In less than five years, Dr Benedikt Erdmann has successfully turned around the fortunes of one of Europe’s largest dealer groups, BRANION.
Together with his joint MD, Viktor Jarosch, Dr Erdmann appears to have achieved the impossible and steered BRANION away from its collision course and saved the organisation from implosion and near-certain closure.
And from those dark days in 2002, BRANION resembles a very different company today. Gone is its reputation for high cash burns, inflexibility and sticky relationships with its suppliers.
Today the group resembles a lean and mean machine, well oiled and with a content membership that is reaping the benefits.
From his tough experiences, Dr Erdmann is better placed than many to understand the unique challenges faced by the European office products industry, and in particular the notoriously tough German market.
Here he describes the tough task of rescuing BRANION from the brink of extinction and what he believes lies ahead in the future.
OPI: When you took over the position as joint MD in 2002, you promised to focus on four main points: Communicate better with the members, concentrate on the core business, reduce costs and focus on the customer. Have you succeeded and can you describe how?
Dr Benedikt Erdmann: We have kept our word on each of these points. Costs have been reduced significantly, and the entire organisation is geared towards the benefit of our members. The results are noticeably higher dividends and significantly improved operative performance. Nevertheless, there is still a lot to do.
OPI: How have you managed the Soennecken and Büro Actuell divisions and how have they performed individually within the group?
BE: We are one group and act accordingly. We no longer think in categories of the past. What’s important for us today is to orient ourselves on the business segments of our members. Larger and smaller non-store retailers need different things from us. This also applies for stationery stores, specialist retailers or members dealing in office technology. These are the member groups we and our organisation align ourselves with.
OPI: What do you predict for the notoriously difficult German market?
BE: Unfortunately I don’t have a crystal ball. But I will try to give you some forecasts:
• The market will continue to be notoriously difficult. Competition is incredibly intense, and that won’t change.
• The trade will have to specialise. All-rounders will become do-nothing-right retailers. The future belongs to the specialists.
• There is a future in consultation and sustained top service will prevail. Many suppliers don’t provide what they promise.
• There will be moderate growth. It is unfortunate that the German domestic market is growing less than the export market.
OPI: You place a great emphasis on eCommerce, what would you describe as the most successful developments in this field over the past five years?
BE: Our members receive highly functional c-article management systems from us, with which the end-user can handle all procurement processes, from generating a shopping cart to invoicing, electronically. This allows our members to dovetail with the procurement processes of their customers and thus become an indispensable part of the value-added chain for the customer.
OPI: You are credited with reinvigorating the BRANION co-operative. Were you ever deeply worried for its future?
BE: Yes, I was deeply worried. But that also sets some energies free. No adrenaline – no top performance. Any athlete knows that.
We have overcome the critical phase we were facing in 2002. That was only possible because our members, the BRANION employees, but also many of our suppliers, all pulled together.
OPI: When BRANION was created in 1999 it was supposed to become "the most powerful office dealer organisation within the OP industry worldwide". You’ve certainly come a long way, but is that still a realistic vision?
BE: Worldwide operations make no sense for us. It is true, though, that we can claim leadership in the German-speaking countries.
OPI: What is the future for the dealer buying group? In last month’s issue of OPI, Peter Ventress said he thought the days of the groups were numbered. What is your prediction for groups in the years ahead?
BE: For mid-sized dealers a buying group is absolutely necessary. Alone, the dealers will have great difficulties keeping up with the competition.
Therefore our future depends on the future of our members. For as long as mid-sized dealers in the industry are doing well, there will also be strong co-operative groups. That’s why I’m very optimistic. Nevertheless, the co-operatives have to change a lot. In this regard we are well positioned.
OPI: Can you describe the health of your own-brand lines. How are they performing year-on-year and are you increasing the number of products or decreasing them?
BE: We are concentrating on our own Soennecken brand and are very successful with it. We’ve got about 1,000 articles, which account for 12 percent of our sales and 33 percent of our gross earnings in the warehousing business. The annual growth rate is 10 percent.
OPI: What level were your rebates last year? Have you avoided the disappointing days of 0.15 percent rebates for your members?
