Staples’ new Australian wholesaling business
Corporate Express Australia to service the newsagency channel
Staples-owned Corporate Express Australia (CE) has launched a wholesaling business that is targeted at the country’s newsagency channel.
A new business unit, Office Products Wholesale (OPW), has been set up following a pilot period last year to prove the channel was a viable one for CE.
CE said that it was approached in early 2010 by a group of newsagents that were unhappy with their current office supplies and stationery supplier, believed to be Group Newsagency Supplies (GNS). GNS is Australia’s leading wholesaler into the newsagency channel and a company that is owned and run by newsagents.
The newsagents that CE worked with during the pilot period were mostly independent businesses, the company told OPI, and it is also working with a national franchise group.
Around ten years ago, CE formed a supply and service alliance with newsagency franchise group Nextra.
CE CEO Paul Hitchcock says there is huge potential for both CE and the newsagent channel.
"There are around 4,500 newsagents in Australia, and collectively they are the fourth largest office products reseller with a market worth around A$360 million (US$359 million) per year, according to recent market reports."
He continued: "The market is largely fragmented and newsagents have limited sourcing options today. More choice for newsagents can only be a good thing, and by offering broad supplier consolidation in the office products category, CE can reduce costs for many independent businesses."
OPW is headed by Alex Stewart, previously CE’s National Merchandising Manager.
"We see newsagents as a natural business partner for us. We can sell them best-of-breed branded product at competitive prices. We’ll also offer fantastic service and work with them on product marketing initiatives," said Stewart.
The focus will be on branded office products, IT consumables and relevant educational items. The company told OPI that it didn’t intend to promote CE/Staples branded products "at this time".
In terms of marketing and merchandising initiatives, CE said it planned to provide bi-monthly campaigns focused around key market drivers in this segment including tax time, back-to-school/back-to-work and some specific themed campaigns, supported by existing office products suppliers that are also keen to grow the newsagency segment.
"We are also building a web presence and will utilise this for account customers to promote and communicate targeted campaigns," Stewart told OPI.
"We also see benefits for customers with the provision of merchandising assistance, especially in high-growth categories such as IT consumables.
"This is a great opportunity for newsagents to increase their average order values and we can assist them with range reviews, machine compatibility charts and reference guides, POS displays, sale or return facilities for specific cartridge types and leveraging OEM marketing campaigns."
The first step
OPW’s budget year began on 1 February and since then it has been trading with customers that were involved in the pilot programme and also others that approached CE during the pilot. CE says it intends to target all states and territories within Australia and potentially New Zealand.
Mark Fletcher, Director at Australian newsagency marketing group newsXpress, told OPI that newsagents should rally behind GNS instead of looking for alternative sources of supply.
"The newsagents that are critical of GNS feel that the range is not quite appropriate and that prices are not as competitive as they could be," he said in an email to OPI.
"Newsagents need to understand the value they have in the GNS warehouse network and support this. While some are happy to sit on the side and criticise, they would be better off investing energy in supporting GNS to become a stronger competitor and, as a result, help newsagents become more competitive in the office products space."
Fletcher also warned that newsagents needed to be wary of CE and its Staples ownership.
"Staples could end up being their biggest retail competitor in this country, and giving an insight into consumer behaviour in newsagencies through our buying patterns with OPW would, in my view, be a big mistake."
However, he did concede that OPW’s arrival could prod GNS into becoming more aggressive and that this would be a positive development for Australian newsagents.