Brother Reveals Some Inconvenient Truths About The Industry

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Date: Thursday February 16, 2012 08:22:44 am
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    Brother reveals some inconvenient truths about the office supplies industry

    FEATURE: To help its readers compete in an increasingly cut-throat and changing market, Dealer Support is partnering with technology firm Brother on a series of articles exploring the future of business supplies and the independent channel

    As readers of the magazine and decision-makers at your business, it’s more than likely you either have or are contemplating buying an iPad. Indeed, within only 90 days of its release, 50% of Fortune 100 companies were using the tablet for work and a survey by Frost and Sullivan shows that iPad usage in office workplaces is linked to increased employee productivity, reduced paperwork, and increased revenue. As a result, the firm estimates that the mobile-office application market in North America could reach $6.85bn in 2015, up from an estimated $1.76bn last year.

    Of course, that is the US – but if any industry has learned that whatever happens over there tends to follow suit over here, it’s the office products industry. With a change in work styles, and products used, those whose job it is to provide supplies to these businesses had better think fast – with declining sales of traditional office products, the answer to improving sales in the independent business supplies channel exist elsewhere. It’s a hard-hitting truth that many will find hard to swallow, but if there is ever a time for change, the time is now.

    FUTURE FORWARD

    With this in mind, Brother UK is working with Dealer Support on a series of articles over the next few issues highlighting the significant changes set to hit the market. This ‘Futures Campaign’ will provide some uncomfortable truths about what to expect from the marketplace, presented in a thought-provoking way that will help ensure the independent dealers reading this magazine are players in the future marketplace – one where pens, paper and stationery may play second fiddle to tablets, the cloud and apps.

    Brother UK’s sales and marketing director, Phil Jones, has been spending his time researching these trends in a bid to ensure his business stays in touch with current demand, and shares a few of his technological predictions for the coming decade. "I think we are in a golden age of change," he comments. "There seems to be a theme running through all of it – and it feels like disruptive times." He believes there needs to be a cultural change between generations, likening generation X (those born from 1960-1980) and generation Y (1980s-90s) to two different software programmes, which run quite differently. "Xs really need to do a patch on their software to update to where the Ys are at now," he explains. Jones also applies this metaphor to the independent dealer channel. "It’s time for the industry to also update," he says. Major structural changes occurring in the market have triggered Jones and his colleagues to start thinking about what the OP industry looks like in 2020, here he shares his thoughts on the major trends.

    DIGITISATION

    The paperless office has been a topic of conversation among office supplies dealers for decades, but it’s only now that it could truly become a reality – thanks to technological advances like the iPad and moving data to the cloud. "We are finally reaching the tipping point where Apple, which had struggled to break the enterprise market through traditional technology, have now, brought what’s referred to as a ‘disruptive innovation’ to the market," explains Jones of the iPad. These changes have brought about a consumerisation of IT, which sees personal devices and products playing a part in both work and play.

    BYOD

    With the consumerisation of IT, comes a move towards employees bringing their own device to work. This bring-your-own-device (BYOD) approach to workplace technology comes as a result of technologically savvy (often younger) workers keen to utilise their iPad in favour of the run-of-the-mill work computer, allowing them to work on the go. Thus, it runs hand in hand with a shift towards storing documents in the cloud. "All we simply need is access," explains Jones. "We don’t need the processing power that laptops have; you don’t need to run localised programmes like Microsoft Office, because you could just run Google Docs or Office in the cloud." BYOD is proving popular. According to a survey by Good Technology, 80% of companies with more than 2,000 employees are supporting the BYOD model. This trend towards consumerisation of IT will inevitably lead to buying power moving out of the hands of the large organisation, and into the hands of the consumer. "The one-to-one relationship a reseller has with its big customers would turn back into a one-to-many relationship," says Jones. This cultural change is set to effect all kinds of business procurement – for instance, it is conceivable that employees could be given individual allowances to buy their own office products.

    CONVENIENCE IS THE NEW GOOD DEAL

    This new generation of buyers, used to the internet and working in a fast-paced, click-of-a-button world, puts a high value on convenience, and may be willing to pay more to get it. Jones highlights Amazon’s concept of ‘pick-up points’ as an example. The internet giant is trialling collection lockers in some shopping centres in the UK in the hopes that in future, customers will be able to pick up their orders on the go, instead of having to get them delivered at home. If the world is becoming increasingly consumerised, this move by Amazon is proof positive that future providers will have to fit in with the buyers’ busy schedules. "Is price the issue anymore? No. The issue is about convenience, time, attention and trust," confirms Jones. The solution to meeting this demand for convenience, believes Jones, is in collaboration – and thinking outside the traditional competitor model to work together with other companies to provide a better service. "If we’re in disruptive times, maybe we need to think more disruptively about our industry too," he adds.

    FIND EFFICIENCIES

    In order to survive in what will inevitably be a more competitive market, office products dealerships have to become more efficient. By contrast, the operational cost in the office products sector is significantly higher than the IT sector – and Jones feels this puts the OP channel at risk. "If the industry decided to carry on as it is, because it feels cosy, it leaves the market wide open for new entrants to come in and disrupt your model," he says. "If suddenly somewhere in the chain, someone breaks their link, the industry isn’t ready for that," he explains. "I’ve seen this done already on the IT side of the industry and if that were to happen and you examine the current vendor-to-wholesaler-to-dealer-to-end-user chain, and how much cost is in it, and ultimately how much gross margin needs to be made in that chain, it wouldn’t take a management consultant to figure out that there’s an opportunity there to streamline costs and efficiency."

    So, what can you do? "If I were an independent, I’d be looking at all areas of my business and seeing where I could reduce operational and fixed costs and try to move them to become variable costs as much as possible in order that I can flex my business as it needs to adapt to future conditions," says Jones. He advises differentiating customers based on margin expectation and prioritising lucrative business. He also recommends charging more for convenience in a similar model to the airlines, which put last-minute bookings at a higher price than those made in advance. It is also worth thinking outside of the constraints of traditional products and considering skilling up to sell services and technology. "When you look at what the future looks like, it’s not paper-punch folders, staplers or files, which have seen the industry do really well for 20-odd years," he says. "They are not the baked beans of the next 20." Even EOS won’t save the day – as the print industry has reached capacity.

    Jones predicts that content is the new consumable of 2020. "If the world is digitising, then we have much less need for paper and therefore filing cabinets and storage, so how does the office products industry get involved?" He encourages dealers to look towards accessories and support, how they can tap into the growing trend for cloud based computing and how to monetise locality. However, it’s clear there won’t be room in the industry for everyone. The way we work is changing. It’s all about increasing agility; those that do will be benefit hugely from the future.

    The Brother Future programme will feature in the next few issues of Dealer Support. Next month will feature a round-table industry debate on what the independent dealer channel can do to adapt to change.

    This article appeared in the January edition of Dealer Support magazine. To subscribe for free, visit http://www.dealersupport.co.uk/subscribe/

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