Independent dealers channel the future

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Independent dealers channel the future

Lisa Veeck asks a selection of dealers for their predictions on what 2024 will look like for the IDC

It’s hard to believe it’s almost time to usher in a new year.

But what will 2024 bring? We can’t predict the outcome of the US presidential election or even confirm who the top candidates will be. However, we have asked a cross-section of independent dealers for their thoughts on what the year might hold for the IDC. We thank them for their time and hope you find their insights valuable.

 

David Guernsey, president and CEO, Guernsey, Inc., Dulles, Virginia

Until more folks return to work, not much will change for those of us providing workplace supplies. Recession notwithstanding, I’m predicting flat demand with an ongoing sectoral decline in office products; it has not plateaued yet. Federal workers won’t return to the office in large numbers in 2024 unless the Biden administration is defeated in November. However, local government and schools have money, so I suggest dealers follow the money.

Moving aggressively into adjacent categories is an absolute must for independents—and not simply into convenience categories, such as janitorial. Breakroom, done big, will be critical; project furniture is necessary, but not just transactional deals. Bold moves may be necessary if dealers are to fully recover to the pace of 2019 revenues. We have a few in mind but are not yet disclosing them. Embracing new technology will be increasingly critical as well. Artificial intelligence (AI) is not a fad and staying current with its evolving features will be a must, not a nicety.

 

Nathan Gamett, print services manager, The Office BOSS, Reno, Nevada

Engagement with our customers using the newest and most exciting digital experiences is something I am looking forward to in 2024. I am studying business marketing and see many new tools to help businesses create a memorable experience for customers, such as free design programs to draw customers in with high-end professional graphics and digital animation that comes to life with a simple QR code scan. I am looking into ways to leverage the power of augmented reality technology, one of the most exciting new technologies I have seen. The Office BOSS is looking forward to 2024 and giving our customers the most memorable experiences.

 

Jaret Lyons, vice president of sales and operations, Emerald Business Supply & Emerald Business Interiors, Philadelphia, Pennsylvania

It’s tough to analyze trends here at Emerald because we are growing rapidly and bringing on new customers daily. So, when it comes to year-on-year trends, ours may be misleading, since we are seeing an uptick in every category based on our customer acquisitions. That said, there are some trends we expect to continue in 2024.

We have had significant growth in our furniture division due to several factors, including adding a full-time in-house interior designer and project manager and investing heavily in software program upgrades specific to contract furniture. We are also seeing more employees returning to the office full time post-COVID-19, which helps in various categories. We expect this upward trend to continue in 2024.

Another area where we are experiencing major growth is in breakroom and coffee service—again in part due to more employees returning to the office full time, and also to employers looking to attract new employees and keep existing ones by providing an array of options that today’s jobseekers consider important to their work experience. Our office supply category is also booming, thanks to our sales efforts and continued focus on pushing the “buy local” message. Emerald was born and bred in Philadelphia, which we believe is a key differentiator for us compared to other companies that call themselves local but are headquartered out of state or outside the Greater Philadelphia region. Our janitorial and facility maintenance category has seen significant growth, although demand for personal protective equipment is less than in previous years.

 

Jeff Lurcook, president, Strive Workplace Solutions, Salt Lake City, Utah,

At Strive, we believe fewer people will be working from home in 2024. But employees —especially younger generations —watched their parents work and sacrifice for retirement only to be too tired to do anything and/or pass away shortly after retiring. These employees now want to work to live, not live to work. Some form of the hybrid model will continue, while workers who return full time will have more flexible hours and more part-time job sharing. We also think employers will improve their benefit packages to attract employees, while offices will remain forced to do more with less through necessity.

 

Lincoln Dix, vice president, Storey Kenworthy, Hiawatha, Iowa,

A few of the trends I believe will continue in 2024 include mergers and acquisitions; dealers expanding into adjacent categories; inventory rationalization; dealers shifting the products they stock; stable and consistent suppressed occupancy rates; and the continued growth of third-party distribution.

New for 2024, I see dealers becoming more creative and expanding into adjacent talent pools; a greater focus on growing services instead of product lines; more aggressive pricing; and traditional office product dealers moving into various new marketplaces and adopting less traditional distribution models. I also predict there will be greater collaboration between distributors to handle last-mile delivery service and less dependency on legacy parcel carriers.

 

Jerry Sinclair, owner and vice president, Business Office Outfitters and Office Furniture Outlet in San Diego, California

Remote work is never going away—it’s a major trend. A Sandag survey found that the percentage of businesses that reduced or planned to reduce their square footage increased from 19 percent in 2021 to 44 percent in 2023; while the percentage of businesses that terminated leases or made plans to do so rose from 18.5 percent in 2021 to over 34 percent in 2023. Businesses with returning employees are updating their furniture to make the office look more casual and inviting, giving it more of a home feel and using bright and exciting colors and fabrics. I see these trends continuing.