BE: Those times are long gone. Every year our members get a rebate on goods of just under two percent. But that’s only one side of the coin. Together with increasing the dividends, we have significantly extended our service portfolio for our members and further strengthened BRANION’s equity capital.
OPI: What challenges will the German dealer face in 2007? Is the economy on the upturn and if so, how is that affecting consumer confidence?
BE: As I said earlier, the market will continue to be notoriously difficult, these are tough times. Competition is incredibly intense and that won’t change.
OPI: How is your standalone warehouse division performing? What’s the secret behind LogServe’s success when so many other group’s efforts have either failed or badly struggled?
BE: LogServe is very well accepted by our members. We have some good gains there. I am sure this is due, among other things, to us having significantly increased our sales activities and to the fact that our prices are very competitive. But there’s still a lot to do here, too. We’ve got plans for lowering our logistics costs and improving our logistics services in particular.
OPI: Spicers brought the concept of the stockless dealer to Germany – how is that being received? Do you think Spicers has reached its maximum level of turnover in the German market?
BE: Our members have their own wholesaler with BRANION – LogServe.
But aside from BRANION, there are still many dealers in Germany that could be considered for a stockless dealer concept due to their size. There is still some market potential present, but I doubt it is enough to sustain three system wholesalers.
OPI: How do you support your members in tackling these tough market conditions?
BE: We offer a very wide range of services. For members that use us extensively we act as marketing department, warehouse, purchasing and eCommerce contractor, bank, consultant and sometimes even as pastor. We want to take care of our members as much as possible so that they can devote all their energies to taking care of their customers.
OPI: What would you describe as BRANION’s USP?
BE: By being part of BRANION, every member gets access to services and offers that are otherwise not available to mid-sized companies as far as quality and costs are concerned. BRANION is both a capable system wholesaler and a market- and sales-oriented competence centre, as it were, which is solely owned by its members.
By bundling the strengths of its members, BRANION reaches the size and economic power to competently and effectively represent the interests of members and/or member groups for a long time.
With the exclusive member-only Soennecken brand, BRANION members have a wide demand-oriented assortment at their disposal with which they can stand out from their competitors in the perception of the customer.
BRANION is a community of members that is carried by personal closeness, mutual trust and a common creative will. At BRANION, people are working for people. Not just the member companies, but also the entrepreneurs and employees of our members are important to us.
OPI: Would you say you are still working to the same 2002 strategy?
BE: Basically yes. Back then we defined our core business and expertise and stuck to these consistently. That was the right thing to do and still is. Nonetheless, there are many differences in detail, of course.
OPI: What are your aims and objectives for the group for the next two years?
BE: First, to form a closer community with our members. Just imagine all BRANION members were purchasing, negotiating and acting as one business. We still have a lot of potential as far as acting together is concerned. Secondly, we are working on a new logistics concept for our warehousing business. Thirdly, we must bring our range of services even better in line with the specific requirements of our members.
OPI: What lessons did you learn from your expansion into the European market? What advantage do domestic players have over their pan-European counterparts?
BE: In difficult times it is more promising to boost one’s strengths than to expand into new markets. And the European markets are very different in terms of their retail environments. Half-hearted activities make no sense there. As for the rest, the launch of a commercial enterprise that is geared to the worthwhile special features of a region offers many advantages. The point is to use these advantages, and in this we are supporting our members.
OPI: What is the thinking behind the plans to change the name of BRANION back to Soennecken?
BE: Soennecken is one of the best-known brands for office supplies in Germany. We want to strengthen this brand even further. Incidentally, BRANION has always been a compromise because one couldn’t or wouldn’t agree on Büro Actuell or Soennecken. That’s the past. The future belongs to Soennecken.
OPI: BRANION used to have its own show in Cologne but dropped it in favour of a stand at Paperworld. Now it has started the Cologne show again, do you plan to stop attending Paperworld?
BE: Not at all. As I’ve already said, we want to strengthen the community of members. Having our own show is part of this. Paperworld is the leading trade show of our industry worldwide. BRANION expo, on the other hand, is something of a family celebration that also presents itself quite differently in terms of content. In all other respects we are and will remain an avowed Paperworld exhibitor. I can’t imagine attending a Paperworld show without BRANION.