2021: A Rollercoaster Ridfe

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2021: A Rollercoaster Ridfe

COVID-19 upended the world as we knew it in 2020, creating untold challenges and disruption, but also unprecedented opportunities. With the virus still not under control, 2021 is promising to be one helluva ride

 

For those of us expecting to start 2021 with some sense of normalcy, we’ve been sorely disappointed—on many levels. Not least is the realization that whatever “normal” was pre-COVID-19 is no longer applicable.

We’ve been living with the pandemic for almost a year, and sadly, along with the loss of hundreds of thousands of lives, the economic impact has affected every business in some way, shape or form. As the months stretch out in front of us, there is a glimmer of light at the end of the tunnel as vaccination programs roll out across the country. Ultimately, this will allow businesses to reopen fully and millions to head back to their place of work. With this in mind, what will a 2021 post-COVID-19 world look like?

 

Will they, won’t they?

The most direct impact of the pandemic on independent dealers has been the “world’s biggest social experiment”—the mass migration of employees from their traditional workplace to the home. The repercussions still linger, as many businesses have not returned to a full staff complement within their physical offices. Bob Daniels, president of Daniels Office Products in The Woodlands, Texas, expects there will be a staggered return to the office, with some as late as the summer.

It’s the same situation in California, as Joe Cunningham, president of Modesto-based Warden’s Office Center, explains: “Some large customers have already informed us they won’t be returning to the office this year, no matter the status of the pandemic. Other businesses have reverted to 100 percent capacity. Most companies comprise a mixture of those working on-site and others from home; but post-COVID-19, I expect these employees to head back to the workplace.”

The broad consensus is that it is predominantly larger firms that are holding back on the return to work. As owner and vice president Steve Klaver of Lansing, Michigan-based DBI notes: “We have noticed that many small-to-medium businesses have started returning to the office. Our large, corporate clients continue to have the majority of their staff work from home (WFH) and are less concerned with getting back into the office.”

Similar scenarios are playing out across the country and creating uncertainty for the year ahead. “We have some customers who don’t plan to be in the office until 2022, making us feel very uneasy. Until the children are back to school, we will not see a move back to the workplace, and it will be a gradual move when it happens,” agrees Diane Mangano, owner and president of Kershaw’s in Spokane, Washington.

When the inevitable bounce back to the workplace occurs, expectations are that teleworking—a trend that was already on the rise pre-pandemic—will have significantly increased and dealers will need to adjust accordingly. Having already had months to perfect home office product selections and home deliveries, the initial shock has worn off, but factoring it into business models and costs moving forward will be imperative.

As Jennifer Smith, CEO of Innovative Office Solutions, Burnsville, Minnesota, remarks: “We do anticipate that early 2021 will look a lot like much of 2020, but we believe many workers will then return to the office in one form or another. We also expect that businesses have learned a lot from the WFH experiment and will likely carry on offering more flexibility in working arrangements.

“It will be critical for dealers to remain connected to their customers and positioned as the first call as new requirements develop. With more flexibility in working arrangements and different expectations of what the workplace looks like, dealers will continue to witness a shift in their product mix and must be proactive with new solutions to meet client needs.”

 

Delivery dilemma

Wayne Stillwagon, executive vice president for Lorton, Virginia-based dealership Miller’s Supplies at Work, calls out issues with non-office deliveries: “Many of us struggle with freight costs in the WFH model. We have changed—or should I say, adapted—our service proposition to provide clients with this option. Early on, we enhanced our e-commerce platform to incorporate home delivery functionality while still providing the same buying rules of in-office staff.”

He adds: “We also changed our distribution structure to accommodate residential deliveries. We are still in a learning process with this aspect of our business, and without help with freight costs, profitability for at-home deliveries is questionable.”

Smith agrees, pointing out that freight and shipping industry trends should be a concern for independents, especially for those that participate in national business: “Costs are persistently rising and will force dealers to innovate to mitigate the expense while also continuing to provide high levels of service.”

Despite the associated expenditure, Bryan Langston, president of Schwegmans Office Supplies in Batesville, Arkansas, thinks home deliveries will become the new standard. When customers began homeworking, the company supported them by offering a free service: “We believe it is key to get the word out to everyone that this service is available and that we value rapid response times after orders are placed. In my opinion, one of the most positive sides to home delivery is that it allows us to continue customer interactions and build on that relationship.”

Mangano states that Kershaw’s will retain its home dispatch service, especially for customers that have given up their offices for good: “Our focus will now be emphasizing buying local, with free next-day delivery so we can gain an edge over Amazon.”

The personal touch is the IDC’s not-so-secret customer service weapon. With the current WFH situation and a hybrid working model likely for many businesses in the future, coupled with the associated rise of online purchasing, the past year has presented formidable challenges. Yet despite the shift to e-commerce brought about by WFH and some customer employees purchasing from pure-play etailers, lockdowns simultaneously boosted the “buy local” sentiment. “We will continue to emphasize ‘shop local’ and the expertise we bring to our customers,” says Daniel. “As independent dealers, there is immense value in providing a well-informed, personalized service from a business in the same community.” Ensuring all bases are covered, he adds that both the company’s website and email marketing program were upgraded last year.

 

Investing online

Langston’s thinking follows along the same lines, with e-commerce a key priority this year: “It is of utmost importance for us to possess a great online presence, since everyone is spending more time on the Internet. Branding and customer service will help when competing opportunities arise and also highlight our product offering. For those who prefer a ‘person-to-person’ or ‘buy local’ purchasing experience, we will carry on building on these. We offer a considerable advantage over the big corporations, in that as a smaller business, we have the ability to pivot on a dime to take care of all our customers.”

