Although budgets remain tight there seems to be a resurgence in school sales
Across the country school systems are expanding and new schools are being built. New school construction currently stands at roughly $49 billion annually according to a coalition of organizations led by the 21st Century School Fund and the National Council on School Facilities. Yet that figure needs to almost double to meet current educational facility needs, according to the coalition. When homebuilding suffered a setback in 2008, schools were similarly impacted and have not returned to full health.
Although construction still lags, it is large enough to drive school spending from coast to coast. Tim Morris, vice president of Ernie Morris Enterprises, Bushnell, Florida, says that the school business in the southeast is definitely on the increase. He also sees school sales increasing across the country. “The economy is good and money is being spent,” he adds.
Morris says his dealership is well-positioned to obtain the maximum business possible from schools in its region. “Only a few dealers across the United States can do turnkey schools—from the bus loop to the administrative offices, classrooms, media center, cafeteria and the playground out back,” says Morris.
Not your typical sale
Selling to schools is generally quite different from selling to everyday commercial accounts. To start, it is frequently a challenge to determine who is the actual decision maker, suggests Natasha Seacrest, office products manager for Eakes Office Solutions, Grand Island, Nebraska. “It can be the principal or the superintendent,” she says. “You have to navigate each school differently to find who is making the decision. And you end up having a lot more people involved.”
The bureaucracy that exists is part of the challenge. “To get a purchase order you can go through as many as 14 steps,” says Jim Sheffield, owner of Sheffield Office Products and Schools Supplies, Duluth, Georgia. He compares that to a commercial account where generally one person makes the buying decision. “Private schools are a little better,” he says. “There is usually a decision maker that can be found a little quicker.”
Like most sales situations, school sales depend on the relationship that can be developed. “But you have to be able to add value and buyers want to hear ideas and know what other schools and school districts are doing,” Sheffield says. His school customers want to hear what other districts are up to. “Some of them are on the cutting edge and some of them just kind of follow the flow,” he adds.
Another big difference is the cyclical nature of school sales; if the buying time is missed dealers might have to wait a year for it to roll around again. “If you are going to get in for the next school year here in Nebraska you need to be talking to accounts in December or January to get appointments in February or March,” says Seacrest. Decisions tend to be made in March and the buying period is April, May and June. “They also have a buying time between semesters for janitorial supplies when they refinish floors and perform other maintenance,” she adds.
Dutch Jones, executive vice president of sales for The Supply Room (TSR). Richmond, Virginia, points to difficulties beyond the cyclical nature of education sales. “To be perfectly honest, it’s a tough nut to crack,” he says. Schools tend to stick with their established suppliers. “It is not so much what you can provide, but how you can make their jobs easier,” he adds. With hundreds of users throughout a school system, reaching all of them can be a challenge. “Schools these days have to be very cost-conscious so price is a predominant consideration,” he adds.
As school purchasing budgets have tightened, TSR must deal with budget constraints. “We try to partner with these schools and help guide them to the best products to meet their needs,” Jones says. The product expertise available from TSR sales representatives spreads across product categories (office supplies, school supplies, furniture, and cleaning and sanitation products), helps differentiate the dealership from its competition and sets school customers’ concerns at ease. School buyers crave guidance that its salespeople are all too happy to provide.
With the exception of some sales to state and federal government agencies, Alaska Education and Recreational Products in Anchorage is 95-percent focused on schools. Owner Kit Wilson suggests that to compete successfully entails more than sales ability and product knowledge but knowing what might be appropriate for educational settings.
To illustrate, an administrative assistant called Alaska Education and Recreational Products to place an order for tables. After questioning the caller, it was discovered that the tables were to be used for music classes and students would dance on them. “The activity tables they looked at would never have held up,” Wilson says. “It’s appropriate to know what is going to work in an environment and how they’re going to be used.”
The business is personal
Bill Zimmerman, owner at Office Outfitters, Waupaca, Wisconsin, says that his school business is fairly consistent. “A lot of it is based on relationships, and if there is any variation it depends on the people who do the buying,” he says. In school districts where Office Outfitters currently has business it has the support of the administration. “But they don’t dictate how each building buys, so we sell up and down the organization.”
“The biggest opportunity I have is to build relationships in every part of these school districts so that I am top of mind,” says Zimmerman.
“They know that Office Outfitters provides construction paper and poster board, but they don’t think about me when it comes to lunch tables,” he adds. The challenge, and the opportunity, is to be top of mind for everything that schools buy.
Teachers, Zimmerman contends, have some latitude to make purchase decisions and they could order through the school purchasing system or visit Office Outfitter’s retail location. “Also community involvement is more important to school districts than it is to commercial customers,” he says.
Office Outfitters participates in an event called the Reality Store that offers real-life simulations to educate high school juniors and seniors about personal finance. The dealership also participates in career fairs where staff interact with students and faculty. “There is an initiative in our district called Waupaca Works that offers internships with companies,” says Zimmerman and a high school student currently works as a part-time intern at the dealership.
“The schools understand that we are a valuable contributing member of our community,” Zimmerman says. “It enhances the relationship and gives us visibility.” He recommends that dealers get involved in local career fairs to gain increased recognition.
Competition is intense
Competition for sales to schools is as intense as any aspect of a dealer’s portfolio. “The internet has revolutionized the business,” Wilson says. In the past he would compete for sales with local companies, but now competition comes from everywhere. “We’re seeing companies from the lower 48 states up here,” he says. “They are not selling so much but they are showing up on bid lists.”
