OPI: Ian, your company – Wist Office Products – has been a long-time member of TriMega. What’s your view of where the group stands today?
Ian Wist: From an internal perspective, Mike [Maggio] has done a great job of cutting costs. TriMega had too many people for what we were doing. He continues to streamline the headcount insuring a well-run and efficient organisation. There’s also much greater transparency and visibility in the group.
When it comes to engagement with suppliers, Mike has spearheaded these top to top meetings with certain suppliers and created our Supplier Council. We have very open – but obviously closed door and confidential – conversations about the challenges and issues. These frank conversations have really benefitted TriMega and increased our knowledge of what manufacturers need from us, which we can then take to our membership. His outreach to other groups and organisations has resulted in us developing major initiatives that enable us to do more while creating a more efficient platform for the manufacturers and distributors that participate.
OPI: There seems to be a shift away from the stockless direction that dealers were going in a few years ago and back towards a stocking situation. If that’s the case, what’s driving that?
Mike Maggio: If you look at the history of the industry, there’s always been a back and forth depending not only on model, but size, capabilities, etc. Yes, some dealers have been talking to us recently about stocking more and the reasons could be manifold: margin differential between direct buy and wholesale; individual businesses growing to a point where they want to start stocking more; or dealers changing their product mix to an extent where perhaps there’s not enough wholesale support. But I’m not sure there’s a real change or trend.
IW: The manufacturers have been through the wringer with Staples and Office Depot and negotiations have been difficult for them; then there are the new wholesaler arrangements, beginning with Essendant.
What I’m saying is that I believe the manufacturers are trying to re-embrace independent dealers and encouraging them to buy direct through us. We are a sweet spot for them and if they engage with us, we engage pretty quickly back to them. So it’s not just dealer driven. To me, it’s a 2017 phenomenon that sees manufacturers reaching out to dealers far more proactively.
OPI: How good is our industry at helping dealers to be more technologically enabled?
MM: The simple answer is ‘no, we’re not doing enough’. In my view there are plenty of resources – good resources – available. It’s often the case of whether a dealer is willing to invest in them.
It’s a mindset. World-class software systems are available off the shelf and at reasonable cost. But dealers have to be prepared to change their business around the system and be willing to pay for customisation when necessary. DDMS has made its living from customising literally the whole system for every individual dealer. However, that level of customisation creates significant issues when upgrading the platform.
Progressive independent dealers are making investments in technology because they realise the critical importance of it to the success of their business. That said, many dealers are not willing – or able – to invest the necessary capital which could be a significant issue for them in the long term.
OPI: What do you think the future holds for dealers that are not investing in technology and other initiatives that you’re involved in?
MM: Depending on their market, business model and the niche they’re filling, they may be just fine. But ultimately, if they don’t embrace technology and run their business as efficiently as possible they won’t be competitive.
OPI: Do you believe the failed Staples/Depot merger created the great opportunity for the IDC that was anticipated?
IW: Well, Wist is growing year on year. We’ve slowed down now that the dust is settling a bit, but our numbers continue to move north. But the bubble of OP is contracting and we just happen to be expanding within it as an independent dealer. It’s a mere share shift.
OPI: Do you believe you are adding enough new business opportunities with all the adjacent categories the industry keeps talking about?
IW: I don’t know. With the secular decline of traditional OP, are dealers adding enough to make up for it? And if I go after so many channels today, do I have that competency that I have in OP? Not quite. But there’s no doubt that there are opportunities. We’re doing a lot of apparel and safety products now, for example, but I don’t have nearly enough of that volume revenue pushing through yet.
Awareness of OP dealers is finally growing and we’re seeing that when we attend shows like ISSA/INTERCLEAN which is positive.
MM: TriMega has had a very aggressive push to add adjacent suppliers as fast and as best we can. But it’s a struggle. These industries – cleaning and breakroom, for example – operate differently. They don’t do a lot of direct selling to resellers of our size, for instance. It’s done through distributors.
Secondly, as Ian says, often the players in those markets don’t know the OP sector and awareness of individual operators is low.
OPI: I’d like to ask you about branding. Manufacturers love the dealer space because of its greater emphasis on supporting manufacturer brands, but a lot has been said over the years about the channel needing its own brand beyond the wholesaler brands such as Universal, Business Source, etc. Do you think the channel needs an all-encompassing fighting brand that the dealers could go out with?
MM: Had you asked this question 15-20 years ago, it would be an easy answer of ‘yes, we need to do that’. But I don’t think it’s realistic or necessary anymore. The conversations that we now routinely have with our key suppliers – the Averys, Smeads and 3Ms of this world – is ‘give us an alternative’. White-box it, call it whatever you want, but you’ve got to give us something to fight with. That seems to be gaining traction and I expect that we’ll see continued movement in that direction.
It’s common practice in almost every other market that the dealer community does have its own brand, but because of the way we’ve developed here in the US over the years, we just never got there.
OPI: You said something recently to vendors Mike, about taking on the credit risk for your dealers. That is quite a risk…
MM: We insure our risk and there’s a cost to that, but that’s the only way it can work. One of the strengths of TriMega is our balance sheet and our cash flow. Both are excellent and that’s because of the foundation the folks before me built in the group. And that is what allows us to continue to provide this function for our members and manufacturer partners.
OPI: Let’s talk about EPIC. Between you and IS you have about 800-900 dealers. About 400 dealer companies attended EPIC this year. That engagement is better than some groups, but why is it not closer to 100%? What do dealers tell you why they can’t make it?
MM: There are many reasons given but ultimately, I believe it comes down to dealer apathy – that is probably the biggest challenge as an organisation, and a channel that we have.
IW: It’s interesting what the dealers that do show up say – that having an opportunity to network and talk best practice with other dealers of similar size and model from other geographies is extremely helpful and beneficial. They learn things. There’s an exchange of ideas. Those that don’t come don’t get that. Which is unfortunate considering the challenges we all face in today’s business environment.