30 Sep Feature: The post-pandemic world
There’s no doubt COVID-19 has upended the working world as we know it, but what does the ‘new normal’ look like for the OP industry? OPI finds out…
One of the biggest upheavals of the COVID-19 pandemic was the instruction by governments to work from home. This has severely affected the OP industry and continues to do so. Now, as companies and individuals are beginning to slowly emerge from lockdowns, they are getting to grips with a new way of life and working.
The business supplies sector is no stranger to battling headwinds, but this time it’s not on its own. The coronavirus has created a global ‘new normal’ in mere months, but what does this really mean for our market specifically? Michelle Sturman asked a number of key players in our space for their thoughts.
John Barrett, Executive Director, ISSA
Business supplies dealers have been reinventing themselves for the past decade. As the use of traditional OP has declined, they have increased their offerings in other categories such as furniture, jan/san, breakroom, managed print services, and promotional products.
As a result, dealers have been considered ‘essential businesses’ during this pandemic. Nearly all will survive, and many have thrived as a result of their nimble business model.
Savvy dealers will take what they’ve learnt during this crisis and develop a plan to meet the needs of their customers, maximising short-term opportunities while transitioning to a longer-term new normal.
Businesses will adapt inventory, marketing and training. As more people work from home, solutions will evolve to provide business supplies, ergonomic products, office furniture and residential delivery. Products and services will support enhanced cleaning solutions, social distancing and better personal hygiene for urban and public sector accounts.
More emphasis will be placed on training and expertise in products used for cleaning and disinfecting, as well as personal protection. Being a trusted resource for clients will be critical. The training and resources available from ISSA and IOPFDA will be a big part of this, especially the new qualifications delivered by the Global Biorisk Advisory Council (GBAC), a division of ISSA.
Jan Van Belleghem, Managing Director, Interaction
In the ‘new normal’, there will be more homeworking, with people being in the office less often. It will have a negative impact on the consumption of traditional office and catering supplies.
We will see further consolidation of the market, both on the suppliers and manufacturers side in the traditional office products and paper section, as well on the distribution side. There are just too many players in a market that needs less.
Interaction is accelerating the development of its personal protective equipment (PPE) range and has identified products to source jointly and those that for practical reasons better remain local. Over these past few months, we have gathered a lot of information and sources in this field. It would be a shame not to capitalise on it.
Mark Cooper, President, Avery
It strikes me that the two most significant long-term implications for the new normal are the accelerated rise in e-commerce and the potential for more remote working.
Many are now suggesting that the COVID-19 crisis will have a step-change impact on the rise of e-commerce. The pandemic has moved more people online who may not return fully to traditional retail. The OP sector has already seen a steady move to online purchasing, and we can only assume that this will be further accelerated post-pandemic.
The second area of significance will be a propensity towards remote working. Where there is little impact on productivity, companies will consider this part of their new normal in the future. Employees who have become used to this will also be more demanding for greater future flexibility from their employers.
The rise in the use of technologies such as Zoom and Slack are persuading people that more meetings and communication can be done remotely. It’s likely that in many of our offices we’ll see a rise in more frequent and permanent telecommuting. We’ll potentially see reduced travelling for what would have been face-to-face meetings in the past, as there is now a greater acceptance that some of these can be achieved via video conference calls.
In terms of the products ordered and consumed, there will be more home deliveries, the demand for smaller pack sizes and purchase quantities, along with different assortments.
We have seen an increased focus on PPE because of concerns for health and safety in the office. Some of this may stay around but, in my view, mask-wearing, for example, will be more of a short-term solution rather than something which will be part of any new normal.
We’ve also had to adapt faster to changing consumer requirements and have been able to pivot to bring products to market much quicker than we had typically done in the past. This rethink about how we operate will have lasting implications for our businesses in the future and put us in a position where we can react better to evolving consumer needs.
Harry Dochelli, CEO, Essendant
As businesses prioritise employee safety ahead of returning to the office, growth will be slow for the OP industry. We will see companies return in waves, starting with SMBs located in suburban areas and in low-rise buildings, and less dependent on public transport.
Trends that were already underway have accelerated and will endure. These include increased consolidation in the channel, remote working and a shift to e-commerce. The latter two will require dealers to adopt new digital ways to reach and attract customers, while sales teams will need to learn new approaches to sell virtually. With less travel, virtual selling should have the added benefit of increasing sales team productivity.