In Nebraska besides the usual competitors, Eakes has to contend with a state-run buying organization that provides shared services to schools across the state. It puts items out for bid and schools decide which supplier wins the business. Traditionally, Eakes would never get any business, but broke through because of its ability to handle returns and deliver more expeditiously, Seacrest says.
There are ten school districts in Office Outfitters’ marketplace and the dealer regularly sells to five of them. The five that Zimmerman doesn’t get business from work with the usual suspects. “We can’t break through with one district that uses a software system that integrates with Office Depot,” he says. “Our home district has the same capability but they understand the benefit of doing business locally and supporting the local economy,” he adds.
Contracts do not always provide schools with the best options. “I have spent years trying to convince buyers that their best price is to go out for bid or buy off contract,” Wilson says. He gives the example of U.S. Communities where the average margin on furniture is 25 to 30 percent. On bids it could be five to 12 percent. “Districts may save some money because they don’t have to go through the bid process,” he says, “but they’re paying way too much for furniture.”
Service wins the day
Eakes put together a special program for the Grand Island school district, The district had been buying online in bulk and didn’t have the ability to look beyond the purchase to the needs of individual grades or classrooms. Eakes took it upon itself to package materials by classroom or grade level, which was a service that other suppliers were unable to match. After it won the business, Eakes relied on word of mouth about the project to generate sales with other school districts.
As schools pursue more collaborative classroom settings, Ernie Morris Enterprises works with them to make it happen. The dealership has been providing collaborative classrooms to school districts for them to use and evaluate. Often these school districts are on a tight budget. “They want to change the learning environment, but don’t think they have the money to do it,” says Morris.
The dealership works with these schools to assist in the execution of the district’s vision and the budgeting process. “They might tell us that they like it and they are going to put it out for bid,” he says. “We will even help them write the specifications.” Ernie Morris Enterprises won’t always win these projects but it takes enough of them to make the effort profitable.
STEM (Science, Technology, Engineering and Math) and STEAM (Science, Technology, Engineering, the Arts and Math) are initiatives that are making an impact on many school districts. A new hands-on program recently went into effect in Alaska schools to to determine needed product and budgets to update classrooms. As part of that effort, Alaska Education and Recreational Products held an in-service session for teachers, where they are trained to use the materials. The program just launched this month and Wilson anticipates it will generate additional educational furniture sales.
Eakes Office Solutions is currently working on a partnership to support different types of learning environments with furniture within the Grand Island school district. The project looks at different ways to configure the learning environment beyond the traditional rectangular boxes coming off a central hallway. Nothing has been decided yet but the dealership was honored to present ideas and is hopeful that future sales could result.
Furniture looks strong
Independent dealers see sales of school furniture as one area with tremendous growth potential. So much of the existing base of school furniture is decades old. In some cases, it could be past its useful life; in other instances, it no longer meets the needs of today’s students and classrooms. “What’s happening now is high school is a lot like college; it’s results driven,” Morris says. Students no longer sit for lectures; instead they discuss assignments in collaborative environments.
New schools are being built in Sheffield’s market area, and their need for new furniture combines with an existing base of school furniture that in many cases has already outlived its usefulness. “When they build these schools that need new furniture, the older schools have to update because the new schools look so good,” says Sheffield.
Dealers need to be innovative with the latest collaborative furniture options. “You are not going to sell desks anymore, so you have to do your homework so that when you meet potential clients you are able to add value,” says Sheffield. New furniture products are being introduced to the education market on a regular basis and independents need to keep up. One market that is sure to take off is for special needs students, says Sheffield.
Even with sales to schools approaching 20 percent of total volume at TSR, Jones says he feels that efforts only scratch the surface. The wholesalers are bringing on more products but some competitors still have an advantage when it comes to specialty school supplies. “You have to treat it like a vertical,” Jones says. “It’s a different product mix with cut-sheet paper, paint and all of the specialty items that our wholesalers have a hard time supporting.” As a result, TSR buys more educational products direct through its buying group.
“S.P. Richards has really expanded its school offering in the past several years,” says Seacrest. She says that in that time the wholesaler has demonstrated an understanding of the market and has worked to improve its educational product assortment. “A lot of local teacher supply stores have gone out of business,” she says. “Because that local person closed down we’ve had more opportunity for some items that traditionally we wouldn’t have sold.”
The lure of local
Any independent thinking about starting or expanding its own school sales effort could find the market especially receptive. Seacrest suggests that the buy local message might land harder with school districts. “They understand working locally benefits them versus sending all the tax dollars out of state,” Seacrest says.
Jones is also optimistic and believes the education market is just starting to come into its own. “Over the next five years the whole landscape is going to change; it’s going to be great,” says Jones. He suggests that dealers hold on as the market is cyclical and probably won’t turnaround everywhere at the same time. He says the resurgence has already started near him where five new schools currently are under construction.
One key to the school market is to have at least one dedicated person who can attend meetings and learn the rules and regulations. “You have to have someone who will get involved and learn where the money is and when budgets get set,” Sheffield says.
Dealers also must learn to understand what schools are up against when it comes to product selection. “Money is very tight,” says Wilson. “They can’t be wasting money so the first thing that they buy has to work.”
Wilson goes out to schools regularly to fix furniture at no charge. “People will tell me they need a new table and I ask what’s wrong with what they have.” If they tell him it’s broken, he goes out and repairs it for free. Unexpected service such as that wins the day. “Service is so difficult to find any more, and these internet companies are not providing it,” Wilson says.
Michael Chazin is a freelance writer specializing in business topics. He has been writing about the office supply business for more than 15 years. He can be reached at email@example.com.