OPI-Dick Gochnauer Interview - Ussco.com

the big interview
that is our expectation. And, of course, the independent
dealer represents by far the largest share of our business,
so it’s an important part of our customer base.
OPI: Let’s move on to the US wholesale industry.
Were you surprised at Daisytek’s fall from grace?
DG: Not too surprised. It was a virtual rather than an
asset-rich company. Once you lose your funding, can’t pay
suppliers and don’t have inventory, it doesn’t take long
for customers to switch. And so the flight was very rapid.
“Companies who have drifted off
purely in pursuit of greed, have got
into big trouble, reinforcing the
position that it’s dangerous territory”
OPI: A flawed business model?
DG: Clearly. What was not fully appreciated was the difficulty
and the amount of capital required to enter into the
full line supply of office products. This industry is built on
speed, and the only way you’re going to get speed and low
cost is to have inventory in local markets. That requires
huge investments in physical facilities and inventory. A
slightly lower price while giving up on service, is not a
proposition that will sell, so it was an underestimation of
what it required to get into that segment of the business.
OPI: Ostensibly, that leaves you and SP Richards. Is
that a good thing?
DG: It was SP Richards and United before Daisytek as well,
because it was not a full line supplier. It’s when it tried to
become a full line supplier that it exacerbated its problems.
So really the industry has been served for sometime by two
national wholesalers. All customers need at least two
choices. Whether you need three or four remains to be
seen. Here you’ve got two good options - both well run,
well financed and healthy. So each dealer has a choice.
OPI: Do you expect the likes of Tech Data, Synnex,
Ingram Micro to try and move into the market or
will they stay niche orientated?
DG: It would be a whole different
service proposition for
them and requires a different
business model. I think
they’ll continue to be active
players in the segment that
makes sense for them.
OPI: You bought
Daisytek Inc for a
knock down price of $1
million. What does it
offer you?
DG: We were interested in
the intellectual property. It
has some software capabilities
too and clearly we
get the customer lists and
suppliers and there is
some information that I’m
sure will be new to us. It
had a software engine that
allows you to do some
product comparisons and
which the industry had
been using. We wanted to
make sure the industry
didn’t lose this, so we’ll
try to keep that available.
OPI: So some of the
things Daisytek did
were very impressive.
DG: Yes. It didn’t get
where it got to without
delivering some good
products and service to
the industry.
OPI: Will you keep that
name - Daisytek Inc?
DG: I don’t know - it wasn’t
our primary focus. I don’t
snapshot
age: 53
job title: CEO and president of
United Stationers
lives: Winnetka, Illinois
favourite food: hamburgers!
favourite restaurant: McDonald’s
favourite drink: iced tea
loves: The City of Hope
hates: dysfunction
education: under graduate degree
in engineering from North
Western, and MBA from Harvard
alternative career: in the nonprofit
world
favourite past time:
volunteering
holiday destination: Colorado
skiing
biggest fear: Not responding
fast enough to customers
biggest hope: the industry
learns to collaborate better
nickname: none
know whether or not there is some future use for that name.
OPI: We’ll move onto your results over the period
you’ve been there. Sales of $923 million for Q4 2002;
$970 million for Q1 2003; and $955 million for Q2
2003. Why the fluctuation?
DG: That’s normal. January is a big month, so you get some
extra pop in the first quarter. People cut off purchases but
January is the new budget period so they’re replenishing
inventories. Our sales for the first half of 2003 were up
about 4%, heavily driven by growth on the computer consumables
side. The good news is that furniture has gone
from big negatives to closer to flat, so that’s moving in the
right direction, but certainly not driving any sales growth.
OPI: Are you happy with sales overall?
DG: I’m concerned about the more traditional office products
segment, because that hasn’t picked up. The brakes are still
on in large companies in terms of spending, and the control
of spending, even to the point where companies talk
about how you get a choice of one pen or one pencil and if
Office Products International • December 2003