| FOCUS >
Stocking the workplace
Written by: John Letzing & Klára Smolová
Photo: René Jakl, Tomáš Kubeš
As major local firms centralize operations
into large office complexes, fresh opportunities are being created
for suppliers prepared to provide everything from copiers to garbage
cans.
 |
| Tony Shee |
TONY SHEE has a question: "How do you make office furniture
interesting?" Shee, managing director of Kinnarps (pronounced
'Shin-arps') in the Czech Republic, an international producer of
office interiors, is posing the question in a strictly rhetorical
sense. Because he could spend hours, days even, expounding on the
fascinating minutiae - from color philosophy to ergonomics - of
a proper working environment. Just try him.
The Czech market provides a tough test for Shee's skills as a salesman
(as it does that of salespeople at all office supplies firms here),
as its limited number of large potential clients creates fairly
intense competition. "It's not like other countries where the
big head offices are located, where they have tens of thousands
people," says Shee. "That's a juicy piece of bone for
me, but it's a dream." The reality here is that the biggest
single entities, a Czech Telecom or a Česká spořitelna, carry between
ten and 15 thousand employees at dispersed locations. Their largest
single offices make up a small and much sought after group. Techo,
a Czech-owned office interiors firm more than a decade old, has
supplied Česká spořitelna for the past seven years. Yet, Techo must
still look abroad for the sort of contracts that make or break an
enterprise. It recently won a tender to supply the Met, the Meteorological
Office in Wales, worth CZK 100 million - which will, according to
Techo director Jiří Kejval, effectively double revenues for the
year.
Even among what big potential clients there are here, the degree
to which they will be willing to tailor an attractive work place
is a bit nebulous. Whether a firm will be willing to invest considerably
in something like office interiors, for example, "depends on
the maturity of the customer," says Eric Balloffet, general
manager of American-based office interior supplier Steelcase. Someone
like Shee at Kinnarps can spend an entire sales call discussing
the importance of ergonomics or color, but will customers listen,
or care enough to spend any extra? According to Shee, soon they
won't have a choice. With EU entry and, presumably, a new set of
professional standards on the horizon, employers need to act now
- and suppliers need to be ready to accommodate them. "This
market has only a certain number of (potential clients), and to
acquire them we (suppliers) just can't do it like the old days,
you know, here's your table and chair, now work there," says
Shee. "People who are qualified will demand a good working
environment."
It should be noted that the Czech office supplies market has already
undergone radical change - smaller firms have progressively been
stamped out by bigger players capable of offering complete product
lines and full services. "Four or five years ago there were
a lot of small companies on the market," says Techo's Kejval,
who adds that progressively tighter quarters draw him into more
intimate competition with big foreign players.
Who needs what and why
"Our furniture is like Legos - they can be taken down and rebuilt,
and when they're moved and end up missing a few pieces we replace
them," says Kejval, underlining what separates the serious
competitors in office supplies from others - an ability to implement
huge and flexible orders. When someone like consulting firm Ernst
& Young, for example, announces a tender for supplying the offices
of its 400 employees in Prague, including outfitting its new location
on Prague's Karlovo náměstí, it can now afford to be choosy like
never before. Petra Di Nicola, facilities manager for Ernst &
Young, says, "most of the suppliers, in order to succeed in
the (annual tender), constantly improve their services," and
adds, "as competition grows fast on this market... suppliers
are trying harder to meet clients' needs. Some gaps are only in
terms of offered goods."
Kateřina Voráčková, senior manager at Pricewaterhouse-Coopers, which
went with Steelcase for the outfitting of the interior of its Czech
flagship office on Kateřinská street, also indicates a need for
any potential supplier to be as flexible as possible, and to be
"able to customize." What a firm like PwC (with 550 employees
in Prague) spends on office supplies is nothing to scoff at - Voráčková
says that the firm spends up to CZK 80,000 per month on stationery
alone.
 |
 |
| Petra Di Nicola |
Tony Shee, of Kinnarps, earned his stripes in the Czech market
nine years ago by designing offices for a new start-up TV station
called Nova. Shee adamantly believes that it's more than flexibility
that his customers are after. To him, the subject of what color
to paint an office alone can require lengthy considerations that
rely on symbolism more than the financial bottom line. Yellow, he
tells us, is a get-up-and-go color, while green means comfort and
security, and orange is ideal for meeting rooms. Why orange? Well,
it's the color of fire, around which humans have naturally congregated
since we were hunting mastodons and living in caves. Whether you
buy this bit of psychologizing or not, Shee makes one point that's
difficult to refute - "20% more sick leaves occur in buildings
that are gray or black."
