The education sector is becoming increasingly important for many independents. With a name like the Knowledge Tree, it should come as little surprise that up to 97 percent of this independent dealer’s business comes from the educational sector. Of course, the school buildings in Memphis, Tennessee—as everywhere—were closed for much of 2020 by the pandemic. So it is also little wonder that the dealer’s sales of school office supplies were down by as much as 60 percent at one point. Yet the company recovered half of that, ending up down only 30 percent in one of the most challenging years independent dealers have ever faced.
What cut the company’s deficit in half? According to Knowledge Tree president Andy Gattas, it was a mix of products—albeit different than those sold in past school years. “PPE was a huge help,” he says. “We sold a lot of face shields. Teachers are communicators, and kids learn by seeing their faces and lips. We sold pallets and pallets of dry-erase lapboards because every child needed one when students were learning from home. In the classroom, they would share. The same was true with pattern blocks and alphabet tiles. We also sold flashcards, workbooks and the alphabet line that goes around the room. Teachers still decorated the room for online learning. Furniture was another huge help. Fortunately, we had a lot of projects already booked.”
Brian Kerr, president of Kerr Workplace Solutions, Elizabethtown, Kentucky, says that 40 to 50 percent of the company’s sales are to the education sector. He explains how the company weathered the pandemic shutdown with furniture sales and schools planning ahead for what they would need to reopen: “We sold a lot of furniture; it was a good time to outfit new schools or remodel old ones. And we were blessed that we were able to shift our business to PPE and find vendors that could source spray, wipes, etc. We were selling Lysol to schools by the truckload and shipping skids of wipes. The schools weren’t open, but they were getting ready.”
Mike Horne, owner of Latsons.com, Sulphur Springs, Texas, had a similar experience: “Schools were spending money on furniture. A lot of schools saw the shutdown as an opportunity to upgrade when there were no people there.”
According to most dealers selling to the sector, schools’ budgets are set in advance and are used before next year’s budget.
Back to school
With most schools now returning to in-person classes, sales for the 2021-22 school year are soaring—in part thanks to the COVID-19 relief packages.
“This year, we picked up three to five new schools,” Kerr says. “The federal funds to help since COVID-19 are being given to the state to allocate to the school systems. One school system bought all the school supplies for every student K-12, so the students didn’t have to buy any. Several schools are using the funds to remodel and get all new furniture.”
Gattas agrees: “The COVID-19 relief packages were designed to help public, private and charter schools, and were given to the state to determine how to divvy them up,” he explains. “It’s complex on how this was decided; but in some cases, the financial help was 50 percent more than the school’s budget—and in one case, the school received three times the amount of its budget. Last year was our worst ever and this year is turning into the best we’ve ever had.”
The government assistance wasn’t only for buyers. “We were lucky enough to get government financial help, which was a huge blessing,” says Amanda Liezert, vice president of customer relations with Tierney Office Products. “We didn’t have to let any of our employees go and I am proud to say we have recovered and are growing.” She attributes the company’s survival to the post-shutdown trend of customers buying local: “Everyone knows people who have lost their jobs, and I think people are starting to realize how important it is to have local work and to work with local businesses.”
Horne says 60 percent of the company’s office products and printing business is with K-12 schools and local colleges. His experience with the government’s pandemic funding was slightly different. “We bought items we thought the K-12 schools would need—PPE, hand sanitizer and so on,” he says. “But the schools got special COVID-19 funding and had to buy those products from the Texas Equipment Association, and told us they couldn’t buy those products from us. So we had to switch gears. We created school supply take-home packets for students who weren’t ready to go online or didn’t have internet access, to tide them over until they figured things out. We also could sell take-home PPE kits with small sanitizers, wipes and so on to programs for younger children like Head Start. So we created take-home packets for them and printed the school district on them.”
Print personalization has also been big for Midwest Single Source, Wichita, Kansas, where 15 percent of total sales are to the education sector.
“Our biggest sellers to education are T-shirts with logos, followed by other apparel, from uniforms to sports jackets,” says Midwest Single Source president Kevin Ulwelling.
“It slowed down when people weren’t in the building, but is picking up now that schools are open and sports teams are playing. A lot of the items we sell are already out of stock.”
Technology: a principal role
According to Ulwelling, his company’s increased sales of personalized apparel and other items can be partially attributed to technology. “About 40 percent of our sales to the education sector are online,” he says. “Probably the latest and greatest creation for us in this area has been school stores. Teachers and administrators can choose what they want. They can personalize items and schools can control the school brand, such as the logo and only offering the school colors.”
Liezert has had similar luck with online customized class kits. “The class kit program allows each teacher to customize what they want in the kit for their grade,” she explains. “If a teacher wants a five-star notebook versus a more generic one, it can be ordered. This allows teachers to get what they want and the orders get approved all online. We put the kits together for each grade and with each student’s name on it, so it can be sitting on their desk the first day of school.”
Gattas estimates 40 percent of Knowledge Tree’s sales are online, whether through online ordering or email. He says he also sold a lot of technology accessories to teachers working from home, such as keyboards, digital cameras and lights. However, he says that the company is not expecting these sales to continue and does not stock these items, relying instead on S.P. Richards.
