Most independent dealers are more than happy to see 2021 draw to a close in the hope of a bright, shiny new year. Yet with continued pandemic uncertainty, an economy that may be on the brink of going rogue and the vague underlying feeling that the world is a bit off-kilter, most dealers are wondering what 2022 will bring. While no one claims to have the proverbial crystal ball, many dealers are willing to make educated guesses about what 2022 might look like, including trends, concerns and opportunities.
“Buy local will continue to be important and we will continue to emphasize it, especially for schools and other local businesses,” says Yancey Jones, COO of The Supply Room, Ashland, Virginia. “It’s about keeping dollars local and supporting our communities.”
Bruce C. Eaton, president of Eaton Office Supply, Amherst, New York, agrees: “Buy local is absolutely a trend I see continuing in 2022. We just had Small Business Saturday, which is an example of how the trend is moving into the local and national spotlight. We have ‘buy local’ on all our marketing materials. I think it is important. It’s what differentiates independent dealers.”
But Kasie Morley—president of Jacobs Gardner Supply Co. and Penny Wise Office Products, both headquartered in Bowie, Maryland—doesn’t think stressing “buy local” is enough. “Buy local took a back seat during the pandemic to convenience, which is still top of mind with customers,” she says. “Dealers need to stress speed, delivery, product selection and ordering convenience.”
Cleaning up with clean
Another trend that may—or may not—continue from this year to the next is the surge in PPE and other janitorial supply sales most dealers experienced in 2020-21. While the wave was moving in that direction pre-pandemic, COVID-19 triggered a tsunami of sales in these categories.
“Janitorial sales was a big boost for us last year,” recalls Jeremy Bourret, CEO/owner of Suburban Inc.—We Help People Work, Middleton, Connecticut. “We sell more and more in janitorial, while traditional office supplies are shrinking. And we keep the business. Office products has become so competitive; but once we get janitorial product accounts, they stay with us. It has grown so much that the comfort level for our sales force is now the same as selling coffee. It is an opportunity they might have shied away from in the past, but sales reps are now more willing to take on new things.”
According to Jordon Kudler, president of Legacy Office Solutions, Brooklyn, New York, the category exposes some of the advantages of doing business with independent dealers. “I hope our janitorial product sales continue,” he says. “It shows the ability of independent dealers to be nimble and respond quickly. Besides broadening our product offerings, it showed our willingness to work harder and go the extra mile.”
Morley contends that “absolutely” janitorial products will remain a hot category in 2022: “People are thinking of cleaning and air purification—things we never thought of before that open doors for office product dealers and create new opportunities.”
“Lucky for us, we have two companies,” Morley continues. “Through Penny Wise, we’ve always served small home offices, so we were prepared for what was needed, including residential deliveries. I don’t think it will return to pre-pandemic days; it will be a hybrid of workers in the office, maybe three days, and working remotely the other two. We feel well prepared for this scenario.”
Kudler agrees emphatically: “Yes, yes, yes, the hybrid office model will definitely continue in 2022. I think they will work in the office two or three or alternate days. I don’t know if it will be permanent. People still need to collaborate, which is difficult, and filling some customer requests can be challenging. One concern with the hybrid model is how it will impact how people buy. In the early days of COVID-19, businesses were scurrying and didn’t have time to think about prices. They gave employees the latitude to buy where they could get produce and submit receipts for reimbursements. But this is cumbersome for offices going forward. I think businesses will begin having a requisition process to fill requests from their normal supplier to the office to avoid additional expense.”
Jones agrees that the hybrid workplace model is here to stay for many businesses. “How independent dealers adapt to the hybrid model will be very important,” he says. “Home delivery is a huge challenge and order size has to be profitable. There also are geographical differences regarding going back to the office; and there are verticals—such as healthcare, education and manufacturing—where working from home is not an option. But with the additional services we provide, remote working gives us a chance to do well. Plus, very few offices are saying they are never coming back; and when they do, we will be ready.”
Mary Catherine Sigmon, president of Kennedy Office Supply, Lincolnton, North Carolina, also thinks geography plays a role: “In the more metropolitan areas, the hybrid model of a couple days in the office and a couple days remote is likely to stay. Some of our largest accounts in these areas are still not back. In more remote areas, workers are all back in the office. Our outside sales team in remote areas had much higher numbers, while our outside sales forces located in cities struggled to make sales and reach their goals.”
