OPI: Can you give us an overview of the company as it is now in terms of the number of markets you’re in, the number of employees that you have, etc?
CM: ACCO Brands EMEA operates in most European countries; we have sales offices in pretty much every country in Europe.
In all, we have about 2,000 staff, which includes a significant manufacturing base. We have four European manufacturing facilities in Poland, The Czech Republic, Belgium and Sweden, plus several smaller local factories addressing markets that are either remote geographically or where there are specific products that don’t make shipping a viable option. ACCO in Europe did not have significant manufacturing; they only had one factory in Portugal and we integrated it into the new ACCO Brands manufacturing footprint in Europe.
Distribution-wise, we have our main European distribution centre in Heilbronn in Germany. We announced in the fourth quarter of 2017 the closure of the legacy ACCO central DC in Born in the Netherlands and we’re merging that into Heilbronn. We’re on track to complete that process by the end of June. In all, we have closed three warehouses and eliminated nine offices where both companies had offices and merged the workforces there.
OPI: Where is the headquarters of ACCO Brands Europe now?
CM: We have three key locations and they are based on the activity and on specific responsibilities. The first one is the UK, in Aylesbury; obviously, the UK organisation is based there and we also have about half of our marketing competence there, responsibility for the legacy ACCO brands and responsibility for business machines.
Stuttgart is the second one which is located in our biggest market of Germany. There we have the rest of marketing, including communications, responsibility for filing products, and responsibility for legacy Esselte brands like Rapid, Esselte, Leitz.
The third one is Warsaw, where I happen to be, which is our service of excellence for finance, accounting and IT. That’s the shared service centre and our biggest manufacturing site.
So those three are the core locations and is where our leadership team resides.
OPI: And a quick recap of the senior leadership team.
CM: Most of us have been together as a group now for 15 years, so it is very stable. Apart from myself, there is SVP Finance Steve Boaler and SVP Sales Nigel Gunn who both have more than 30 years’ experience in the industry. Incidentally, Nigel started at Nobo, then he was with Esselte for many years, and now he’s in charge of the sales of ACCO, so it has come full circle for him.
Arild Olsen, SVP Marketing, and SVP Operations Kjell Clefjord have each been with the company more than 25 and 15 years respectively.
OPI: So, all former Esselte managers.
CM: Well, we kept the top five from Esselte, complemented by managers new to the organisation.
OPI: Combining those two cultures must have been an interesting time.
CM: It still is. This culture melding is probably the most challenging because no one knows exactly what the final model will look like. As the organisation in continental Europe is predominantly based on legacy Esselte, we have to be careful; on the one hand we are defending something, and on the other hand implementing other things. The people in legacy Esselte are highly motivated, typically dynamic and they don’t immediately recognise the benefits of going public. So that takes education, explanation and convincing; it’s an ongoing process.
OPI: So, you’re having to sell that to the legacy Esselte staff?
CM: Yes, because for the legacy ACCO side, these are obvious things. On the other hand, they don’t fully realise that some of their processes may limit their ability to act in the market, to be flexible, aggressive, competitive, etc. It slows them down, and, for those of us coming from Esselte, we have a fresh view on that and we challenge it actively.
But the ultimate responsibility of the President is to ensure that we are fully compliant with public company regulations.
The one thing we must not challenge and where we cannot make comprises is with compliance. We have to make sure that we are Sarbanes-Oxley compliant and that’s been our priority. It’s been quite challenging and we’re still going through it. We’re going through several tests now on how successful we were and I think we’ve done a good job. We have achieved a great deal and the company is ready for any audit or test of compliance, but it’s been hard work.
OPI: Do staff feel they belong to ACCO Brands Europe, or do people in Germany, for example, still think of themselves as Esselte-Leitz?
CM: Brands are important, so I see nothing wrong when people connect themselves in Germany, for example, with the Leitz brand. That’s a good thing. But we recently had our first yearly sales kick-off of the combined organisation and I can say I was very impressed, how integrated the sales function is.
