Big Interview: Sitting pretty

There aren't many independent dealers, or indeed dealer groups, that have stood the test of time in the Swedish market. Those that have owe it in large part to very strong relationships - with customers, suppliers as well as their peers

In Sweden, many dealer groups have fallen by the wayside over the years, due partly to consolidation that has affected both the groups and the dealers within these groups. RKV is the last cooperative remaining and it’s faring very well indeed, putting up a good fight against the global players that have had a very strong presence in the country for many years and that, incidentally, are also partially responsible for the amount of reseller consolidation which has occurred.

One of RKV’s core attributes is its endeavour to help members be fiercely focused on their local market, giving them the tools and combined purchasing power to explore any specific niches and opportunities while at the same time shining with unmatched service. 

OPI spoke to Stefan Sonesson, who has practically spent his entire career at the dealer group. With plenty done and no doubt more to do, Sonesson still clearly gets an enormous buzz from seeing the group’s members thrive and sees a bright future ahead.

OPI: Stefan, you are something of a ‘lifer’ in OP terms. What brought you to RKV?

Stefan Sonesson: I joined RKV in 1995 as marketing manager following a few years of doing market research in various companies and then studying marketing and economics at Växjö University in Sweden and at Eckerd College in the US. 

I was basically looking for a marketing job after university and saw the position of marketing manager advertised at RKV. I got the job and I’ve been here ever since and became Managing Director in 2004 – that’s the simple story.

OPI: So office supplies wasn’t some kind of calling for you, or any type of family link? 

SS: Definitely not! When I came to RKV I didn’t know anything about the OP business. I joined because I wanted to work in marketing. The concept of a dealer group and selling office supplies didn’t really mean much to me, but that has changed. Today, I love the products and the business, and I think RKV has seen great developments over the past 20+ years.

OPI: What have been the core milestones?

SS: Well, the group was created in 1967. At that time it was just a few family-owned businesses cooperating with purchasing agreements and volumes. It wasn’t until 1987 that the group established its first centralised office. When I joined, I was the third person at our central office near Borås, in the south of the country. Today, it’s five of us working for RKV full time. 

OPI: How’s RKV set up today? 

SS: It’s completely owned by its members. Each member has one share and one vote. We have 25 members with 59 stores and locations, covering more or less all of Sweden. Our combined turnover is about F130 million ($147 million).

Each member pays an annual fee depending on its size and we pay rebates based on purchasing volume in our central agreements. So if you are a loyal member and buy under RKV agreements, you get a nice kickback.

Overall, we’ve gone through a stable period and had good volumes within the group, and these in turn have given good rebates. 

 OPI: I seem to remember that there were several dealer groups in Sweden at some stage. What’s the situation now? 

SS: We are the only independent dealer group of family-owned companies in the office supplies space now. And yes, you’re right. Several years back, we used to have at least four groups in Sweden. One of them was Kontorsman. Our current Purchasing Director Michael Alfinson was the Managing Director at the time. He joined RKV in 2004 and that was when Kontorsman split up. 

Most of the members came to us and some went to another group called Niofem which, as you know, joined RKV about 18 months ago. 

OPI: Tell me about your typical member.    

SS: Overall, they are all B2B and focus on delivery, although maybe three or four are a bit more retail based. A couple of members, for example, also have bookstores but it’s 98% B2B. So the stores our members have are more like cash-and-carry stores.

We as RKV only have what we call a split warehouse where we take in imported products, mainly private label, and then redistribute them to our members. As such, in addition to their stores, most members still have their own warehouse as well. This gives superior service at a local level.

OPI: How big is your average dealer?

SS: It varies. The smallest one has revenues of maybe F1 million while the largest one has around F25 million – the majority are in the middle somewhere. 

What’s important in my view is that all of them have stores and all of them employ salespeople in the field who call on local businesses. And it’s that local focus that matters so much. Our members are family-run businesses that are hugely entrenched in their community. That also means that they often adapt their offering to the peculiarities of that community. So they will work with the range that we present in the RKV catalogue, which is about 7,000 SKUs, but at a local level they might also be specialists in, say, furniture, IT solutions or workwear.

