UK dealers unfazed by Amazon and private equity

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Cairns do: Office Brands CEO Gavin Ward with Integra CEO Aidan McDonough, who is also the current chairman of international buying group BPGI. 

Independent UK dealer groups have yet to see any discernible change in the pricing strategy of the former Staples businesses in the UK following their acquisition by private equity interests last year.

“It’s still early days but we’ve not seen any significant changes in the way they operate,” Aidan McDonough. CEO of Integra, told Stationery News.

McDonough, who is also the current chairman of international office products buying group BPGI, was in Australia to attend the Office Brands annual conference in Cairns (22-24 September), held in association with Office Products Depot New Zealand.

Office Brands has an “associative relationship” with Integra, the UK’s leading OP dealer group with more 230 members, accounting for nearly $800 million in combined turnover.

McDonough said the situation regarding the Staples sale in the UK was different to Australia in that private equity firm Hilco bought the UK retail operations of Staples while an affiliate of Cerebus Capital Management bought the European side of the business, which included retail, contract, and online businesses in 17 countries.

He said the corporate upheavals opened up opportunities for independent resellers, who, as in Australia, had a strong presence in the B2B sector.

McDonough said he was surprised by the name change to Office Outlet for Staples’ former high street retail chain – “In the UK, the term ‘depot’ usually applies to those discount big box stores.”

 Amazon ‘just another platform’

During the Office Brands conference, McDonough was joined by ACCO Brands Australia managing director Bruce Haynes for a panel session on the impact of Amazon on the OP market.

McDonough said one of Amazon’s greatest marketing strengths is its Prime offer, which includes free delivery to members.

“It’s hard for consumers to go past Amazon when they know they will get free delivery with every purchase,” he said. “It is an online monster with a very fast website and delivery service.”

At the same time, he said there been “no impact” in the past six months on the dealer channel with the launch of Amazon Business.

Amazon, which has been operating in the UK for 20 years, is driven by price and ratings, according to McDonough.

“The key for suppliers is to get on the ‘buy’ button,” he said. ”In the UK, price transparency has hit margins because online players like Amazon can adjust prices in two seconds.”

Haynes believed Amazon’s progress in Australia will be “slow” but competitors will need to ramp up their online capability.

”You will have to have a brilliant website,” Haynes said. “The advantage for resellers is that they can add a personal touch,” he said. “You can’t talk to anyone at Amazon.

“At the end of the day, Amazon is just another platform,” he said.