I can confidently say that we are one company, we are ACCO Brands EMEA. There is no old ACCO, there’s no old Esselte; and there were people at the kick-off who’ve been with those businesses for many years, so I think we did a good job there.
The formal difference in the cultures – what I said about public reporting – does not affect our new sales organisation; it’s run pretty much in the same way as it was before. We feel that we have the same level of enthusiasm in the team, and I strongly believe that we will be able to achieve the same results as we did before.
OPI: Have you brought an ‘Esselte’ way of thinking into the UK?
CM: It wasn’t very difficult. We had really good people on both sides; we saw great enthusiasm and a great improvement, especially in the sales team which is really what matters to us in the marketplace. We merged Esselte into ACCO, sales-wise, administration-wise and distribution-wise and we did it in just a few months. The deal closed on 1 February and by 1 October we were pretty much fully integrated, shipping from one warehouse, invoicing from one system, and with customer service integrated.
OPI: Was that the plan?
CM: We were on plan, on schedule and on budget. And I have to say, we restructured ACCO UK quite heavily because there were some centralised European functions located in the UK that we no longer required. For instance, customer service in the new ACCO Brands is local. In legacy ACCO Europe, it was centralised, which we found less effective.
OPI: What is your exposure to large accounts such as Staples, Office Depot and Lyreco?
CM: They are less than 20% of our sales.
OPI: So, there’s no dependence on one massive customer?
CM: They are all very important to us but we are not reliant on one customer or a small group of customers. But we care about this channel and we’d really like to grow there. But it’s been difficult. As you well know, the market is different, but we have about 10,000 customers in Europe in total.
OPI: When you look at the channels that you sell into, how are you adapting to the growth of online resellers?
CM: The obvious example would be Amazon. In that sense, we’re going where they’re going and we’re there to partner with them. But we try to balance various channels and not give any preference to one in particular. We work with everyone that sells our products, but we would not refrain from entering new channels and getting technologically ready to work with them. We have to stay on top of these changes.
So Amazon is important to us and as long as we understand their development and we understand how to work with them and it allows us to manage our business, we’re going to work and support their business.
OPI: We do hear things about Amazon perhaps being a little bit more ‘challenging’ to work with than it was before.
CM: In the sense that they are becoming more knowledgeable about the industry. They’re becoming more professional and in a structured way they’re putting more pressure [on vendors]. But who would not expect that knowing who they are and how big they are? It’s not a surprise, and we still believe that within this development into a more professional approach, we still have a huge potential.
For now, we feel we understand the way they run the business with us , but what the future brings and how they can affect the rest of the industry, it’s hard to predict. They’re gigantic. They’re a superpower. I hope they will continue to grow the market for our products. I think in some instances there is evidence they are actually developing the market for us in the consumer environment. They help the sales, and the awareness among consumers is enhanced because of that. The moment they decide to compete with the manufacturers it will be a different story, in a big way.
OPI: Which they do with their Amazon Basics range, for example. I think they do shredders as one of their categories…
CM: And that’s obviously a threat, but everybody has tried that; every big retailer has tried to compete with the manufacturers to some extent. In the long term, there is no evidence they’ll be successful.
Strategies fluctuate. Some reduce private label, some develop it, but no one can really prove that this model supports their business to be honest. My theory is that people should do what they’re good at. Good branded manufacturers invest in development, in innovation, in trends, and that’s part of their responsibility; others should focus on what they’re good at. When you start mixing roles and responsibilities, then nothing positive will come in the long term.
OPI: Any thoughts about manufacturers selling direct to consumers?
CM: This has obviously been a recurring question over the years, but it’s not something that we see as strategic for us. We have pockets of sales with some seasonal products, for instance, but it’s not a strategic initiative for us and not even something we are testing. As I said, people should do what they’re good at and as long as the existing channels and emerging channels do their job and we feel that we have the right access to the consumer, there’s no desire to expand. We are better connected than ever to the end user without going direct, so it’s not really a consideration for us and it’s not a temptation.
