OPI: Hi Carsten, first of all I wanted to ask you what it’s like being head of Büroring when you are such a comparatively young guy?
CM: I don’t know if I’m that young. I was 40 in August!
OPI: Well, in our European Office Products Awards, we have the category of Young Professional of the Year and, believe me, very few of them are under 40, so that puts you at kindergarten level in terms of most of the people we have for that.
CM: (laughs) Well, I’m delighted to still be young!
OPI: I know that you came in and replaced Klaus Kemper. Does he still have some involvement with Büroring?
CM: Yes. I think we found a very good solution for the situation. A couple of years ago he informed the supervisory board that he wanted to reduce his workload and the board found a way so that he could still work two or three days a week.
So Klaus is still with Büroring for two or three days a week. He is responsible for two of our marketing groups and he also helps us if we have some big projects on and need to tap into his extensive knowledge.
OPI: I guess coming into the organisation to replace Klaus must have been very daunting, even if you did know that he was going to be staying on in some capacity.
CM: Yes, but to be honest, right from the beginning I knew that Klaus has a very good name, but I had no problem with that because somebody has to do the job. The members knew that there would come a day when Klaus would say goodbye and then they would have to make sure that there is somebody who can take over.
I did a very good job in the envelope industry before coming here, and so I felt I could also do a very good job here. I had no problem with the situation. I can handle it and I’m not afraid at all.
OPI: You back your own ability.
CM: Absolutely, and this is a great opportunity to push this organisation forward.
OPI: And is the situation with Klaus an ongoing thing? Do you expect him to stay working three days a week for the foreseeable future or will he wind down?
CM: Well, I think it’s Klaus’ decision how long he wants to go on.
I am sure that Klaus has a deadline in mind of when he may want to leave completely but, from my point of view, I have no fixed date to say I don’t want to work with him anymore, so everyone is happy.
OPI: How many members do you have at the moment?
OPI: What is the group revenue?
CM: Last year we had €160.5 million ($204 million) in sales and €25.7 million was the turnover of the warehouse.
OPI: Interesting that you should mention your warehouse operation. I know that Büroring has had some success as a dealer group working as a wholesaler but elsewhere in the world the model has proved tricky. In the US there is a lot of debate over is.group’s initiative and in Australia and the UK recently, this model has come unstuck. Why do you think this model has found success in Germany?
CM: Well, I think you must see there is a difference between the past and the future. In the past it worked because the dealer groups, or the wholesaler groups let’s say, brought a special benefit to the dealers. They had the possibility to bring different products together and then make one delivery. They had a very big salesforce whereby the salespeople of the wholesalers went to the dealers and were there every week to find out what product they needed.
I think there has been a very big change in the wholesaling landscape since the market entrance of Spicers here in Germany.
OPI: I was going to ask you about that. How do you think things have changed with Spicers’ entry? It had a slow-ish start but has really gained a foothold now.
CM: I think there has been a dramatic development in the market since the entrance of Spicers. It really brought a special benefit to the people who buy from Spicers, and this is different from the wholesalers in the past.
It brought marketing, it brought new possibilities of advertising, a special computer system, a special internet shop. All these things were very relevant to Spicers being so successful and it provided a lot of things that wholesalers didn’t offer dealers in the past.
And another thing is, from my point of view, that part of the industry found out that the key issue is not logistics. The key issue of the industry is producing products and also selling products, but not delivering them to the desk of a customer.
It was the right time, in the middle of the 1990s, that Spicers came to the German market and offered the industry all those possibilities and deliver a very wide range of products to all dealers here in Germany with enormous speed.
The old wholesaler groups also had enormous problems as a result of the market entrance of Spicers and the possibilities Spicers gave to dealers. They couldn’t offer a range of products like Spicers and they were not able to deliver them for the same prices.
OPI: So if you were thinking about recent developments in the market that have had a major effect on the landscape of the industry, the entry of Spicers and the growth of Spicers would be a key one.
CM: Yes, absolutely. From my point of view, that was the first step that brought a really dramatic change in the wholesaling landscape. And now we have, I think, the next dramatic change.
OPI: And that is?