Inside or out?
This brings up another interesting trend: will the focus on inside sales reps that started in 2020 and gained momentum through 2021 continue next year and into the future?
“It’s been an interesting evolution,” Jones acknowledges. “Outside sales reps didn’t have a choice but to become inside reps, since they couldn’t see customers. But the days when outside reps can just manage accounts are gone, since inside sales reps can do this more effectively. Outside reps will become more like category specialists in charge of expanding into other categories and increasing market share with existing and new clients. Other outside reps will be hunters, bringing in new business, which will continue to be the hardest part. I also think it depends on the size and type of account. A school or state account needs a strong inside sales force to handle the number of e-commerce users. Even if you have the most effective outside reps, they won’t be able to service these customers as well as an inside group. I think it will be a hybrid, but I think inside sales will be bigger for a lot of dealers.”
Morley believes change is imminent. “Our company always had inside sales reps, but a lot of our outside reps are transitioning to inside since the days of knocking on doors are over for now,” she says. “What I’ve found is inside sales outperform outside, due to the volume of customers.”
But Eaton suggests it’s too soon to write off outside reps: “We had a sales meeting this morning, and it included both inside and outside reps because I believe both models are needed. They offer different levels of service. Inside can contact more people by phone and smaller accounts may only need inside assistance. But complex customers need both. You can buy office furniture online, but it is not the same as sitting in a chair; so I see a life for outside sales. Many big regional and national entities have eliminated their outside sales forces, and I think that is a big mistake. I think it is headed that way, where people will have no time to see outside reps and will go one line to get their questions answered. There’s no question about that, but we are not there yet.”
Bourret is betting the exact opposite. “Many of the larger companies scaled back during the pandemic and didn’t bring the human capital back,” he says. “There was a lot of talk at the recent ISG meeting about investing in inside sales versus outside sales. We found there is now a lack of outside sales at our competition. Customers are having a tough time finding the outside help they need, so we’ve kept our focus on outside sales and continue to invest in our outside salespeople to fill the gaps.”
According to Rosemary Czopek, president of Gorilla Stationers LLC, Cypress, California, “Outside sales has never been our model.” But she does predict changes in how sales will be handled due to the pandemic: “With COVID-19 and customers being less likely to go out, they are now much more likely to demand immediate service. They also want to get in touch the way they want to—whether by text, email or through the website.”
Undermining the king
Czopek attributes some of these changes to Amazon, which she believes poses a two-pronged threat to small businesses. “Amazon is controlling the environment and making it hard for smaller dealers to compete,” she explains. “Whether dealers are selling against Amazon or selling on it, the company is taking a huge piece of the pie, putting pressure on dealers’ margins, pricing and profitability. It’s a huge threat and one that is here to stay.”
Sigmon too envisages that Amazon will still very much be in the picture in 2022, but believes emphasizing what differentiates independent dealers is the best way to compete. “There’s no getting around that Amazon is a threat,” she says. “It’s the king and controls so much; it’s difficult to compete head to head. But we have humans who offer customer care and delivery; humans who can answer questions and solve problems. Everyone buys from Amazon some, but most don’t trust it. Independent dealers can capitalize on their relationships and trust.”
Bourret agrees on the value of human capital: “We take a consultative approach. People still have questions and need answers. We also can handle larger orders and larger deliveries of multiple product lines. We provide a point of contact, and we can bend more and quicker than Amazon. We are focusing on what we can do better and will continue to do that in 2022.”
One thing Bourret believes Suburban does better than many online retailers is communicate with customers. “My wife’s birthday is today,” he says, providing a personal example. “I ordered three things online well over a week ago, and not just from Amazon. One of the three arrived; and there’s no number to call for the others, just an email and tracking number. Our customers need answers to run their businesses. There’s a need for the IDC, and I think many of us are leveraging this differentiation. Some customers don’t appreciate these things, but the customers we work with appreciate and need it.”