Smith believes the COVID-19 crisis has accelerated the shift to e-commerce, with positive implications for the independent dealers that have invested and continue to invest in scalable technology. Stillwagon maintains that, pandemic or no pandemic, a robust e-commerce platform is essential to be a financially healthy dealer. “We intend to keep investing in e-commerce as a higher percentage of our revenue flows through that platform,” he comments.

But as Mangano points out, with Amazon and the home office currently the most significant threats to the IDC, support and leadership from the buying groups and suppliers will have to be “tremendous this year for us to compete.” She also reiterates that no e-commerce site or box store can match a dealer’s customer service: “We have to continue going the extra mile and remind our customers why they are purchasing from Kershaw’s. These large competitors can’t deliver an emergency toner before 8:00 a.m., pick up a return without asking them to package it back up, or deliver and install damage-free furniture. These are just a few things that set us apart.”

Aside from the “usual” support of lower prices, expanded product lines and increased buying power, Lisa Crowson, president of Advance Office and Janitorial Supplies, based in Las Vegas, Nevada, would love to receive access to more marketing expertise. For Klaver, sales training programs would be welcome, as well as additional drop-ship support. “We would like to see a scheme for partnering with other independent dealers on deliveries,” he says.

 

Supply chain woes

One major hangover from 2020 is the ongoing supply chain issue, which remains a persistent headache for dealers, despite improved wholesaler inventory levels. Crowson reveals there are longer transportation times with all trucking companies, and uncertainty with parts, materials and greater lead times for furniture.

Mangano foresees enduring problems, but credits S.P. Richards with supporting Kershaw’s during the pandemic: “If not for the support they have given us, we would not be in as good a shape as we are. We feel very fortunate.” And Langston commends both manufacturers and customers in dealing with supply chain challenges: “It’s clear, in these unique times, that supply demand is unstable and manufacturers remain under extreme pressure. However, our vendors have done a great job keeping us informed of product availability and alternative items to sell and present to our customers. In response to this issue, we appreciate that our clients have become more flexible. When many of the brands they have requested in the past are no longer available, they have been open to trying alternatives.”

Aside from gloves, the supply chain is gaining stock, according to Keith Powell, owner and executive vice president of Omaha, Nebraska-based Pay-LESS Office Products. But with priority (understandably) given to specific sectors like healthcare, alternative vendor sources have had to be sought, which brings its own issues and could pose an interesting dilemma for well-known manufacturers down the road. Says Powell: “Other than name brands prioritizing distribution to first responders before us, we’ve adjusted with new vendors. I don’t know how we’ll embrace these name brands later.”

 

Winners and losers

Given the PPE items necessary to combat COVID-19 and the global scramble to secure unprecedented amounts of stock that meet required health and safety standards, Powell’s comment on gloves is hardly surprising. Although PPE items were already available from some dealers pre-COVID-19, demand soared last year, with the industry swiftly pivoting to source new or alternative suppliers and products, along with the requisite expertise (read more about this in the September/October 2020 issue). With the pandemic still in full throttle, it’s no wonder that most independent dealers regard the PPE and wider facilities category as a no-brainer, and one which will help offset the continued decline of traditional office products.

Cunningham predicts that while PPE will remain a dominant and vital category, sales will slow down as vaccinations become more widespread. “However, I believe basics such as wipes, hand sanitizer, disinfectants and masks will be here in some capacity throughout 2021 and probably into 2022 as well,” he notes.

Advance Office and Janitorial Supplies has already recruited several new employees for the category and is looking to hire more this year, says Crowson, adding that although our industry may not have been very interesting in the past, PPE and cleaning supplies are now super-exciting to people: “We were so fortunate to have supplied a wealth of businesses with PPE early on when COVID-19 hit last year that I feel it solidified us with many clients. I also think it has opened customers’ eyes to supporting us as a local business.”

Expectations remain optimistic for the category, even when staff return to the workplace, due to a strong emphasis on ensuring a COVID-secure environment. “I think the biggest product categories will be PPE and safety,” says Megan Collins, marketing coordinator of The Office Connection, headquartered in Farmington Hills, Michigan. “There is still so much unknown about COVID-19 and people have such a fear of the unknown that safety remains a considerable concern. As a result, the open concept workspace will change as people adhere to social distancing. The product category that will lose out will be breakroom.”

Collins is far from alone in this thinking, with dealers including Powell and Daniel agreeing with the future product category assessments and expectations for office layout alterations. But as the saying goes, as one door closes, another one opens. States Stillwagon: “The biggest loser as far as product categories are concerned is easily breakroom supplies. When in the office, you have to use office supplies. Use of the breakroom is optional, so its return to previous levels will be substantially slower.

“But we see facility supplies and furniture as growth categories in 2021, and are committed to turning PPE customers into facility supplies customers. A lot of goodwill was generated within our client base when we were able to procure PPE products when their facility supplier could not. Many of our customers now view us differently in this category than they did before the pandemic. We will capitalize on that.

“Our furniture division had experienced tremendous growth over the past several years and remained strong throughout 2020. We expect businesses will look to change their office layouts through reconfigurations, which will drive furniture sales.”

Cunningham agrees, saying that many companies spent some PPP money on furniture and safety reconfiguration of their workplace in 2020. “I’m sure there are other companies that have not yet invested and will do so when they are ready to bring people back to the office. New construction, offices moving to other locations or being reconfigured/remodeled—all offer additional sales solutions opportunities for the IDC
in 2021.”

The consensus is that the significant changes caused by COVID-19 in 2020 and the subsequent impact on the business supplies industry will continue throughout this year. The IDC continues to go above and beyond customer expectations, but the emergence of new variants of the virus may have just thrown a spanner in the works in the return to some semblance of normality—whatever that may be. So, hold on tight—the coronacoaster in 2021 is likely to be as bumpy a ride as it was last year.