CM: Well, one of the former German wholesalers, Schreyer, was bought by a company called KNV, and this company KNV is one of the biggest companies in the book industry. I think this new company will provide the next step that brings enormous changes to the wholesaling community.
OPI: I remember doing an interview, a year or so ago, with wholesaler PBS Deutschland which had just launched in Germany at the time. What effect has that had on the market?
CM: From our point of view, it was not such a big kick like the market entrance of Spicers, but it still has some projects which are interesting and we will see what the future brings for the company.
OPI: I spoke to Dieter Taffel from PBS Deutschland then and I found him to be very impressive. He’s a very smart guy, very knowledgeable and I thought that in time his set-up would make an impact.
CM: When PBS Deutschland was launched I was still in the envelope industry. But I thought the idea was a very good one. The concept of bringing logistics knowledge together and reducing costs because of different warehouses, and then to having a different assortment in the relevant warehouse for different customer groups. But I still feel we have to wait and see if this idea will have a major impact or not.
OPI: People have often said to me that the countries where dealer groups have been able to successfully act as wholesalers are the ones where there has not traditionally been a strong specialist wholesale presence, and Germany would be a good example for this.
For instance, in the US you have very good wholesalers in United Stationers and SP Richards and in the UK you have Spicers and Kingfield Heath.
So, I guess my big question would be: if you believe Spicers is going to be a strong specialist wholesaler, and PBS Deutschland is going to be there as well, will that mean there’s a possibility that Büroring, in time, might have to discharge their wholesale operation as the country becomes better served by the specialist wholesalers?
CM: No, absolutely not. Our warehouse is still growing and one of our aims is to be stronger in this area. From our point of view, we are really competitive, and we can really say that we earn money with our warehouse and we work it like a profit centre.
Our members are really very happy with our warehouse and it is true to say that our product range is also different from some other specialist wholesalers.
Most of our members come more from the technical side, so most of the products we have are more of a technical nature. Of course, we have stationery products and all these things, but we come more from the technical side and we think that our warehouse will be even more important in the future.
OPI: Let’s talk a little private label now. I know you have a Büroring-branded range – how successful is that for you?
CM: Very successful. We had an increase in turnover in private label of 25 per cent last year.
OPI: And that is something that you’re looking to grow further I assume, just like everybody else in the OP industry?
CM: Yes. But private label brings its problems because on the one hand we want to progress with our private label range, but also we have to work together with the industry to make sure that manufacturer brands progress. So we always have to find the middle ground and do one thing without forgetting about the other concern. It’s always very difficult to find the right way, but the market wants private label as do our members, so we have to be active in that area.
OPI: How are German dealers faring at the moment?
CM: Well, it’s still a very hard market. You still have some dumping prices and a lot of problems, and I think there continue to be dealers that go bankrupt – less last year than the year before, but there were still a lot of big dealers that went under.
The rate of privately-owned capital is a problem for a lot of dealers. If the financial situation is not very good, then they get a lot of problems with their banks and they go bankrupt. I think that is more or less the current state of the situation in Germany.
The mood is very good or, let’s say it’s becoming better, but the situation is still very challenging.
OPI: Do you have the kind of key issues in the German dealer community that we see throughout the rest of the world? I guess one of them would be that there’s not a leadership line at a lot of dealers. Do you have that problem?
CM: Absolutely, yes. And we actually try to help members that are in that kind of situation. If we know that somebody wants to sell his/her company, we will try and help. We would try to, for example, find somebody for the company or maybe we would talk to the dealer about the price it could get. Because, if companies want to sell, mostly they would have a totally different idea of the price they want to get for their businesses. So that is a big problem in Germany.
OPI: Another area I was going to ask about is the stocking versus stockless dealer debate – whether dealers should stock huge amounts of product or not. Is that a topic that’s spoken about a lot in Germany?
CM: Yes, I think that is also an important point. Not for all dealers, but still very important. That is also why we say we need our warehouse and we want our warehouse to grow. We offer our members the chance to become stockless dealers, because we can deliver directly to their customers. We have projects in which we offer our dealers the chance to become stockless. Although some do not like being stockless. They like to deliver personally from their company, because they see it as being an important part of their service offering.
