Early in 2020, OPI and specialist office products market research firm Martin Wilde Associates (MWA) published The View From The Top: The State Of The OP Industry 2019-20. This annual survey, in its seventh edition this year, serves as an authoritative sourcebook for our sector.
There was plenty to report on and digest from 2019 and the start of 2020, all of which is covered in the original study. But then COVID-19 happened, the world as we knew it turned upside down and a completely different dimension was added to previously made forecasts and predictions. An update was needed to assess the impact of the COVID-19 pandemic on the business supplies industry.
As such, OPI and MWA took the opportunity to revisit the senior industry executives in Australia, Benelux, Canada, France, Germany, the UK and the USA who had originally participated in the State Of The OP Industry survey. What are these executives’ thoughts now as regards core OP market value, their sales and margins, as well as the growth or decline of key product categories and distribution channels?
The latest research has unearthed some fascinating new findings. Across the seven geographies, the expected shrinkage in demand for core OP in 2020 has accelerated considerably, for instance, with 94% of all respondents expecting this, compared to 85% earlier in the year. The anticipated downward trend is now also significantly steeper.
While respondents’ overall revenues are still expected to outperform the core OP market in 2020, most currently believe that these will be lower than those of 2019: only 37% expect any increase in turnover in 2020, compared to 73% earlier in the year. In addition, distributors are slightly less positive about gross margin trends: while a few are expecting their margins to increase in 2020, the shift towards predicting lower yields this year is more pronounced.
The research update has also found dramatic changes in forecast product trends in 2020, all caused by the COVID-19 crisis. Cleaning/janitorial supplies, PPE and technology products now head the list of categories that are most widely expected to grow in the surveyed countries, displacing catering/breakroom supplies and office furniture. The previous ascendency of these latter segments has been completely thrown into reverse.
As regards traditional stationery, the pandemic has done little to arrest the long-standing downward movement – this continues to be the category by far the most likely to diminish this year. Meanwhile, other key core OP segments such as cut office paper and printer/IT consumables appear to be rallying slightly, not least because of the move to homeworking.
Indeed, the workplace exodus is clearly affecting trends across the distribution channels. Amazon/Amazon Business and – to a lesser extent – other internet-only OP resellers continue to be the most widely expected to take share in 2020, with eBay also appearing as an upcoming channel in many countries for the very first time.
Unsurprisingly, COVID has hugely benefitted the facilities supplies specialists, while operators such as paper merchants and furniture distributors are forecast to be struggling this year.