Charlie Cleary, TriMega

Charlie Cleary, President of US dealer group TriMega, on the recent merger with INTEC and a lookback at 2011.

OPI spoke to Charlie Cleary, President of US dealer group TriMega, on the recent merger with INTEC and on his group’s 2011 performance.
 
INTEC merger
 
There was some positive news from TriMega last week with the announcement that technology dealer group INTEC was merging into the office supplies group.
 
INTEC brings a further 25 members into the TriMega fold and $300 million in aggregate sales volume.
 
Cleary said the merger cements the relationship that the two groups have had over the last ten years with their TriTEC strategic alliance, but he pointed to a number of additional benefits arising from the new arrangement.
 
These include:
 

  • The ability of TriMega to negotiate on behalf of INTEC’s $300 million of collaborative volume, something that hadn’t been available previously
  • Synergies and efficiencies – including reduced staffing costs – with INTEC being run from TriMega’s headquarters in Rosemont and the closing of its office in Indianapolis which is expected to be completed during the first quarter this year
  • The addition of INTEC’s expertise in the managed print services (MPS) field and the possibility of TriMega introducing its own MPS programme at some stage. Cleary said that there were no preconceived plans on any TriMega MPS programme, but it’s something they are going to be looking at and evaluating
  • Opportunities for the Marathon and Business Source brands. INTEC members will continue to be offered their own Marathon private label brand and could benefit some existing TriMega members. Likewise, the Business Source brand will now be available to INTEC members.

 
INTEC’s members are technology-oriented dealers and sell office products to varying degrees. However, Cleary said OP was a category that they had expanded over the last ten years or so and there was now an opportunity for further expansion.
 
INTEC dealers will have similar membership terms to other TriMega members but will remain as a separate sub-group within the whole group with their own brand and marketing support.
 
Cleary confirmed that INTEC’s decision to merge with TriMega had been prompted by the decision of long-standing President and CEO Dennis Hardy to retire, but added it was not a question of INTEC no longer being sustainable as a standalone group. Rather, following months of research and discussions with TriMega, it became apparent that the synergies and collective negotiating volume of a merger were in the best interests of INTEC’s members.
 
TriMega’s 2011 performance
 
Cleary provided some more colour on the points that TriMega brought up in its positive look back on 2011.
 
Membership
 
In terms of membership, the INTEC merger brings the total number in TriMega to over 600. Excluding the impact of INTEC, Cleary confirmed that the net change in 2011 was +30. This included 50 dealers joining the group (including ten that rejoined in 2011 after having left in 2010).
 
Of the 20 dealers which left TriMega, Cleary said that the majority of these were due to dealer consolidations or being acquired by WB Mason.
 
About three dealers closed down during the period and the TriMega President referred to only one large dealer – San Francisco’s AAA – which left to join the Pinnacle Affiliates group.
 
Public sector and national accounts business
 
Cleary said it was group policy not to disclose sales figures from the TCPN and FSSI public sector agreements which were signed during 2011, nor from Point Nationwide group contracts.
 
FSSI was performing “significantly” ahead of expectations and TCPN was enjoying “very nice growth”, he stated, adding that he expected both programmes to show “significant growth” in 2012.
 
Regarding the Point Nationwide national accounts programme, Cleary said that “hundreds” of organisations who were members of business associations were purchasing under the programme and that 20 large corporate accounts had also been brought on board in 2011.
 
SmartXpress
 
SmartXpress was acquired by TriMega to tap into the internet ‘browser’ business and to attract consumer and very small business customers.
 
Again, Cleary said that TriMega was not publicly disclosing sales numbers from SmartXpress, but that B2C sales were “on track” with the business plan.
 
Search engine optimisation work had been completed, he confirmed, and would lead to more sales to consumers and businesses with fewer than five employees.
 
What had been working well, according to Cleary, was the qualified lead generation programme that was part of the SmartXpress package. This provides participating dealers with new customer leads for small businesses with five or more office workers. 120 TriMega members have signed up to this programme and Cleary described the results as “exciting”.
 
Marketing programmes
 
Cleary referred to three initiatives from 2011.
 
The FlipShop online marketing flyers have been enhanced to enable customers to add products to their baskets directly from the flyers. This has required integration with the systems of leading e-commerce providers such as ECi, MBS Dev, Red Cheetah and BMI. Cleary said that “signification traction” had been gained by adding this new functionality.
 
With the tendency for people to delete incoming emails, there is still a place for snail mail in marketing programmes, stated Cleary. TriMega’s Power Postcard programme now allows for cards that are customised with the customer’s name and is available for a minimum quantity of just 25.
 
Cleary also said that the Paper3 programme in partnership with SP Richards and Georgia Pacific – which enables dealers to consolidate paper and jan/san shipments – has been going well, especially for dealers that compete in the jan/san category.
 
Outlook
 
The TriMega President said he was “cautiously optimistic” about the coming year, forecasting industry-wide top-line growth of 2-3% rather than more robust growth.
 
He added that he didn’t expect the fact that 2012 is a US election year to have much of a bearing on the economy. Whereas in previous years some kind of economy-friendly fiscal incentive might have been implemented by an incumbent President seeking re-election, it would appear that those cards have already been played trying to kick-start the economy of the last few years.