For three days at the beginning of October, the eyes of the sporting world were turned on south Wales as Europe and the US went head to head for golf’s hotly-contested Ryder Cup. It’s fitting, then, that this month’s dealer profile visits COS, the office products supplier to the event’s Celtic Manor venue
The 2010 Ryder Cup has certainly thrust South Wales into the media spotlight but, as we saw with this year’s World Cup in South Africa, having a major sporting event on your doorstep isn’t always good for business – in fact, the opposite is usually true, and it’s no exception for highly-regarded Cardiff-based dealer COS (Complete Office Solutions).
COS Managing Director – Operations, David Emery is expecting a small dip in sales in the days leading up to the tournament and as it gets under way as parents take time off work to look after their children (schools are shutting for one day) and deliveries are hit by the predicted heavy traffic.
"The event will be great for raising the profile of Newport and Wales in general," says Emery, "but I don’t know what the impact is going to be on the local economy long term."
COS has been supplying the Ryder Cup’s Celtic Manor venue with office products for a number of years and has even supported its Wales Open golf tournament in the past, but Emery says that as the Ryder Cup approached, costs to become involved escalated and the company decided against any sponsorship or partner involvement.
If the Ryder Cup hasn’t been of a particular benefit to COS, other sporting events which take place in Cardiff are used to their full advantage as part of the company’s extensive networking activities. For example, COS has agreements with other like-minded local businesses for sharing hospitality suites at rugby, football and cricket events in the capital.
"This means that we not only get to entertain our clients and prospects, but we’re also guaranteed to be introduced to additional prospects as well, so it just helps us meet more people and this works for us really well," explains Emery.
Networking and company profile are pillars of COS’ growth strategy. As well as hospitality, the company makes extensive use of PR and is heavily involved in the local business community.
Emery says that COS is probably atypical for a small dealer in the amount of profile raising activity that it actually does.
"We think you can’t meet enough people in business," he states. "I think a lot of dealers neglect their profile a bit and profile is equally as important as some of the other aspects of the business."
A lot of the PR is carried out by David’s brother, James Emery, who is also VP of the South Wales Chamber of Commerce. A third brother, Matthew, completes the triumvirate that has run COS since 2008, succeeding their father, Peter Emery, who founded the business in 1968 and who remains on the board today as Chairman.
Based in the town of Barry, near Cardiff, COS began life as Celtic Office Supplies, before becoming COS Group in 1997 after the acquisition of Cardiff Office Supplies. A further re-branding took place at the end of 2008 to differentiate and market the company’s divisions, COS Office, COS Print and COS Interiors.
David Emery says the re-branding is an extension of the single source model that the company had led with for a number of years, but now allows COS to lead as a specialist in all three areas.
"It’s about being a specialist in an area so that you’re not seen to be a jack of all trades. You are a genuine specialist in what you do, but then having that diverse portfolio to maximise the strength of the relationships that you develop. So if you’re an excellent service provider in print, then it just opens the door to being an excellent service provider in office or in interiors."
Completing the COS portfolio is a promotional products division called Pitch Promotions and, interestingly, a relatively new business called Natural Power Wales that designs, supplies and installs renewable energy systems, such as solar thermal panels, geo-thermal heating and rainwater harvesting.
The idea for Natural Power came after the Interiors division completed a refurbishment job that involved installing heat exchangers and making good use of energy and heat.
Realising the potential – both with businesses and households – for these types of installations, they set up the new business, which is now a key component in the group’s target of achieving £10 million ($16 million) in annual sales.
COS is currently turning over around £6 million annually and Emery says that so far in 2010 sales are up by around 15 percent, due in part to recruitment on the sales side, but also to a pickup in clients’ spending.
South Wales was hit hard during the recession and some of COS’ clients cut staff numbers dramatically. Jobs are coming back, but these are also being coupled with other losses.
"We’re finding that we didn’t lose many clients through the recession," he notes. "Throughout the recession we worked very hard to proactively help our clients save money and protect their businesses. This has now given us better cross sell opportunities in other areas such as print and interiors."
Emery also states that he has seen a lot of trading down to value and private labels brands in the last couple of years.
"We have seen a lot of that, and clients who we never thought would take that kind of product are now taking it as a preference. The other big shift in the market is the move to compatible and remanufactured cartridges. Again, clients who I never thought would have a reman are now taking that over and above the manufacturer OEM product. And I think that this is a trend that could stick – people have seen the savings that are possible there and some of those are very hard to walk away from."
There has also been an increase in sales of the initiative brand, the private label range that COS offers through its membership of dealer group Integra.
"It’s a very important brand for us," says Emery. "It helps differentiate us and we think it also helps us compete. It’s a good quality product at a good price that helps us win and retain business."
Emery, himself, is a non-executive member of Integra’s board and a keen supporter of the dealer group concept.
"Personally speaking, I don’t think there’s ever been a better time to be a member of a dealer group," he states.
"The economy is weak, the market is volatile, especially in terms of paper and the margin pressure we’re all under in other areas. The work that Integra and other dealer groups do to help us compete with the large organisations, help us buy better, keep us informed, help us streamline and give us access to appropriate technology solutions, I don’t think it’s ever more relevant than now."
The recession also coincided with COS overhauling its back-office systems late in 2008, using Blue Sky’s Horizon package.
"I think people are the most important thing in the business, but the way we use technology is vital as well," says Emery.
"I don’t think it’s necessarily ever a good time to change your back office system, but we’re very pleased to have done it because we feel we’re very much smarter than we were two or three years ago in terms of knowing what’s happening with our business minute by minute."
In terms of competition, COS has leading UK independent dealer SET as a neighbour. Emery describes a healthy rivalry and mutual respect that has developed between the two firms over the 35 years they have been competing against each other.
The globals are also strong in south Wales, especially in the public sector, which employs 30 percent of the workforce in the region. There has been a bit of controversy over the years about awarding public sector business to non Welsh-based suppliers, despite a strong buy local message.
"The Welsh private sector is better at supporting Welsh business than the public sector," Emery claims. "In my view the private sector understands better the advantages that a responsive and reliable local supplier brings to their business and how that’s more important than just bottom line price."
Emery admits that the situation has improved recently after Value Wales, the purchasing arm of the Welsh Assembly, included SET in its latest framework agreement along with Lyreco, Office Depot and Banner, even though he felt the auction process itself – an e-auction – was a bit of "a gamble" and could have led to "unsustainable" business decisions being made.
COS currently has very little public sector business, a situation that David Emery says does not keep him awake at night with widespread spending cuts imminent. "I’m glad that I haven’t got our business built around a very large public sector share. That being said, when the framework comes round again, we certainly have a hope of being successful and winning a share of it."
In the meantime, Emery says that COS is looking at growing all areas of its business, even declining sectors such as print.
He also sees more potential for Facilities Management and verticals such as the education market.
"Our largest office products client spends 50 percent of its turnover on FM and it shouldn’t be the exception. I think our channel needs to get an awful lot better at FM, and I include the dealer groups and the wholesalers in that. I think we have a phenomenal infrastructure for delivering these products which is second to none, and I think that, as yet, we haven’t really seen the benefit.
"So I would like to have the right product mix and I’d certainly like to have the right pricing in place for us to really exploit those opportunities – I don’t think we’re there yet."
Along the same lines, he argues that there should be a better offering to the education sector. "We have an infrastructure that can deliver those products phenomenally well and I think we should make better use of it.
"In Wales we have an online portal for education for sourcing products and we’re a part of that. It works very well; we have orders from schools in north Wales where we’ve obviously never knocked on their door. I think if we had more appropriate products to sell to those organisations we would do more business."