UK and European suppliers disgruntled as wholesalers review 2012 pricing.
The former DS Smith-owned wholesaler Spicers may now be two separate companies, but there was an uncanny resemblance to their purchasing strategies at the start of 2012 as suppliers on both sides of the English Channel were asked to review previously agreed pricing terms. The issue was probably the main talking point at Paperworld in Frankfurt and some vendors were suggesting that they may even pull out of the UK market altogether.
Under pressure
In the UK, Spicers unveiled a number of pricing and payment demands (or ‘requests’, depending on how you look at it) at a ‘supplier engagement day’ in mid-January. They included:
A retraction of 2012 price increases agreed at the end of last year
A further 5% reduction based on 2011 cost prices
A 1.5% discount on existing payment terms or a further 30 days
A 2% ‘investment rebate’ to support 2012 investments.
CEO Alan Ball described the meeting as “robust”, but told OPI that he felt Spicers was not asking for anything unreasonable from its vendors.
The wholesaler’s line is that the fall in certain commodity prices and the strengthening of the euro versus sterling in the last six months – and since the 2012 prices were agreed – means that vendor prices need to be re-evaluated.
Ball also pointed to a number of price increases over the last 12 months which have “hit the pocket” of the wholesaler and its dealer customers. In fact, he said that Spicers is coming under increasing pressure from dealers to reduce its prices, a recurring message he noted from the recent Furnology roadshow meetings.
As well as the general soft trading conditions, Spicers referred to the end-user’s preference for cheaper house-brand products over vendor brands, suggesting that it would continue to reduce the number of vendors and brands featured in the Spicers catalogue.
“Some of the vendors [at the January meeting] won’t be part of Spicers’ future,” said Ball. “That’s the impact that the market and the end-users are dictating.”
The Spicers UK CEO added that some vendors – including some major players – had already accepted the wholesaler’s terms, “begging the question if we were ever asking enough”, but is clearly expecting further meetings to take place with the majority of vendors over the coming few weeks. Reaction from vendors that OPI spoke to both during and after Paperworld ranged from “disappointed” to “disgusted”
Buying below its weight?
Contentiously, Ball believes that Spicers (when it was owned by DS Smith) didn’t receive vendor terms that were in tune with its size, suggesting that the former European purchasing team could have bought better. That’s sure to raise a few eyebrows amongst vendors that had to deal with renowned negotiator Stewart Barton-Taylor for a number of years.
“We’ve made an ask – our team wouldn’t be doing its job if it didn’t and [the vendors] wouldn’t be doing their jobs if they didn’t negotiate. [I hope] we end up with a sensible position in the middle and then move on,” Ball commented.
This, at the end of the day, probably wouldn’t be a bad result for Spicers UK taking into account
its overall reduced purchasing power.
European champions
Unipapel-owned Spicers Europe has also been asking vendors to make a number of concessions – not wholly dissimilar to those in the UK – albeit wrapped up in a slightly different message to that of its namesake wholesaler on the other side of the Channel.
“We actually want to increase the number of European partners and develop closer relationships,” Unipapel CEO Millán Álvarez-Miranda told OPI.
His argument is that the Spicers Europe story is one of growth, suggesting – although not explicitly stating – that this is not the case in the UK.
He also affirmed the Spicers wholesaling business model – which also holds true for its IT distribution business Adimpo – of being able to offer a wide assortment of slower moving ‘B’ and ‘C’ products and turning these into faster-moving items for vendors.
“We will maintain our catalogue with 20,000 SKUs because one of our strengths is that we carry more SKUs than anyone else,” explained Álvarez-Miranda.
“We realise that there are some SKUs which present a problem for vendors and resellers, but we hold them in stock and offer next-day delivery – that is our job as a wholesaler.
“We are not going in the direction of consolidating into a narrower portfolio of SKUs and brands. To do that would be more like the large contract stationers.”
Investment contribution
There are two main arguments that Spicers Europe is putting forward for gaining increased vendor support.
The first is simply that if Spicers grows its business across Europe then supporting vendors will grow with it. The classic win-win situation.
The second – perhaps more controversial – argument is that vendors should make some contribution to the investments that Unipapel has made over the last three years.
“All we are saying is that suppliers should share a small part of this investment we are making on growth,” stated Álvarez-Miranda.
“The effort we are asking from suppliers compared to the effort we have made is very limited,” he continued. “That sharing of the effort will give vendors a chance to grow, not just to take a bigger part of the cake, but to actually be able to grow the market.
“This is a free choice for suppliers. If they don’t believe that there is any opportunity to grow with Unipapel, Adimpo and Spicers, then they are free not to participate.”
Álvarez-Miranda didn’t go as far as saying that vendors which didn’t help “in this collective effort” would be shut out of Spicers’ future, but he did say that it would be “unfair” for some suppliers to make the effort and others not to.
However, he did leave the door open for some kind of compromise.
“Life is about negotiating and we are always open to discussion – one of our core values is collaboration,” he said.
“However, it’s not a question of whether there is room for negotiation. The most important thing for me is that the vendor community feels that there is an opportunity to do something differently.”
Spicers confirms leadership set-ups
Spicers UK & Ireland
Changes to the cost structure have seen the departures of Merchandising Director John Fenton and Supply Chain Director Vida Barr-Jones.
The former UKIMT board has been disbanded and replaced by a new strategic leadership team.
The team and its responsibilities are as follows:
Tom Rodda becomes Sales & Marketing Director. Director of Marketing Services Jeanette Bresitz and her team report into Rodda
Greg Pritchett takes responsibility for all procurement, catalogue production, pricing and data under the new title of Commercial Director
Shirley Irons is responsible for all UK & Ireland HR activities as HR Director
Siobhan O’Connor continues in her role as Managing Director Ireland
David Molyneux will report to CFO Sarah Jones as Director of Inventory
Mark O’Neill will oversee customer services, warehousing and transport as Operations Director
Mary Curtis recently took over as Director of IT reporting to Sarah Jones and has responsibility for all functionality and development of the company’s IT infrastructure
Phillip Turner was recently promoted to the newly-created role of Director of Business Development. Reporting to Tom Rodda, he will be in charge of Spicers’ managed print services solution, the Spring last-mile delivery initiative and, at the beginning of April, will also take control of furniture sales for the UK.
At the same time, the number of reporting regions on the UK mainland has been reduced from four to three.
Spicers Europe
Jean-Yves Sebaoun has been confirmed as Managing Director of Spicers Europe.
Sebaoun has been with Spicers for the last 12 years and acted as COO in the months leading up to the sale to Unipapel. In addition to his Managing Director role, he will continue to have responsibility for Spicers France.
On a European level, Rob Abrahams – who was previously a member of the EU purchasing team – has been appointed as Purchasing Director, and former France Marketing Manager Philippe Guillotin takes on the Marketing Director’s role.
Joining Abrahams on the purchasing side are Dennis Albers and Pieter Wolters who have been named as Category Directors. Both men have extensive experience in the OP industry and worked together at Office Depot in Europe.
The Managing Directors of individual countries are largely unchanged with Thomas Apelrath (Germany), Eddy Priem (Benelux) and Fabrizio Pistoni (Italy) staying on. The only major difference is in Spain where Spicers has been without a permanent country manager for some time.
The decision there has been taken to integrate the management teams of the Unipapel Distribución reseller business in Spain – which includes the UniStar dealer brand – and Spicers Spain under the leadership of Javier María González Tejera.
