Last year was yet another momentous year of change, upheaval and a fair few surprises in the global business products industry. Some of the most notable stories that unsettled our sector in Europe and the US in 2018 included:
- Staples Inc owners Sycamore Partners bidding for and buying Essendant
- Office Depot and Staples Inc both acquiring a number of independent dealers in the US
- European business products wholesaler ADVEO filing for voluntary insolvency proceedings
- Amazon Business launching in France, Italy and Spain
During such periods of industry convulsion, it is vital that senior executives have a firm perspective on what is happening in the market. What have been the effects of these and other changes? Where is the market going in terms of product demand and distribution? What are the underlying trends at work in the industry?
It is precisely these kinds of questions that the sixth edition of the annual research study, The View from the Top: The State of the OP Industry 2018-19 (SOTI), aims to answer. This authoritative sourcebook for the OP industry, researched and published by Martin Wilde Associates (MWA) and OPI respectively, is based on the results of 55 in-depth telephone and online interviews with senior executives in Australia, Benelux, Canada, France, Germany, the UK and the US.
Overall, the study unearthed some fascinating findings across these seven markets:
The rate of decline in core OP demand may now be deepening slightly.
As many as 82% of all respondents reported a core OP market decline in 2018, compared to only 68% in 2017 and 2016.
The full SOTI report gives the reasons for the decline in each country, but also shows that there are some countries where respondents are still reporting some value growth in demand for core OP. It also shows how respondents believe this core OP demand will change in 2019.
Survey respondents’ overall sales continue to outperform the core OP market.
In total, 67% of respondents reported growth in their sales in 2018, compared to only 9% reporting growth in core OP market values in that year.
The full report explains how respondents in each country achieved this growth in 2018 and forecasts their revenue expectations for 2019.
Distributor respondents were more likely to report that margins were unchanged in 2018 (42%) as opposed to increasing (31%) or decreasing (28%).
The full report details the average gross margins achieved and expected by respondents in each country in 2018 and 2019, and highlights the reasons for any margin changes.
The categories most widely reported to be growing in 2018 were cleaning/janitorial supplies, catering/breakroom supplies and office furniture.
The full report shows that, whereas ergonomic and well-being products were also often widely mentioned as growing in 2017, in 2018 it was typically technology products and – because of the European General Data Protection Regulation legislation – shredders and shredding services. It also forecasts the key product growth categories for each country in 2019.
The product categories that are most widely reported to be declining in 2018 were traditional stationery products, printer/IT consumables and cut office paper.
The full report shows that there are some national markets where other products were among the top categories reported to be declining in 2018. It also forecasts the key product decline categories for each country in 2019.
The channels that are most widely reported to be taking share in 2018 were Amazon/Amazon Business, other internet-only OP resellers and large independent dealers.
The full report shows how – in some national markets – other channels have also enjoyed a very positive 2018. It also forecasts the key growth channels for each country in 2019.
The channels that are most widely reported to be losing share in 2018 were small independent dealers, national contract stationers and OP wholesalers.
The full report shows that there are some national markets where other channels are among the top three reported to be in decline in 2018. In addition, it forecasts the key decline channels by country this year.
Adjacent categories are on the rise.
The average share of distributor sales accounted for by cleaning/janitorial supplies, catering/breakroom products, workwear/PPE/signage products, business gifts/promotional products, well-being/ergonomic products and MPS are all projected to increase in 2019.
Private label growth.
The average share of sales accounted for by private label and online sales is expected to grow in 2019.
M&A activity continues.
The majority of respondents are looking to acquire another business in 2019. The full report indicates the types of company that are being targeted for acquisition and shows that only just over half of potential acquirers are looking to buy an OP specialist.
The report provides answers to several other key questions on the state of the market:
- What was the value of the core OP market in 2018 and what will it be worth in 2019?
- What was the value of the addressable facilities supplies market – and its key constituent categories – in 2018?
- Which product categories are actively being developed by respondents in 2019?
- What share of the core OP market does Amazon/Amazon Business now have in each country, and which types of customer is it being most successful in capturing?
- What has been the reaction in Australia to the entry of Amazon?
- What are the recent and future results of the acquisition of Essendant?
- What are opinions in Europe about the future survival of ADVEO, and how will the wholesale landscape look if the company does not survive?
The View from the Top: The State of the OP Industry 2018-19 is available now for £850 (approx. $1,100). Please visit www.opi.net/research/soti2019 to order your copy.