by Andy Braithwaite
November’s Global Dealer Profile takes OPI to eastern Germany to see what life is like for an office dealer in the region 20 years after the fall of the Berlin Wall
This month marks the 20th anniversary of the fall of the Berlin Wall, the event which symbolises the end the Iron Curtain and heralded the reunification of East and West Germany less than a year later.
Just a couple of months before the official reunification of Germany in October 1990, Susanne Krause started an office supplies business called BÜRO PERFEKT in Neuhardenberg, a small village about 60 km east of Berlin and just 30 km from the Polish border.
Krause had been working as a software engineer for a large government-owned agriculture production company, but became an early casualty of reunification when the company quickly slid into bankruptcy.
She saw an opportunity to start her own business, but the dealership had humble beginnings.
The first shop consisted of a 15 sq m room and an even smaller adjacent office located in the house of her parents-in-law. At first, the company dealt mainly in the sale of school supplies, but just a year into its existence she had already taken on a salesperson and a copier technician as the business grew well.
It was at this time that husband Wolfgang Krause joined the fledgling firm as Sales Manager, a post that he still occupies today.
BÜRO PERFEKT was in the right place at the right time. Conveniently located between Berlin and Frankfurt (Oder), Krause was able to develop a strong customer base and the business boomed as money was pumped into the economy.
"Before 1989 most products in East Germany were scarce," explains Wolfgang Krause. "There were only a limited amount of office machines, no copiers and hardly any computers. This created a huge demand after reunification which was why the business developed so well and good margins were possible in those days."
By 1995, BÜRO PERFEKT had outgrown its original premises and needed to expand, moving into a new 400 sq m office supplies shop with its own offices, warehouse and workshop for copiers just 100m from the original location. This shop is still the company’s only retail outlet today, offering a range of office, school and craft supplies. It also offers copier and binding services.
However, the main focus is the sale of supplies and services to local businesses. "Our customers are small companies, councils, industrial companies, as well as nationwide firms," says Wolfgang Krause. "In our region there are almost exclusively small to medium-sized businesses and larger companies are rare. In Frankfurt (Oder) there is the Europa University and many regional councils."
Despite the economic crisis and a regional unemployment rate of 11.5 percent, Krause still sees some positives in the current climate. "Since we do not have so many mechanical engineering and automotive companies as customers in our region, we do not envisage any drastic decrease in turnover," he says.
"Also, larger companies are slowly being attracted to our region. Renewable energy companies such as First Solar and Conergy have set up here and both are now customers of BÜRO PERFEKT. The last three years have been the most successful in the company’s history."
Krause sees his main competitors as the other local dealerships, but complains that they try to win business by aggressive "price dumping" that can have a destabilising effect on the market.
Global players such as Lyreco and Staples have also recently entered the marketplace. "They are also very price aggressive," he notes.
However, even a small dealership such as BÜRO PERFEKT is not afraid to take on the big guys and recently had a notable success.
"We continue to believe in our strengths and the reality of the market proves to us that price is not the only thing to compete on," states Wolfgang Krause.
"Just recently we won back a bigger customer who went to Staples for a year, but has now decided that our reliability, flexibility and service have a bigger impact on their business continuity than saving a cent or two on a folder."
Proximity and customer relations are key to the success of small dealers and BÜRO PERFEKT is no exception.
As Krause explains: "Our big advantage is the strong connection to our customers – we do not use a call centre to communicate with them. Also, we can deliver a bigger product range than some globals can, plus the quality of our products is better in many cases. We supply our customers with the products they have ordered and don’t exchange them for cheaper ones."
One area where Krause thinks that his company can add specialist value is in office furniture.
"We see the planning of office furniture as especially important," he states. "For that we use a planning software program without which we could not cope with the demands of our customers anymore. The installation of furniture is performed only by our own employees, all of whom have several years’ experience dealing with large scale furniture projects. We pride ourselves on our high quality on any furniture project from start to finish and our customer references in this area speak for themselves."
Low cost model
BÜRO PERFEKT may not be a large operation, with a turnover of just under N2 million ($3 million), but there are just four full-time employees and the company has a low cost business model, especially in terms of logistics and purchasing, which it has refined over the years, enabling it to remain competitive as the competition has increased over the years.
It joined the Büroring dealer network as far back as 1991 and was one of the first members of the OfficeStar Group when it entered Germany in 2003.
"The OfficeStar Group works very closely with Spicers in Germany," explains Krause. "Due to the big variety of products, services and reliability when it comes to delivery, we have remained competitive with some of the large players. We also use the warehouses of Büroring, which are very reliable, and we still purchase some products directly from the manufacturer."
The company seeks the best purchasing options and buys ink and toner for printers and copiers itself on the European market rather than through a local wholesaler.
BÜRO PERFEKT has also reduced its purchasing and logistics costs by no longer having a large warehouse and 95 percent of all purchases are delivered directly from the supplier to the customer. The company does have its own vans but very few customers receive their orders this way.
"Office furniture and office chairs are directly purchased from the supplier, otherwise we could not be competitive," adds Krause.
BÜRO PERFEKT also uses the power of the internet to keep costs down. More than 50 percent of all incoming orders come in via its internet shop and every new customer is introduced to the web shop concept. Customers who use the internet to place orders also receive a financial incentive.
Despite this, Krause is under no illusions that the internet presents its own competitive challenges.
"It will be tough for us to keep our momentum since internet retailers are also developing their service levels and offer comparable goods at a cheaper price," he notes.
Still, BÜRO PERFEKT has shown itself to be resilient over the years and Krause knows that he will have to continue to offer new and flexible solutions to differentiate the business from the competition.
As an example of this, local schools have been encouraged to use more technology in the classroom and BÜRO PERFEKT has been working closely with interactive whiteboard suppliers so that it can offer a specialist service in this area.
"Being quick at understanding the needs of customers and reacting faster than our competition will make us successful in the future," states Krause.
You can’t argue with that.