Sector Analysis: Facilities management

 

Onwards and greenwards

 

If you take on facilities management, the range of products is daunting enough, but then add in the green factor…

 

Under pressure, more and more office products dealers are absorbing facilities management supplies into their offerings. The market in the past few years has been extremely tough as we all know, and as OP dealers look around for new and different growth opportunities FM supplies has caught their eye.

 

With this sector offering higher margins than can be expected for traditional office products, nowadays it is becoming increasingly popular for OP dealers to supply coffee and beverage and jan/san products alongside their other offerings. Wandering around the warehouse of one of the larger resellers, you may well spot palettes of fizzy drinks or boxes of peppermint tea lining the shelves. This wasn’t the case going back a few years.

 

But even those resellers that are striding through the economic storm are embracing facilities supplies. Staples, for one, announced that facilities supplies is one of its key growth areas that it is investing in during the coming year, and we don’t expect it to be the only company taking this track.

 

In early December 2010, Spicers’ annual Everything for the Office Show (EFTOS) included a facilities management section for the first year. When asked why, Amanda Murray, Dealer Marketing Manager, Spicers UK, said: "FM is a huge growth opportunity for dealers as every business has a need for facilities products and services, whether this is for work wear and protective equipment, catering or cleaning equipment.

 

"Our aim in including a dedicated FM section at EFTOS is to showcase the new products available to dealers… Diversifying into FM is a key part of becoming ‘everything for the office’."

 

And this essential diversification is starting to show. When asked how the FM market has been faring James D’Agosta, Senior Vice President of Sales at Marcal, a manufacturer of recycled paper products, says: "The overall market has been relatively flat in 2010 compared to 2009 as businesses struggle to grow.

 

"However, there has been an ongoing share gain in the office products channel as the industry continues to devote more assets to gaining and growing the FM business."

 

Behind the scenes

 

Apart from it being an opportunity to expand, the OP industry is responding to the fact that the role of the facilities manager itself has been evolving over time.

 

Going back 20 years, facilities managers were responsible for security, catering, jan/san, possibly basic breakroom supplies and a few other areas. Nowadays, the role often encompasses more broad areas such as managing printer supplies, for example, or energy supplies. In some of the more flashy offices, a facilities manager may be required to manage crèche or gym supplies, maintain a bicycle storeroom or install automatic blinds that are sensitive to sunlight.

 

These developments are now providing more ways into the market for OP dealers, and London-based office products supplier Red Box is anticipating the breadth of products and services to increase even further.

 

"A big challenge and opportunity for the office supplies dealer is tapping into more of the facilities managers’ responsibilities," says Isobel Pearce, Marketing Director at Red Box. "The facilities manager’s role involves purchasing across a wide range of products and services that span a company’s non-core activities and this is both an opportunity and a challenge for dealers."

 

And for all these different needs, with customers requiring any number of different products, the trend does appear to be heading towards one-source solutions. As the role of the facilities manager grows more complicated, businesses want their suppliers to provide an increasingly easy solution. D’Agosta says: "We expect the facilities management share shift to the office products channel continuing, as the one-source solution concept continues to gain ground."

 

Isobel Pearce has similar predictions: "Our sales of facilities management products are growing and we’re around 7 percent up year on year, which is mostly attributed to catering and cleaning supplies. We’re anticipating more growth within facilities management as more of our clients consolidate and look for transparency across their purchases. We have seen product expansion within this sector as the market grows and more choice becomes available."

 

Businesses are turning to their OP suppliers to provide them with solutions to all their needs, and in order for a dealer to keep up it must meet these requests. One example of this can be seen in how schools have started to source their products. Many schools have now started ordering toilet tissue and paper towels from the same company that supplies them with pens and paper, as well as the increasingly popular hand sanitizer.

 

So they’re not asking for much; an OP dealer that can act as a single-source supplier for all facilities management supplies possible in an ever-expanding sector. And even if an OP dealer can provide what offices these days want, there is the added factor that has been with us now for some time: the environment.

 

Going green

 

"Without a doubt, consumers and businesses alike are demanding more ecologically sound products across all categories," says D’Agosta of Marcal.

 

D’Agosta is voicing a trend that is increasing its force in many OP channels, as it is in every industry. It’s not only the breadth of products that has increased in the facilities management sector, but also the breadth of components.

 

The difference with FM supplies is that the products are on one level a hidden part of a business. For example, a telecoms office does not actually need paper towels in order to run its telecoms business, but it needs paper towels in order for employees to dry their hands effectively.

 

As an almost hidden service, these types of products have been off the radar until now, but as the environment has slowly risen higher and higher up many businesses’ agendas, managers are starting to question the type of paper towels they buy.

 

A recent survey found that 90 percent of consumers would purchase a sustainable product over a non-sustainable product, if the price were the same. This might not have been the case a number of years ago when sustainable was not such a buzz word. But now it is, everyone is starting to take notice. Paper towels might now be a contentious point for a business; should more money be spent on buying in recycled paper towels rather than the cheapest brand on offer? The office products dealer who can answer this question cheaply and easily is going to be ahead of the game.

 

Marcal is just one of the suppliers out there that has defined its brand through its green credentials, having recently rebranded its products under the Marcal Small Steps name to demonstrate its recycled offering, and it has been reaping the rewards.

 

"We’re seeing more intense interest than ever in our 100 percent recycled towel and tissue products, where we are the US segment leader," says D’Agosta. "We’ve been fortunate to grow in a very tight economy, some of which is down to the growing call for greener goods."

 

Isobel Pearce also reports that "ethical and environmentally-friendly options have been very strong" for Red Box. "We’ve also started to offer our clients a recycling service via a third party that has received a lot of interest," she continues.

 

Kimberley Clark takes its environmental stance seriously. Heather Pearce, Customer Marketing Manager at Kimberley-Clark Professional, says: "On the jan/san and paper side of our business, Kimberly-Clark Professional is still very much focused on its global sustainability campaign even with cutbacks in spending.

 

"For us it’s a standard way that we should be doing business going forward, not a fad or trend that we want to take advantage of just for the moment. We are fully committed to sustainability and we continue to launch products that support our position, such as towels and tissue that are FSC certified."

 

With a final message, D’Agosta doesn’t see the green trend fading away anytime soon. "We see demand for environmentally-friendly products maintaining an upward trajectory, leading to an expansion of green products offered in the channel." Let’s see who gets on board next.