Article: Büroring on an upward curve
| 10 November, 2017
“There is a trend for companies with over1000 white-collar staff to move away from the globals back to the local dealer,” says Ingo Dewitz, managing director, Büroring
What is your current turnover and market position?
Turnover from the reseller side is around €900 million and Büroring itself, which is run as a cooperative owned by the members, has sales of approximately €200 million. We are having another strong year in terms of financials and continue to help our members increase their market share. If you take into account the 900 retail-oriented dealers from Prisma AG, which is a close partner and cooperates with the Büroring Group, then it is likely that we are the largest dealer group in Europe. Büroring dealers are of various sizes and include major German resellers such as Kaut-Bullinger, which moved to us recently. There is a possibility of another large company joining soon, which highlights Büroring’s relevance and appeal after 40 years of existence.
What has been your strategy to result in this sales increase?
One reason for our success is that we are quite unique in the sense that our dealers offer a local one-stop-shop solution to end users for their office equipment and furniture, as well as providing a range of technology products and services. Our main goal as a dealer group is to facilitate this exchange by integrating the purchasing department of the end customer into our systems to allow them to easily acquire the products and services they need from their local dealer.
Büroring has a warehouse to deliver office supplies, toner and most other products, apart from the larger items. IT and logistics have been a strong focus for us, but this is always based around giving dealers the platform to service the needs of their local customers. It’s not our aim for a dealer in Munich, for example, to market products to an end user at the opposite end of the country.
How does your strategy differ from the globals?
There are advantages for companies to have their suppliers close by, such as higher levels of support, which are not feasible from a national supplier. Price is very important, but one of our main strengths is the services we provide.
Which services can add value to the end customer?
Offices are in the process of adapting to the digital age and require products to be delivered directly to the desktop. Technology products need to be installed and serviced with a high level of support. These products need to be combined with the right choice of furniture to increase productivity. Büroring dealers are ideally placed to advise end users and provide them with the products and managed services that are adapted to their total workflow.
Are you gaining market share on the globals?
We are now seeing a reversal in the trend that started in the 1990s for companies with over 1000 white-collar staff to move from the local dealer to one of the globals. Dealers could not compete with pricing, but our strategy has evolved from offering niche products that fall outside of the contracts that globals have with larger customers to now competing directly. This is due to the declining position of the globals, with the exception of Lyreco, in the German market combined with the improvements we have made in terms of developing an IT, procurement and logistics platform that enables our members to compete for larger contracts. We have given them the weapons to fight back to win larger businesses. Our resellers have contacts, both professional and social, to all the customers in their region and we are now winning back some of the over 1000 employee businesses.
What is the current market share of local dealers in Germany?
Local dealers account for over 50% of the market in Germany and this figure increases to over 70% for ink and toner supplies and office furniture. Globals account for only 18% of the B2B market and this figure has been decreasing.
Do you consider Amazon as the new threat to your market position?
Amazon is currently more of a direct competitor to catalogue companies and is gaining market share in the SOHO market. It is not making significant inroads into the B2B market in Germany as it has done in some other countries such as the USA. Germany has quite a unique market structure based on a large network of local dealers throughout the country, so as long as we can provide them with industry-leading IT infrastructure then we are well-positioned to take advantage of doing business in the digital age. Additionally, the range of services that our dealers provide would also make it hard for Amazon to compete effectively against us in the B2B market.
How is your product mix changing to meet new demands?
Büroring has traditionally been a supplier of what we in Germany call PBS products - Papier, Bürobedarf, Schreibwaren (Paper, office supplies, stationery). However, the market for these products has been steadily changing in Germany over the last few years. For example, drug store chains such as Muller have gained significant market share in stationery. Due to our dealers seeing lower sales of PBS products year-on-year, we have been compensating by increasing the assortment of products and services to provide a one-stop-shop for end customers. This goes much wider than offering just facility supplies or catering products. This strategy has resulted in record sales over the last two years. In general terms, office supplies accounts 35% of sales, technology-related products, (including MPS) 40%, and 25% for furniture.
Which categories are performing well?
Sales of office furniture are up by 20% due to a boom in construction in Germany and the fact that there are a record number of office workers in the country due to employment growth. These factors have also shielded sales of traditional office supplies, which in normal circumstances would be experiencing a steeper decline due to the increase in digital technology. Managed Print Services are also performing strongly because businesses are digitally filing their analogue records. However, printing will be a declining category in the future. That is why it is so important to diversify and stay ahead of trends in the workplace to benefit from any new opportunities.
How do you see the market changing in the near future?
We held a meeting with 200 of our partners at the end of September to discuss the office of the future and what this implies for workspaces. The aim of this is to help us position dealers as partners to fulfill the needs of offices that are becoming increasingly digitally connected. We need to see future trends as opportunities to help end users deal with their digital workflows, rather than as threats to our business. Typewriters were an integral part of the initial Büroring product assortment forty years ago, so we are used to adapting to changes in the workplace and I’m confident we will continue to do so.