Kerr is similarly lukewarm about technology sales: “Most schools have their own in-house IT departments and have contracts so they can buy iPads, computers and copiers cheaper direct from the manufacturers. We sell various copiers, but schools don’t use one brand. It depends on what brand a particular school principal likes.”
A is for Amazon
While Amazon has impacted nearly all sectors of office product sales, few have been hit harder than education. Gattas’ description of the mega online retailer speaks volumes: “Amazon? Satan incarnate!” he says. “Brick and mortar stores have been fighting the trend toward Amazon for 15 years, but it became the default during COVID-19. I think it will continue. When people want something, they go to Amazon. Even if it is not the cheapest, it is perceived to be by most people—including many teachers and school purchasers.”
Gattas believes his company’s new close-out procedure proves his theory: “We have a store that sells educational toys around Christmas along with our other school and office supplies. But toys aren’t like copier paper; toys that are hot this year will not be the next. Previously, we would mark these down in the store. Now we up the price and sell them on Amazon. Of course, we have to cover our Amazon costs; but we still make more.”
Kerr believes the media has helped foster this perception: “Amazon announces one or two-day delivery and it’s all over the news. Dealers in our industry have been offering next-day delivery and no-hassle returns for 15 years, and we are not on TV.”
Horne feels similarly, but thinks some of the blame belongs in-house: “We’ve been delivering next day for 20 to 30 years, but we struggle with how to promote it. We are terrible about telling our customers what we do. There are things we’ve done for 10 years, and yet schools will say, ‘I didn’t know you did that.’”
The good news is that many independent dealers have found ways to fight back by offering what Amazon so far does not. “Schools can order regular copy paper from Amazon,” says Ulwelling. “But our reps deliver and take it inside and put it in the area where it belongs.”
Kerr believes the best weapon against Amazon is direct communication. “I noticed sales were down at one school district and I went and met with the superintendent,” he says. “I explained how we give back, supporting the band and sports and how Amazon does not. I explained how a lot of times, Amazon is not the cheapest. The superintendent apologized. He met with the finance person and we got the business back. Often people at the C-level are not aware where a purchaser is buying or if there’s a vendor change. Before long, 60 to 70 percent of the business has switched. We monitor our business for 30, 60, and 90 days and look for variances. If we see the volume decrease, we call and ask to find out why. That’s important.”
Liezert says Tierney’s superpower against Amazon is its customer service and the peace of mind that comes with it. “We are very relationship driven,” she says. “We treat people the way they want to be treated. There’s a type of customer Amazon does well with; but the people we do best with are looking for consistency and good customer service. They are not the type who want to jump online and push a button. Our customers can relax with us. They don’t have to audit every invoice.”
Liezert provides an example of the kind of loyalty the company’s consistently good service breeds: “We have a three-year contract with one of our larger school districts that has a two-year option to extend. At the start of the third year, I reached out and the school superintendent said, ‘We have no interest in putting it out to bid.’ Before this, the district worked with Amazon and stopped. I attribute this to the relationships we have and our consistency.”
Navigating the road to future success
Ulwelling has seen significant changes in the educational market. “Schools have become much more budget conscious—there’s more watching of the dollar,” he observes. “They get three bids and many take the lowest price. Spending patterns have also changed. There’s been distributor consolidation and purchasers are using one source. There’s also been consolidation of schools and now more teachers can purchase what they want for their classroom. This can be good and bad. We’ve lost some consistent business and have gotten new business.”
Liezart agrees there’s been a change in the education market, but has a different perspective on what that looks like. “Education has definitely changed in the last decade,” she says. “The educational market has grown and created lots of opportunities. We had consolidation, but now, new schools are popping up everywhere. There are a lot of RFPs and RFQs with a chance to get whole districts versus individual schools.”
Gattas divides the future into interim and longer term. “Right now, there’s a lot of money out there,” he says. “We’re seeing a lot of education systems tearing down old schools and building new, so we are seeing a huge spike in furniture sales. Longer term, the challenge will be internet purchasing. Purchasers are younger and lean toward purchasing online. If a dealer isn’t positioned for this, it will be lights out.”
Ulwelling believes the diversification that has kept Midwest Single Source going will become increasingly important moving forward. “Dealers need to diversify; it’s what’s kept us afloat,” he advises. “There is not as much paper and toner being used, and the number of items schools are buying is dwindling. Dealers need to understand budgets are shrinking. It’s about finding ways to increase spend.”
Horne agrees: “The most important thing a business can do is diversify. If you stick solely with office products, well, everyone knows the trend.”
Kerr suggests the answer is a combination of new and old: “The Internet and good business relationships are the future.”
Liezert would concur that the key is—and will continue to be—relationships, along with a can-do attitude: “We got into the educational sector because a friend of mine’s child attended a school that was working with a competitor to supply class kits. Two weeks before school started, the supplier said it couldn’t fill the order. The school contacted us and asked if we had the supplies and could supply the items. We got everything the school needed before school started. Word spread and we picked up seven schools from that one action.”