Integra“Education Collection”

Mailer

Educational Market BackgroundMarch 2013

Contents

1. Market size / opportunity2. Key competitors3. SWOT Analysis4. Dealer USPs

Market SizeEstimated to be: £4.65 billion**About 95% in Primary & Secondary schools environmentBroken down as follows:• Nursery £26m• Primary £2.48bn (est 22,500)• Secondary £1.98bn (est 5,500)• Special Needs £176m(**Note: England & Wales only. Includes services and utilities)

Market Size / Opportunity• Significant Opportunity £££s• Service complacent industry• Ideal for independent dealers with high service level and

ethos• Opportunity to really add value to schools• Supports the ‘localised’ agenda• Very fragmented landscape• Increasing student population• Increasing autonomy of spend

Fragmented Market• Framework agreements locking schools and local authorities in are

prevalent on large contract areas such as utilities, photocopiers, MPS etc….but much less so on consumables such as office and classroom supplies

• Key competitors only represent 15% of market• No obligation on schools and colleges to buy from them – misconception –

especially on low value orders / contracts below £15k per annum– Under £75k per annum simply need to obtain 3 quotes– Over £156k per annum OJEU (Official Journal of the European Union) public

sector procurement rules oblige formal advertising ad tendering of contracts

Fragmented Market

• Public sector consortia such as YPO, ESPO,NEPO, WMS are only able to supply public sector bodies not privately owned ones or individuals

• LMS (Local management in schools) and growth of private sector funded academies, free schools and nursery chains

• Many small, specialist suppliers operate in the market supplying schools and colleges direct

• Hence relatively recent entry into the market by global contract stationers like Office Depot (Viking), Lyreco, Staples Advantage

Key Competitors1. Findel Education2. Local Authority Consortia

a) Yorkshire Purchasing Organisation (YPO)b) Eastern Shires Purchasing Organisation (ESPO)c) North East Purchasing Organisation (NEPO)d) West Mercia Supplies (WMS)

3. TTS Limited4. The Consortium 5. Contract Stationers – Depot, Staples, Lyreco

ESPO (Eastern Shires Purchasing Organisation)

• £750m turnover (£200m = energy)• Joint committee of 7 local authorities in Midlands & East Anglia • Not for profit• CDC Leicester• Reputation for highly competitive pricing BUT poor service (twice weekly –

next day outsourced with £5 surcharge)• Perception that schools MUST use them• Massive catalogue and range• Significant spend on service and utility contracts

Findel Education• £260m turnover• Multi-brand offer covering not only stationery and classroom but also

science, sports etc… Brands include: NESA, Hope, Galt, SBS, GLS, A-Z, WNW, Edco, Philip Harris, Davies Sports, Philip & Tacey, LDA

• HO in Manchester, CDC in Nottingham• 30+ sales force• Privately owned - New management team• Recently closed indirect division - shutting accounts with dealers they

previously supplied• 2-4 day delivery as standard• Next day cut-off midday

YPO (Yorkshire Purchasing Organisation)

• £400m turnover• Joint committee of 13 local authorities in Yorkshire• Well-known in North & Scotland but supply nationwide• Experienced field sales team• Not for profit bit must cover costs• Reputation for highly competitive pricing BUT poor service• Weekly delivery

NEPO (North East Purchasing Organisation)

• £120m turnover• Joint committee of 12 local authorities in North East based in

Newcastle• Perception that schools MUST use them• Wide range of contracts including services and utilities• Reputation for patchy service and product quality

West Mercia Supplies

• £70m turnover• Joint Committee of 4 local authorities in Hereford,

Worcester & Shropshire• Recently acquired by The Consortium

The Consortium• Formerly local authority consortium in South West• Now privately owned – for profit• Recently acquired West Mercia Supplies• Just acquired themselves by Smiths News• Based in Trowbridge• Good market share in SW• Good website• Next day service• Price match guarantee

TTS• £80m turnover• Privately owned – for profit• Based in Oxford – part of RM plc• New-ish kid on the block• Huge growth in recent years• Strong in secondary, technology, nursery and primary• A lot of ex-Findel personnel• Far Eastern import program can cause supply issues

Contract Stationers• Recent focus on educational sector to grow office products

sales in stagnant market– Lyreco– Office Depot– Staples

• Good service levels and differing degrees of genuine specialism

• Cannot compete with dealer local service and community proposition but highly competitive and professional

Notes re competitors• Public sector consortia such as YPO, ESPO,NEPO, WMS are only able to

supply public sector bodies not privately owned ones or individuals• Perception exists often locally within schools even that local authorities

have to buy from them. This is not the case.• Historically service complacent although this may be changing due to new

entrants / high interest from private sector suppliers – dealers and contract stationers

• Very price aggressive on certain lines – heavily due to price protection on large brands e.g. Pritt Stick, which is unavailable to us

• Public sector consortia can enjoy preferential pricing on certain products – beware

Competitors SWOT: StrengthsStrengths Target / Response/ Opportunity• Huge Range• Not for Profit• Purchasing Volume• Aggressive pricing• Traditional consortia

• Schools focus / experts• Product knowledge / quality• Trusted, gain access to schools

• Too much choice – help customer choose what they need from focussed range

• Best Value / value for money / affordable• Local supplier with national / international

back up (Integra, BPGI)• Local - knowledge of / interest in local

education• Consider CRB checks for drivers and reps• Office products experts (significant part of

spend) with growing knowledge and access to specialist educational supplies (see Education Collection mailer)

• initiative own brand

Competitors SWOT: WeaknessesWeakness Target / Response

• Sales force – low quality or very corporate

• Staples – no local rep for small accounts?

• Customer service – not great & distant• Delivery service – variable:• ESPO – twice weekly, outsourced next

day with £5 charge• Consortium / Staples – TNT

• Professional, friendly, non-corporate and local

• Professional, friendly customer service team near at hand

• No quibble returns policy• Next day delivery with late cut-off• Own vehicles & drivers• Easy to deal with and part of the local

community• Sell on service, local agenda, quality –

not price

Competitors SWOT: ThreatsThreat Response

• Office Depot & Lyreco entering market• Educational catalogue 8500 items• Expanding to 12000 in 2012• Traditional channels have preferential

sector pricing in certain product categories e.g. Berol, Staedtler, Pritt

• Locally based and responsive• High level of personal service• Next Day / Same Day• Integra mailer & Inprints• New products and suppliers• Better EOS and hardware offer• Initiative brand• Local telesales and rep contact• Non-price focus

Dealer USPs• Local, trustworthy

– Close at hand– Part of the community– Local employer with interest in the wealth and education of the local

community– Locally held stock delivered by local drivers– Locally based field sales and friendly, professional customer service– Short delivery distance – low carbon footprint

• Personal service• Responsive and responsible• Service culture and can do attitude

Dealer USPs• No minimum order, order when you need it with next day delivery:

– Reduces stocks– Saves space – Reduces waste

• Flexible and easy to deal with – e.g.: class room delivery if required• Order how you want to order: phone, fax, post, online or via friendly,

professional internal or field sales person• Local focus with national back up from group (£600m turnover network of

local businesses)• AVOID “best price” type statements as competitors can be very aggressive

on key stationery lines• Value for money, affordable