 

Beth Freeman, executive vice president, FSI Office, Charlotte, North Carolina

The coming year will bring more economic uncertainty. Customers will also receive less service from the big boxes, causing dissatisfaction and giving independent dealers opportunities with some larger accounts that we had a hard time getting into before. We recently picked up three accounts like this due to poor customer service. Dealers are continuing to—and must—broaden our product and service offerings. The “stickier” an offering, the better. Anything that requires true expertise, installation or service is stickier and less likely to go to Amazon. Meanwhile, in 2024, Amazon will continue to pull spend away from dealers—not entire accounts, mainly ancillary items. However, these products typically are higher margin and dollar value items, which makes growth and profitability increasingly challenging. In the breakroom category, snacks and other food items are an area of focus for us in 2024.

 

David Leahy, managed print product manager, Eakes Office Solutions, Grand Island, Nebraska

We are very excited about print product opportunities in 2024. We will be introducing new products and expanding our opportunities in this category. We also are excited as we expect aggressive growth in the technology sector, which covers a lot. We are optimistic these trends will continue in 2024.

 

Mike Flaherty, owner and president, Great Falls Paper and Supply, Great Falls, Montana

Shredders are selling more than ever as they are being worn out and replaced. We do mainly government contracts that have a lot of classified documents, so we expect this to continue into the New Year. There’s also been an increase in visitors to national parks. Yellowstone, for example, saw a 47 percent increase year-over-year in 2023, but its budget was decreased by 2 percent. We help them save money, but they need more supplies. Another trend I believe will be strong in 2024 is more salespeople on the street. Some people disagree, but customers want service—especially in the government sector.

 

Charlie Kennedy, vice president of sales and marketing, Kennedy Office, Raleigh, North Carolina

The biggest trends in 2024 will be in areas where Amazon can’t do well, as they require service. Amazon doesn’t help customers pick out and install furniture or design spaces. It doesn’t clean coffee brewers. Dealers can take projects from start to finish. As for the janitorial sector, which is more complicated, customers want a knowledge base to call and say, “We have this random stain or a bad odor,” and have the issue solved. This type of consulting will be increasingly important in 2024. Our role as a dealer is to guide, which contrasts with the confusion caused by many big boxes. Type “legal pads” into Office Depot’s website search and you’ll get a great price; but many people don’t realize you’ll only get eight pads instead of the traditional 12 per package. Or binders where the company doesn’t make it clear they have five rings instead of eight. I refer to this as “shrinkflation” and I think customers will have more appreciation for our guidance because of this. Don’t get me wrong: Amazon will not slow down. It will still be a huge player, as it is in all industries. But it’s still not as good in the business-to-business space. We’ll see if that changes in 2024, but I don’t anticipate it will.

Regardless of Amazon, office products will continue to decline in 2024—not at the rate they did during the pandemic, but by the 4 to 7 percent they’ve been averaging in recent years. Other trends I see include less next-day delivery—janitorial companies deliver once a week and people are getting used to this—more scheduled deliveries and minimum order charges.

 

Greg McLeod, president and CEO, 1st Source, Minneapolis, Minnesota

While the hybrid office will continue, increased pressure from employers for people to return to the office should lead to an uptick in office product, breakroom and janitorial consumption. Independent dealers will also benefit from continued anti-big corporation sentiment that encourages people to buy from regional and local suppliers, which tend to be more responsive to customer needs, hungrier for new opportunities and faster to address problems and new opportunities.

The most successful dealers will continue to leverage their appetite for new revenue sources. The COVID-19 pandemic forced most of us to pivot into new areas to keep the lights on. One unintended benefit of that miserable period is that many dealers are now more openminded and less risk averse when it comes to exploring new product categories. The aim is to achieve better margins, larger orders and more strategic client relationships.

AI will continue to grow. However, I predict an interesting and contrarian trend toward less technology and automation, in favor of more personal, genuine interactions. We are already seeing this trend as grocery stores pull the plug on self-checkouts to give customers a more human, enjoyable interaction. This trend bodes well for dealers committed to offering outstanding, experienced, personal customer service. Technology is great and will remain important, but it’s not the panacea for all business challenges.

I also see more manufacturers working closer with independent dealers. Larger distributors may not be delivering growth or may have squeezed all the profit out of the mix, so the manufacturers will look for dealers who believe in collaboration and partnerships. Challenges on the hiring front will continue and even increase in 2024 as we struggle to find employees with the right attitude, temperament and work ethic. Customers will place larger orders as we all look to lower supply chain costs: fewer deliveries, fewer people needed to receive orders and less paperwork help everyone. Our largest casino customer receives complete orders once a week instead of daily and uses the dollar and time savings to deploy employees elsewhere, making it a true win-win.

Finally, I suspect there will be a renewed focus in 2024 on developing “old-school” sales and interpersonal skills. One of my favorite expressions is: “The world belongs to those who show up.” Many companies were sold a bill of goods when they were told they could build business and relationships using e-commerce, telemarketing and inside sales. Those are valuable tools, but our biggest successes have come from showing up and putting in the time to add real value to customer relationships.