OPI: So they see stocking the product and delivering it personally as differentiating themselves from the Staples’s and the Office Depots?
CM: Some of them believe that is the difference. They say we want our own shop or we want our own warehouse with our own stock, because we can then personally deliver to our customers. We have the personal contact and the personal contact every day, because the customer wants products to be delivered directly from us.
So we give our members the option to become stockless dealers, but we do not force them. There are some members that have very good margins and very good benefits at the end of the year, and they still have their own stock and their own warehouse because the customers pay for this service.
OPI: And what about competition from the mass market retailers – from the Wal-Marts, Media Markts etc, in Germany? How much pressure do German dealers get from these? I assume it’s the same there as it is throughout the world.
CM: Well, they get a lot of pressure from those companies. Because we also have the situation where not every industry partner has a clear pricing strategy. We have companies that deliver for us and that have a clear strategy. They deliver a professional product to our members and they sometimes deliver products that are more for end-users of the Media Markts and the Wal-Marts.
So in that situation it’s not a problem because they have a different product range which they deliver to the retailer and which they deliver to the cash-and-carry market.
But we also have companies that deliver the same products in both channels, and some of them do not have a clear pricing strategy. For example, it could happen that they deliver products to us for a price for which Media Markt or Wal-Mart can sell them, and then it’s a problem.
I think we have to face this market head-on. We have the situation whereby we must find a way of getting customers to buy products from us and not from Media Markt.
However, if you really look at the figures, you will find that companies like Wal-Mart or Media Markt have very good advertising and that they always put price as the most important criteria. But if you analyse it, you will see that, at the end of the day, out of ten products they maybe have one or two that are cheaper, the rest are the same price or higher.
But the people who shop at these mass market retailers think they are cheap, though that’s not always the case, but it’s the perception that is an obvious problem for us.
OPI: Looking forward a bit, you say the wholesale market is changing in Germany following Spicers coming in, and the mass market retailers obviously aren’t going anywhere either… So how will Büroring change going forward, to better serve its members as the market evolves?
CM: Well, I think it’s a combination of different services we offer our members. One very important thing is, of course, the warehouse. And, in this case, the range of products we offer with a special price and, of course, with a special service. We deliver in 24 hours and we also deliver, at the moment, more than 50 per cent of products directly to the customers of our members without a higher price.
So we do special services for them. We help them, for example, when they have discussions with their banks or we offer to do an analysis of their figures and help them doing presentations. At the moment we also try to get a better position in the market by cooperating with, for example, big members or with other groups to get bigger volume and better prices from the industry.
We have also reduced the value that members have to order to get goods with free delivery. We reduced it to €49. If they order products priced over €49 they get the delivery for free, to whatever destination in Germany, all within 24 hours.
In addition, we are thinking of having a bigger range of products here in our warehouse. So there are a lot of possibilities for maintaining the position we are in and even becoming a little bit better.
We also have very good IT support in-house. We offer our members special internet shops for themselves or for their customers. Overall, it’s a range of services that we can offer. It’s not just the warehouse, it’s not just the IT support, it’s not just the economics and the figures we can help with – it’s a combination of all these things which, at the end of the day, make us successful and will continue to make us successful.
OPI: That’s great. I’ve got most of the stuff I need now but perhaps, if we can indulge ourselves for a little bit, I was going to ask you about the football World Cup which is obviously coming to Germany this summer. So, what are you going to do after Germany gets knocked out of the tournament?
CM: (laughs) I am sure you know better than to say that.
OPI: OK, so do you think you can win it?
CM: I hope so. And I would like to quote one of your greatest ever players, Gary Lineker. He said football is always a game where on both sides 11 people play and, at the end of the day, Germany wins.
OPI: (laughs) I always say that football is a game played with 11 people on each side and, at the end of the day, England loses a penalty shoot-out.
CM: (laughs) Yes. There is a lot of truth in both those sayings.
OPI: So your feeling is that Germany can win on home soil?
CM: Well, I hope so. I think it’s a very young team and that we should be positive – and yes, I hope that Germany wins.
OPI: Thanks Carsten, that will just about do us. I wish you all the best for the future – for Büroring that is, not the World Cup!