Office Brands plans restructure



Office Brands plans restructure


Australian dealer group to put plans before membership in February vote


Leading Australian dealer group Office Brands has asked its members to vote on a restructuring plan this month.


Office Brands presented the proposal to its members during its annual meeting in November and it will now be voted on at an extraordinary general meeting to be held on 23 February.


"The structure originally put in place for the business is now ten years old and we think we need to structure ourselves differently for the future," the group’s CEO Andrew Boath told OPI.


However, Boath said that he was unable to provide specific details of the proposal until the vote had taken place.


Office Brands – which comprises the Office National, Office Products Depot and O-Net dealer groups – is currently run as a member-owned cooperative, so the proposed new structure will obviously be a move away from that model.


Boath said that the strategy had been drawn up by Office Brands’ board, which is made up of elected representatives of the membership. He added that members’ reactions to the proposal have so far been "very positive".


The proposal would certainly appear to represent a major change in the way that Office Brands is run and give the group more flexibility in its strategic decision-making.


This will be important for the group as it looks to adapt to the changing marketplace as global office supplies giant Staples starts to pay more attention to the Australian market following its 2008 acquisition of Corporate Express.


The first two years following the acquisition were largely focused on first North America and then Europe. Now Staples has its eyes firmly on the Australian market, too.


Staples paid around $360 million in 2010 to take a 100% stake in market leader Corporate Express (CE) Australia and has recently launched its own Staples-branded direct business in the country.


With Staples thought to be looking at re-branding the entire CE Australia business in 2011, this will enable it to tap more effectively into its global sourcing capabilities out of Asia, adding pressure to the local market players – suppliers as well as resellers.


Global threat


The global players have also been able to take greater advantage of the recent strengthening of the Australian dollar, which has gained around 10% on the US dollar in the last six months. This has provided opportunities for more imported products that the globals – with their warehousing capabilities – can take advantage of.


Boath said that Office Brands needed to be able to compete more effectively with the globals on these kinds of issues, something that the current group structure doesn’t allow it to do.


The Office Brands CEO is known to be an admirer of the distribution models of fellow BPGI members such as Novexco, Majuscule and PEG. Whether this type of model would be suitable for the Australian market is questionable, but it may be a possibility at a local level.


Turning to the performance of Office Brands’ 156 members over the last year, Boath said that, by the end of October 2010, group sales were trending up around 5% versus 2009, while fourth quarter sales comparisons were slightly better at about 7%.


"The economy is picking up. We’re definitely in recovery even though it’s not as good as it was," he noted. "Our members are experiencing reasonable growth, although we’re obviously lapping a very poor 2009."


He added that OfficeMax’s 2010 agreement with Australia Post did not appear to be having a major impact on its members.


"It was a clever move by OfficeMax," he admitted. "They don’t have the regional distribution that a dealer group would have. Now they are providing a service where OfficeMax supplies to metro areas and Australia Post delivers to the regional areas.


"It’s something that is probably targeted more at Officeworks, but could provide competition for our regional members that have retail outlets," he added.