OPI: To what extent are you looking further ahead in terms the product portfolio? Diversifying into other product groups, for example?
CM: That is something we are thinking about and we’re evaluating various areas. But we’re analysing it from the consumer perspective, not from a manufacturing nor even from a reseller perspective. We do not have any specific plans today, but our primary thoughts are around our positioning.
Our inclination is to focus on the more premium segment because we think that to be able to invest in products, features and designs, we need to make sure that we get paid for it! That’s not only the cost of product, but also certain premium value-adds there.
Our experience in the office products environment with the Leitz brand is very encouraging to us. I don’t want to dwell on that because it’s early days, but, yes, we do have a longer-term perspective.
Today Europe represents about a third of our company sales. I strongly believe that, like the whole industry, Europe should be equal to North America so there is some catching up there to be done.
For this to happen, there is innovation and entering new areas, which can be organic or through acquisitions. Both are equally important and both are likely, but not just yet: at the moment, our hands are full, but in the not too distant future we will be analysing the opportunities in the market and we will be looking for product extension adjacencies, again through the eyes of the consumer. Probably fields that are close adjacencies to what we do today in the consumer premium market.
OPI: What’s the strategy for the Kensington brand in Europe?
CM: Kensington is an important brand. It’s part of my responsibility in Europe and we approach the market two-fold. One, and the largest part, is what we call the tech channel, which is serviced by a dedicated Kensington sales force working directly with equipment manufacturers, the Dells of this world and so on.
The other part is through what we call the Kensington for office products channel, security and ergonomic products, for example, that is our brand in the technology, computer and tablet space that will be sold through the office channel.
OPI: The brand has never been able to gain much traction in Europe. Was that because legacy ACCO didn’t really give it enough attention?
CM: They did give a lot of attention to it, but I would say they did not fully exploit the potential they had in the office channel. They never used the sales interface to the office products market to sell Kensington in any big way. We think that’s a missed opportunity and we want to change it. We want to use our German Leitz organisation to sell Kensington to the German office products market, for example.
OPI: How important is your message regarding the breadth of products you offer?
CM: It is important… and it’s true, by the way. There’s no other company now in Europe that offers all the brand values and products that we have – that’s a fact. We have good competitors in different categories, but there’s no one else like us who does a good job across all those fields. I don’t want to sound arrogant, but that fact is that we have innovative and competitive products in all the categories we address, even with consistent design and colour trends across the different ranges. So, in an era of rationalising products, rationalising brands, and rationalising suppliers, it’s something that every serious long-term oriented reseller should seriously evaluate. It drives productivity for them.
It’s a dialogue we like to have. All we need is the chance to come in and present it and convince those we are talking to. I think that’s the win instead of short-term paying for the business.
OPI: To what extent are you sharing best practices and ideas with your colleagues in the US?
CM: We do some. With my management team, we have had opportunities to visit some US facilities, but it’s a big, complex organisation on both sides and everybody’s busy, so it’s a process that we’ve only just started.
There’s a lot in common, but we’re not only learning about what our colleagues in the US or globally do, we’re also learning about ACCO itself. We’re learning and we’re building a new business. So the answer is yes, sharing best practices is important, but it’s in the longer-term priorities.
OPI: To flip that around, to what extent do you think ACCO in the US will look at what you were doing at Esselte before and think they could learn something from that?
CM: I’m very pleased to say they have already been doing that and are they are very interested in areas such as product development and our approach to the design. Generally speaking, products in America are very sober in design; they’re less colourful, less attractive visually. That’s something our colleagues in the US are actively looking at now, and I think in general they like our product development process a lot.
OPI: Do you envisage the possibility of ACCO selling the Leitz brand in the US?
CM: ACCO bought Esselte with all of its brands, so of course its’s a possibility. Whether and when it’s going to happen, it’s really hard for me to say. But we could imagine that there are features, designs and solutions that will work in the US, and that’s something for our colleagues to look at.
And we are doing the same with products that ACCO only sells in the US. So each of us is looking at what could work, what could be adopted and transferred. We’re one company, we really are.