Kinnarps' new showroom, now being finished in Průhonice, is meant
to be more of an art space, to hear Shee tell it, than a sales office.
Physically, the building is a radical new addition to the countryside
east of Prague, an unflinchingly modern construction of wood and
glass designed to look like a boat floating beneath a suspension
bridge. It's an ambitious venture, clearly indicating that Kinnarps
has a good deal of confidence in the future of the office interiors
market here. Kinnarps is not alone - most observers agree that as
the local economy develops, more and more firms will be able to
afford an unprecedented level of style and comfort. And of course,
in the face of rigid ergonomics standards imposed within the EU,
many soon won't have a choice.
A key area of the local market as-yet untapped is public facilities.
Currently cash-strapped and usually slightly better than putrid
to look at, public offices will likely be able to dramatically upgrade
their environs in the not-too-distant future. "That's virgin
territory at the moment," says Shee, adding, "the ministries,
hospitals, post offices, police stations, they will all have the
possibility to invest in better furniture, a better environment
and a better life."
| Local
player makes good
 |
| Jiří Kejval |
When a young Jiří Kejval launched the firm Techo with schoolmates
back in 1991, most offices here were of a piece - dreary,
uniform and overwhelmingly bland. Kejval and friends put up
an assembly area right on campus in Prague, and things moved
fast.
By 1992 Techo had 200 employees, and in 1994 its first full
line of office furniture was released in cooperation with
Ikea. Two years later Techo had the resources to tap renowned
Dutch designer Hans Verbloom to put together their Arka series,
a collection of desks, tables and various accoutrements. Verbloom
has a vanity shot on the Techo web site making him appear
more hip hairstylist than furniture designer. His brainchild,
Arka, is by contrast quite mundane - you've likely seen his
work in a number of local offices and not thought twice about
it. But here lies the conundrum of office interiors; one needs
big clients to make bulk deliveries of easily assembled and
uniform furniture; yet one also needs to maintain an image
stylized enough to be deemed worthy of decorating interiors
for demanding customers. Tony Shee, managing director of Kinnarps,
a Swedish-based office interiors firm, says "it's difficult"
to blend a high design concept with the practical realities
of his business, "but definitely feasible." Techo
is unique as a majority Czech-owned firm battling successfully
with big foreign players like Kinnarps and Steelcase for juicy
bits of this market. Turnover for Techo this year is expected
to be some CZK 600 million, and Kejval says he's comfortable
estimating that in 2004 it could reach CZK 1 billion. Techo's
international presence, which now stretches from Britain to
Romania, has helped it get further familiarized with the big
players that dominate much of Europe. "In Romania there
are only about two players, us and Steelcase," says Kejval,
"so whenever there is a big project, there are only two
of us." Ironically, here at home Techo finds conditions
to be in some ways more problematic than elsewhere. Says Kejval:
"in the Czech Republic it's very tough - we have to have
our lowest prices here." |
| Tough
competition
 |
| Martin Leitgeb |
Since the beginning of the nineties, two large firms, Activa
and Papirius, have become established on the market of wholesalers
delivering office equipment to corporate headquarters. Both
of these purely Czech firms started from scratch, and today
they have tens of thousands of clients. Their offers include
thousands of catalog items, and they set the market's tempo
and trends. In addition to them there are dozens of smaller
firms, but they compete on the basis of prices rather than
services.
Papirius and Activa, two equally strong firms with sales of
over CZK 700 million, are engaged in
a merciless market battle, which ultimately benefits the customer.
Both firms offer practically the same line of products, both
are active nationwide and have branches in Slovakia (Papirius
even has a Hungarian branch). They have comparable standard
services, such as delivery of ordered goods within 24 hours,
sales over the internet or over a toll-free line, after-sales
service for purchased equipment, unconditional product return
or exchange, and so forth. Therefore they must attempt to
attract customers with additional services or activities.
"Customers don't want paper delivered just to the firm,
but directly to the copier. And they want service for their
copiers, too," says Martin Leitgeb, one of Activa's executives.