Supply for high-demand items was – and still is – a huge factor. As supplies began to dry up, many customers looked to alternative sources. Supply chains will eventually catch up again and, as they do, many customers will go back to their traditional resellers as their first choice. But supply chain leaders will re-evaluate their global sourcing and safety stock positions and make choices to better manage risk and prepare for non-anticipated disruption.
A key product trend that will expand is infection prevention and protection. ‘Clean’ is the new marker for business quality and eventually, accreditations like the ISSA GBAC Star Facility Accreditation will emerge as industry standards. The pursuit of ‘clean’ will further bolster the jan/san category.
A top priority for Essendant will continue to be employee safety. When the pandemic began, we implemented many new policies and procedures to support employee safety within our distribution centres and offices. This focus continues within our distribution centres and drives our thinking as we decide how to return to the office.
Throughout the past few months, many lessons have been learnt as we navigated our way through this very disruptive environment. Many of our responses to these lessons will have lasting effects on who we are and how we operate. One specific outcome is that we have become much nimbler and more efficient in both our decision-making as well as the development and implementation of solutions in response to customer needs.
Our channel mix has evolved. The traditional OP vertical experienced declines while our
jan/san and e-commerce channels had significant growth. We are organising and resourcing ourselves to support the unique challenges and opportunities within each of these areas. We are also responding to new demand with emerging categories and taking aggressive positions to broaden the product assortment and establish our dealers as leaders within them.
Simon Drakeford, CEO, EO Group
I believe we may see further challenges to some businesses in our supply chain as the cost protection initiatives unwind and revenues don’t fully return to pre-COVID-19 levels. Credit will become a new battleground as cash is squeezed and service levels will be compromised as new working practices are adopted.
Some positivity will result from those companies that have been able to pivot to support the demand for PPE. However, the supply chain will normalise and requirements will settle. This opportunity needs to be great enough to mitigate the risk resulting from a lack of demand due to new working practices and the dramatic rise in unemployment that the UK economy is likely to suffer. I expect further supply to come out of the channel which may help those that remain.
The EO Group was not immune to the dramatic impact the pandemic has had on our sector and at its peak, we experienced an approximately 50% reduction in turnover. During lockdown, we saw a significant shift in our online businesses away from B2B to B2C orders as customers bought for themselves at home. Revenues are steadily climbing as companies open up again, and we are optimistic that the small business customer segment will return to some levels of new normal quicker than the corporates.
Office Power, our dealer software/services platform, has seen considerably increased interest as progressive dealers realise that adapting both the structure of their businesses and the way they go to market is critical if they are to ensure survival. We have also seen much larger dealers engaging with the model. It is a trend we expect to continue.
Alex Dunn, Managing Director, Superstat
With the new normal likely meaning a prolonged recession and more people working from home, many dealers don’t expect to see a return to pre-COVID-19 levels of traditional business quickly, or even at all.
Several also have concerns about long-term profitability. One area where dealers do expect to see continued growth is in the technology sector – and long after sales have ceased to be propped up by coronavirus-related hygiene and safety supplies.
Having seen a big upheaval in the UK wholesale channel (see also Advertorial, page 48), dealers feel that a more efficient, lower-cost model is essential to their future profitability. Where dealer principals have been more hands-on recently, they are looking at streamlining their logistics and purchasing processes. At the same time, their customers have been much more flexible in their service expectations during the crisis, which is adding to that thought process.
At Superstat, the whole industry shake-up has probably given us a more relevant offering for the future, with better margin opportunities for dealers and a vast range of technology products and expertise.
Julie Hawley, Managing Director, Office Friendly
Mobilise, mobilise, mobilise. That’s been the call from Office Friendly from the beginning of the pandemic. Don’t hide and hibernate before analysing your business – this will be the consistent message going forward.
The industry has been hit in both the service and product sectors. Every company has had to assess to what degree it tries to operate during the next few months. Business models will be tested to see if the traditional versions are still valid or need to be repurposed.
The term ‘new normal’ suggests a period of consistency, but I don’t think we will have that for possibly at least 18 months as we come out of the first wave of debt, unemployment and deferred payments. Survival of the fittest, collaboration, working key relationships, and a sense of community will all play a part if we are going to help one another through this.
I can’t predict what the new norm will look like at this stage, except to say that areas such as online and homeworking will be part of it more than ever. The supply chain will continue to be challenged as suppliers look for new routes to market.
Daniel Kelly, Managing Director, Stuart & Dunn Office Choice
The new normal is just like the ‘old normal’ but with streaming, Zoom meetings and a whole lot of sanitiser. Welcome to the time before technology… with technology.
