Home sweet home
In times of strife – political or economic – communities have a tendency to band together, to share and care more. Is it for that reason that ‘buy local’ initiatives have blossomed over the past few years when many economies have been volatile, unemployment figures soared and businesses closed down in their thousands?
There’s certainly a good case for promoting locally-based businesses if the statistics are to be believed.
Credible and, crucially, sustainable ‘buy local’ initiatives are not always easy to find, however. Stories of cities (such as Bristol in the UK) printing their own currency that can then only be used in and by local businesses, genuine though they may be, only enhance the perception of gimmicky and short-lived initiatives to capture the imagination of the consumer.
In office products terms, ‘buy local’ has gathered an increasing following in a host of countries, most notably in the US where the large buying groups such as TriMega and Independent Stationers (IS) have also jumped on the bandwagon. Both organisations are trying to help dealers with their local campaigns, not least through national programmes such as the US Communities contract that IS was awarded and that has slowly started to gain traction for many dealers last year. TriMega’s Independent Dealer Locator (IDL) is another initiative aimed at helping customers find local alternatives to big box chains on manufacturer websites (or through the NOPA website).
But with manufacturers in particular only slowly starting to take the bait, it’s still very much a work in progress. What’s needed, says Dick Dodge, Chairman of both TriMega and his own San Francisco, California-based dealership The Office City, is a national ‘buy local’ initiative, something that is selling the concept and that can be adapted and tailored to individual markets.
“A lot of current ‘buy local’ initiatives are designed for the retail space. Independent OP dealers don’t have that store front visibility. We need to have a consortium that has everyone working together to create a template that dealers can use in their market.
“Dealers don’t have the marketing department that the wholesalers and the manufacturers have and the capability to put together a strong national programme that will resonate with office products buyers. If we can implore our partners to come up with such a programme that can then be implemented at a local level, it’ll be a win-win situation – the faster independents grow, the more our partners will grow.”
We might be years away from such concerted efforts, but at ground level there are definitely examples of dealers that have made ‘buy local’ a core focus of their business, and very successfully so.
To be successful in the ‘buy local’ arena, it’s important to become engaged, says Ian Wist, General Manager of Wist Office Products, an Arizona-based $20 million dealer. “A lot of dealers will say they’re local but that’s about as far as it goes; you have to become involved.”
A good way of doing that, he adds, is to join organisations that operate on a ‘buy local’ basis for any type of business. Wist says: “We joined an organisation called Local First about four years ago and have been very active as part of Local First Arizona and its affiliate programme. Any members can receive special pricing and a rebate back on purchases. A proportion of the money will go back to Local First to fund the organisation.
“We are also part of several other organisations such as the Association of Air Conditioning Contractors – we live in the desert so everybody has an air conditioner – and the Alliance of Arizona Nonprofits. As part of the latter, we’re now talking to every non-profit organisation in the state and there’s an awful lot of them – for the blind, the elderly, hospice services and so on. And many of these businesses want to support local organisations, but don’t know how to find them. They also want special pricing, or a rebate on their purchases, and that’s what we give them.”
Umbrella organisations such as Local First are also helpful from a networking perspective, as the people involved are often engaged at a higher level, talking to state and local government, larger organisations and so on – all potential customers.
Another independent that has taken ‘buy local’ to a surprisingly different level is Austin, Texas-based Gonzalez Office Products, a dealer that, due to its focus on school supplies, is now a nationwide customer of Pearson, one of the world’s leading suppliers of educational products.
Says President Wayne Gonzalez: “We have just received our tax ID for the state of New York, for example, so Pearson is taking us with them there and we’re helping them because we are their minority diversity supplier. It works for both of us – they are a large corporation that have to spend certain dollars in the minority business and we can take our local business and strategy nationally.”
Gonzalez Office Products’ success in this area, however, stems from good old-fashioned networking and from the owner’s enthusiasm to be utterly immersed in his local community. For Wayne Gonzalez, ‘buy local’ is a lifestyle rather than a business choice.
Apart from spending a large amount of time networking with local businesses and supporting charitable events, Gonzalez feels immensely passionate about volunteering in his community. As such, he spends a lot of time with his wife volunteering at local schools, at church, at charitable events and so on. And while that sounds very philanthropic, it has had a huge commercial impact on his company which, over the past decade, has grown from nothing to a $3 million company. Partly as a result of the nationwide school supplies contract with Pearson, Gonzalez is hoping to double that figure to $6 million by the end of this year.