OPI: You mentioned Niofem before. Is that integration process now complete?

SS: Yes, it is. Like I said, these dealers joined us at the beginning of last year. At that point they had already produced their own catalogue, which they launched in late 2014, and they also had to honour their various supplier agreements, etc. 

So last year was effectively a year of transition, with overlaps in different areas. We started combining our volumes and while this took some effort, it’s all complete now and it was good that we didn’t have to rush the process. It gave us the chance to get to know each other and find out how we all work.  

Now we’re on track with the same catalogue, the same supplier agreements, a good overall organisational structure and, of course, great purchasing power.

The only thing that remains outstanding is for those Niofem members that are ready to join our e-commerce platform; we’ve included some of them so far, but not all. 

OPI: What’s the state of the Swedish market and how do your dealers stack up in that market?

SS: The market is growing slightly and our dealers on average have the same increase or perhaps a bit better. Last year we took some small market share. It varies in the different regions and also by member, but overall our competitors had quite a tough time and we benefited from that. 

OPI: Who are your competitors? All the globals have a big presence in Sweden…

SS: And in reality, the global players are the biggest competitors to our members. There are some Swedish companies, but not many and there are just not many independent dealers left. We also compete with the mass market operators and the supermarkets to some extent.

The competition varies more in the rural areas, where there’s less of a focus on the big operators which are usually in the large cities. 

OPI: Is that also where your members are?

SS: In the main, yes, but you also have to bear in mind that Sweden is a very long country – almost 2,000 km from north to south, so we have members that, for example, have a very good grip on the market in the north of the country or indeed some other, more remote, parts. 

Like I said before, that’s our main point of differentiation: to have a very local focus and be the best supplier to small and medium-sized businesses. That is where we excel.

OPI: But are the likes of Office Depot, Staples and Lyreco not going to the same customers as you do? 

SS: They do, in part. To start with, they have a much bigger part of the corporate cake than our dealers – although some of our larger members are also playing in that field – and they also serve the SME sector, but we are definitely closer to that local market with our field sales force, local stores, etc. 

OPI: What about online operators?

SS: We have a selection of small B2B web stores concentrating on office supplies. And over the past 2-3 years, we have seen some B2C-oriented players – those that have physical stores as well – launch a wider range of office supplies online. Adding office supplies as part of the long tail in e-commerce is definitely a change we’ve seen.

OPI: How about your dealer members – how are they set up in terms of their online abilities? You mentioned your e-commerce platform earlier.

SS: None of them are web-only operators, but most of them have a web store. We launched the first version of our platform back in 2000. As you say, digitisation has come a long way in Sweden and every year there’s a big increase in online commerce, particularly in the B2C sector. 

At RKV specifically, we are in the middle of developing our e-commerce platform for our members, and that relaunch will happen later on this year. So while most of our members have their own web stores, they are all run by RKV – we update the stores, include all the product information and imagery, run any marketing campaigns, etc. That’s a big part of our role as their dealer group so our members can concentrate on sales. 

Importantly, however, our members always maintain their own identity – the e-commerce platform is not RKV-branded in any way. Often dealers have been in the market for many years with strong local names. We’ve had discussions over time about having one common name and branding, but concluded that separate identities make us stronger.

There’s no doubt that the internet is hugely important and every member ultimately needs to have a web presence, but they also need the physical stores and the field reps – we think it’s really important that this balance remains.

And today, of course, most experts talk a lot about omnichannel…

OPI: Is the Staples/Office Depot saga having much of an impact on your market? If the merger goes ahead, Staples will have to divest all of Depot’s operations in Sweden. What type of scenario would benefit the Swedish market and also RKV dealers the most?

SS: It’s been more or less business as usual so far I’d say, certainly from an outsider’s view. Staples and Office Depot are both doing well in the Swedish market, certainly if you compare their performances to the rest of Europe. Both companies have stores as well as contract operations in the country. 