Spending close to three quality months with family in isolation while working has provided a couple of honesty moments. Number one: family is everything. Number two: if you aren’t willing to adapt, diversify and change your business, prepare for the beginning of the end. Only the resilient will remain.
There has been a shift in attitude from the Australian consumer, with a genuine hunger to support local businesses. The proof that ‘local matters’ has put a real spring in the step of those SMBs that have remained optimistic.
The reality is though that the world is a business, and it will soon be all about the bottom line again, so capitalising while you can, has been paramount.
In an ideal world, the new normal will see people remember to stick by their new-found or reignited values during this time and look after what matters. Themselves, their family and the businesses that helped get everyone through the virus.
Peter Kelly, CEO, Winc Australia & OfficeMax New Zealand
There’s no denying that the new normal is creating fundamental changes for our industry and society in general.
Some organisations are embracing newly distributed workforces, while others remain on-site and are busier than ever. Then there are businesses that are still trying to work out how best to navigate both their short and long-term future.
To support our clients at this time, we see it as our job to flex as the market requires it and to innovate to ensure needs are met. We’re looking at several different initiatives to support the work-from-home market while also exploring the opportunities that come with changing customer behaviour. It’s certainly an interesting and challenging time for the industry.
Martin Kelterborn, CEO, Offix Holding
With gratitude, I would say that Offix has come through the crisis very well, thanks to its multichannel sales strategy. Management has dealt with the situation critically and always with a view to the future. It is vital to recognise and use new opportunities – any business that still has to revise its fundamental structures has not done its homework.
For Offix Holding (Ecomedia, Oridis, Papedis, Office Leader and Docuserv), the new normal has consequences, especially in terms of corporate culture. For Offix executives, it means to become more courageous. More ‘why not’ and less ‘yes, but’ thinking; more trial and error than analysis and planning; more trust, less monitoring; and also hard, consistent and honest administration.
The new normal should not be wasted on a few operational measures, but should encourage us to invest in the supreme discipline of corporate management.
Elina Pienimäki, CEO, Wulff Group
In a post-coronavirus future, we need to find a balance between what worked before and what needs to change to succeed in the new normal. Whether we like it or not, that future is not what we thought it would be just a few months back.
Although coronavirus froze various companies for several months, it has also created opportunities in the short and long term. There will be some permanent changes accelerated by COVID-19 such as buying online, remote working, a more sustainable way of living, and a virtual way of working.
For Wulff, the focus will continue to be on sales activities, although this may be in new forms such as on-screen meetings, more digital marketing, online sales, etc. As the world accelerates to digital, customers will get used to a faster-evolving assortment and user experience. Online purchasing will speed up and contain product and user groups that were not as impacted by e-commerce before the coronavirus pandemic.
As customers will carry on working remotely at least to some extent, there is a need to develop product and service assortments as well as the supply chain in order to meet their needs wherever they are.
The first steps in the new normal will be to ensure workplaces are safe, resulting in higher demand for hygiene, disinfection and safeguarding products.
Sustainability will also play a crucial role as business leaders see it increasingly as a competitive advantage. Environmentally friendly products and deliveries will continue to play an important and relevant role in Wulff’s strategy.
Richard Scharmann, CEO, PBS Holding
The business supplies sector seems to be under the same pressure as other industries after the lockdowns. However, the extent to which the crisis hit PBS Holding companies across the eight countries in which we operate has not varied that much.
I don’t think there is a new normal. Instead, it’s a special situation which has highlighted the well-known weaknesses of our industry. It will therefore not redefine us, but accelerate consolidation and the shift to real online sales and distribution concepts.
Dolph Westerbos, CEO, Staples Solutions
The coronavirus pandemic has accelerated Staples Solutions’ digital revolution. Our customer communication has transformed as our sales agents work more digitally, and we conduct customer webinars. Many of our contract B2B customers have started to behave more like B2C ones as their employees work from home.
We made the required functionalities available to support our clients and their employees in record time, which resulted in online hypergrowth in various countries. It is amazing to see how quickly everyone adjusted, and we believe many of these changes are here to stay.
In these extraordinary circumstances, our customers need not just products, but a trusted guide to help them transition out of lockdown and reopen workplaces safely. Most companies have a plan B to deal with unforeseen situations, but even those do not apply in such unprecedented times.
That is why we launched Plan C, our offer to support employers navigate the new normal. Through a framework of safe distancing, keeping clean and staying connected, Plan C is a comprehensive solution of products and services that help customers transform their workspaces.