Spicers has been on quite the journey since 2020, from bringing in the administrators to starting a whole new business during a pandemic. We speak to Spicer’s sales director Steve Morley who fills us in on the rollercoaster ride Spicers have been on in the last three years
Read the full article below or on page 24 in our April magazine
For the benefit of those who may not have followed your journey closely, give a brief overview of what’s been happening at Spicers the last few years.
It would be easier to say what hasn’t been happening in that time, to be fair! Back in 2020 at the start of the pandemic Spicers UK, along with the SPOT Group, went into administration. When Paragon first acquired parts of SPOT in May 2020, they didn’t buy the UK wholesale business, but there was a real concern that the wholesale market could become uncompetitive; and a resounding requirement within the dealer community to have choice and flexibility across their supply chain.
We introduced OT Wholesale as part of the newly formed OT Group back in May 2020, in the middle of a pandemic, with no customers, no systems, no systems integration, and the only way people could trade with us was by opening an account online – they could email or phone an order in and we would send them a hardcopy invoice – that’s how basic we had to go back to in order to restart the business and we remain very grateful to those dealers who backed us. We started with four people initially, and we’re about 12 people now. We’ve grown the team in line with the sales line but kept the resource deliberately small as we want to keep costs very low and pass on the benefits to our dealer partners.
We currently deal with circa 830 plus customers and we have full EDI integration now with every back-office system. Since our launch we’ve been through three lockdowns, moved carriers, moved warehouse, been through Brexit, experienced the paper shortage, a war in Ukraine and now high inflation.
As you can see, in less than three years we’ve been through numerous amounts of change, to get the business fit-for-purpose for where we see it, going forward. The last part of our change plan is the new ERP system, which we’re heavily investing in at this moment in time so that we can move from some very old legacy systems to a state-of-the-art platform and unlock the potential of where we want to go as a business.
So, we’re looking forward to some stability now to do the exciting things that we want to bring to market, but we had to go through all the pain to get to where we are. It’s been interesting navigating a pandemic with three lockdowns and putting a team together; we didn’t meet as a team in person for over 18 months because of the pandemic and in that time, we built a multi-million pound business again from scratch. Everything was done remotely; it’s been a real journey, a real journey.
It’s fair to say you’ve had a tumultuous few years. How are you planning on reinstating confidence in your brand with the dealer community?
The key for us is just to make sure we’ve got the right products, at the right price, with the right service offerings, and that will breed confidence. Obviously, we’re very fortunate that we have the Five Star™ brand, which is 30 years old this year, and probably the most trusted own brand in the business. The difference between the old world and the new world is, of course, that we’re now privately backed, and we no longer have VC ownership – the people that are in it understand the business and are planning for long term future growth. Ultimately, we must prove ourselves to the dealers; we’ve been through a lot of change to make this business fit for purpose and future proof, and now we need to show them some stability and demonstrate that we are a partner they can trust. I’d to like to think that’s what we’ve always done since we setup – to be honest with people and build that trust.
What plans do you have in place to make sure you’ll be coming back stronger than ever before?
The major difference we have is strong backing from Paragon Group. They have already invested in a state-of-the-art warehouse in Ashton-under-Lyne – the biggest single warehouse in the UK servicing the office supplies industry. We’ve just invested over seven-figures in our new ERP system, and that will also help us bring forward plans that we have for further service offerings to dealers and flexible delivery options.
We’re also looking at range extension. Now, it sounds very easy when you say ‘range extension’, but what we’re looking at is the ‘endless aisle’, as we call it. We plan, by the end of this year, to have a million products available online to dealers – with plans to increase that further in 2025 by up to three million products. We want to make sure that, from a dealers’ perspective, when a customer is on their web portal, looking for a product, they will find that product they need without having to look elsewhere.
So, there will be a stocked range as well as the endless aisle, and what we need to do is let the endless aisle data guide us as to what products to stock rather than, as we used to do in the old wholesaler model, tell dealers what we are stocking. We want to work in partnership with dealers, and as long as we can all make an acceptable margin, we will stock it – which is a fundamentally different mindset from a traditional wholesaler.
What are Spicers’ goals and ambitions for the year ahead?
We have some very ambitious targets – we’ve got a growth forecast of over 70% this year. Paragon expects us to grow rapidly and to be number one in our industry. The main reason for changing the ERP system for us is to unlock what the future holds. We had over 35 legacy systems and over 200 databases powering the old system. Now we’ve moved to a single platform, the simplicity and flexibility it will give us will allow us to offer different service delivery models that dealers need. We’ll be able to provide lots of different products and services, going forward and the endless aisle is a key part of that strategy for us.
I think the dealer community is ready for a new, hungry, wholesaler – and although we have a 200-year-old name, we’re really a business that’s only been going for two-and-a-half years, and we have a large appetite for growth.
