In this extract from the interview we published in the last ISG Newsletter, Lyreco's Group Marketing Director explains the company's strategy for private label and product purchasing.
ISG: “Private label” is also something of a buzzword at the moment. Is this an area that you are looking to develop?
John Watson: We have our own range of products under the Impega brand, and these are available to customers wherever they are. However, Lyreco remains very much focused on and committed to branded products, which account for around 80 percent of our sales. Our philosophy is to support branded products into the market, and to offer an alternative where there is either no brand available in a product category or where we can’t get the brand at the right price. We don’t often lead with our own products. Some of our competitors do, but we like to be different. Besides, manufacturers put a lot of investment and support into their brands and our customers want to benefit from them.
ISG: In terms of product sourcing and purchasing, how are you organised?
John Watson: In Group Marketing we have a team who source products globally with responsibility for all contractual matters. Our local marketing teams are responsible for implantation: to ensure product is delivered on time, with the right packaging, put in catalogue correctly, right kind of promotions, priced correctly etc.
ISG: What does it take to be a Lyreco supplier?
Global and local opportunities
John Watson: Global management with strong local support. You can, of course, approach Lyreco in two ways. You can either be part of the global development or you can stay on the local development. There are opportunities in both areas.
However, a clear focus for Lyreco is the development of our global purchasing scope. Clearly, there is a drive for Lyreco to develop our common range, our group product. If a supplier wants to come into us, develop a group business, to me they’ve got to have a group structure to manage it globally.
We’ve got a team here that can manage and negotiate on a global basis. We also expect the same thing from a supplier. So that means I need to negotiate the price, the programme, the conditions, the whole agreement with one person. I don’t want to be negotiating with one person in Asia, another in Europe, North America, Australia – it’s just not efficient. After all, in most cases, we are negotiating the same issues. Obviously, for a supplier to be able to do that, they’ve got to have a global brand, a global distribution network and everything associated with that.
ISG: This means a presence in your individual markets?
Local support
John Watson: Absolutely. While I have put a strong emphasis on being global, without the local support, representation and interface, it means nothing. Our most successful suppliers will give us one contact, to manage and negotiate centrally, but they’ll implement it locally. It’s the only way it will ever work.
ISG: Is there much scope for new suppliers looking to work with you?
John Watson: We do try to keep our catalogue fairly stable whilst at the same time ensuring we maximise new market opportunities. Office products is not the most dynamic of product ranges, so typically we do not make too many changes. A typical Lyreco catalogue has about 5,000 products, and typically we bring in between 400 and 500 new products a year.
Besides, it costs a lot to change – the energy of the selection process, energy of catalogue production, stock management, getting in front of the customer and talking about his pricing again. It’s not necessarily the most productive thing for us to be doing!
I can probably count on my fingers the number of new Group suppliers we’ve brought in over the last three or four years. It’s not something we undertake lightly, just as finishing with a supplier is not taken lightly. It does happen; sometimes difficult decisions have to be made.
Global purchasing, local selection
ISG: And each country is responsible for product selection for the catalogue?
John Watson: We’ve got a team here that is responsible for sourcing and purchasing of global contracts. What they don’t do is make a decision on the selection of a product. We give that responsibility to the local teams. It’s co-ordinated and managed by the Group team, but the ownership of the decision is local.