Have a nice day

 

Have a nice day

 

May is glamour month on the French Riviera with Hollywood A-listers descending on Cannes for its annual film festival and the private yacht set heading to Monaco for the Formula One Grand Prix. What better choice, then, for this month’s dealer profile than the aptly-named Riviera-Papeterie based in Nice?

 

Stéphane Couchot can look back on the last 12 months with some satisfaction. His Riviera-Papeterie business (‘papeterie’ is the French for stationers) is set to see sales increase by around 10 percent to N3.3 million ($4.4 million) when the current financial year closes at the end of June. Couchot reveals that despite its glamorous reputation, The French Riviera has not been above the current strife in the economy.

 

"While we haven’t lost many clients, we are certainly seeing companies cutting back on their office supplies spending," says 38-year-old Couchot, "either by reducing the quantities they order or trading down to more basic products or lower grades. The region has seen companies go out of business like anywhere else."

 

The thing that has made the difference for Couchot was the hiring of two new sales reps, one from Office Depot and the other from leading French B2B supplier Fiducial, enabling his company to see sales rise even as the market declines.

 

"Successful recruitment is key to our growth strategy," states Couchot. "Reps come to us with a portfolio of clients that allows us to gain market share."

 

A few years ago this would have been difficult, with ‘no compete’ clauses preventing reps from operating in a given sales territory for up to two years.

 

"Things have changed," notes Couchot. "In France, no compete clauses can cost employers up to the equivalent of two years’ of a departing rep’s salary, plus all the employer’s charges. Now they prefer to let the rep go without a no complete clause and use a portion of the money they save to try and keep clients, by making special price deals, for example."

 

This evidently hasn’t been a total success in the Nice region of France as Riviera-Papeterie’s market share gains testify.

 

Couchot points to a couple of reasons for this. First, he says that in the south of France, with its ‘Mediterranean’ culture, there is still a strong notion of face-to-face contact with clients as part of the business norm. Second, he feels that the larger players in France (at least in Couchot’s region) are placing less emphasis than before on the traditional SMB customer.

 

"When a rep leaves one of the big players, they tend not to be replaced," he states. "They expand the sales sector of another rep, but this of course affects the quality of the contact with the client. I get the impression that companies like Office Depot, Lyreco and Fiducial are focusing more on large corporations or big groups, at either a national or European level. Perhaps they feel that SMBs are expensive to maintain, with small average order values. Guilbert, for example, used to have a strong focus on the small business customer."

 

Couchot is well placed to know because he left Guilbert in 2002 when the company was taken over by Office Depot and subsequently set up Riviera-Papterie with another former Guilbert colleague and a third partner, both of whom have since left the business, leaving Couchot in sole charge.

 

Stockless model

 

For just over a year, the start-up business used Spicers as its wholesaler before moving over to the Majuscule group, where it remains to this day.

 

"In the beginning., we prepared our own orders after receiving bulk shipments from Spicers," Couchot explains. "Then we were approached by Majuscule and we decided to adopt their pick and wrap model, which Spicers wasn’t offering at the time."

 

The Majuscule model allows Riviera-Papeterie to operate as a stockless dealer. Majuscule receives the orders at its central distribution facility at St Quentin in northern France, prepares orders for each client and then ships them overnight so that Couchot’s own delivery staff can load up and make the deliveries to the end-users.

 

"We make around 100 deliveries per day," says Couchot. "We have four vans in our company colours and the drivers are our own people. I feel it’s important to keep this final customer-interfacing link in the chain in-house."

 

The only thing that Riviera-Papeterie keeps in stock is paper, ordering directly from Majuscule’s own supplier in truckloads in order to cut down on overall shipping costs.

 

"Many Majuscule members function in the same way," adds Couchot. "It lowers costs because we are not carrying any inventory and we don’t have to employ order pickers. Operating a low cost model is important to us because it allows us to compete on price with the larger players."

