Summer tends to see a bit of a lull news-wise, but this year could be regarded as something of an exception.
As well as the ongoing saga of Office Depot’s US contract business, we saw the launch of TriMega’s national accounts programme in partnership with wholesaler SP Richards.
We have also been reminded of the opportunities and the dangers still lurking in the economy.
Esselte is in acquisition mode, snapping up Ampad and could be targeting a major European vendor, while Staples is flexing its financial muscle, buying Finnish partner Lindell, and finalising its takeover of CE Australia.
However, the news that UK-based vendor Masters is going into administration, highlights that cashflow issues are still very much a clear and present danger.
Economic data continues to be contradictory at best. Many of you reading this issue of OPI on a sun-drenched beach somewhere will no doubt have your Blackberries ready for the coming quarterly results. And we don’t need Paul the World Cup oracle octopus to tell us that those results are likely to be very challenging!
Andy Braithwaite, News Editor
California RFP has been cancelled
Sacramento (CA), USA
The State of California has cancelled its request for proposals (RFP) for a new statewide office supplies contract.
The previous contract – held by Office Depot – expired in May 2009. Previously, a new award was expected to be announced with three suppliers, Staples, Office Solutions and National Office Solutions, expected to be in the running for the estimated $24 million-a-year’s worth of business.
Office Solutions’ President, Bob Mairena, confirmed to opi.net that the RFP has indeed been cancelled.
According to a statement on the FAQ section of Office Depot’s investors’ website, the state cancelled its RFP on 7 July 2010.
California’s decision to cancel its office supplies RFP may be in relation to a new report issued by the California State Auditor which highlighted a number of problems that the state’s Department of General Services (DGS) has experienced with strategically sourced contracts.
Particular focus in the report was given to the Depot office supplies contract, and the recommendations by the auditor that the DGS improves its procedures related to strategic sourcing. Furthermore, the potential role to be played by small businesses may have convinced the DGS to postpone the existing RFP procedure.
Global turnout at HSM conference
Participants from 38 countries at the beginning of July attended the annual HSM Partner Conference which took place in southern Germany.
HSM partners came from countries such as Australia, Japan, Brazil, the US, China, Vietnam, Malaysia and Russia to attend the company’s 6th Partner Conference, which this year took place in the picturesque surroundings of Lake Constance near HSM’s headquarters.
As well as HSM partners, reseller attendees included OTTO Office, Kaut-Bullinger and Printus from Germany, and UK independent dealer Egan Reid.
The two-day event comprised presentations on latest HSM developments, success stories from HSM partners – including a presentation on BPGI by Claude Ackermann, Chairman of BPGI and Director of Swiss wholesaler PEG – and a partners awards ceremony.
There was also a visit to HSM’s production facility in Salem and to the new headquarters a few miles away in Frickingen.
After seeing sales fall 15 percent in 2009, HSM is targeting growth of 8 percent in 2010, maintaining its forecast made earlier in the year at Paperworld.
Two new Securio-branded shredders are set to hit the market later this year, completing the range. In the meantime, HSM’s cutters and trimmers line of products is being completely revamped at present.
UK vendor Masters to be closed
One of the UK’s best-known vendors, Masters London, is to cease trading.
Masters, which specialisesd
in business luggage and desktop accessories, delivered to 25 countries and distributed worldwide from a sourcing and warehouse operation in China.The company told OPI that "due to the current challenging business environment, in particular recent currency weakness, it has appointed BDO as administrators".
As press time, OPI understands that BDO was unable to secure a buyer for the business and Masters is in the process of being wound-up.
3M wants 40 percent overseas increase
St Paul (MN), USA
3M is aiming to increase sales of its consumer and office products by more than 40 percent as it expands its iconic brands in overseas markets.
The company told the Wall Street Journal at a 3M plant at the end of June that its consumer and office products division generated $3.5 billion in revenue last year, but sales from the business could rise to $5 billion by 2014 as 3M steps up new product offerings and additional marketing.
International sales of 3M’s consumer and office products have been growing at an average rate of 12 percent per year since 2000 and account for 40 percent of the company’s total $3.5 billion in annual revenues.
"If you were inside 3M, you’d see an absolute forest fire of [product] innovation happening," said CEO George Buckley.
3M’s strategy for exploiting the faster overseas growth indeed hinges on accelerating the pace of new product introductions. Last year, 20 percent of the revenue from the consumer business came from new products. That’s below the 30 percent rate elsewhere in the company, which also manufactures adhesives, sand paper and reflective plastic films used in road signs and flat-screen televisions.
3M is expanding its core product line-up of tape, notes, cleaning pads and other items to cover more price points. In doing so, it hopes to block competitors from flooding into markets that 3M created with its distinctive products.
"It’s about defending this enduring Post-It note franchise," Joe Harlan, EVP for Consumer and Office Business told the Wall Street Journal.
Harlan has developed his own wide-ranging and ambitious "strategic playbook", a five-part growth strategy to reach its 2014 goals: protect and expand 3M’s core with new products; expand internationally; become more e-savvy; focus on design; and make opportune acquisitions.
To reach these expansion targets, Harlan and his team have completed research on the growth potential of each of its markets and a country-by-country analysis of current business conditions.
"China, for example, isn’t a consumer country yet," said Harlan. "China is going through an industrial revolution, so we are building a business from the ground up. We are going through the mass retail channel and focusing on Scotch-Brite products and Command Adhesives."
Product lines are also being overhauled, as are the designs of product packaging and planograms to make "3M products cool again".