“The casual encounters you get to enjoy at these neighbourhood activities and businesses are what build your local relationships and the local cohesiveness of a community. It’s amazing how many decision-makers and presidents of companies I run into just by going out and volunteering for a local lake clean-up or watching kids at school while they’re having fun. I truly believe that volunteering and having a ‘buy local’ initiative is better than any social networking site.”
But one can happily complement the other it seems, with many dealers citing social media and online sites such as YouTube as valuable marketing and communication vehicles. London, UK-based printer and stationer Sprint Stationers is one of them. Unlike Gonzalez Office Products, which is 100% B2B focused, Sprint has its irons in both fires but the retail side outweighs the commercial business by 2 to 1.
Sprint’s ‘buy local’ initiative is very much in its infancy and a different proposition given that, as a £500,000 ($784,000) player in a huge metropolis like London, the competition is fierce and altogether of a different character than Gonzalez’s remote Texas locations of Austin and Rockport.
Dani Gavriel is Head of Sales & Marketing at Sprint and she indeed points to social media, in addition to its more traditional local networking groups, as a marketing vehicle that has worked well for the company since its January 2012 ‘buy local’ launch. “We’re very active on Facebook, Twitter, LinkedIn and Google+ and we’ve found that there are groups available, especially on Facebook, that are set up with local postcodes, so people that are on there are purely looking to shop locally. Social media is a big time commitment and a long-term project, but it’s definitely started off very well for us.”
Offline, Sprint Stationery operates various loyalty card schemes for both its B2C and B2B customers. “In our B2B segment, where we do business with local estate agents or solicitors for example, we introduced a loyalty scheme so when they open an account with us, with every pound they spend before VAT they earn a point, which they can redeem against prizes. That’s worked out well because on the commercial side, we’re up against Viking and Lyreco who are constantly trying to poach our customers. We’re saying thank you to them for staying with us.”
It’s specifically at retail level, however, where dealers are fighting a tough battle when it comes to local buying campaigns as their big box competitors are increasingly trying to steal their thunder.
At a recent Business Solutions Association (BSA) event in San Antonio, Texas, much criticism was hauled at the big boxes that have been jumping on the ‘buy local’ bandwagon and calling themselves the customers’ ‘local’ Costco, Staples or Walmart.
And why not, is the somewhat frustrated response. Says Peter Howard, SVP & Head of Staples Online and Marketing Europe, says: “We ARE local. Yes, we’re a global company, but we work at a local level. Our trucks, our drivers, our store associates who work face-to-face with the customers, they are all local. We’re always promoting stores within a specific area with special campaigns and I would definitely include us in that club of ‘elite local retailers’. We hire local people, we pay local taxes, we’re promoting the local economy. Our social media strategy is also very geared towards a customer-centric local service.”
That doesn’t necessarily equate to local involvement in the community from the top down, of course, and this is something that the big boxes will never be able to rectify. Also, even a ‘local’ Walmart or Office Depot will presumably take a considerable percentage of its profit back to Bentonville and Boca Raton rather than investing it locally.
Lack of support
Manufacturers too have come under criticism from independent dealers that need support from their vendor partners at local level.
Says TriMega’s Dick Dodge: “If you look at the manufacturers’ websites and their ‘where to buy’ options, you’ll almost always find the big three right at the top of the list. Why, if you’re a manufacturer, would you send people to one of the big boxes knowing that your product may be on the shelf, but right next to it is a private label product that’s selling for 10% less? You’re far more likely to get traction sending that customer to an independent dealer who is far more likely to be selling the branded product.”
True though that might be, none of the manufacturers OPI spoke to regarded ‘buy local’ as important enough to change their efforts in any meaningful way. When asked, Kevin Schoen, President of manufacturing rep firm Schoen and Associates, said: “OfficeMax, Staples and Depot all have a presence here in our market, so we go out into the field with their salesmen and we go out with the independent dealer salesmen – a customer is a customer. We get no direction from the manufacturers to do anything local; we get direction about getting share of the market; it’s a numbers thing from the manufacturer to us.”
Dodge doesn’t buy into the volume issue, however: “The big boxes may have the larger volume but they would much rather sell their private label product. And you have to ask the manufacturers: where does your growth come from? Does it come from those guys or does it come from the independent channel? Most will tell you that they are growing with the independents and either staying even or declining with the big three.”
