It’s all change again at South African reseller Waltons, part of the Office and Print division of the country’s Bidvest conglomerate. And the man tasked with the job is Trevor Girnun, Managing Director of Waltons since the middle of last year.
Having had very long-serving management members for many years – John Farrell epitomised Waltons for several decades – the past few years have seen a much higher staff turnaround at the top, all eager to eradicate legacy systems, keep up with the fast pace of today’s business supplies sector, and maintain and improve profitability.
How to achieve all of the above is clearly very much in the eye of the beholder, as OPI’s Heike Dieckmann found out when she recently caught up with Girnun.
OPI: Let’s start with a bit of background as most of our readers won’t be familiar with you and you’ve been at Waltons for less than a year.
Trevor Girnun: Sure. I’ve actually been at Bidvest my whole working career. I started in 1991 at a Bidvest company called Buffalo Tapes which is part of its industrial division. I started in a warehouse picking goods and managed to work my way up that organisation to eventually become Managing Director. I left Buffalo Tapes in 2010 and moved to stationery manufacturer/wholesaler Silveray as Managing Director.
My role at Silveray was to try and reinvigorate the whole business: look at the processes, systems, disciplines and challenge everything. It was an oldish business and there was a lot of legacy stuff that no longer worked. There was a lot to do, but we managed to pretty much give it a complete overhaul.
I believe the business today is in really good shape, with sounds systems, processes and disciplines in place and a young, exciting management team that is pushing boundaries.
OPI: Is that success the reason you were drafted in to lead Waltons?
TG: Well, I guess if I had done a shocking job they wouldn’t have asked me.
But before we talk about Waltons, I want to stress that what we achieved at Silveray wasn’t down to me, but a whole team of individuals, so the credit should definitely not come to me.
OPI: OK. So what’s your remit at Waltons? You’ve been in the job for just under a year now.
TG: It’s more of the same I think, but at Waltons it’s a bit more complicated, because there are a lot of working parts to it, more locations, a lot of outdated processes, etc.
My first task was to develop a plan and identify what fundamentally needs to change in the organisation, so in the first few months I spent a lot of time learning, understanding and developing that plan in conjunction with my superior at Bidvest Office and Print.
One thing that is hugely important in my opinion is to have the right human capital on board, so we can execute the plan. We’ve worked hard on that and I’m happy that we’re starting to develop a very good team and implement certain parts of our strategy.
OPI: It seems you’re going through another full-scale Waltons overhaul. When we spoke to Dave Jenkins – your predecessor before Dave Crichton took over on an interim basis – in 2014, he was in the middle of a three-year restructuring plan. Is this still the same plan?
TG: There’s a fundamental difference in how we see the business now. It’s probably going to take us a similar amount of time to implement and be successful in the changes we’ve identified, but that’s where the similarities stop.
OPI: Why the complete change of tack?
TG: Just as an example, we don’t want to be in a business with too many layers.
We prefer flat, very simplistic structures and people who are connected to their businesses and are masters of their own jungle.
OPI: What is the overriding strategy that you’re pursuing now?
TG: One of the core fundamentals is to uncomplicate what should become quite a simple business.
Take a look at our business model: in several instances we’ve got distribution centres (DC) in relatively close proximity to little depots and our so-called combo stores. Why should we service a commercial customer by delivering product from our DC to the local depot and then to the customer? Why not do it directly? It’s a duplication of both cost and effort and needs to be reviewed.
Essentially, we want to empower the regions. We envisage a very limited head office here in Johannesburg, with only the bare essentials of what we need. Instead, we want our people in the regions to run the business as if it were their own and be rewarded on that basis as well. Decentralisation and simplicity are totally core to our strategy.
OPI: OK. Let’s have some facts and figures. Do you still have five warehouses?
TG: Yes, our main DCs are in Johannesburg, Durban, Cape Town, Port Elizabeth and Bloemfontein. In terms of the regions I just alluded to, we have the Inland region, the Cape (Eastern and Western Cape) and KwaZulu-Natal (KZN).
OPI: What about staff? How many people work for Bidvest Waltons?