3M’s plans would appear to be well underway with last year’s purchase of the ACE brand and the recent purchase of leading Asian office and consumer brand, A-One. It has also formed an e-Hub, a service organisation to help achieve the goal of becoming e-savvy. The goal is to bring expertise to key customers and make 3M a dominant brand on their websites.
Meanwhile, the balance sheet looks in rude health. Analysts surveyed by Thomson Reuters recently projected the current quarter sales to come in at $6.56 billion; 3M has predicted, however, that sales will come in above expectations at $6.6-$6.75 billion.
3M’s Q2 outlook reflects 16-18 percent growth in organic sales, excluding revenue from acquisitions. It has also forecasted a 4-6 percent increase in total dollar sales from the first quarter.
Rowe makes leap for charity
Jane Rowe, Marketing and Communications Director at Spicers UK, has made a 12,000 ft parachute jump as part of a fundraising effort for a breast cancer charity.
Rowe was one of 14 women taking part in the Breakthrough Booby Birds campaign that has so far raised £250,000 ($375,000) for the Breakthrough Breast Cancer charity.
The money raised is being used to help change lives by funding vital breast cancer research at the Breakthrough Research Centre at The Institute of Cancer Research in London.
Rowe said that this was an experience she would never forget! "Who in their right mind would fall out of a perfectly sound plane head first, dropping to earth from 12,000 feet at 120 miles per hour for 50 seconds before the parachute opens, strapped to a man you’ve never met before- she commented.
"It certainly puts into perspective the fear and lack of control that women diagnosed with breast cancer go through on diagnosis, as you put your total faith in the experts."
Staples acquires Lindell
Framingham (MA), USA
Staples has strengthened its European business with the acquisition of Oy Lindell, Finland’s leading office supply company.
Lindell currently serves businesses of all sizes through a delivery and retail network, offering a wide range of office products and industrial and school supplies.
Staples inherited an alliance with Lindell when it acquired Corporate Express in 2008. For the past two years, Lindell has serviced global contract customers in Finland and now, the company’s owners say, the Finnish company will benefit from Staples’ global buying leverage while also being able to share best practices.
"Lindell is a perfect fit with our Nordics region," explained Mike Miles, Staples’ President and COO. "We’ve worked together for two years and both companies share a passion for making it easy for our customers. Lindell is a great addition to the Staples family, and we look forward to working more closely with the team."
John Lindell, Oy Lindell’s owner, said: "I am proud of the leading and well respected position that the company has developed in the Finnish market. I believe Staples will further develop this position while embracing the heritage and customer-oriented approach that has been a key factor in the success of the company."
Lindell CEO Bo Nyman added: "This is an excellent opportunity for us, as Staples is in a great position to support and accelerate the development of the business. The transaction will also give us new resources for developing our coverage across all channels."
Lindell has already enjoyed 120 years of success in the Finnish office products market. It has a state-of-the-art central warehouse, seven stores and two franchise operations, plus a strong team of sales representatives."
Healthy turnout at Corwell event
Hungarian wholesaler Corwell reported a good turnout for its annual Expo and Dealer Days event despite the poor weather in Budapest at the beginning of June. More than 1,100 visitors, all active OP resellers in Hungary and Slovakia, attended the three-day event, while 30 Corwell vendor partners participated in a specially-organised exhibition.
"The Corwell Expo is professionally organised and always well attended by the dealers. Senior management at Corwell have always given this event a high profile in their marketing plans and worked hard with key vendors to maximise the sales opportunities," said Adrian Frost, Managing Director of Rapesco, who added that he appreciated the wholesaler’s open management style.
One vendor with a long-established relationship with Corwell is Spain-based labels manufacturer APLI, which began working with the wholesaler back in 1994. "Corwell has been a key to our success in the Hungarian market," APLI’s International Area Manager, Tony Luna, told OPI.
Luna recognises that the economic situation in Hungary is affecting the OP sector and says the coming months will be a "fight for survival" for many companies.
"Small and medium-size dealers now have the possibility of using all the services Corwell puts at their disposal so they can focus only on understanding the problems and new needs of their customers. Flexibility and the capacity to quickly adapt to this new situation will make the difference for them," he added.
Corwell also used the event to promote its own logistics and marketing services as well as its own private label brand, Victoria. The annual Corwell Expo Awards of Excellence took place with 3M, ACCO, Schneider and Verbatim taking the honours this year. The event closed with the traditional Tinta (‘ink’) party on the final evening.
Mergers and acquisitions
Staples has declared its offer for the remaining stake in Corporate Express unconditional.
Staples Australia said that its takeover offer for Corporate Express Australia was "free from all conditions" set out in its bidder’s statement on 19 March. Staples said its voting power in Corporate Express as of 8 July was 89.26 percent. Sydney, Australia
European paper merchant group Inapa has finalised its acquisition of Spanish merchant Ebix.
The deal was finalised on 2 July and makes Inapa the third largest paper merchant in the Spanish market with an estimated market share of 20 percent. Lisbon, Portugal
The Danwood Group has expanded its presence in the US with the acquisition of Florida-based AXSA Document Solutions.
The Danwood Group formed Danwood USA in 2007, based in Tampa, Florida, to research and scope the opportunity to replicate its successful UK model in the US.
AXSA, which was founded in 1992, services over 31 counties in Florida from its offices in Tampa. Under the leadership of its CEO Ian Craig, Danwood USA will now look to bring its value proposition to the Florida market, especially in the Managed Print Services sector utilising the reach and expertise of the AXSA team.
Colin Daniels, Chairman of The Danwood Group, commented: "This is an exciting acquisition for both Danwood USA and the group.
We felt the time and opportunity was right with AXSA and Robert to grow our overseas operations and we look forward to working with him and his team over the coming months." Tampa, USA