As a country with a population of just under 25 million people, Australia could be considered a minor player with a relatively small office products market in the great scheme of our industry. However, over the past year or two, the Australian OP sector has experienced as much disruption and activity as any other market globally.
The action, though slowed, has far from stopped and what will unfold ultimately sits with the boards and the management of the key players involved. I fear, however, that an element of complacency and a lack foresight, urgency and strategic capability from all industry participants will lead to further challenges.
Shaky corporate sector
Let’s take a look at the B2B reseller network, in particular the corporate sector, for a start. The big global resellers, while securing large volumes and commanding great market share, have absorbed unfathomable trading losses that are quite simply unsustainable. Enter the saviour – albeit often short-term – of many a large operator: private equity firms. Platinum Equity marched in with what seemed, on the surface, to be a sensible approach. Buy Staples, rebrand it to Winc and then look to consolidate the two leading organisations in the country through the additional acquisition of OfficeMax.
A good plan perhaps, but easier said than done, predominantly due to the regulators dragging out the review and approval process for months. What impact will this have? Is the deal and the companies in it salvageable?
The shining light in the big end of town remains Officeworks. Nearing A$2 billion (US$1.6 billion) in revenues, this operator continues to enjoy high single-digit growth and an ever increasing footprint. That said, the bulk of its volume is in the B2C retail market. There’s no doubt that in retail, Officeworks is in formidable shape, but while not reported individually, industry intel suggests that the company continues to struggle in B2B. Lack of range, service, B2B expertise and credibility all contribute to that channel representing less than the rumoured 15% of Officeworks’ total business.
Is there anybody in the B2B space with a successful, profitable model? It is definitely not Lyreco, the remaining well-respected global player. Like its counterparts, it continues to find profitability in Australia a challenge.
That leaves the independent channel which is quite diverse in itself, ranging from large, standalone family-owned enterprises to small operators that come together in the buying groups. The latter I can speak about with some authority, having headed up one of Australia’s leading dealer groups – Office Choice – for the past five years.
Similar to the US, Canada and the UK, there has been a real resurgence in Australia’s independent space. Complete Office Supplies, a family-owned B2B specialist created quite the stir when it entered into the OfficeMax acquisition battle.
And why should this impressive, well-managed and successful business not be in the same conversation as Staples? Who says independents cannot mix with the big boys? That has certainly been the focus and mantra of Office Choice and as a result we have steadily grown the business for the past four years.
But while I’m confident about the future of Office Choice thanks to our healthy balance sheet, 2020 strategic plan and recent dealer acquisitions, overall I feel the picture is a little more hazy.
The need to up your game
In particular, I am concerned that small operators, most notably in the buying group space, are not open-minded enough and evolving fast enough. With Amazon now finally on our shores too, further complacency is not an option.
The goal must be to future-proof our business. And perhaps the supplier community is heading in the right direction in that sense. ACCO Brands merging with Pelikan Artline, Australian Paper buying out Edwards Dunlop and GNS acquiring state-based wholesalers V-Wholesale and Satex all demonstrate an appetite for progress and an awareness of a changing market.
The alternative? The recently announced wind-up of key industry publication Stationery News, the voluntary administration of long-term stationery supplier Bantex and the failure of many iconic independent dealers across the country speak volumes.
Wherever you’re positioned on the spectrum or in the channel, the message is simple: be progressive, open-minded, flexible and evolve – or risk becoming irrelevant!