TG: We currently employ about 2,000 people.
OPI: That’s fewer than in the past I believe, isn’t it?
TG: It is. Unfortunately, in any turnaround and clean-up of an organisation it’s an area you need to look at. And in legacy businesses in particular, you often find that there’s an abundance of staff in certain areas where positions are duplicated.
We are addressing that while also bearing in mind that people are very important and that we live in a country where jobs are desperately needed. But we also want to run a business on world-class fundamentals; talented people are important and we want a culture of excellence in our business, not one of mediocrity. Bringing the right calibre of people in will take us to the next level.
OPI: What about Waltons’ coverage outside South Africa – has that changed?
TG: It has. Bidvest Waltons has a substantial presence in Namibia. But a few years ago, Bidvest took all the South African affiliates in Namibia and listed them separately on the Namibian stock exchange. So while I retain a role on the board, it’s not in an executive capacity, the Namibian business doesn’t report to me and doesn’t form part of our revenues, so it’s pretty standalone in that sense.
We also have a relatively new operation in Botswana.
OPI: Zimbabwe and Zambia were also mentioned a few years ago. I’m guessing those plans have been abandoned?
TG: That’s correct, we don’t have a presence in either country.
OPI: What’s your business model in terms of commercial versus retail?
TG: We’re predominantly a commercial stationer, that is our focus, so at the moment we’re 80:20 commercial/retail. We still have a retail footprint with 34 stores, but we’re assessing that footprint in terms of which stores are profitable.
Overall, we are trying to better understand the retailing space. We believe it’s an area that we could improve on, particularly given the strong competition. Our strategy in the past has been a bit of a hotchpotch in terms of store locations, store size, etc. If we’re going to play in the retail space, we need to become hardcore retailers.
It’s a learning curve and we’re still at the beginning of where we need to be.
OPI: What about your combo stores you referred to earlier; what’s happening with them?
TG: It is our intention to review our entire supply chain as part of our overall strategy of simplification and aggressive expense management.
In line with this, combo stores that do not make sense in terms of proximity to major DCs will be reviewed. That said, combo stores in strategic lcoations will be retained.
OPI: Do you foresee a time when you don’t have a retail presence at all?
TG: I’m not sure. I don’t see our overall retail strategy changing fundamentally in the short to medium term, but who knows?
OPI: Dave Jenkins mentioned franchising stores and his plans for that three years ago. I assume that’s off the cards now?
TG: It is. We don’t believe in franchising and there is no plan.
OPI: How has your product mix evolved both on the commercial side and in retail? One-stop shop, services and solutions seem to be on everybody’s radar these days…
TG: Again, the first phase is to simplify what we have. We are in all the major key categories any office products company needs to be in and we are dabbling to a minor extent in the jan/san and breakroom sector.
But these adjacent areas are not really a major focus for us, and right now we want to do what we do extremely well rather than adding to the pile.
That said, I attended a Staples CEO alliance conference a couple of months ago and they spoke quite extensively about ‘beyond office supplies’ and I like the idea of where they’re going. But we’re not there yet – simplicity is our focus right now, as is decentralisation and all the fundamentals working well. Only when we’ve accomplished that we will decide whether we do or don’t play majorly in those other areas.
OPI: Talking about Staples – has your relationship changed as a result of Staples pulling out of pretty much all of its international markets?
TG: No, it hasn’t changed at all, because we have never dealt with the US side, but always had a relationship with Staples’ European arm, so we continue to operate with the new European owner Cerberus Capital Management.
It’s a good relationship, we converse a fair amount and from our perspective we would like to learn and that’s exactly what we’re doing from a company like Staples. We want to be a learning organisation and I don’t think there’s been enough of this attitude at Waltons in the past.
OPI: Is that broadly the extent of your relationship – learning and best practice sharing?
TG: Staples is a world leader – they’ve been doing things, moved in certain directions, seen stuff happening in their markets that are bound to happen in ours sooner or later, so I believe we’re really benefiting from the relationship.
As for servicing their customers – that’s already happening and we continue to look for further opportunities in this area.
