As one of its fastest-growing product segments, just over a year ago breakroom was removed from United Stationers’ Lagasse business and became a unique category under the company’s Supply division, alongside categories such as office supplies, technology and office furniture. At the same time, Jeff Bobroff was appointed Director of Category Management, Breakroom, tasked with bringing a stronger focus to the category and setting its strategic direction.
One of the first tangible results of Bobroff’s work has been the recent launch of a catalogue purely dedicated to breakroom.
OPI: First up, please tell me about the new breakroom catalogue.
Jeff Bobroff: Sure. The catalogue is really a very good representation of how we have evolved in the category and how we hope our dealers will evolve. It’s a sizeable publication – over 100 pages – and it looks like what we call a ‘magalogue’, a cross between a magazine and a catalogue. It’s different from any of the catalogues that we’ve done in the past and includes a combination of educational information and plenty of lifestyle imagery.
OPI: How many products are in your breakroom assortment now?
JB: We added about 300 new products to what we had in our 2013 ‘Everything for the Workplace’ catalogue, so in total we now have about 1,000 SKUs.
OPI: What makes up these extra products?
JB: We enhanced our offering in a couple of areas, including snacks and cold beverages. We had a very limited assortment of cold beverages in the past, but really bolstered our offering here with soda, juices, sparkling water and flavoured waters, and a wider selection of energy drinks.
OPI: There’s always plenty of talk about coffee – how important is it to you?
JB: We have a saying and that is ‘win coffee and win the breakroom’. Industry statistics say coffee is 70% of the category so it’s incredibly important that we have not only a great selection of coffee – our offering has been pretty decent for a while – but that we have a coffee offering in the marketplace which allows our customers to be successful.
We recently launched a programme called Perks in the dealer community. The brewer is a key component of winning coffee and Perks aims to remove the obstacles that our dealers might have. These include the capital risk around buying and hiring brewer equipment, but also everything to do with installation and service.
There are certain brewer models we stock and others that we make available through our third party partner BUNN. Essentially, dealers are working with United and BUNN on the installation and service aspects of brewers as well as the training and support, in exchange for increasing their breakroom purchases with us. With this cooperation they also feel more confident that, if they win an account, they are able to do everything they need to do to keep the customer happy.
OPI: What other issues are there that dealers wishing to sell that category need to be aware of?
JB: As with everything new, there’s always an educational and a confidence component. Most of our dealers are accustomed to selling certain types of products, but when you get into food and drink and issues like expiry dates, the different types of coffee roasts, pods and cups and then of course packaging quantities, there’s a learning curve.
OPI: Is it a steep learning curve?
JB: It depends. People know what a Doritos chip is and they either like it or they don’t. Like I said, there are a couple of spots where dealers have to educate themselves and feel comfortable with what they’re selling, but most of the products in the breakroom category are for everyday general use, so for the most part it isn’t a huge learning curve.
OPI: Where do the biggest opportunities lie for dealers?
JB: Dealers have huge advantages in terms of service and the breadth of products they offer. Quite often the end user is serviced by those dealers several times a week, so there is a big relationship advantage as well.
OPI: Who is your sweet spot dealer in breakroom?
JB: There’s an enormous opportunity with our existing customers, both in terms of these dealers penetrating their end users as well as getting a bigger share of wallet for those that are a little more established in the category already. Before breakroom became a unique category for United last year we were mostly reactive to the marketplace and definitely had a bit of catching up to do. We believe we did that successfully in the last year, particularly with our existing customer base.
With further investment and creating value in the category, we will hopefully also gain additional customers in the breakroom space, but for now it’s really about helping our dealers in terms of their evolution and sophistication in the category. If they currently sell Folgers coffee, creamers and sugars, look to them to sell snacks and appliances. If maybe they sell K-Cups but don’t have an offering for traditional brew, let’s help them get that full offering.
OPI: What has been the feedback from your dealers with regards to your more concerted focus in breakroom?
JB: It’s been very positive. We’ve had a good response to our training programmes and also some very positive feedback to the Perks programme I mentioned. So I think the dealer community is pleased with the direction we’re going in and we’re trying to lead them as best as we can to help them grow.
OPI: So what now? Are there, for example, any products that you think could be further explored that you’re not stocking at the moment for whatever reason? JB: Good question. Economically, drop-shipping liquids is a bit of a challenge because of the ratio between the line value and the weight. If you have a 24-pack of water and it’s a $5 item, when you drop-ship that item with your packaging it adds cost. But that’s a challenge for the whole channel and is similar to what’s happening with copy paper – heavy item, low value.
Something else that is an opportunity as well as a challenge relates to products requiring temperature control and which conventionally don’t fit into our current distribution model. There are opportunities for us to round off our service offering, both in terms of categories that we provide today where we continue to add options for our dealers, as well as products – like chocolate – that are non-traditional because they require temperature control.
OPI: Much has been said about the fantastic opportunities of breakroom for the OP community. Are we anywhere near reaching maturity or is the current growth sustainable?
JB: The category is still growing and that growth is very sustainable. According to industry sources, breakroom overall is a $4 billion category, projected to grow at about 3.5%. That’s not a huge growth, but if you look at the OP channel, it only owns about 14% of that market. Like I said before, OP players have a superior service proposition and a convenience factor that allows them to leverage their current relationship, their current product breadth and everything that they’re already doing for that customer. So they really have an opportunity to take share.
It’s not a discussion about ‘here’s my price on this item’. Instead, it’s about: ‘Hey, you’re already buying your office products from me; I want to sell you all the business products you want in your office and breakroom is a big part of that. If you’re sending somebody to a warehouse club or you have an office coffee service dealer coming here, you don’t need either of them. We can provide you with the products and the service that you need.’
It’s really about OP dealers embracing this category, getting comfortable with it and selling their overall value proposition.