On the topic of diversification, Jones summarizes the overall sentiment: “Diversification will be key. Even pre-pandemic, if you were growing market share in traditional office products, you were taking shares from other dealers.”
So, where will the growth areas be? “Janitorial, PPE and safety are big ones,” he says. “I see packaging and shipping supplies continuing to grow. Facility maintenance, repairs and operations is another; a lot of dealers have scratched this surface and the ability to expand here is pretty vast.”
Causes for concern
Dealers seem to be unanimous on their two main business concerns. Czopek gets straight to the point: “Inflation is at the top of my list for 2022, with the supply chain right under it.”
Bourret seconds this sentiment: “The supply chain is not improving and inflation doesn’t seem to have an end in sight. Right now, customers seem to be understanding, but I am not sure how much longer they will continue to be. Prices can’t go up forever. At some point, there needs to be a balance. I do credit the suppliers that have been able to get products to us. But right now, whoever has what we need, we have to pay what we need to get it.”
And Kudler concurs: “Product availability and supply chain constraint are major concerns. So too is inflation. Historically, it has been my experience that when companies feel they need to save money, they cut office products first; which is ironic, since it is the smallest expense. It happens every time there is a recession. I don’t think janitorial budgets will be scrutinized quite as much, but companies will be looking to maximize their spending by price comparing and shopping around there, too.”
According to Morley, these concerns may exist beyond 2022. “At the recent ISG show, many predicted supply chain issues will continue next year and maybe through 2023,” she says. “My company is a stockless dealer, so we have to rely on our wholesalers. They tell us cargo ships are full, but there’s no room to dock or unload product. There are labor shortages at the docks and not enough trucks or drivers. Labor will continue to be a problem.”
But inflation and supply chain shortages are not the only challenges dealers see on the immediate horizon.
“I think a major concern is our ability to continue to adapt,” suggests Jones. “We put a lot of investment in e-commerce, but it still needs a lot of work to adapt to the hybrid work model. Another is continued consolidation. We’ve always looked at acquisitions strategically; I think the Staples and Office Depots of the world will be looking at dealers that don’t want to continue or don’t have a succession plan. Many independent office product dealers sold janitorial products and were able to take advantage of federal funding and support to make it through 2021. Now they are looking at challenges in 2022; and if they haven’t diversified from office products, they are looking to exit sooner than expected.”
Another challenge Jones sees continuing in 2022 is worker shortages. “The labor market is not getting easier any time soon,” he predicts.
And Czopek believes uncertainty is exacerbating these concerns. “The environment has changed more in the last 12 months than in our 22 years with supply chain and wholesaler product availability issues,” she says. “These are unprecedented times.”
Words of wisdom:
Despite genuine concerns for 2022, these independent dealers are far from ready to throw in the towel. Instead, they offer advice for dealers like themselves seeking prosperity in the coming year.
Bourret: “While larger companies are downsizing and automating, we are doing the opposite. People need people. When the competition is pulling back on people, there is an opportunity for outside sales reps.”
Czopek: “Educate your customers on what your costs are; do your best to procure goods; and make yourself available to customers however they want to get in touch.”
Eaton: “Independent dealers should set customer expectations, then meet these expectations to the best of their ability. Also, understand your customer habits. We invested a lot in data analytics for our website and are studying what our customers view versus buy; where they come to the site; where they exit and so on. We are learning a lot from our investment.”
Jones: “It may be a challenge, but acquiring talented workers to take next steps is critical—new workers who may look at the world differently. This will continue to be essential for dealers to adapt to changing business models in 2022.”
Kudler: “Independent dealers should continue to align themselves with buying groups and focus on selling brands and buying direct, so manufacturers see them as relevant partners. They should also continue managing operational expenses and stay close to the customer.”
Morley: “Be nimble and embrace change. Find your niche. Look for where your wins are and how you can replicate them. Adapt to changes in the workplace landscape. Be open to new products and opportunities. Be creative with social media and video campaigns and new ways to reach customers.”
Sigmon: “Stay flexible and work together with wholesalers and manufacturers. Be resourceful. Strategize and capitalize on every opportunity to keep you moving forward. Stay on track; but be open to new relationships and new opportunities. Positive thinking is powerful. Use it to your advantage. Plus, it’s more fun that way!”