ‘from the supply room’ and that’s how we came up with the name,” recalls Barber.

The company operates a stocking model from its impressive 280,000 sq ft (28,000 sq m) headquarters and distribution centre on the North Washington Highway in Ashland. It inherited a similar sized distribution centre in Hanover, Maryland, from the Frank Parsons acquisition, but the division has recently relocated to a new 50,000 sq ft facility not far from the old building.

That move was overseen by Yancey and Jane’s son, Yancey Jr, who is General Manager at the Frank Parsons division. Their other son, Dutch, is running the local North Carolina branch in Charlotte, a recent greenfield opening which has enjoyed contract wins with major sports teams such as the Charlotte Bobcats. 

The Supply Room also has other high-profile customers including American football teams such as the Washington Redskins and the Baltimore Ravens.

Yancey Jr is supported by an experienced management team at Frank Parsons that now includes well-known industry figure Mike Maggio, the former ActionEmco CEO having recently joined the firm as a consultant.

Developing the Frank Parsons business is key to TSRC’s growth strategy. Traditionally strong in the paper and technology categories, only around 10% of Frank Parsons’ sales came from office supplies, so there are clearly opportunities in that category as well as in furniture.

Cross-fertilisation

“We believe that Frank Parsons will be a great fit for us,” states EVP Addison Jones. “It was doing just over $50 million a year when we acquired it, but we see a huge upside – possibly another $25-30 million in the next three to five years – just by developing office products and furniture sales with existing customers.”

But the benefits of the Frank Parsons acquisition are not just one way. The company had already developed its own managed print expertise, for example, which it is now sharing across the business. TSRC recently won a $1 million three-year managed print contract with a major customer and its MPS offering is expected to play a major part in sales and margin growth in the coming years.

The combined paper volumes with Frank Parsons have also led to the introduction this month of private label paper branded under The Supply Room name, something which is seen by the company as an important development.

 “It really is a great way to advertise ourselves,” says Barber. “Our design is on both the cartons and the wrappers so it really gets our name out there.”

Another category that is showing great potential is coffee. TSRC acquired a local coffee supplier about one year ago and since then has developed its own office coffee service, stocking 100 blends of coffee in its warehouse and providing a machine maintenance service.

“Coffee is growing in leaps and bounds for us, but still only represents a fraction of our sales,” notes Addison Jones. “I’ve talked to dealers that are deriving 15-20% of their sales from coffee so we believe that there is a huge opportunity for us to grow this business.”

Yancey Jones points to the ability of office suppliers to provide next-day delivery for coffee-related products, something that traditional suppliers are just not able to offer. “I don’t know of any local coffee suppliers that have 55 trucks in Virginia!” he states.

The 24-hour delivery model is something which is perhaps taken for granted in office supplies circles, but TSRC still sees it as a major selling point, and even a service that not everyone may be delivering.

“Pat and I were at a forum for state purchasing officials recently and one thing that surprised people was our ability to consistently offer next-day delivery,” says Addison Jones. “For us we just feel that this is the norm, but perhaps not all our competitors are doing it. Everybody promises it, but we are delivering it.”

Dealing with state agencies is an important component of TSRC’s business. It has been a contractor on the Virginia state contract since 2005 – the only independent dealer to win the award – and has recently signed its third renewal. TSRC claims to have the lion’s share of the state contract business, despite going toe-to-toe with the three national big box suppliers. Education – including K-12 schools and higher education establishments – is a key channel within the state contract and TSRC has developed a number of innovative partnerships here. 

For example, it works with the Green Committee of the University of Virginia to recycle delivery boxes, helping to fund the activities of the committee. It has also partnered with the Virginia State Lottery in a programme that has been awarding $2,000 in supplies to 32 ‘Super Teachers’ across the state since 2008.

The company is also heavily involved in charitable causes, including supporting City of Hope, a local children’s hospital, and food and blood drives. It even sponsored a Virginia Special Olympic athlete to enable her to take part in the 2011 Games in Greece.

TSRC is a member of the DPCG buying group which comprises 15 stocking dealers that now collaborate to produce a joint annual catalogue. It has also been a longstanding member of the AOPD group, which has helped it to compete in the national accounts arena.

“This not only gives us national reach, but also the ability to provide that local touch and local service that I believe the big boxes just can’t match,” states Addison Jones.

Looking ahead, the company has no doubt that 2012 is going to be another tough year across the country. However, the Virginia economy is probably more robust than that of most other US states and with the addition of Frank Parsons and relatively new but fast-growing categories, the company is targeting organic growth of 7.5% for the year. 

  • Headquarters: Ashland (VA), USA
  • Sales: +$100 million
  • Staff: 206
  • Model: Stocking dealer
  • Dealer/marketing groups: DPCG & AOPD
  • Chairwoman: Jane Jones
  • President/CEO: Pat Barber
  • EVPs: Yancey Jones & Addison Jones