Q&A with Simon Drakeford, Office Power CEO & BOSS Chairman: What’s the extent of the impact on the industry?

At Office Power we talk to hundreds of dealers every day, as well as discuss the latest events with our connections from both within and outside of our industry. At this strange time communication and awareness of what’s going on in the market and the wider world has become more critical than ever. To help us share some industry insights and shed some light onto how the COVID-19 is affecting dealers and the office supplies industry as a whole, we have asked our CEO and BOSS Federation Chairman Simon Drakeford to answer our questions around some of the most discussed issues.

1. What’s happened to trading for dealers over the last couple of weeks?

Over the last few weeks, we’ve spoken with many dealers both inside and outside the Office Power community and the feedback we’ve received varies greatly. On the whole it seems that dealers in the North are holding up better than those down South. This is most likely because working from home is less prevalent and there is a low service company mix there.

Dealers who have a heavier weighting of SIC (standard industrial classification) customers (for example construction) are coping, and there are others finding some success in pockets of unusual demand patterns such as the rise in PPE and packaging.

Almost every dealer we’ve spoken with has been affected by the drop in demand from their customers, as well as their teams’ shift to remote working and stock shortages in the supply chain.

2. What’s your insight into what may happen going forward – short and long term?

In the short term, we predict that once dealers have fulfilled the remaining demand from March’s boom, the ones who can’t immediately reduce their fixed costs will struggle. They will need to reconfigure their businesses in order to adapt to the remote workforces, disrupted supply chain and a dispersing customer base.

Dealers with drivers and warehouses will need to rethink the logistics of their situation fast and come up with more flexible ways of servicing their customers, which will allow for them to de-risk their business and enable staff and customers to order online and reduce cashflow problems. On top of this, we think there will also be concerns surrounding collecting cash, and dealers will look to chase debts in order to cover immediate costs.

With many dealers furloughing large portions of their workforce, there’s likely to be increased pressure on the remaining staff across businesses to fulfil operational tasks. Because of this many dealers will need to run the risk of deprioritising selling to keep the business going.
We’re likely to see an upturn in the use of digital channels, particularly social media, and email will enjoy a short-lived revival to appeal to the SoHo and consumer traffic. Alongside this, mobile traffic is set to increase significantly.

It’s very difficult to predict the full extent of the long-term impact of this pandemic, mainly because of unpredictable statistics and the uncertainties of how an exit from social distancing will work.
Working from Home is the biggest influencer on when behaviours may normalise into new world demand patterns. It’s likely that there will be a staggered return to work which will be turned on regionally.

It’s also possible that this will be turned on and off periodically to manage the impact on mental and physical health, economic performance and pressure on public health services.
Ultimately dealers will need to be more flexible, open to adapting their business model and technologically enabled if they are to survive this drawn-out adjustment to a new way of working and succeed in the long-term.

3. What are your top tips which dealers can action now to protect their businesses during this period, and ensure they are still viable at the end of this very difficult period?

Turn as many fixed costs into variables as soon as possible (furloughing doesn’t come under this as it’s a government grant). This is critical for the current health and future success of your business.
Do some work to consider what your cost structures will look like if there is no furloughing and you only recover 80% of lost demand.

Focus on your online offering. Think about how well your functionality will hold up for a dispersed customer base who are working from anywhere and will need open pricing.

Start thinking now about how you will shift your product mix to meet and support changing working patterns.

Start to strategise about the long-term impact on deliveries. When the lockdown is eased many employees will continue to work from home either through choice or at the request of their employers seeking lower rent of office space service costs. This will increase both the number of deliveries and the geographic area to service.

Work on checking in with as many customers as possible as frequently as possible. However, make sure you have an efficient process for actioning this.

4. A topic that needs some clarification for dealers is the viability of deliveries to employee home addresses – do you have any thoughts on this?

Because of Work from Home restrictions, our industry’s non key worker status and a significant drop in demand, many suppliers have reduced the flexibility of their delivery services. The dispersing of the workforce means that many van routes are now not able to accommodate the increase in multiple delivery locations.

Dealers are trying to accommodate this in the short term by delivering items themselves, but it’s not feasible in the long-term. What’s clear is that this reduced flexibility has and will continue to lead to an increase in supplier to end customer deliveries.

Dealer systems will need to be configured to manage a significant increase in number of delivery addresses per customers. Ultimately, the cost to serve this change will increase and dealers need to consider the proposition to accommodate this.

5. Do you have any other news or advice to help dealers?

It’s predicted that 75% of a dealers customer base will temporarily go home, and only 50% will permanently come back. So, dealer businesses need to be configured for the ‘work anywhere’ customer. As always, Office Power is ready and waiting to support this change, protect these dealerships for the present and futureproof them for the years to come.

Dealers who choose to partner with Office Power can easily turn their fixed costs into variable costs. They have the e-commerce platform that has all the functionalities a dealer needs to be able to seamlessly service the everywhere worker, the buying power and relationships to secure stock, cost prices and service levels where others might struggle.

They also have the sales and marketing tools that enable timely and relevant contact with customers and flexible delivery options that enable dealers to service their customers wherever they are.

Our dealer partners are supported by operational and customer service teams, so they can continue to focus on securing sales, source in-demand products and keep their businesses going and future-proof them in the long-run. We don’t think there’s ever been a more important and relevant time for dealers to have this level of support.

The Office Power COMMUNITY – now open to all dealers

If you’ve found this article interesting and would like to have access to more valuable industry insights, connect and communicate with other dealers, why not join the Office Power Dealer Community? Our community is an online platform that has originally been designed for existing Office Power dealer partners to learn, share and communicate, however in light of current events we have made a decision to open the community up to other dealers as well, so you don’t have to be an Office Power partner to join our community. This closed community will provide you with ongoing valuable industry insights from our teams and our dealer community, as well as give a unique opportunity network and learn what other like-minded dealers are doing to address this crisis both short and long term.

If you’re an office supplies dealer in the UK and would like access to the Office Power Dealer Community, please let me know on chris.armstong@officepower.net or call 07789 004 158.