If the merger goes through and Staples has to divest Depot in Sweden, that would be an interesting situation, but only for Depot – for Staples it would probably still be business as usual. Certainly there are some rumours and thoughts about possible buyers, but it’s still a wait-and-see scenario. 

OPI: Staples/Depot aside, is there more consolidation to come in Sweden? 

SS: The main changes in the reseller channel have taken place, I believe, mostly years back when the globals came in and bought up Swedish companies. Wholesale-wise, Despec moved in, which leaves the vendor channel where there hasn’t been much movement, so we could see more consolidation in that space.

OPI: Tell me more about the wholesalers.   

SS: Well, we did have an office supplies wholesaler in Sweden called Büngers. It was a family-owned business which was bought by Denmark-based Despec at the beginning of 2015. Despec is now the biggest OP and EOS wholesaler in the country. Then we have Papyrus, but they don’t carry a wide range of OP and are more prevalent in office paper, packaging materials and jan/san products. 

We mostly deal directly with the manufacturers for office supplies, but both Despec and Papyrus are also sizeable suppliers to us. 

OPI: Talking of vendors, has your manufacturer base expanded much  given the rather stagnant state of the traditional OP category?

SS: As you say, office supplies are more or less flat, although we had good results in some segments and it’s still our main product group. We’ve had some good increases in the jan/san category and some members have also expanded majorly into workwear and personal protection equipment, as well as packaging material. 

OPI: What dictates what categories these dealers expand into? 

SS: It can be anything from specific geographical reasons, ie what type of businesses operate in certain areas and as such what type of ‘business products’ they need, or it can be historically linked and simply go back to the origin of a member. 

It’s all about local entrepreneurship – our members see the opportunities in their local markets and, if they’re switched on, they respond to those opportunities. We help them with this in whichever way we can, with services like marketing, education and product pricing/availability. 

OPI: What about breakroom products? This month’s OPI focuses on the breakroom category, so it’d be interesting to hear how important this is to you.

SS: Well, coffee in particular has always been quite an important product for us and many dealers have developed their breakroom range in recent years and some have also gone down the equipment-leasing route. 

But I wouldn’t say that the category is flying high and fast yet – there’s plenty of room for improvement. Jan/san is certainly the bigger adjacent category for us right now.

OPI: Let’s move onto the Nordic Office Alliance (NOA) that RKV joined four years ago. How is that cooperation going?

SS: It’s a work in progress but it’s going well. I’m the Chairman of the board and Michael, my colleague, is working with the purchasing group. We don’t have any permanent staff in NOA and it’s a voluntary-based organisation.

When RKV joined NOA, the main focus of the alliance was on the private label, Nordic Office, which is imported from Asia and comprises mainly traditional office products, including toner and paper. We’ve since developed it with new product ranges, new packaging designs, etc. 

The biggest change, however, has been our cooperation – under the NOA umbrella – with brand suppliers like 3M, Pilot and ACCO. We didn’t have this before and started going down this route about three years ago. Today, we have 10-12 agreements with big key suppliers and that has increased our purchasing power with brand manufacturers hugely. 

OPI: But the Nordic Office own brand remains an important component of dealers’ offering? 

SS: Yes, definitely. It’s something that is unique to a relatively small group of companies, something that differentiates us and can occasionally be used in tenders.  

But it’s not a big part of what we do – similar to our own RKV private brand which is just a small sideline for uniquely Swedish products. Our relationships with the brand suppliers are very important to us and we haven’t got a substantial private brand strategy. 

OPI: So what’s the ideal positioning of RKV in your opinion? 

SS: First up, I really want RKV to continue to be the leading independent dealer group in Sweden, comprising family-owned businesses that have a really strong local grip on the market.  

RKV as the central organisation should provide all the essential tools for our members to prosper and progress. And if – or should I say when – the market changes, we will change with it and offer our members exactly what they need. 

Working with independents is a really positive thing. Being family-owned, they have their own direction and their own goals, but they want to cooperate within their dealer group and are also fiercely loyal to us. I see many challenges ahead, but nice challenges and to me the future looks very bright.