The pride of Ireland
Remaining a prosperous dealer in a country that’s been as economically struck down as Ireland is hard, to say the least, but Codex Office Products has done it. OPI takes a trip to the city of Dublin to find out how the European Office Products Awards-shortlisted dealer has become a rival for the big boxes
Every year on 17 March, the Republic of Ireland turns to party in celebration of St Patrick’s Day. This year will be no different because, although Ireland has been hit harder than many countries by the global recession, patriotism is alive and well – at least according to Peter Killian, Sales and Business Development Manager at Codex Office Products.
"Recently, a huge element of national pride has come back into business," he says. "Because things have been so difficult here, people are tending to ‘buy Irish’ and that’s helping us. We tend to bang our drum a little bit about that and we’ve done exceptionally well out of the concept in the last 18 months. It turn, we’re really supporting any manufacturers that are still here in the office products sector."
Codex was established by current Managing Director Brendan Murphy back in 1979. An accountant by trade, Murphy saw an opportunity in the market for selling office products, initially in the north of Dublin. The business has grown to be one of the largest independent dealers in Ireland, with 55 employees and a strong customer base, and was recently shortlisted for the Regional Reseller of the Year Award at the European Office Products Awards 2011.
"This is a lifestyle business for Brendan," says Killian. "He knows every employee and customer by name and it’s a real passion for him. Some of the guys have worked here for 25 years and Brendan’s very first employee only retired about two weeks ago. We have a huge pool of knowledge – those employees have grown up with the company and in the OP industry."
The business experienced a change of pace in 2002 when Killian and Director John Fullam joined, bringing with them their multinational backgrounds. The big boxes such as Lyreco, Office Depot and Staples had entered the market in Ireland by this point, in Killian’s words, mainly through acquisition.
Despite this, by strengthening the focus on business development, Codex grew from turning over about 18 million ($10.8 million) in 2002 to about 114.7 million ($19.6 million) in 2007. It also doubled the number of employees.
Killian says: "The company was coming to terms a little bit with the arrival of the global competitors, as they were bringing a lot of new solutions to customers that at the time the local industry didn’t feel able to do.
"We came in and blew away all the smoke and mirrors behind what the global guys actually do, and developed a programme that meant we could stand up there in terms of all the whistles and bells that go with being with an Office Depot or a Lyreco.
"We lifted the profile of the business and put the story out there that we could compete on an equal footing. Once we got a couple of wins under our belt, it just kind of snowballed."
Today, Codex ranks itself as one of the top four dealers in the Republic of Ireland, along with Lyreco, Office Depot and Staples. The dealer is located on the north side of Dublin and has a 30,000 sq ft (3,000 sq m) complex, comprising bulk warehousing, smaller warehousing, a pick/pack area and sales offices. Killian estimates that the company delivers to 6,000 addresses with a customer base of 1,500 throughout Ireland.
"A few years ago we took on the second largest government contract with the health service. We’re one of the biggest suppliers to the insurance sector and supplying into retail is also a strong part of our business. Education is another – we supply to most of the big universities in Ireland."
But it hasn’t been easy during the last three years and Codex has experienced a drop in revenues from its 2007 high. Killian says: "The local market has been very weak. The downturn here has been very dramatic, almost like falling off a cliff. In 2007 we started to see things peg back considerably. At one stage the office products market was down about 35% on 2007 and I would imagine that it was a similar picture for the global players, judging from what they’ve published here in Ireland. But it’s begun to stabilise in the last six months. We’ve actually been what we would consider bumping along the bottom."
As Killian says, Codex coped better than some with the recession. MD Murphy took swift action to ensure the survival of the business, including a reduction in potential headcount. "We saw this thing coming early on and could see almost on a daily basis the business ebbing away," says Killian. "To be fair to Brendan, he’s taken whatever measures needed and now we’re an exceptionally lean organisation."
2011 and onwards
Having survived the worst financial crisis in decades, the business landscape for Codex is now a very different place. A collapse in people’s spend means that many of the dealer’s customers have re-tendered their business to try to get costs down, which has impacted on margins. The types of office products that consumers are demanding has also evolved.
Killian says: "The brands have taken a real hammering here. We’re still picking and packing the same amount of product we were three years ago, but the problem is that the mix of value product is way down. That’s where the brands are being adversely affected. Obviously that has had an impact on margin, both to the cost of the business and in shipping the goods. It presents a challenge for the sales guys to get some margin back.
"We’ve looked at some of our key customers and at extending into different product categories. So now, for example, we keep almost 1,000 products right across the range of clients that are customer-specific. We’ll stock and re-distribute product for them, which helps to maintain our margin."
But Killian believes that things are looking up in Ireland. He is keen to point out that although the country is experiencing tough times, export growth is predicted. According to a recent short film posted on YouTube by IBECinformation, the country is still home to eight out of the top ten pharmaceutical companies and five out of the top ten technology companies, and is the biggest exporter of milk in the EU.
In terms of office products, Killian says "there’s a huge amount of growth" in areas such as breakroom and back-to-school, and Codex is expanding to include arts and crafts products.
"I think it’s going to take a number of years to get back to where we were prior to 2008, but consolidation in the industry and the difficult times might present some opportunity for acquisition for us," says Killian.
And Codex has another current focus, common to many dealers, that will hopefully lead the business back to growth in 2011.
"We’ve made e-commerce a huge part of the business. A significant part of our business is online or through platforms such as SAP, and this year we are hoping to reduce the cost of serving our customers by increasing this.
"Other focuses for 2011 include that we’ve put a heavy emphasis on brands in our catalogue – the only catalogue I know of in Ireland – to try to increase margins. We’re also looking to bring in very well-educated, dynamic salespeople where we can. And of course, we’ll keep our focus on ‘buy Irish’, as there’s nothing like it!"