The Big Interview in December/January issue of OPI magazine features Dirk Collin, Managing Director of Office Depot’s Europe and Middle East operations.
In his first interview with OPI, Collin provides an overview of Depot’s EMEA business and an in-depth look at the company’s key markets and growth strategies, as well as his thoughts on the well-documented issues with contract pricing in the US and recent leadership changes.
Below – and exclusively for Executive Briefing subscribers – are extracts from the full interview that will not be published in the print version.
OPI: What about the share in terms of the different channels? You have your own retail operations inFrance,HungaryandSweden, and then the other markets are just direct and contract?
Dirk Collin: The share is about 15 percent retail and the rest is split evenly between direct and contract. One of our key strategic changes that we are making is to move away from a channel-centric to a customer centric-approach with a service led proposition.
When I joined the company five years ago I saw an enthusiastic team – that was great. But there was too much of a channel focus. We had a VP for Direct Business, a VP for this and a VP for that. For me, that was wrong.
So I would now say we have a customer-centric organisation where we have moved to bringing the marketing and merchandising teams together. They’re looking at things from a customer segment and a touch-point point of view, but they are all managed in one organisation.
Now, that may sound easy, but let me give you one example. When you are organised with a channel focus, you buy your products with a channel focus. Then your warehouses have one product stored in different ways, and that’s not efficient.
So one of the consequences of being customer-centric is to make sure you also achieve efficiencies in your products and have your product only stored once. That sounds self-evident, I know, but it wasn’t like that.
That has led to a lot of changes in our distribution centres; we went from 36 to 19. That means more efficiency.
OPI: Turning back to theUKandIreland. There has recently been a consolidation of some call centres…
DC: If we go back to 2007, an important thing was for us to have a road map on how to achieve our ideal organisational structure. So, independent of whether there was an economical crisis or whatever, we knew exactly where we were going. The recent consolidation is part of that road map.
And let me add that it’s important that each region gets that ideal model – it’s not done on a pan-European basis. It’s market driven and it’s market specific. This is not so unique to Office Depot, although I am of the opinion one of the differences is that it’s more planned in our organisation with a medium and long-term point of view.
OPI: You opened your shared service centre (SSC) inRomaniaabout three years ago. How did that come about?
DC: I would say that it was foremost a question of efficiency. If you look at the pre-Romania situation, the transactional business – that means the accounts payable and accounts receivable – was quite routine. If you looked at this in our key markets, a lot of people were doing exactly the same job. So when we started looking at it, the main driver was how to get efficiencies. For me the first thing was to bring everybody together in one location.
OPI: Was it always the intention to have the SSC inEurope, or did you look elsewhere?
DC: Well, I did look outside of Europe, to be honest. A lot of people go to India, that’s well known. We could have gone to cheaper places, but as I said, purely cost was not the key driver; that would have been a short-term view.
I believe, for this type of activity, you also need to contact customers and I wanted to be in the market where our customers are. And in terms of management, it’s only a couple of hours flight from here. Somewhere like India would have been very impractical.
OPI: I saw a press release that mentioned looking at possibly adding some merchandising functions…
DC: All I would say on that is that it was perhaps a little bit ambitious from the local team there. I’m not ruling anything out, but there are no specific plans at this moment to lift and drop some of those processes over there. But we still have some opportunities there, that’s for sure.
OPI: In theNetherlandsyou’ve got a successful coffee solutions business. Is that something you could expand, for example?
DC: As an example, yes. But I don’t want to pin it down to just coffee or whatever solution. Again, a lot of opportunities are there that we can offer to the customer. It’s not that I’m missing all the opportunities. I want to select those that are most relevant for the customer tomorrow and the day after. Then we will see how we evolve. We are flexible enough to look at that, adapt our organisation and jump on it when it’s needed.
OPI: What about Tech Depot?
DC: Well, today we have Tech Depot selling technology online in some of our markets, and I would like to extend that. We see that customers are buying, they’re loyal and I am convinced that this is something that will definitely see some more exposure in the future.
OPI: What scope have you got to add a service component to that?
DC: Well, service in the sense that when somebody buys a laptop, especially in the SMB market, there is a stronger need for IT support than I would say compared to larger organisations where they have an IT department. So there is realistic potential with that.
We see that more than 90 percent of our customers are looking for a service-led supplier rather than one led on price alone. Of course, there are still price seekers and there will continue to be price seekers, but that’s a very minor part of the total customer base. So, for the majority of our customer base we said, "OK, what type of service is this customer looking for-
OPI: What about green solutions?
DC: First and foremost, our sustainable business model is part of our day-to-day operations and our strategic intentions. One thing we can do is calculate the carbon footprint when we deliver to a customer using software. Our sales rep sits down with the customer and using the customer’s own data can immediately see where we can make savings on the footprint, and that’s something which is appreciated.
Something else we’re looking at is transportation, which is the main contributor to the carbon footprint in our industry. For example, with deliveries we receive from vendors and our own deliveries to customers, the truck is empty on the return journey; so, we started to investigate new ways to implement reverse logistics or closed loop solutions.
OPI: There’s still a lot of focus on green products.
DC: That’s true and one thing that frustrates me a lot in this industry is that there is no standard. Everybody can call a product ‘green’, can put some green flags next to a product, but what does that really mean?
In order to call a product green we really go into the sourcing of that product, look upstream to the lowest denominator and try to work from there.
It’s not only about using recycled materials, but it’s also how you manufacture those products and also social aspects. I see a need in the industry to come up with a defining set of standards. What is a green product? What is a green service?
OPI: What is your view on the competitive situation inEurope?
DC: Competition is tough, but if you take a little step back and look at the key players that we all know, altogether we have a relatively small market share. So the market still is very fragmented.
We have a tendency to only look at who are the top two or three competitors and, for me, competition is much broader. I always say competition is only one click away. In other words, in today’s world, we see a lot of companies coming into this market. Why? Because for me the barriers to entry are extremely low.
OPI: What impact did the Staples/Corporate Express acquisition have on you?
DC: I haven’t seen any impact at all for our business.
OPI: You don’t think you’ve got a stronger competitor than you had before?
DC: Honestly, I haven’t seen any impact. I guess if you look at that market, which is the major accounts and key accounts, I recognise the competition is quite clear.
OPI: Do you think there is scope for more consolidation inEurope?
DC: Because of the fragmentation of the market, by definition there will be more consolidation, so that is definitely going to happen. To what scale, it’s difficult to say, but just looking at it economically speaking, I think you will see more consolidation.