What are some of the challenges of running a business when you have lots of different dealers, with lots of different business needs, and trying to cater for all of them?
It’s an interesting question because, when I look back – being that I was part of the old Spicers until its demise – Spicers was taking too much complexity, and therefore cost into its business. At a recent dealer forum we held, we asked ‘What do dealers want today?’ And, when you listen to what they want, it’s a fairly simple model – right product, right time, and easy to do business with. Yes, there are some nuances within that, but the fundamentals are great service, a good price and being easy to deal with.
We think our approach of a very low cost, stripped-back model is fit for online, hybrid and traditional dealers. Yes, we’ll have to adapt as we grow, but the actual base is now very solid and, being a low-cost distributor, we can then tweak slightly as we go along to meet a dealer’s needs.
I think what we need is simplicity and transparency within the wholesale channel. Dealers need to be able to trust their wholesale partner, and that they’re going to do the right thing at the right time and give them the right information and widest product choices. That’s what we aim to do.
What do you think will be some of the wider challenges facing the industry and dealers, particularly this year?
The interesting part – and probably one that we haven’t faced as a business until the pandemic – is going to be high inflationary pressures, because they’re coming from all angles on costs of goods, fuel costs, staffing costs etc. I think the biggest challenge for a dealer is managing this in their pricing model, and really understanding what their actual costs are. Yes, they see the cost of goods that will increase, but you’ve also got to factor in your own fixed costs which are increasing for you as a business owner. If you just pass on the cost of goods increase, you’re going to go backwards on your margin. It is the right time to question everything and move as much fixed costs to variable costs where possible, i.e., delivery costs versus a third party offering etc.
Face-to-face selling and office-based workers have all been very key in this business for many years – as long as I’ve been in it – but the market is changing with hybrid working and remote working, and a younger new tech savvy generation of buyers and consumers, which means different delivery models are needed, along with smaller pack sizes and a much wider range. As a result, the way people are purchasing is changing and we need to reflect this by looking at web-based offerings, app offerings, making it simple for people to order quickly and efficiently for both them and us.
For those dealers that are going after larger contract business, you’ve got to review your sustainability and social credentials, and those of your suppliers – this is becoming more and more important. As a business we have just been awarded the EcoVadis silver accreditation, which enables us to assure our customers, suppliers, and other stakeholders of our environmental commitment as well as helping dealers highlight this to their customers and potential clients.
With Spicers coming from a more traditional office products background, how do you ensure you are future-proofing your brands as the industry evolves?
As we discussed earlier, Spicers is a very old name on a very new business and bearing in mind what we’ve been through as a business, the one thing I would say is we’ve had to be very flexible and adaptable, we’ve learnt very valuable lessons along the way. We have a clear plan in place to reflect what the market needs both today and in future. This industry constantly evolves, remember fax rolls?! Most dealers are very, very resilient and have been very entrepreneurial through the pandemic. I take my hat off to them; there’s some great businesses that have pivoted and done a really good job in some very testing times and are emerging with a stronger, more robust business as a result.
We need to utilise the power of data. As we mentioned before with the endless aisle, we need to look at the data and let this guide us whilst also listening to dealers – understand what is selling, when it’s selling, and make sure that we’re ahead of the curve to provide what the dealers want. We want to be their trusted supply chain and services partner; we don’t want to be just a supplier.
The whole supply chain today has had so much cost brought into it with dealers multi sourcing and collating goods themselves. Now more than ever, we need to work together as wholesalers depend on the success of the independent dealer community.
What forward-thinking strategies should dealers adopt to also thrive in 2023?
The key is listening to your customers, understanding their issues and concerns and then offering the solution. This will bring long term loyalty and something that our parent company Paragon Group do very well. Again, look at your data, look at gap fill opportunities, most back offices can offer add-ons which really allow insight into customers buying habits and patterns, but more importantly can highlight what is not being sold into these customers and gives a great target list to review.
Also think local, it is a great story to encourage local businesses to buy from other local businesses and in turn support the local economy.
We also have to understand what the consumer wants and how they want to consume it, and then what format they want to consume it in.
Any final thoughts?
We’ve been a very traditional industry that’s gone through seismic change in the last three years. We now need to start reflecting and asking what the lessons are we learnt and how do we ensure that the whole channel is fit-for-purpose in this new world. With our support from Paragon and from where I can sit now looking out, looking at what we’re doing as a wholesaler, and how we’ll bring that to dealers in the not-too-distant future, I also believe there’s a lot to be positive about.
We’ve been a very resilient channel for a number of years, and we need to get back to being entrepreneurial, working in partnership, driving down costs and really looking at growing our businesses together.
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