Will the rollercoaster ride continue?

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Will the rollercoaster ride continue?

Dealers share insights into the top trends for 2023

This time two years ago, INDEPENDENT DEALER’s cover story focused on the rollercoaster ride that the industry was encountering as the COVID-19 pandemic raged on. But is that ride now over? What will 2023 bring? Can we hope for a little bit more certainty going forward? While there’s no crystal ball that can provide the answers, we spoke to some independent dealers who were kind enough to share insights into the trends they believe will persist, gain momentum or just get started in the coming year.


The highs and lows of hybrid

Jeff Lurcook, president of Strive Workplace Solutions, Portland, Oregon, predicts the hybrid workplace will be the norm in 2023—which will at least be an improvement on the last two years. “I don’t like the hybrid model or think it is good for business,” he admits, “but we have to adapt. When people went to work from home, they were not buying office products from us at all. They bought them from Amazon, put them on an expense report and had them delivered right to their home. Independent dealers are not set up for home delivery. It’s not cost effective for us to use our vans, gas and labor for a $20 home order. But we were willing to do it to keep our brand out there. We even did a campaign for home delivery, but very few took us up on it. The hybrid schedule, with employees working some days in the office, will help.”

David Guernsey, president and CEO of Guernsey Inc., Dulles, Virginia, also believes selling to the hybrid workforce will remain challenging in 2023. However, he is optimistic the current labor shortages won’t persist, which he thinks could help offices fill faster. “No longer are 100 percent of workers in the office at the same time,” he says. “I think some version of the hybrid will be here forever, but not to the degree it is now. An account that might have been $100,000 in 2019 might be only $50,000. But I think the labor shortages will ease. What goes around comes around and toward the middle of 2023, employers will be better able to fill positions with qualified people for a fair wage.”

Barry Honoré, owner and CEO of Honoré Office Products, Dallas, Texas, sees the hybrid model as a 2023 sales opportunity: “Companies and workers are starting to adapt to the hybrid model. They are more settled. They now realize that to work from home two to three days a week, they need a permanent setup. So, we ask how we can help employees adapt, such as helping with the technology they need to work in both places. We sell them portable screens so they can have the two screens on their desktops at home that they have in the office without carrying a monitor back and forth. We are selling a ton of ring lights to help with virtual lighting. Now that many workers know they need to keep an office, we show them desks and chairs. For employees who want us to, we will come to their house and help them set up a home office.”

Honoré Office Products’ primary customer base is in education—a sector its owner says is also in hybrid mode, which he similarly views as an opportunity. “Dallas’s One-on-One program mandates every child have a laptop or tablet to use at home,” he says. “Many need desks and supplies for both school and home.” Yet he also believes that “the copy paper industry is in trouble.”

Lincoln Dix, vice president of Storey Kenworthy, Des Moines, Iowa, says his territory didn’t suffer the total shutdowns from COVID-19 experienced in large cities, so many of his customer base stayed in the office. However, he reports that sales of PPE are now far from the records set during the pandemic.


The pros and cons of these inflationary times

Dix is also keeping a careful eye on other trends that will affect the bottom line both for Storey Kenworthy and for other dealers.

“As prices go down, I believe our top and bottom lines will continue to grow,” he predicts. “Customers were willing to tolerate price increases because it was an availability economy versus a price economy. Even publicly traded companies increased their pricing to cover increased costs and hold their margins. But dealers who are unwilling to hold the line or who can’t acquire new customers will see their numbers retract.”

Guernsey, too, is watching how inflation might impact business: “The Federal Reserve has made progress by raising interest rates, but it will still be a factor in 2023. An economic slowdown could slow inflation even more but could lead to layoffs. Whatever happens, I hope it will not be a hard landing into a recession but a soft landing.”


Supply chain: fewer woes, but far from healed

Lurcook suggests that supply chain issues are now improving, and that there has been a silver lining to last year’s nightmare. “Before the pandemic, if something was out of stock from our wholesalers, it would be back ordered and we’d have to wait,” he explains. “The pandemic forced us to look for new vendors and we plan to keep those relationships with our new sources. I wonder if things will ever get back to normal—whatever ‘normal’ is—and what lies ahead. So, we have to keep our channels open. Now we can source from anywhere. We also had to sell a lot of things we didn’t before and we will continue doing that. If a customer asks if we sell frozen pizzas, we will say, ‘Yes, how many do you need?’ and find a way to get them.”

