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00:00:11.000Foreign. Welcome back to Distribution Unpacked. I'm Adam Fox and I'm really excited because we have my good friend Alex Gordon from Highlands.
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00:00:12.000Hey, how's it going?
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00:00:26.000I'm great. Alex, before we dive in, why don't we help everyone understand a little bit more about what Highlands Group is, what you guys do. How do you guys operate? Since you're not a manufacturer, you're not a customer, you're not a distributor? Like what. What is your role in this whole ecosystem?
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00:00:45.000Yeah, no, it's a good question. We're a manufacturer rep agency, so we specialize in sales and marketing. We have a lot of different areas of the business, you know, and functions. But the, you know, grand scheme of things is we work with vendors and their customers, downstream customers, to drive business through distribution, essentially.
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00:00:51.000So simplifying this for a little bit, you work closely with the manufacturer to take their products closer to the end user.
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00:00:52.000Correct.
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00:00:56.000So they may not have a full sales Org. That's where you would jump in. Or a full marketing organization. That's where you jump in.
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00:01:07.000Yep. And, you know, we look at it as kind of a holistic view from a headquarters standpoint, working with like an SP Richards, working with the downstream dealers, and then working with the end users in the field as well.
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00:01:12.000Fair enough. Fair enough. So that means we could talk about the entire industry and every different aspect of it.
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00:01:13.000Absolutely.
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00:01:17.000So what are you seeing in the OP landscape right now amid all of the industry changes?
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00:01:29.000In the OP landscape, things are definitely changing. Right. I think the biggest thing that we're seeing change is, is really the blurring of channel lines.
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00:01:30.000Okay, tell me more.
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00:01:58.000So an OP dealer, Jansan has always been kind of a topic of discussion. Right. But now that Jansan has kind of become a little bit more mature in our channel and people are kind of digging their teeth into it a little bit more. They're looking at other areas. So we're seeing more OP dealers looking at food service, mro know, trying to kind of get into some different categories and cross sell, since they're dealing with some of the same purchasing decision makers.
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00:01:59.000Yeah.
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00:02:01.000You know, and selling some different products that they may not, you know, usually do.
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00:02:09.000Yeah. So for our folks that are listening at home, let's define food service as pretty much everything non perishable, non perishable food service, disposables.
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00:02:13.000That's going to be your paper cups, plates, cutlery to go, boxes, things like
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00:02:16.000that, which has seen a massive increase since COVID obviously.
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00:02:17.000Yes. Yeah.
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00:02:24.000All the compostables and all that kind of stuff. And then when we say mro, that's one of my favorite acronyms because I never remember what it stands for.
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00:02:25.000Maintenance, repair and operations.
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00:02:27.000And that's everything from the industrial space,
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00:02:35.000all industrial type products. We're talking paints, coatings. It could be some type of tooling thing like that. Things like that. Yep.
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00:02:47.000Fun stuff. Where are you seeing the. The opportunity as these. As the OP dealer is looking for new opportunities? Is it more on the Jansan side? Is it food services at mro? Where do you see that they're winning?
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00:04:14.000Definitely in Jansan, sure, right. I mean, that's been kind of going on for the past couple of years. But for the kind of new categories that we're really, you know, seeing some growth in, food service, disposables is definitely one, right? It's OP dealers really like it. They're dealing with a lot of the customers that are buying this education. Some of them have great relationships there. They're supplying, you know, some of that product for schools, things like that. They like it too as well, because there's a lot of turns, right. Because you're disposing the product and then, you know, you have to buy more in the maintenance, in the MRO space. You know, Jansan and MRO we're seeing that kind of really combine a little bit closer. Right. The people that are making decisions for a facilities manager are also going to be making sometimes a lot of decisions for the maintenance department as well in terms of their purchasing and where they're sourcing their products. So what we find is dealing with these OP dealers, dealing with some of. In the Jans and category, it's a really easy cross sell to get into that maintenance department, to get into that maintenance closet. If they, you know, we. We sell spray paint quite a bit. And, you know, every maintenance department has a paint storage unit, right? That's about a $35,000 annual spend just on that paint box every year. So teaching these dealers, hey, this is what you can go after. This is what you need to identify. This is what you need to.