With Activa, customers can not only order goods for the company,
they can also have the goods distributed among individual
offices. You can even order a single item, regardless of price,
and the packaging will be picked up for free by EKO-KOM, a
recycling company that works together with Activa.
Some time ago Papirius established a guaranteed service, "Tomorrow
or no charge", which it has trademarked, and it also
offers its customers savings on expenditures for buying office
products by means of outsourcing. "More than just office
products are involved. Customers want comprehensiveness -
they want to save time and money," says Eva Slezáková,
marketing manager for Papirius. "Customers these days
are far more demanding. They want to be sure they can rely
on their suppliers," she adds. In order to demonstrate
its credibility, Papirius joined a coalition of promoters
of ethical business, Viva etika, which was founded by Transparency
International.
The companies quickly and easily got used to such pampering,
which small suppliers noticed as well, as they were forced
to adapt to this trend. "The trend is heading towards
complete service. Large companies are coddled, and they want
everything delivered," claims František Lebeda, the owner
of Per Partes, which delivers office materials and also offers
the entire Xerox line of products. His firm, which has been
in existence since 1993, today has about 200 steady customers
and 600 items in its catalog. It also offers deliveries within
24 hours and settles complaints by promptly exchanging products.
In general, however, prices constitute its main competitive
advantage. "Large firms invest a lot, so they have to
set higher prices. I can always undercut them," says
Lebeda.
Recently the market has begun to show a trend towards cutting
costs, so although the large companies don't like this price
war, they will probably have to take it into account. "Firms
have started cutting costs heavily. Some of them are replacing
more expensive, brand-name goods, with less expensive ones,"
Leitgeb acknowledges. |
| Outsourcing
- reducing worries
 |
| Stanislav Havel |
Ten years ago firms bought individual technological products
in accord with their immediate needs - here a fax machine,
there a copier, or a computer for a new employee. Today companies
buy complete technological solutions, including software that
is customized to their requirements. And the latest hit is
outsourcing IT services.
"There is a notable trend towards services on the market,"
confirms Stanislav Havel, the marketing director for Hewlett-Packard
(HP). This traditional manufacturer of computers and printers
currently provides firms with total technological solutions
that are ready to go, as well as software and other services
that go beyond classic product support, such as CRM systems.
"Everyone is trying to rationalize purchases. Firms calculate
the return on their investments, and they want services to
go along with the equipment," Havel explains.
Petr Sichrovský, the direct sales manager for Xerox, is of
a similar opinion: "Firms want more services with added
value, for less money. They don't just want hardware, they
want complete solutions." Xerox specializes in outsourcing
services, primarily in the management and printing of documents.
"We can provide out customers with complete service.
They receive the prepared document and the invoice, and they
don't need to worry about anything else," claims Sichrovský.
So far the company has about 16 large outsourcing projects
that account for about 30% of sales, and each year this figure
rises.
Services like these account for a significant part of suppliers'
overall revenues. As Havel says, services alone make up 20-25%
of HP's sales. At Océ Česká republika, which deals in multi-functional
digital printing and large format productions systems and
associated services, commercial services and technical service
account for 64% of total sales, according to product manager
Martin Křikava. "Our customers demand a complete approach
to solutions for their problems," he says. "It isn't
just a question of a single purchase, it's a matter of modifying
the customer's environment, depending on his strategy and
changing needs." Křikava says that the IT field is currently
dominated by the realization of large projects, based on long-term
relationships with customers, not the simple installation
of individual machines, which was once the case.
The most recent offer on the market is the outsourcing of
specialized services. This means that a customer need not
buy any expensive equipment or take care of it. He just signs
a contract with a supplier, who delivers the required product,
be it the processing of calls, the issuing of thousands of
invoices a month for telephone operators, mail management,
or the storing of documents. Although there is not yet much
trust in such services on the Czech market, many companies
see their future in them. "The development of outsourcing
is one of our priorities for this year and next. It works
very well in other countries, so we think that there could
be great interest in it here as well," says Havel of
HP, which offers outsourcing for large companies, in the area
of ERP (enterprise resource planning), for example. This type
of services is of interest mainly to large (top 100) and in
some cases mid-sized companies (top 500), as it saves them
operational costs. |
|
