Article: PBS Holding - a dynamic approach to business
| 08 January, 2016
As PBS Holding is involved in both wholesale and direct sales in various countries in Central Europe, which channel is performing best?
I believe that the direct business is performing more strongly at the moment and has certain advantages, the most important one being proximity to the customer. This allows you to adapt the mechanisms at your disposal to run a profitable business. However, in the mid-term, I also see a lot of opportunities for a modern wholesale business that is adaptive to change. Today, a successful business model for wholesale needs to be dynamic in its online role. This is an area where we have grown significantly as a service provider in order to meet the requirements of new customer groups and end users. Therefore, although the wholesale market is going through a challenging period and a phase of consolidation, I remain upbeat that the right business model can bring long term success.
How much more consolidation is required?
It varies from country to country, but in many European markets there are still a significant number of wholesalers that are no longer profitable or investing enough in their businesses. Over time their customers will switch to more service-orientated providers with the result that they will either go under or become integrated into larger structures. This is not a transition that is taking place overnight, but over the next few years we will see a more consolidated structure led by powerful players that are better adapted to provide higher service levels to their customers.
How is the product mix changing?
Even though I am optimistic for the future, the European market remains characterised by a fall in demand for many traditional office supplies. We are all striving to balance the volumes being lost in some categories by gains from new ones. There is a lot of talk about the high growth in Facilities Management, but the starting base was very low. FM can’t be seen as a savior for the industry because it is not compensating for the drop in sales of items such as toner and paper-related products. On the other hand, it has been one of the few categories that has seen steady growth.
What percentage of sales does FM now account for?
It really depends on how you define your product groups and whether you include items such as envelopes. In terms of products that equip the workplace, it would be around 17%. The question that needs to be answered is ‘how far you can grow these assortments?’ Like I mentioned, I do not see them compensating for the decline in traditional office supplies, which means it is also necessary to develop other strategies.
Would the main one for PBS be continuing your acquisition strategy?
That would be the easy answer! It is true that acquisitions have helped us grow the
business in recent years and there are substantial benefits from having economies
What do you see as the challenges of integrating new businesses?
Technology has always been the basis of our business model and it is the glue that keeps PBS Holding together. It allows us to achieve the best service levels and implement fully-integrated processes from the supplier to the end consumer. As a business present in several countries, the characteristics of each market mean that the technology required can vary according to different levels of competition and end user demand. These differences are easily seen between markets such as Germany and Poland, but even Germany and Austria, which share a common language and have cultural similarities, require separate approaches. It is important that synergies do not impact how companies within our group meet the local needs of the market. Success is a combination of this individual approach backed up with high investment in IT systems and logistics.
How is your approach different in Austria and Germany?
Austria is a fully-integrated market and we are by far the most advanced service provider. As our customers are used to driving their business forward through a service concept, pricing becomes less of a discussion point. We are able to help customers more by working together to create better margins rather than simply reducing purchasing prices. On the other hand, the German market is characterised by a large number of wholesalers competing solely on price, with often poor service levels and little investment.
How does this situation affect your business model?
To a certain extent it is necessary to focus on product and price like our competitors. However, we have been investing heavily in our systems to move up to the next level of taking our service deployment to the market. We are currently rolling out new systems to over 1000 customers in the German market.
How is the increasing importance of online affecting your business?
One of the biggest challenges today is transforming the organisation to make it more effective in a digital world. In our business, this runs a lot deeper than merely publishing product information online. It centers on having the right teams in place to meet the needs of the digital customer. Finding the right people is a major challenge, but without personnel that have a strong understanding of the online environment, having the best technology on the market will not be enough.