Battling with the big stores
Family-owned office products retailer able to beat megastores

Dayton Business Journal
By Suzelle Tempero DBJ Staff Reporter

Garrigan's Office Plus is a third-generation independent office products retailer that has not only survived in an industry increasingly dominated by Goliath-like suppliers but is thriving by offering products and service the mega stores just can't offer.

Family-owned office dealers began to look like candidates for a corporate endangered species list as big box operators and industry consolidators swept through a few years ago, said Simon De Groot, editorial director of Office Dealer, a North Carolina-based industry magazine aimed at independent dealers.

The magazine recently focused a cover story on family-owned suppliers and the importance of supporting local businesses. And De Groot noted that the independents that survived the consolidation are stronger than ever and getting a boost from the best market the industry has seen in years.

During the past 10 years, 80 percent of independent suppliers have gone out of business or been purchased by larger chains, said Joe Garrigan, owner and president of the Springfield-based company, which was founded in 1939 by his grandfather, Al. The remaining suppliers have turned to technology, customization and group buying arrangements to differentiate themselves while keeping prices down. Garrigan's still has a retail store stocked with pens and office chairs, but the bulk of its 11,500-square-foot space is devoted to a warehouse, and its online revenue has grown to make up 40 percent of its business in just three years.

At the same time, the independent suppliers have banded together for grass-roots 'buy local' campaigns.

"We can compete," said Julie Garrigan, Joe's wife and co-owner and business development manager for the company. "We are thriving when it is so hideously competitive."

Garrigan's has the numbers to prove it: sales have increased every month for the past 18, and sales were up about 15 percent in May compared with this time last year. The company posts more than $2 million in sales annually, Joe Garrigan said, adding the company is aiming to hit the $3.6 million mark within three years. And online sales have gone from zero percent of the sales volume in 2003 to 40 percent and growing today.

A big part of Garrigan's success is the cooperative the company had joined in the 1980s called ISgroup, which is run out of Indianapolis and is now one of the most extensive organizations of independent office suppliers in the country. What started out as a group purchasing arrangement that allowed small- and medium-sized retailers make large-scale buys to get volume discounts has turned into a marketing and technology supplier helping them compete against the deeper pockets of bigger chains, Garrigan said.

"ISgroup has stepped up and said, if you are going to survive this, you've got to have a good e-commerce system, you've got to have the right kind of marketing, you've got to be efficient," Garrigan said. "Your infrastructure lets you work on a lower margin than you did 20 years ago because the super stores aren't going to let you charge that kind of price. So whoever is alive today is learning that lesson."

ISgroup now has three distribution points that take in deliveries from the Bics and Lexmarks of the world and ship out to the suppliers daily. It also has a full marketing staff in Indianapolis that put together the catalogs used by the independent suppliers, cutting down on design costs. And it maintains a slew of programmers who update and run the e-commerce programs each supplier uses to place its orders as well as the customizable Web sites developed for each customer.

In Garrigan's case, about 300 customers -- ranging from a two-man company to an employer of 1,500 -- actively use the customized e-commerce system it rolled out three years ago.

"We have less employees than we did 10 years ago but we do twice as much business," Garrigan said, noting the company currently employs 13 and hired two this year. "We are using a tremendous amount of technology. In the past a lot of our time was spent sitting on the phone talking to our buyers and the actual companies -- Smead, Bic -- to procure our products. But computers allow us to do it electronically."

The e-commerce system allows Garrigans to walk into a company, do an inventory of products and set things up so that when John, an employee, logs into the site, he can order new color cartridges by simply clicking on "John's printer." Then the system can be set to send the order to his boss for approval before it is sent to Garrigans to be filled. That personal service is what sets the company apart from the big boxes even though they are what first trained customers to get used to Internet shopping, Garrigan said.

And personalized service is something unique to small, independent businesses, Garrigan said, adding there are other benefits to shopping local. He cited a U.S. Chamber of Commerce statistic that money spent in a community will turn over locally an average of seven times: from the store to the employee to the accountant to the lawyer to the area non-profit.

Through an online forum and seminars, ISgroup members are working together to create grass-roots campaigns in their individual areas, most with good results, Garrigan said. And other industry co-ops are also jumping on the bandwagon as the movement gains traction, said Office Dealer's De Groot.

"We have an extreme vested interest in seeing that this community stays," Garrigan said, noting he is involved at the national level with ISgroup as well as at the local level with three area chambers, including the Springfield-Clark County Chamber of Commerce. "How do you keep this level of business alive? It's our community, our government and our organizations. We're part of the branding that any community should be embracing."

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