Barrie Hayes CEO

Challenging

Office products Markets over the last 5 years

& Changing

Traditional Office products

• The traditional areas of Paper / IT consumables/ Stationery Last 2 years continue to decline:-

Paper - 2 to 5% decline EOS -3% (switching to MPS) Stationery - 3 to 7% decline

Paper 15-20% of sales

EOS 20 - 40% of sales

Filing 5-10% of sales

Areas that are commoditised and suffering decline /change of purchase

• 2013 GDP stagnant• 2014 across 28 countries = 1.4%• Euro markets € = 1.1%• Fastest growth 3 Baltic countries

4.4%• German growth 1.7%• Modest growth in Spain / Italy <1%• Non Euro markets:-

– Sweden 2.8%– UK 2.2%

• Unemployment expected to stay @ 12.2% in Eurozone . In Europe as a whole dip from 11.1% to 11.0%

Market trends – GDP

The last 5 years has seen major change:-• Big box players

– Staples focus on Direct delivery and E Commerce (not stores), expanding range 1m sku’s

– OD/OMax merge – Antalis & Xerox

– Lyreco expanding non - traditional products model

– Wholesale - creation of Adveo

– New entrants web players Amazon / Shoplet $100m online with huge ranges 250,000 sku’s

Consolidation and diversification

•Retail model is challenged within Europe.

•New partnerships being made.

•Manufacturers will continue to consolidate

•Convergence of traditional channels–(web is a driving force)

Manufacturer > Wholesaler > Reseller > User Manufacturer Reseller

Wholesaler User

Consolidation and diversification

Margin pressure

• Margins have dropped with the commoditisation of volume products and fast web pricing awareness.

• Web entrants have made it more visible and price sensitive particularly in the SME sector.

• Customers are more aware of the market due to web / smart phones.

• Key in office supplies in Google – 104m results

• Its been difficult to pass on increases with low inflation.

Change is here and inevitable

Are you selling office supplies ?

Or

Supplies/Services to the office ?

Selling only office supplies will mean a dealer contraction as the web has commoditised this.

Category development (Adjacencies)

• Trends are moving from office supplies companies to Business Service Providers & have been happening for the last 5 years.

• Europe has been slow to react.

Main areas of development:-

JanSan – Janitorial and disposables

Coffee & Break room – Coffee solutions /catering items

MPS – Managed Print Services – major profit provider

Promotional products – Overprinted /Marketing

Category development (Adjacencies)

Category development (Adjacencies)

Coffee & Break room services

- Office coffee market growing at 15-20% p.a - Disposable coffee consumables . - Full line service/ support offer- Coffee is a growth market

- Sometimes more important than paper choice

- Other break room products

- Adds value to the AOV

Category development (Adjacencies)

MPS – Manage Print Services

•Being offered in SME

•Complete service machines / toners and paper

•Growth market and good margin generator

•Single software option to branded manufacturer

Like a Rubiks cube…………………

Connecting with the customer – Success is profiling

Data & mining

Age profileGen X / Baby boomersMillenials

Contact type Web/direct /retail

Categoryoffering

Customer type Large / SME

Logistics offeringTechnology

Your touch point marketing strategy

Success is 3 dimensional

Speed of change is crucial

Albert Einstein said: “To keep doing the same thing and expecting a different result is the definition of madness”

Office product companies need to evolve

• What do you offer ?– Products /services

• Who is it for?– Target market

• What problem are you solving for them?

• How do you do it distinctively – USP’s

• What is your promise?– Understand yours and how you meet their needs

Evolve or go out of business

What do we need to ask ourselves ?