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00:04:34.000So when we think about that and the OP guy now learning, the OP dealer learning how to go in and sell the Jansan story or the facilities conversation or what does that look like? What are one of the two or three obstacles that an OP dealer, from your perspective, struggles to. From the transition from the OP space into Jansan product sales, it's getting comfortable
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00:04:57.000in those what I call hard surface concrete spaces, right? They're comfortable in the carpet spaces. They're comfortable selling Supplies. But it's just getting that, you know, education, that awareness about the products and how to sell them. And some of it is just getting out there and having those conversations. Yeah, you know, it's definitely kind of getting out of your comfort zone is probably the biggest challenge.
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00:05:26.000Yeah. And I think it's interesting. So the OP customer, obviously, you know, they understand how to sell the supplies. They understand how to sell the catalog of product that they offer. I think when you get into the Jansan space and would love your perspective, the facilities, conversation with the facilities individual, they can sniff it out if you're not authentic. Exactly. And I think for more. So it's now selling a TCO story. That total cost of ownership. What's a way for a OP dealer to get comfortable? Starting to have that discussion in your perspective?
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00:06:02.000Yeah, I mean, I think what we like to do from a Highlands perspective is do a lot of training, do a lot of hands on training. We go into the dealer in person training. We like to do ride alongs. You know, we always say for a distributor or dealer, like lean on us to be the expert. Sure, you don't need to be the expert. You need to be, you know, you need to know a little bit to be dangerous. But lean on the manufacturer, lean on the manufacturer rep agency to come in, be the experts and provide that solution selling. And then along the way they kind of learn and you know, pick up more and more along the way to be able to sell it on themselves, you know.
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00:06:12.000Yeah, it's interesting. One of the things we keep hearing, obviously even on the Jansan side of the house, when you talk about our Jansan distributors, is the opportunity in the break room. What are you seeing from that perspective?
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00:07:03.000Yeah, no, not the break room. You know, that the cool thing about the break room is that's usually in a lot of carpeted spaces as well. Right. So that's an easy transition from selling supplies into that break room space. Has some crossover in that food service disposables as well. You know, with the break room, a lot of the times people kind of walk by it and tend to kind of ignore it. But there's tons of opportunities. You know, you're. You're also selling office. You know, you can sell office supplies, organizational type of things in a break room to organize your coffee and your sweeteners and your cups and all that kind of stuff too. So there is some crossover and some familiarity of it. But again, it's just kind of getting out of your comfort zone, identifying different opportunities and you know, going after it and talking to that customer about that end user about, hey, where are you getting this? Why are you sourcing this from five different places when we have it all in our catalog?
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00:07:27.000Yeah, no, that's a, that's a valid statement. I think sometimes we forget that when you kind of win with coffee, you win in the same way you do with towel and tissue. And as you win with chemicals, you kind of get the dispenser or the Keurig machine or the Lavazza machine or whatever the coffee machine is, if you will, kind of get it on the counter. And then all of a sudden you kind of just kind of go through the coffee. I think you'd probably prefer to talk about, you know, Folgers, but that's a different kind of. Right.
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00:07:47.000Yeah, we do, we do a lot of open brew coffee with Folgers and J.M. smucker and they're a great partner of ours. You know, we still see in the break room space that coffee is, you know, such a component. You know, when you go into any break room and, or any business, right. In the morning, you want to have that cup of coffee because it is
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00:07:48.000the best part of waking up.
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00:08:11.000It's the best part of waking up. Right. And. Or maybe your mid afternoon coffee as well. So, yeah, you know, having that service for employees or having that for them and is really important. And that's another thing is that we educate end users of, hey, having a good quality coffee actually can lead to better productivity from your employees.
