OPI: Over the years, Fellowes has reinvented itself many times. You describe yourself as "historically a manufacturing-based company". How would you define Fellowes now, what has changed and when? James, as chairman/CEO who has been with the firm for more than 30 years, you are perhaps best placed to answer this.
James Fellowes: Fellowes has always been a manufacturing-orientated company. We call ourselves a manufacturer and this is the position we occupy in the supply chain. We envision, develop, market and manufacture our products. What has changed in the past five years is that we do not rely on manufacturing as much for our competitive edge.
In the 1990s (and before), we worked to be a ‘low-cost producer’. We invested very heavily in engineering, machinery and processes. This strategy worked very well at the time. However, with the opening up of low-cost Asian markets during the second half of that decade, we began to face new forms of competition. Our factory floor could no longer carry the day for Fellowes. We simply had to shift our strategies and emphasis.
OPI: So how does Fellowes compete today, if not by being the low-cost producer?
James F: Our competitive edge arises from new emphasis on consumer brand marketing. We are building consumer brands – Fellowes, Bankers Box, R-Kive, Neato, Body Glove – which are known to consumers for their distinctive value. It begins with our understanding of consumers and the belief that, if we lean much more heavily on consumer insight to drive the product development process, we will bring meaningful innovation and value.
Our consumer brand model requires us to invest very differently today than, say, five years ago. Today, we pour our resources into consumer market research, product development and innovation, consumer advertising, consumer sales promotion, and other forms of consumer marketing. We have been encouraged by our investments in TV, radio, and print media, and we have some exciting new innovations in the pipeline.
We began making these investments in the US four years ago, but our work is now spreading to other global markets.
OPI: But Fellowes is still directly involved in manufacturing?
James F: Yes, of course. Many of our products continue to be made in our plants in North America and Europe, but some manufacturing has shifted to Asia.
In the past year, Fellowes has established its own manufacturing base in China for its business machines. China-produced goods offer low prices, but there are plenty of associated problems that come with these low prices. Therefore, we decided that we needed to control our manufacturing, rather than just sourcing Asian products, although we do not make all of our products.
The aim behind establishing our own facility in China is not to build a ‘Chinese factory’, but to leverage our know-how in manufacturing and build a ‘Fellowes factory in China’.
OPI: Overall then, what is Fellowes’ core vision and strategy today?
James F: Our vision revolves around innovation. We want Fellowes to become an ‘innovation machine’ whereby we are continuously bringing something that is different, something that is better, something that is novel. This begins with great products, but it also encompasses our marketing, supply chain enhancements or administrative refinements.
We believe that this is a very different approach from the well-beaten path of the office products industry. There is too much price fighting, commoditisation, ‘same-old, same-old’ in the industry. Bringing innovation to our business will result in a strong consumer brand which is respected by our customers for adding value to their business.
OPI: And is your focus on innovation concentrated on any particular product category? You’ve been in the president/COO’s seat for just over a year now Jude – what’s topical at the moment?
Jude Rake: Well, we compete in three categories, and all three are very important to us. We are the leader of the records storage business with our Bankers Box brand, which has been around for almost nine decades and is still going strong.
Our technology accessories category is our largest business even though it is our youngest, but this category is stale and needs innovation desperately. We’ve just completed a massive market research study. This will enable us to focus our product development resources on the most attractive innovation zones where consumer needs are greatest and our competition is weakest. We intend to reignite this business over the next few years with exciting new products.
Lastly, our fastest growing category is business machines. The hero of this category has been our shredder business, which is growing dramatically on the back of some new innovations and a heavy investment in world class marketing support. You asked about what’s topical at present – all our product categories are important, but the shredder business is Fellowes’ current growth engine, as we help consumers fight the fastest growing crime – identity theft.
OPI: So what are consumers and corporate users looking for in a shredder? John, as senior marketing manager of the shredder segment, you’ve been greatly involved in the research that’s been done in this area.
John Fellowes: That’s correct. Fellowes has conducted quantitative and qualitative research with home-based users, corporate users and purchasing agents in markets throughout the world.
