There is not much good news coming out of the Italian economy at the moment as the country continues to face high unemployment and government austerity measures. Reports suggest that for the second consecutive year the traditional office products market is down by around 15% and that the business machines (printers/copiers/MFPs) market has dropped by as much as 20%.
In this context, the continued strong growth of second generation independent dealer GBR Rossetto is a real eye-opener. The company has confirmed that its 2013 sales are on target to reach €36 million ($47 million), an increase of more than 10% on the 2012 figure.
GBR is based in the town of Rubano (Padova), about 40 kilometres (25 miles) from Venice, and was founded by the parents of current CEO Antonio Rossetto and CFO Elisabetta Rossetto in 1958. In the early years of the company, the office supplies business developed mainly in and around the Veneto region of north-east Italy.
In the 1990s, however, the business expanded throughout Italy, becoming a nationwide player due to a significant investment programme that included investing in both people (on the sales, logistics and technical side) and in the resources and infrastructure necessary to support this expansion. The company now operates out of a modern facility that includes 7,500 sq m (75,000 sq ft) of warehousing with a further 2,100 sq m of warehousing located nearby, and directly employs over 100 staff.
Copy and print growth
While the majority of business still revolves around office products, in the early 2000s GBR began to develop a business machines and supplies leasing offering, which has now grown to represent around 25% of total sales.
“We realised that companies required products not only on an on-demand basis, not wishing to invest in stocking individual items themselves, but in addition were no longer prepared to be financially or operationally responsible for the maintenance of their office machines and relevant parts replacement costs,” explains Antonio Rossetto.
This has now grown into what is essentially a successful managed copy and print business with current multi-year contracts worth more than €50 million and generating around 3.8 billion guaranteed pages – including half a billion colour copies.
GBR has developed a flexible print offering, working with brands such as HP, Xerox, Ricoh and Samsung, which allows it to tailor contracts to specific customer needs. It has also created its own print management application called GBR Assist that has been installed on 40% of its managed devices – with the goal of reaching 70% by this time next year. This software allows GBR’s technical team and customers to be automatically updated on toner levels of networked machines, and provides print trends, consumption data and maintenance scheduling in order to anticipate future failure or parts replacement. It also collects the copy volume data for billing purposes.
“We have progressively expanded our software functionality in order to reduce costs and increase document security,” adds Rossetto.
“Our highly trained technical team is certified to offer our customers professional assistance in areas such as data security and WiFi printing for mobile devices.”
On the office supplies side, GBR offers around 9,500 products grouped into 13 categories. It also has a customised print service ranging from business cards to banners and a growing promotional items business.
The office products division has increased the top line by around 7% in the first half of 2013 and Rossetto points to strong growth in service-orientated categories such as furniture, digital printing and customised products. Relatively new areas such as safety, hygiene and cleaning are also achieving good results.
Sales have also been boosted by a growing number of GBR-branded private label products that now cover almost all categories, and by an extensive eco-friendly range of items.
Supporting the salesforce
As is the norm in Italy, GBR uses the services of a network of independent sales agents who are responsible for the bulk of the company’s sales. Currently there are around 230 agents working for the reseller and around 60% of these derive their income exclusively from GBR, with the other 40% also representing other, non-competing firms. In addition, GBR has a 15-strong team of its own which focuses on the development and management of key accounts, and provides technical and contract support to the salesforce. GBR is also hiring a training professional in order to develop cross-selling and ensure that agents are up to speed on adjacent categories and the new digital tools.
This relatively large sales team leads to a lot of face-to-face contact with customers, which is still a vital way of doing business in a country dominated by small and very small businesses and where personal relationships are all important. However, GBR has still provided its agents with modern tools and each rep is able to provide customers with an updated online B2B sales platform. For the office products business, the company will be introducing a tablet app for agents later this year while the business machines software application is being improved to provide real-time comparisons with competitors’ offers.
Solid financial position
About three-quarters of GBR’s customer base is made up of small and medium-sized private businesses, while the public sector and local government entities – mainly served through the government’s online procurement platform – account for the remainder. Rossetto says that GBR’s growth has been helped by customers’ confidence in the reseller’s financial position.
This was underlined at the end of 2012 when D&B gave GBR its highest ‘Rating 1’ level in recognition of its prompt payments to suppliers. GBR raised its share capital by €400,000 in December last year and continues to invest in improving systems and infrastructure, including €600,000 which has been earmarked for upgrades to the logistics platform and customer service.
Rossetto claims that not all competitors in the Italian market are in such a strong financial position.
“Some companies that were performing very well several years ago have seen profits fall to such an extent that their long-term future is in doubt,” states the GBR CEO. “Market analysis using financial databases clearly shows some cases of competitors in financial difficulty, caused by their willingness to pursue inappropriate sales methods and marketing strategies.”
He also points to global competitors who “compete aggressively on price regardless of maintaining profit margins”
“Today’s market requires a more innovative approach regarding the range of services and the quality of products,” he adds. “Right now we believe it is essential to focus on what we do best and to avoid diversifying distribution policies. This, however, does not mean neglecting innovation and new forms of communication aimed at expanding the customer base. Sustainable economic development should be driven by careful management planning rather than by the need to simply ‘close out the year’ with increased sales figures.”
We may be hearing more about GBR in the near future. The company has never been a member of a dealer or buying group, but this could be about to change.
“Now that we have achieved significant national visibility, we are evaluating potential partnerships with international purchasing groups,” says Rossetto.