Vendors are all quick to point out the importance of the independent channel, but none OPI spoke to singled out ‘buy local’ as vital. What they did say, however, is that ‘made in’ is enjoying a renaissance, with local manufacturing becoming more important to customers. Environmental concerns as well as quality issues are at the top of the agenda for customers, while for the vendors lower logistics costs and the ability to respond quickly to consumer demands are key.
Over time, both ‘buy local’ and ‘made in’ are likely to become more important customer purchasing criteria, but neither initiative has reached its full potential yet.
What the manufacturers say…
“‘Made in Germany’ is regarded by our customers and particularly by the end-consumer as a real differentiating factor when compared to other product offers. This outstanding product quality also warrants the higher price tag that manufacturers can demand compared to products that come from Asia”– Christian Schneider, Managing Director, Schneider Pen
“‘Buy local’ doesn’t mean anything, it’s an irrelevance I think. But ‘Made in…’ may become more important to the market I believe. We produce locally to be close to our customers, for logistics reasons and to be able to give the best service with the shortest lead time possible to our customers ” – Eric Joan, CEO, Hamelin Group
“All four of our production facilities are located in Germany. As a result of these bundled resources in Germany combined with our international subsidiaries and distribution partners we are able to meet customer demands very quickly and effectively. Even in these times of increasing globalisation ‘Made in Germany’ products still enjoy an outstanding reputation”– Stefanie Keller, PR & Market Research, HSM
“I want consumers to get our product in any way they want it. I can’t force a ‘buy local’ or ‘buy from big box’ attitude because if I did I would either be aggravating one or the other. It’s the customers’ choice and we don’t distinguish between them”– Kevin Schoen, President
Schoen and Associates
“For end-consumers it’s important that the product they want is available exactly when they are ready to purchase. If it’s not available at your local stationer or dealer at that point, they will buy elsewhere – from the globals or the internet” – Rolf Bonsack, Managing Director, helit
“Our manufacturing facilities are in Austria and the Czech Republic. The short distances between our R&D, production and sales & marketing locations, as well as senior management, are one of the key factors for the success of COLOP”– Gerald Binder, Marketing Manager, COLOP
Groupon – OP opportunity or rip-off?
Over the past three years Groupon – and its thousands of clones – has become synonymous with incredibly good-value consumer deals. Groupon has taken the old-fashioned coupon cutting, catapulted it into the internet age and turned it into an immensely profitable business.
In many instances, Groupon-type companies promote local businesses, ranging from restaurants over petrol stations to health centres and tyre companies. Groupon is not by default a B2C entity, but that’s where it’s at its most potent. Does it drive traffic to local businesses? No doubt about that. Does it foster longstanding customer relationships and result in enough repeat business to offset the substantial cut that participating companies have to endure both at the hands of Groupon and the heavily discounted product they’re selling? The jury is still very much out there, certainly from the perspective of the office products industry where, in many product categories, margins are already cut-throat enough without the added commission and discounting.
None of the independent dealers and retailers that OPI spoke to rated Groupon-type marketing as a long-term viable opportunity for their business (yet). Stefano di Veroli, CEO of Italy’s gift and stationery retail chain C’ART, is sceptical about Groupon’s suitability for the OP market though he’s still exploring possibilities with the company that is hugely successful in the Italian market and growing fast. “We are in contact with Groupon and are discussing some ideas with them, but we haven’t used them yet because they want too much money. They ask for 50% of our margin for themselves and they also want a high selling price from which to take that substantial cut, higher than what we would typically sell for. Groupon in our opinion is very useful if you want to show a new restaurant or a new hotel, as they are very good at advertising a product, but if you’re hoping to make money selling products it is very hard to have any margin left for yourself.”
Wayne Gonzalez, President of Gonzalez Office Products in Austin, Texas, is equally unconvinced: “Our concern with a Groupon-type programme is: how many products do we stock, do we need wholesale support? We basically don’t know how to support the programme if it goes well. We only have one shot as an independent to make a customer’s buying experience awesome. If it’s not, we can lose that customer back to the big boxes.”
Perhaps not surprisingly given their bigger budgets and ability to absorb losses, it’s the big boxes that view the Groupon-style of marketing as a viable opportunity to drive traffic to their stores.
Staples Business Depot in Canada has for a couple of years trialled this kind of local marketing, most recently last autumn when it partnered with buytopia.ca and offered heavily discounted voucher promotions in its Vancouver, Edmonton and Calgary stores.