Regardless of geographic location or shredding needs, all consumers care a great deal about quality and performance. Once they are confident that these are delivered, they seek out innovative features. For example, style, safety and ease of use are growing in importance. Consumers also want their shredder to shred not only paper but paper clips, staples, CDs and DVDs. And as the shredder becomes an essential appliance in every office from the home to the large corporation, safety is becoming increasingly important.
Our research also provided interesting insights into purchasing habits. Universally, once consumers own a shredder, they shred up to twice as much as they had expected. We have used this insight to educate consumers about shredding and selecting the machine best suited to their needs.
OPI: Do you have any new products in the pipeline in this segment?
John F: Yes, we have. Fellowes has just introduced a completely new line of paper shredders for the office known as Phase III, and a new product for both the home and office, the Designer Series One (DS1). Both the design and engineering of these products is based on consumer feedback. Performance and quality are the baseline and from there we added ease of use features to improve the shredding experience.
OPI: Please tell me a bit more about the features of these two shredders.
John F: Let’s start with the Phase III line. In designing these, we spent hundreds of hours watching consumers shred. We found out their dislikes and designed this line based on how consumers want to use a shredder.
For example, consumers guess how much paper they are putting into the shredder, tend to overestimate the quantity and jam the machine. It’s the number one frustration for them.
To solve the problem, Fellowes Phase III shredders feature a sheet capacity gauge. It’s an easy and quick way to measure paper thickness before shredding.
Another issue is the shredding of CDs. With more media being stored electronically, consumers want to be able to do this and now all Fellowes cross-cut shredders provide this capability. Also, since most shredders in the office are located under the desk and the shredding itself is done from a sitting position, all of the paper openings have been angled towards the user for easier under-desk access.
Emptying the shredder can be both messy and difficult as shredder heads can be heavy and awkward to remove. The Phase III machines feature a built-in handle and swivel design, making the head easy to remove and replace for fast and tidy emptying of the bin. They also feature either mechanical or electronic safety switches to disengage the machine when not in use.
OPI: What about the other product you mentioned, the DS1?
John F: The DS1 was originally developed for home use. However, reception for use in the office has been so overwhelming that it is now being offered in both channels. The DS1 is the first shredder designed to combine form and function. If a shredder can be called ‘sexy’, this is it.
It’s a black and silver sleek design that is totally based on consumer input. Consumers told us they wanted an attractive looking machine that they could display, not hide under the desk. They also wanted a wastebasket built into the shredder. The DS1 includes a silver mesh five- gallon basket with a pedal that opens the basket when engaged.
Another advancement Fellowes has made to the DS1 is the introduction of its patent-pending Safe Sense technology.
And this is where the real big news is. An electronic sensor surrounds the shredder’s ‘throat’, or what is commonly known as the paper opening, and shuts down the machine immediately when it comes in contact with the energy field created by a human or other warm-blooded animal. With three patents pending, Safe Sense is expected to revolutionise the shredder industry.
OPI: As you said before, due to the ever increasing danger of ID theft, shredders have become a household appliance. How do you market them to the various channels you’re selling to? And does your marketing strategy vary in geographic terms?
John F: Regardless of geographic location, Fellowes is the industry leader in educating the press, public officials, businesses and consumers about identity theft and using a shredder as the first line of defence. Our public relations, advertising, packaging and merchandising all address this issue and assist consumers in selecting the shredder that best suits their needs.
We recognise that identity theft, though more prevalent in some parts of the world than others, is a global issue that affects every individual and business, regardless of size, so our approach is integrated and consistent across all touch points throughout the world.
OPI: In a nutshell, what makes Fellowes stand out against the rest in your field?
JR: Our relentless focus on growth. We believe that our commitment to working with our trade partners to profitably grow their top line revenue is unparalleled in our industry, because we are investing heavily in consumer insight, innovation and marketing support.
Price is important, but there has been too much focus on price at the exclusion of innovation, and the end user has suffered. We are convinced that we can move this industry out of the commoditisation doldrums with continuous doses of consumer-inspired innovation supported by good marketing that drives awareness, trial and repeat purchase.
It’s not rocket science, but a formula that has been proven time and again.