Paper chase heightens among office suppliers
"At that time we just went into the city whenever we needed something," said Majchrzak, financial and administrative director at the tobacco firm since 1992. "Then you could only pay in cash."
Not anymore.
Today, Majchrzak has his choice of paper pushers. Every two weeks, Majchrzak orders zl. 15,000 ($6,073) worth of supplies from two suppliers each of whom grant credit for two weeks to a month. Both deliver the goods to the Philip Morris office on ul. Woloska.
In Warsaw alone, there are 25 large office supply retail outlets. That doesn't even include dozens of small shops sprinkled throughout the city.
Hoping to cash in on the growing market, four entrepreneurs opened an Office Depot last month. Owners hope the 4,500-square meter retail and wholesale store will be the first of 20 stores they expect to open by the end of five years.
Rick Lepley, president and one of Office Depot's owners, expects the office supply market in Poland to grow by about 10% every year. And he and his partners are shooting for a 10% market share by buying in huge quantities and matching any competitor's price. The business is being funded in part by venture capital. (See WBJ August 25-31.)
This new big player in the office-supply game is making some competitors nervous. Already, retailers and wholesalers are slashing prices and waving special discounts and extended credit lines in front of customers' faces. At the same time, these businesses expand their product lines and hunt for ways to cut costs.
"I can't imagine we can compete with the prices of Office Depot," said Adam Szawlowski, general manager and an owner of wholesaler Corex Biuroserwis S.C. "We must offer better services, we must be more flexible."
In real terms, the company's revenues increased only 4.7% between 1993 and 1994. The company has a profit margin of 15%, somewhat lower than it was when it first opened three years ago.
Corex offers tailor-made discounts to loyal customers with credit up to two weeks. The payoff is a pool of steady clients and large paper users that include the National Bank of Poland, Creditanstalt and Unilever.
Szawlowski noted that while Corex's prices may not be the lowest in town - it simply can't afford it - that's usually not a concern for large Western companies.
"They want to have good quality and don't care so much about the price," he said.
Case in point: Corex once tried selling low-quality paper at a discount. Problem was, they couldn't sell it. "We finally sold it after we increased the price," Szawlowski said.
Like other suppliers, Corex is also expanding its product lines. Three years ago, the company did not sell sticky notepads - "Poles didn't know how to use them" - or labels for envelopes. Today, they are among the most popular products.
Getting the products to the customer is becoming increasingly costly. Szawlowski is planning to bump up his sales force from four to seven people, and add more delivery cars to the current fleet of six.
GP, another large wholesaler with a 1,000-square-meter warehouse, used to grant credit for four weeks. But at the end of last year, it started granting credit up to 65 days, said managing director Jacek Kubicki.
"Of course, it's not very good that we must wait for the money. We are never completely sure we will get it," said Kubicki. "But without this you cannot sell in big quantities."
Most of the products GP sells are imported from Asia - Hong Kong, Taiwan, China and Korea. The rest - about 20% - is imported from other European countries. GP cannot afford to lower prices and is currently hunting for a paper supplier outside Poland because, Kubicki says, Polish suppliers charge too much.
While the big kids muscle for big profits, there's still room for the corner store.
"Usually if we need to buy something, someone just pops into a shop," said Simon Weiner, finance director at Saatchi & Saatchi Advertising.
Concedes Office Depot's Lepley: "People will always pay for the convenience of being able to walk somewhere."
Not anymore.
Today, Majchrzak has his choice of paper pushers. Every two weeks, Majchrzak orders zl. 15,000 ($6,073) worth of supplies from two suppliers each of whom grant credit for two weeks to a month. Both deliver the goods to the Philip Morris office on ul. Woloska.
In Warsaw alone, there are 25 large office supply retail outlets. That doesn't even include dozens of small shops sprinkled throughout the city.
Hoping to cash in on the growing market, four entrepreneurs opened an Office Depot last month. Owners hope the 4,500-square meter retail and wholesale store will be the first of 20 stores they expect to open by the end of five years.
Rick Lepley, president and one of Office Depot's owners, expects the office supply market in Poland to grow by about 10% every year. And he and his partners are shooting for a 10% market share by buying in huge quantities and matching any competitor's price. The business is being funded in part by venture capital. (See WBJ August 25-31.)
This new big player in the office-supply game is making some competitors nervous. Already, retailers and wholesalers are slashing prices and waving special discounts and extended credit lines in front of customers' faces. At the same time, these businesses expand their product lines and hunt for ways to cut costs.
"I can't imagine we can compete with the prices of Office Depot," said Adam Szawlowski, general manager and an owner of wholesaler Corex Biuroserwis S.C. "We must offer better services, we must be more flexible."
In real terms, the company's revenues increased only 4.7% between 1993 and 1994. The company has a profit margin of 15%, somewhat lower than it was when it first opened three years ago.
Corex offers tailor-made discounts to loyal customers with credit up to two weeks. The payoff is a pool of steady clients and large paper users that include the National Bank of Poland, Creditanstalt and Unilever.
Szawlowski noted that while Corex's prices may not be the lowest in town - it simply can't afford it - that's usually not a concern for large Western companies.
"They want to have good quality and don't care so much about the price," he said.
Case in point: Corex once tried selling low-quality paper at a discount. Problem was, they couldn't sell it. "We finally sold it after we increased the price," Szawlowski said.
Like other suppliers, Corex is also expanding its product lines. Three years ago, the company did not sell sticky notepads - "Poles didn't know how to use them" - or labels for envelopes. Today, they are among the most popular products.
Getting the products to the customer is becoming increasingly costly. Szawlowski is planning to bump up his sales force from four to seven people, and add more delivery cars to the current fleet of six.
GP, another large wholesaler with a 1,000-square-meter warehouse, used to grant credit for four weeks. But at the end of last year, it started granting credit up to 65 days, said managing director Jacek Kubicki.
"Of course, it's not very good that we must wait for the money. We are never completely sure we will get it," said Kubicki. "But without this you cannot sell in big quantities."
Most of the products GP sells are imported from Asia - Hong Kong, Taiwan, China and Korea. The rest - about 20% - is imported from other European countries. GP cannot afford to lower prices and is currently hunting for a paper supplier outside Poland because, Kubicki says, Polish suppliers charge too much.
While the big kids muscle for big profits, there's still room for the corner store.
"Usually if we need to buy something, someone just pops into a shop," said Simon Weiner, finance director at Saatchi & Saatchi Advertising.
Concedes Office Depot's Lepley: "People will always pay for the convenience of being able to walk somewhere."