 

Customer contact

 

Riviera-Papeterie’s client base is what Couchot describes as "very traditional", made up mainly of local SMBs and a large number of professional firms such as accounting practices, estate agents and solicitors. Nearby Monaco is also an important market with the company counting a number of private banks based in the principality as customers.

 

In terms of competition, as well as Lyreco, Fiducial and Office Depot (they haven’t abandoned SMBs altogether!), Couchot says mail order firms Viking, JPG and JM Bruneau (owned by Depot, Staples and Otto Group respectively) and two other local dealers are his main competitors. The importance of his sales team is evident by the percentage of sales that is derived from customer visits – 35 percent of the total, or over N1.15 million per year, from his current number of six reps.

 

Couchot says that reps generally visit clients once a month, helping them with their stationery and office supplies needs, taking an order and making an appointment for their next visit the following month. The other 65 percent of business comes from telephone and fax orders (40 percent) and online orders (25 percent). While the level of internet orders may seem low compared to norms in other countries, Couchot says that they have been putting lot of effort into this and that three years ago, just 3 percent of sales came from online orders.

 

"We would definitely like to see more of the orders currently made by phone or fax placed online," he admits. "Manually entering orders is certainly not as cost effective as clients ordering over the internet where we just have to validate the order with Majuscule’s central ordering system."

 

Riviera-Papeterie is Majuscule’s exclusive member in the Alpes-Maritimes department (referred to locally as the 06 -"zéro six" – after the state’s administrative number). Flanked on three sides by the Mediterranean Sea, Italy and a mountainous hinterland, and on the other by the Var department (which has its own Majuscule member), geographical expansion is not really an option.

 

That is why Couchot is planning to continue to invest in his sales force, something that will be easier if he can drive administrative costs down, for example, by getting customers to order more over the internet.

 

Couchot estimates that he currently enjoys a market share of 5 percent in the 06 and is looking to double this in the next three years by taking on more reps. The company currently has two office-bound sales assistants who provide support to the six reps and are responsible for processing orders. Along with an accountant, a logistics/off-catalogue support person and the four delivery staff, that brings the total number of employees at Riviera-Papeterie to 14, not including Couchot himself.

 

97 percent of business comes from office supplies, the rest being split between furniture and custom print jobs.

 

The office supplies businesses can be further broken down into general office supplies (50 percent), paper (30 percent) and ink and toner (20 percent).

 

Opportunities

 

Interestingly, Couchot says that the percentage of total sales for ink and toner has been steadily decreasing from its level of 30-35 percent just a few years ago.

 

He says that the uptake in networked copiers put a serious dent in sales of toner cartridges, but that a new opportunity is presenting itself.

 

"Manufacturers have made efforts to reduce prices of colour laser machines and we are seeing customers such as estate agents now purchasing these kinds of devices, which they previously couldn’t afford, and doing more colour print work in-house. So there is potential with a new customer group, whereas it did look some time ago like the colour laser market was a dying one for us."

 

Another opportunity is the healthy margins that can be generated by private label products. This is something that Majuscule has really been developing in the last couple of years, and Couchot says that private label sales now represent around 15 percent of office supplies sales.

 

"It has allowed us to compete more effectively with the larger players’ private brands without having to resort to cutting prices – and margins – on branded products."

 

Couchot says that while French consumers are still fond of their brands, he would like to see the level of private label penetration reach 30 percent. "Private label is not something that clients order naturally – it really has to be a proactive effort on the part of the reps to suggest these products."

 

To encourage private label sales, Couchot says that he organises quarterly "challenges", with the top performing rep receiving a bonus or a prize.

 

May 2010 is a month that he is particularly looking forward to, not because he is a film-buff or F1 fanatic (in fact, the film festival and Grand Prix just tend to create delivery headaches), but because May is traditionally a month that it is punctuated by a large number of public holidays and long weekends in France. This significantly reduces the number of days worked and therefore the number of orders placed by customers.

 

"Two of the May holidays fall on a Saturday this year, and on a Sunday next year," he smiles. "And that’s good for business!"