The Edinburgh Festival, which is recognised as the largest cultural event in the world, is held each year in the Scottish capital during the month of August. This month’s Dealer Profile visits the city to speak to BMG Office, a well-established local dealer based just a stone’s throw from the historical centre
BMG Office is definitely what you’d call a family dealership. Only one of its staff – admittedly there are only five of them in total – does not hail from the McGinley family. Founder Charlie McGinley, although officially retired, still plays a role in the business he set up in 1979, while his three children, Patti (Office Manager), Tony (sales) and Brendan (deliveries) make up the majority of the workforce. The only non-McGinley is Ian Gray, who shares the office duties with Patti, and he’s been with the company for over 15 years.
The business began when the office supplies company that Charlie was working for in the 1970s decided to go solely down the office furniture route. Charlie felt that general office supplies was the way to go because it meant more regular contact with customers and founded BMG (Boyle McGinley) in 1978.
"My father has always been good at building relationships," says Tony McGinley, "and we still have some clients that go as far back as 1974, even before he started BMG."
The business expanded quickly in the 1980s, at one time employing around 15 staff. However Charlie, worrying that service and quality levels would not be maintained, reduced the company size to a level that he could still give those guarantees, and fulfil them.
"My father decided to downsize to a manageable size so that he could maintain a certain level of control over the business," explains Tony. "It’s been that way ever since with mostly five staff for about the last 20 years."
Not that McGinley sees this as a disadvantage as large, national competitors have sprung up.
"One thing we don’t have is pressure at the end of the month to reach a certain sales target," he points out. "What that means is that we’re going to give customers the best long term advice as opposed to trying to get one hit. I would rather give someone honest advice and walk away without a sale than give someone advice based on me having to get a sale. I think that does reflect on the fact that customers come back to us time and time again, and that’s something that my father’s always drummed into us as well from a young age."
McGinley argues that this attention to detail and really listening to customers’ needs is an area where the smaller, locally-owned businesses can still outdo the large contract resellers.
"For example," he explains, "I’ve come across many instances where people needing a new printer to print invoices have been sold an inkjet printer by one of these larger companies. Now, the customer is printing 1,000-2,000 pages a month and is going through one or two inkjet cartridges a week, as opposed to having been advised to get a mono laser printer that will print 18,000 pages with a single cartridge!"
McGinley also argues that the reps of the big players cannot compete on product knowledge.
"No disrespect to them, but they are sales people – they’re not office supplies sales people. When you’re looking at a wholesaler catalogue with about 18,000 products, 10,000 of which you probably need to have quite an in-depth knowledge of, plus products from furniture dealers and OEM printer manufacturers, the big contract guys don’t know in depth what they are talking about. They’ll be far more interested in pushing a particular product because they have a special on at the time or because their company has just bought a job lot of a particular product."
Tough being honest
Sales to the public sector in Scotland have been transformed by the award of a global Procurement Scotland contract to Lyreco in 2008. Tony McGinley says that BMG was affected to a certain extent, but not as much as some of the bigger independents and the national players who had been working with local councils.
"I know there were one or two of the independents, not just in Scotland but on the English side too, who lost a lot of money overnight. Basically there was a line drawn and that was it. There was no gradual wind down. It was just, ‘Tomorrow it starts and that’s it’."
McGinley is critical of the way the contract was awarded and points to some contract loopholes where products in the original bid have been "discontinued". He says that this is a problem, not just with Procurement Scotland, but on national accounts in general.
"It’s making promises on pricing, but having no intention of ever offering those products. That’s how it works, but it’s interesting out there. It’s tough being honest, that’s the problem. One thing we’ve always been with our customers is honest. We’ve never gone in and made a loss on anything and we never would make a loss. It’s a massive gamble."
What concerns him most, however, is the effect of such contracts on local businesses.
"If you can’t do business with your local authority or the banks, the building societies and all the big organisations who thrive on local economies; if they can’t invest back into that local economy there won’t be a local economy for them to thrive off of in five or ten years’ time."
McGinley is part of a fledgling ‘buy local’ campaign which involves a number of small local businesses. A LinkedIn group has been set up and efforts are underway to try and get the backing of local and national media.
One knock-on effect of the Procurement Scotland contract that McGinley is seeing is that companies like Office Depot are now taking a closer look at the smaller end of the market.
"One of the things I have noticed is Office Depot never ever had door-to-door guys in the Edinburgh area until recently. Instead of having a radar of not going below anyone that buys less than, say, £70,000 a year in supplies, that seems to have dropped down to a much lower level, so they’re going to start having an effect on businesses like ours."
McGinley also refers to what he calls the "ice cream wars" going on between Lyreco and Office Depot at the moment, with a number of former Lyreco reps understood to have switched to Office Depot and a price war taking place to gain business from the other.
"Long may it continue," says McGinley, "because as long as they’re fighting each other they’re taking their eye off everything else!"
In terms of other competition in the local market, McGinley says that there are not many independents left. Local players such as Lynch McQueen and Wallace Brown have been acquired (by OfficeTeam and Langstane respectively) in recent years.
"Most of the Edinburgh-based dealers are either young dealerships that have just set up over the last 5-10 years or guys who have worked with the big companies and decided they can set up on their own; there are some who have been in and around the area for maybe 20 years or so, but they’re happy just to churn away at their own customer base and they’re not looking to grow at any point. They just want to keep plugging away and stay under the radar."
BMG might fall into that last category to a certain extent, but it has had some success in recent years, with turnover almost doubling in a couple of years following the retirement of Charlie McGinley a few years ago.
However, Tony McGinley admits that BMG is still a very traditional company.
"We don’t specialise in any one particular area," he says. "We cover all your office needs, whether it be tea or coffee, a desk, a printer or just paper and pens and toner for the printer that’s on your desk."
He also says they will go out of their way to meet special client requests, mentioning one particular order for 50 bottles of single malt whisky for one client!
A Spicers dealer from the very beginning, despite "a few tough times", BMG still physically makes up all its own orders after receiving early morning pallet deliveries from the wholesaler.
"It’s still cost-effective for us to do this," argues McGinley. "It only takes us the best part of an hour in the morning. At the end of the day it’s us who are ultimately to blame if there’s a fault with picking our customers’ orders, as long as all the stuff comes in right from Spicers, which, I have to say, is almost always the case."
BMG also still has its own retail outlet attached to its office which sells a range of the most common supplies, catering largely to the local student community. McGinley admits that the shop could probably increase its turnover, but is reluctant to add extra staffing. In addition, because of the store’s location near the centre of Edinburgh, car parking is a severe problem which could hamper trade.
At the end of the day, what the company has been able to do is maintain its traditions, but also adapt with the times, where necessary. For example, BMG offers online ordering and bespoke reporting for clients, but still accepts postal orders from clients.
"We have one person we’ve been dealing with for over 30 years who still posts his order in. Unbeknown to him, his PA also emails us a copy of the order at the same time. He thinks we’re wonderful because his delivery arrives the next day. Not only that, but he thinks the Royal Mail are fantastic too because they get the order from his post box at 8pm to an office at 6am the following morning. But he’s in his 80s, and he honestly thinks that by posting the orders out they’re still sped up!"
Next on the technology agenda for BMG is a fully-blown back-office system. They almost made the leap recently, but were put off by a bad reference. Not a company known for taking nnecessary risks over the last 32 years, they’re not about to start now.