How This Office Solutions Business Increased Margins by 1.1% Despite Inflation

In recent years, Walker’s weathered many storms that put an end to similar small office solution dealerships and did so by achieving high customer satisfaction and loyalty through personalized service and convenience. The threats they have faced included evolving technologies, box store competition, recessions, Amazon, and the pandemic, which Jarrod Anderson says, “wreaked havoc on the office supply section of the business.”

During the onset of the COVID-19 crisis, Jarrod recalled, “We were able to transition fairly easily to PPE (personal protective equipment) because we already had a solid network of suppliers in the janitorial category. It was just a matter of getting the product and putting something in our sales reps’ hands.”

Few challenges over the years held a candle to the latest threat—that of spiraling inflation in 2021-2022 driven by the pandemic, supply chain crises, trade wars, and other geopolitical events. “It was scary, actually,” Jarrod says. “It used to be the catalogs came out once a year, then quarterly, then weekly. Then everything went out the window and prices changed daily! In the world we live in now, there’s just no consistency. Before inflation started taking off, we had price files and matrixes that covered all our customers. We had three tiers of custom contract pricing that I personally handled. That system doesn’t work in an inflationary period like this.”

When asked about how inflation spiraled so quickly out of control, Jarrod had some insights. “The office supply industry is heavily reliant on imported products. Even the companies that make or assemble their products domestically are still waiting on imported raw materials or components at some level. All of this just broke down the supply chain. I’m no expert on any of that. We just needed to have product on our shelves, and at the start of the supply chain crisis, price became secondary. It was about having the product to sell at an ethical price to keep customers satisfied and their own businesses running. The inflation seemed temporary, but then prices just kept going up and up and continued for months. Just today, we got several notices of price raises from manufacturers.”

The crisis did set the business back and profitability was impacted for a month or so. “We were so busy just trying to keep everyone stocked and get orders out the door that managing the price files got neglected. But changes were coming so fast that we decided we had to do something about it. In December of 2021, we started working with ECI’s Margin Accelerator.”

Jarrod recalls, “With Margin Accelerator’s team of Tom Buxton and Brennan Thomson, we were able to outsource pricing to experts who worked exclusively on keeping up to date with the distributors and thousands of products we carry. Tom’s been around forever and really has his finger on the pulse of the industry. Brennan is a numbers wizard. I dial and they pick up the phone. They call me too. It’s like working with partners down the hall. They take my business very seriously with a customer service consultative approach.”

Jarrod adds, “Before, we had price files that didn’t update as quickly as we needed. With Tom, we talked all the time, and these prices were customized for Walker’s, not every dealer in the nation. If there’s something I didn’t like, it got fixed right away.”

Once Jarrod and his team had Margin Accelerator for a few weeks and could look back on monthly reports, they noticed something. “We were seeing increased margins, despite inflation, in all of the right places. It’s almost like we have had more competitive pricing. It’s hard to believe because it looks like Margin Accelerator yields a higher end-of-month margin, yet pricing is aggressive and keeps us competitive. There’s a lot of gouging out there, but our customers are happy.”

Tom Buxton says, “ECI dealers implementing Margin Accelerator typically see a payback in less the 90 days and get the ongoing benefits of increased margins that further deliver an ROI.”

With each passing week, Walker’s leadership team increasingly appreciated just how important Margin Accelerator had become to their business. “Costs are rapidly going up,” says Jarrod. “So, if I don’t increase my prices in time with the increases, profitability can plunge in just one week.” As for specific ROI, Jarrod says “We were able to increase our contracts by several basis points in the first 60 days. Tom and Brennan created three contracts for me. They put the same 70,000 items on each, at different price levels for our customers’ contractual terms. Now we’re getting the updates as they come from suppliers. I don’t want to be doing this myself, sitting in front of a spreadsheet all day, but if it isn’t done, we could lose money in a hurry. I’ve done it myself; I’ve used the distributors. I don’t want to be the one to do it. Tom gets me and we have the same philosophy on pricing strategies. It’s ideal to work with a professional pricing team with Margin Accelerator, and to know that they can carry out the most specific details of my pricing strategy.”