Guernsey agrees: “The supply chain is not back to where it was in 2019, but it’s better than it was six months ago. Still, I’d be surprised if it was all fixed by 2023. There are still hiccups in the transportation area, but it’s trending back—although the railway strike that seems to be coming fast could create real problems by the first of the year.”

Dix and other dealers shared Guernsey’s concern over the repercussions of the strike.


Buy local standing strong

Many of our interviewees believe the “buy local” trend will gain further momentum in 2023 if dealers get the word out. “We are stressing that we are an independent, locally owned and operated dealer,” says Lurcook. “Post-pandemic, many business decision-makers realize the importance of supporting the community and that the money stays in the community. The customers buying from big boxes are not getting better pricing, service or product. They don’t know we exist. We are stressing it heavily and getting our salespeople to talk about it. We are telling them to buy local, and Strive is here.”

Honoré echoes this sentiment: “We put it on our calendar every year. I believe it makes a difference to our clients. We live here; our business is right around the corner. We pay taxes here. The money is recycled in the community, and I see this continuing to be a strong incentive for customers to buy from us in 2023.”


Breakroom and furniture to the office products rescue

Another trend that Lurcook believes should help drive sales in 2023 is the shift toward more upscale breakrooms. “To show they are progressive, companies have to offer employees more than they did,” he explains. “Hiring today is more like a reverse interview, with employees asking, ‘What can you offer me?’—and the breakroom plays a considerable role in this. We see this trend continuing and view it as a significant growth area for us, so we plan to stock more selection.”

Guernsey agrees breakroom advances present a great sales opportunity in the coming year—but at a price. “A simple Keurig coffee machine or water cooler used to be enough in the breakroom. Now, employees are looking for cappuccinos, lattes and sparkling and flavored water. It requires different, much more expensive equipment that most customers prefer to lease or rent. We are lucky we have a balance and can afford to invest in what customers want.”

Meanwhile, Guernsey says furniture sales “are all over the place,” presenting another solid sales opportunity in 2023. “Employers are trying to figure out who is back and what is needed,” he says. “They are wondering, ‘Do I get cubicles for employees who are in Tuesdays and Thursdays to share with those who are in Wednesdays and Fridays? Or just a touchdown space, like a long table with a row of chairs and electronic plug-ins?’ We try to help customers figure out the proper furniture arrangement; but even employers within the same industry are different. This has been happening for the last several months, and I see it continuing in 2023. As I see it, if furnishings have to be changed or if they have to be returned to how they used to be, either way, we get to sell furniture.”

Honoré believes the key to higher furniture sales is showing what you can do: “Staples closed its business interiors division in Dallas, so our biggest competitor is gone and our furniture sales have increased tremendously. But that’s not just because the division closed. Many companies think independent dealers can’t handle bigger projects, so they don’t give us the same chance as the big boxes with the name and the marketing dollars. We just did a job for a school that included demolition and creating 105 cubicles, 31 offices and five conference rooms. We can do it. We just need to make customers aware and confident that we can.”


Sales they are a-changin’

The dealers all agree that selling will never be the same post-pandemic. “Technology, such as virtual meetings, had been gaining popularity, but the pandemic sped it up and forced many people to learn and adapt,” recalls Lurcook. “Now, these kinds of technologies are viable tools. They will never replace one on one, and we still like to meet with customers face to face when we can. But now we have a good alternative for remote customers and when schedules conflict. Now we can offer virtual options, which will continue growing.”

Guernsey agrees: “In the past, salespeople could go into a 12-story building and introduce themselves to every company from the top to the bottom floor. You are less able to do that now. Technology has greatly impacted how dealers go to market and what is acceptable to buyers. Since the pandemic, buyers are more comfortable dealing from afar. This makes sales-buyer relationships much different. We are investing heavily in integrating software and tools, such as HubSpot and ZoomInfo, to help us find prospects and communicate with our customers at a high level.”

