Essendant’s biennial CORE Live event, held last month in Las Vegas, did not disappoint in terms of content and announcements. A new brand tagline of ‘Powering Possibilities’ was unveiled by CEO Bob Aiken as a carefully choreographed opening day of excellent seminars and keynotes sought to lift the mood of the assembled resellers that are increasingly concerned about the penetration of Amazon into the business products sector.
The wholesaler’s President of Office and Facilities, Harry Dochelli, opened the event talking about disruption, distraction and opportunity. The disruption focused primarily on (relatively) new entrants into the office and jan/san industries such as Grainger, Home Depot and Ferguson, as well as Amazon which is now the number three office supplies reseller in the US, and number seven in the more fragmented cleaning sector.
On Amazon, Dochelli also delivered the standout quote of the day: “Amazon is more than a competitor. Amazon is a habit.” Indeed.
Other disruptive forces identified were the rapidly-growing influence of millennials in B2B buying decisions. There are now 53 million millennials employed in the US and by 2020 – just three years away as Dochelli emphasised repeatedly – they will account for 46% of the workforce.
Big box distraction
The distraction Dochelli referred to was the aftermath of the failed Staples/Office Depot deal. With Depot busy integrating OfficeMax into the company – a process which was stalled throughout the Staples saga – and both big boxes trying to reinvent themselves under new CEOs, he emphasised that there was a very real and present opportunity for the independent dealer channel (IDC) to grab market share.
That subject was also picked up by Aiken who pointed out that the US market today for office supplies was approximately $40 billion in size, with the IDC enjoying just a 20% share of it. He was bullish on the prospects for independents to increase that share, but insisted that the channel dynamics of the IDC had to change.
“The all things to all men model no longer works,” Aiken insisted, as he spoke of a new strategy to reduce an overly broad assortment of product, complex pricing and incentive structures and to work more closely and strategically with key reseller and vendor partners.
That topic was expanded upon by the company’s relatively new SVP Merchandising, Inventory & Pricing, Keith Dougherty, who told the audience that the company’s long tail of products was “ridiculous”, with 66% of inventoried SKUs accounting for just 5% of Essendant’s sales. The wholesaler, he said, will now focus aggressively on attacking the tail to eliminate redundant, low-margin brands while optimising the mix of its own and national brands.
Dougherty also unveiled a Preferred Supplier Program which he claimed would “unleash simplicity” and be a win-win. A win if you happen to be on the programme, of course – like Newell Brands, the first participant – but many of the assembled vendors we spoke to were disturbed and some surprised by the timing of the announcement, although such a move had been alluded to frequently in earnings calls since last year’s disappointing Q2 results.
With Aiken and Dougherty being former colleagues at US Foodservice, it was also no surprise that the latter chose CORE Live to announce a major foray into the foodservice sector in Q4, a move that was warmly welcomed by all the dealers OPI spoke to.
The opening session concluded with Dochelli unveiling a plethora of statistics – some quite alarming – from research recently conducted among 1,500 B2B buyers that will be summarised in the April issue of OPI.
The remainder of the event comprised some superb, content-rich seminars and keynotes, with the presentation from former Amazon executive John Rossman providing a gripping insight into the unique way the global giant manages its business.
The only negative at an otherwise excellent event was a three-hour afternoon trade show that failed to capture the imagination of many dealers which scuttled off right after lunch to (presumably) enjoy Vegas, much to the disappointment of most vendors that had invested not insignificant dollars to participate.
With that experience and the Preferred Supplier Program top of mind for most vendors, there will surely be some interesting negotiations at Essendant’s headquarters in the coming weeks.