In Europe, two of the company’s most retail-focused markets – Portugal and Germany – have also dabbled in daily bulk-buying activities, with technology products in Portugal and the copy and print category in Germany being the targeted product segments.
Peter Howard, SVP & Head of Staples Online and Marketing Europe, says: “Driving traffic to our stores is very important to us and that’s where these Groupon-type initiatives are most applicable. We are interested in store traffic, in getting people through the door so that they can see our other products and hopefully become regular customers. For both our retail and delivery business, meanwhile, we’re looking for regular customers that we can have a relationship with, that value us for our service level, our customer care and our assortment. Groupon-type daily deals don’t typically generate relationships, they’re about quick sales. They can be a great marketing vehicle for quick sales, but we still have to work for the relationships.”
What the papers say…
There’s a host of surveys and analytical papers out there, all keen to portray a rosy ‘buy local’ picture. Big boxes of any kind, however ‘local’ they might feel in any given community, are generally speaking not part of that picture (though they no doubt have something to say about their local community involvement). Two surveys in particular grabbed OPI’s attention.
At the beginning of this year, the Institute for Local Self-Reliance, based in Minneapolis, USA, in partnership with several business associations including TriMega Purchasing Association, conducted its fourth annual survey that looked at the importance of ‘buy local’ campaigns, both from a customer as well as an independent business point of view. Over 1,700 locally-owned businesses including retailers, manufacturers and wholesalers from 49 states took part in the eight-day survey. Here are some of the key findings:
- A larger share (61%) of survey respondents reported revenue growth in 2011 compared to last year’s survey, when only 54% of businesses reported an increase for 2010
- Independent retailers experienced stronger holiday sales than the industry average. While overall holiday sales were up 4.1% in 2011, independent retailers reported that their holiday sales increased an average of 6.7%
- More than three-quarters of businesses surveyed said that public awareness of the benefits of supporting locally-owned businesses had increased in the last year
- Independent businesses in communities with an active ‘buy local’ campaign operated by a local business organisation reported revenue growth of 7.2% in 2011, compared to 2.6% for those in areas without such an initiative (see chart below)
- According to 85% of respondents, the fact that their business is locally-owned and independent matters to some or most of their customers.
The survey further concluded that more than three-quarters of independent businesses in cities with an active ‘buy local’ initiative reported that the initiative had had a positive impact on their business, with more than half of those describing the degree of impact as “moderate” or “significant”. Other impacts experienced as a result of the initiative were:
- 42% said the campaign had improved the loyalty of their existing customers
- 41% said it had brought new customers to their businesses
- 62% said it had increased local media coverage of independent businesses
- 42% said it had led to more collaboration, purchasing and mutual support among local businesses.
United Stationers’ Research & Analytics Group, meanwhile, also looked at ‘buy local’ from a consumer perspective in its White Paper: Advantages of Buy Local. Its research results took into account the opinions of 12,500 consumers in the overall context of office supplies, technology, furniture, janitorial and industrial product purchasing. The results make for interesting reading:
63% of purchasers who use local suppliers cite keeping money in the community as the key advantage to buying locally.
- Smaller businesses (1-50 employees) rate this attribute highest, the sweet-spot of buying locally so to speak. Local businesses tend to be small, so keeping money in the community appears to be a common bond
- This attribute is also important in prospecting: 61% of those not purchasing locally consider keeping money in the community as the key advantage of buying locally.
51% of purchasers who use local suppliers indicate that an advantage of doing so is that local suppliers understand their business.
- With familiarity that stems from proximity and fellow members of the same geographic economy, there is a shared understanding that does not need to be explained to non-local providers.
50% of local purchasers regard “having sales reps I know” as a key advantage to buying locally.
- Knowing a sales rep by name adds a layer of trust and is convenient for reordering and service.
Small as well as large businesses value local resellers for fast deliveries.
- Larger companies may value relationships slightly less, but 40% of firms with over 250 employees highly value fast delivery.
Given these statistics, why doesn’t everybody buy local? Lack of awareness, says United. “As much as 48% of purchasers are not aware of a local supplier. In a market where product promotions are a key advertising vehicle, 20% of purchasers had not received a promotional offer from a local supplier.
Price and selection are other frequent reasons cited for not going down the local route. However, adds United, this is more likely based on assumption than experience. Customers of local suppliers rate selection, ordering and pricing twice as favourably as customers who do not shop locally.