The optimistic bottom sales line? “A lot of things that are out of our control will affect us,” Dix predicts. “But I still feel confident we will experience growth in our core categories—even those in decline, like office products. We are projecting growth organically through getting more customers and are always looking for acquisitions. We are always looking for opportunities to grow.”


Last mile gains speed

Another trend Dix sees expanding in the coming year is last-mile delivery: “Dealerships will be collaborating more to provide a network for last-mile delivery. The number one issue independent dealers have is the cost of drop shipping. If I have a customer in Iowa with New York locations, having the wholesaler wrap, label and drop ship product is incredibly expensive. So too is to ship orders ourselves. On the other hand, if we send an order to a dealer in New York to fill, we get the residual money, but we lose our volume with our wholesalers. With last-mile delivery, we’d pay the dealer just the delivery fee instead of us giving up the volume or order. Say the dealer in New York also uses S.P. Richards. We’d set up an account so the product would be marked as coming from us with the New York dealer as the shipper. S.P. Richards doesn’t care since there’s no extra expense. The dealer would charge a delivery fee, but it would be significantly less expensive. So, it helps reduce our costs and increase revenue opportunities. I worked at Staples for 10 years and the number one reason it lost accounts was delivery issues. Last-mile delivery gets the product to end users wherever and whenever they want. A group of 14 large dealers has funded the Dealer Delivery Network (DDN) as a last-mile test model, which is working. Hundreds of thousands of dollars are going to wholesalers and outside delivery entities. Processes like the DDN model will keep those dollars within the IDC. I think this move will be massive in 2023 because it will reduce costs and create revenue streams for independent dealers while improving the customer experience.”


Endless aisles, infinite sales

Dix goes on to suggest that “endless aisle” should also gain traction in 2023. “We are excited about endless aisle,” he enthuses, explaining how it works: “A manufacturer may have 750 products, but our wholesaler only carries 300. We could sell the other 450, but we don’t know they exist unless a customer asks for one. The endless aisle allows us to put these items from the manufacturer on our site, post a minimum quantity to order and say they will arrive in seven to 10 days. All we have to do is price and deliver. Some of the companies we’ve never bought from, but S.P. Richards does, so there is minimal cannibalism. Of course, there’s a tipping point where you can offer too much: the site becomes bloated and customers can’t find the nuts and bolts they need. But in the six to eight weeks we’ve been doing it, we’ve increased our sales five times.”

Dix realizes offering additional products could add make website updating more cumbersome—a task already challenging for many—and suggests: “Why create new content when you can use what manufacturers have already done? Contact your manufacturers and ask for content. Most are happy to help. They are excited to see the independent channel be more sophisticated in its marketing.” He is also a huge fan of relying on data—a trend he believes will become increasingly important.


Suggestions for thriving in the new year

Lurcook’s advice for 2023 is direct: “Be willing and open to change. I like to say, ‘What got us to where we are might not be what takes us to where we want to be.’ I also hear a lot of, ‘This is how we’ve always done it.’ It’s no longer [the case that] we make the rules and our customers follow. We have to adapt to what our customers want. We need to look for ways to say yes. These days, when customers hear no, they take it as a message that maybe it’s time to move on to a more sophisticated vendor that can fulfill their needs.”

Guernsey echoes this counsel: “Dealers need to follow trends. They need to ask, ‘Did the market change, and if it did, what do we need to change to adjust?’ We live in an environment of change and we don’t have the luxury of doing things the old way. Also, technology is an expensive investment. So is breakroom equipment. Dealers need to think through and invest incrementally to deliver what is most important to them and their customer base.”

Dix has the last word: “You must be progressive and use data and technology to grow sales. You need a digital marketing strategy that connects your data. This lets you see who is buying what and what works so you can stop doing what doesn’t work.”


Lisa Veeck is associate editor of INDEPENDENT DEALER and owner of Clean Communications, a full-service content-generating firm specializing in office products, cleaning and maintenance, and healthcare industries. She can be reached at lisa@cleancommunications.biz or 773-484-7412.