When Bryan Kristenson and business partner Laurie Jones went into business together in 2004, it was not an office supply dealership they acquired, but a Wichita-based concession distribution company called American Fun Food that specialised in foodservice products and supplies and jan/san, supplying customers such as movie theatres and restaurants. It wasn’t until two years later that they moved back into the office products side after an acquisition opportunity arose, marking the start of sister company Office Plus of Kansas.
Since then, three further acquisitions – the most recent being the 2013 acquisition of Steelcase furniture dealer Scott Rice – have taken annual sales to about $14 million. The business now operates from five locations covering a 180-mile radius out of Wichita and employs about 50 staff.
“Things have worked out well for us from a distribution viewpoint because we have brought all these businesses together and now single-handedly deliver foodservice, breakroom and office supplies – it’s a mix that our customers appreciate,” explains Kristenson.
It has also helped Office Plus of Kansas develop a more efficient distribution model and cope with seasonality in its main product categories. Foodservice is usually busier in the summer months while office supplies typically see more orders in the new year. “Bringing these businesses together allowed us to reduce our reliance on temporary staff, attract more talented people and created a better business platform,” says Kristenson.
The next leap
“Some of the acquired dealers were at a stage where they had grown to a certain size and would not have been able to grow organically without serious investment,” he continues. “The $1-$2 million dealer, typically with the owner involved in sales or the lead salesperson; their problem is how they make the next leap, and bringing them in has worked well for us and them.”
On the subject of acquisitions, Kristenson notes that dealers should not underestimate the challenges of integrating different sets of systems. Scott Rice had been using the Hedberg office furniture system for about a decade and Kristenson admits that trying to bring that over to ECi’s DDMS system was a challenging experience, but thankfully one that is now behind them.
Traditional office supplies and foodservice/janitorial each account for between 30-40% of the sales mix with the balance coming from the furniture business, which has transitioned from mainly transactional sales towards a larger service-oriented contract offering over the past few years, especially since the Scott Rice acquisition.
Starting the business on the foodservice side has given Kristenson a good perspective on different wholesaling models and – like many – believes that those on the office supply side that work with the likes of SP Richards (SPR) and United Stationers can make good inroads into the jan/san category.
“I think our channel is more flexible and more responsive to customers’ needs,” he states, adding: “As SPR and United have expanded their product ranges that has been good for us too. We are now able to access products that our customers didn’t realise they could have the next day – it’s a new concept for them and means we can provide something the traditional jan/san resellers can’t.”
With jan/san a key category, the person in charge of Office Plus of Kansas’ supplies business has a strong background in janitorial. “Whereas office supplies is largely reliant on the seated employee count, jan/san changes how you have to prospect,” says Kristenson.
“Suddenly you are interested in a manufacturer that’s got 300 people behind a wall our sales people have never been to the other side of. It opens up a new set of opportunities, but also a new set of challenges: it’s a different buyer, a different message and a different sales process, so it was important that the person heading up our supplies business has a good understanding of these.”
While Kristenson certainly appreciates the roles the wholesalers play, one of his bugbears is how to bridge the e-content gap between what the end users want to buy and what the wholesalers stock and want to sell. “We struggle with the breadth of the product and the timing that we can go to market,” he states. “Manufacturers have product available, but when things are wholesale driven it can be a challenge.”
He continues: “I understand the wholesalers’ investment in inventory and what they are trying to merchandise, but I’ll be a healthier dealer longer term if I can find what my customer wants in a more timely fashion.”
Kristenson believes the whole e-content issue – what Independent Stationers (IS) CEO Mike Gentile has coined the ‘digital destiny dilemma’ for dealers – is one of the areas holding the independent dealer community back in terms of its e-commerce capabilities, with individual dealers lacking the resources needed.
“We have to be easy to do business with,” he argues. “I’m not unappreciative of the investments the software providers make, but at the end of the day we do not provide that ‘easy-to-do-business-with’ experience.”
Kristenson also points to changing purchasing habits as younger people – who have grown up with the internet – take on more positions of responsibility in the workplace.
“Where we’d like to be is if you can’t find a product, let us know and we’ll help you to get it. But as customers get younger, the likelihood that they will make that call to us reduces dramatically.
“We are also seeing examples of orders that used to come in regularly at certain times of the year now not showing up. Why? Because someone new has come in and ordered online – but they didn’t order it online from us. How we correct that is, I believe, one of our biggest challenges.”
Kristenson is the current Chairman of the IS dealer group and says he was initially attracted to the group because it was a better fit culturally in terms of what he wanted out of a dealer group, in particular how it developed programmes that would help his dealership grow. The regional distribution centre programme was a factor, tying in as it did with Office Plus’ stocking model. The IS national accounts programme has also opened doors into new accounts that probably wouldn’t have opened otherwise, Kristenson confirms.
Looking ahead, Kristenson says growing jan/san and developing better e-commerce functionality will be key focus areas. And he doesn’t rule out the next Office Plus of Kansas acquisition coming in the jan/san category.