OPI: Financials in the past few years have been far from outstanding. In Bidvest’s most recent half-year results it said that the Office and Print division had solid performances, and margins and expenses were generally well controlled. Is that true for Waltons specifically as well?
TG: I think Bidvest is very forthright in acknowledging what’s happening at Waltons within the Office and Print division. We are a work in progress and currently in a turnaround process, so I don’t think those comments speak directly to Waltons’ performance.
OPI: OK, let me phrase it this way: is Waltons a growing company?
TG: I can’t comment on specifics. What I would say is that Waltons is profitable; it’s not a loss-making company. That said, it’s by no means profitable enough because of the ineffeciencies we still have and are now addressing.
OPI: Let’s talk about your customers. Where’s the main focus?
TG: It’s a real mix – big and small corporates, SMEs and then we have the whole schooling segment which is very sizeable for us.
OPI: Does the school business fall under the commercial or the retail umbrella?
TG: It’s both and it’s quite a varied part of our business. From the commercial point of view, it’s signing up specific schools or supplying stationery suppliers in bulk with school products. Or there are back-to-school (BTS) boxes based on an individual learner basis whereby parents get a school list and tick off exactly what they want for their kids and we then pack that box and deliver it to the school.
But there’s also the retail side when parents walk into our retail stores to purchase products.
We see a significant uptick in revenues during the BTS season and it’s an important time for us. As with most areas, I believe we can do bigger and better things in this segment.
OPI: How does the school business work in South Africa? Are there regional, multiple school contracts that you bid for?
TG: No, it’s school by school. We compete with everybody else and it’s a very competitive space to be in. We offer schools what we believe is a good value proposition, but of course you win some and you lose some. The academic year in South Africa finishes in December, so from a commercial point of view we start getting very busy from October with the schools directly and with the box supplies I mentioned. The busiest time from a retail perspective is the first two or three weeks of January.
OPI: What about higher education – are you playing in that area?
TG: Not really, but maybe that’s something we need to look at more closely going forward.
OPI: What are the core challenges in the South African market overall?
TG: We are facing what the rest of the OP world is facing – a declining industry – so it’s about trying to reinvent yourself in that space, look to new areas, etc. Specifically from a South African perspective, we have the challenge of a very difficult economic climate that currently prevails. The South African economy is showing GDP growth of about 1%, so it’s a tough space to be in right now.
There’s also a lot of political uncertainty which doesn’t help. But we don’t want to get too sidetracked by the macro situation. We believe we have a plan that can be successful irrespective of what’s happening on the political or economic stage.
OPI: It must be hard to disassociate yourself from that though. With the value of the rand down significantly, it must have a substantial impact on imported goods, for example?
TG: It’s something that has to be managed at all times – these are the challenges for anybody in the South African business environment and we’ve learned to deal with them as best we can over many years.
OPI: No matter what market we’re talking about, there’s always the topic of e-commerce. What’s its relevance at Waltons?
TG: It’s important. We know the trends and where they’re going, and quite simply we have to play in that space. We are doing it already, but we could be doing it in a bigger and more efficient way. That’s on the B2B side. As regards B2C, we have a presence there too, but it’s basic and that’s perhaps where we see opportunities in the future.
We don’t have Amazon in South Africa, of course, but we have other substantial online platforms.
OPI: Overall, what does the competitive landscape look like for Waltons?
TG: It’s definitely changed from a couple of years ago. A lot of local companies are now dabbling in e-commerce, so that is putting pressure on us to up our game as well. And of course we compete with all the major retailers.They are all big in the stationery space, particularly in the BTS season when they compete very aggressively.
We also compete with the buying groups and independents within or outside those groups.
To be totally frank with you, while we respect all of our competitors, our success is going to be determined by whether we are or aren’t implementing our strategy well, not by what the competition is doing.
OPI: Let’s wrap up with that strategy. What’s the timescale on it?
TG: There’s no specific timescale, but I would say a maximum of three years. We’re working hard on our plan, getting the right people in the right places and putting great systems and disciplines in place. We’re on track, we’re happy with what we’ve done so far and where we’re going.