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00:08:43.000So let me ask you a question. So I remember, you know, the height of the millennial generation coffee, artisan coffee, our iced coffee, that's critical for us to be able to function like a human. But I think it's interesting, for so long it was the move to the single serve and all the different types of coffees and the creamers and everything. But then you mentioned something. The bulk, I'm calling it bulk coffee. I don't think that's the right term. Your single can, if you will, open brew. There you go. Is that still a growth opportunity? Is that still. Are you seeing that more in maybe the MRO space or more of a blue collar space than you would potentially in the white collar class A office.
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00:09:15.000We see it across the board still. Yeah. If you look at kind of the trends in the coffee space and in break room spaces, single serve and open brew are still kind of neck and neck. Do we definitely see it more kind of back of house to your point? In those. Like right now we have a huge initiative going in that MRO space because to your point, you see it in those distribution centers, break rooms and stuff like that. But at the end of the day, when it comes to a cost savings, open brew is really the best cost savings. Right.
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00:09:16.000For the end user.
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00:09:45.000For the end user, yes. Absolutely. And it's. And a lot of people prefer that experience as well. So, you know, single serve is def. Is still a thing and it has its place and it's very popular. But we still see open brew as, you know, a really large opportunity and people tend, are tending to kind of go back to that because the experience and the taste and everything, you know, is, is a little bit, tends to be a little bit better.
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00:09:46.000Okay.
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00:09:48.000And people are using now yetis and thermoses.
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00:09:53.000So, you know, they're brewing more, they want more than just this end of. And you know, 8 ounce cup.
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00:10:00.000I always ask this, you know, what's, what is the average cup of coffee? Right. How many ounces? And nobody really answers it. Right.
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00:10:04.000I think our cups here are 16 ounces, so I assume 12 ounce.
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00:10:26.000So it's actually 6 ounces a cup of coffee. Yes, it's a standard. Is. Would be considered a standard cup of coffee, right? Yeah. So when you're brewing, you know, a single serve cup of coffee sometimes, right. And you're filling up a 16 ounce and you're wondering why is this not as strong? Why is this sort of weak? It's because it's really not intended to fill up a thermos that big.
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00:10:28.000So I'm having weak coffee every morning probably.
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00:10:33.000Yeah, that's. Yeah, that's probably why you had that afternoon crash.
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00:11:01.000You know, like I'm having right now. We get through it. It's all good. So, you know, one of the things we talked about at our Fender Summit this year and kind of focus at SP is really about how do we simplify complexity. It's a complex space from a supply chain perspective, from having the right product in the right place, industry consolidations and changes. From your perspective, looking at it through the lens of the rep group, if you will, and I know that's a, a nasty term for what you do. How do, how do we simplify complexity? What's the what in your lens? What do you see?
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00:11:08.000Well, I'll speak for us is we are really doubling down on our data and analytics.
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00:11:09.000Okay.
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00:11:17.000And the way that we're kind of simplifying that because you get, we get, you know, we have multiple vendors and partners that we work with and we get a lot of data and a Lot of information coming to us.
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00:11:18.000Sure.
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00:11:52.000And, and how we're kind of leveraging AI to help us kind of sort through that, find trends, find different areas that maybe we should be focusing on more. Not that we weren't finding that before. It would just take us a lot more time to get there. Right. So we're just kind of simplifying that. We're doubling down on the data, doubling down on our end user sell through and pull through with the dealers getting out in the field, but using that data for us to go and actually bring, you know, informative information, selling solutions to a dealer, to an end user.
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00:11:56.000Love that. And then obviously you're sharing that upward through the manufacturer and through us. So we can now partner.
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00:12:11.000Yeah. And it's, it's, you know, it's. Everybody's kind of in the mix with that. Right. So, you know, during business reviews, with merchandise or with the sales team, we're talking about all these things that we're finding through the data or through the POS trace sales that are just so important to us.
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00:12:16.000Yeah. Okay. You know, any last minute thoughts? Anything we should know?
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00:12:30.000No. I appreciate you having me here. I mean, I think this is fantastic. I love the direction SP is going, you know, kind of with the marketing and in these podcasts. I think this is great. You guys are keeping it fresh and cool, you know, I love it.
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00:12:32.000Thanks, Alex. Thanks for joining us, Alex.
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00:12:44.000Absolutely. Thanks for having me.
