Michael Gentile and Independent Stationers battle big-box stores using native power

 

If conventional business thinking prevailed, Michael Gentile’s life might be very different than it is today. Instead of marking his 10th anniversary as president and CEO of Independent Stationers Inc. in January, the head of this member-owned office products dealer cooperative might still be teaching elementary school.

“Ten years ago, many predicted that the independent dealer would become extinct,” Gentile says. “Today, independent dealers are stronger than they were 10 years ago and are gaining market share versus the big-box competitors.”

They’ve been able to push back, he says, by carefully leveraging the $2.5 billion in buying power IS wields on top of the local market strength possessed by its member companies.

The power of local

While IS lays claim to more than 400 independent members across the U.S., Gentile says the real power the cooperative exercises lies in the local nature of its members’ businesses. He says big-box competitors grossly underestimated the entrepreneurial nature and resiliency of the independent dealer.

“They did not value and respect the power of local,” he says. “Here in the U.S. today, as in Europe, people value doing business locally. They want to create jobs locally. They want to keep tax dollars in their local community. They recognize that the people who work in local businesses send their kids to their schools and participate in all their community programs. They go to church and the chamber of commerce together. They want to do business locally.”

And it’s local, independent business people, he says, who have been growing and adding jobs in spite of a challenging economy that remains tight when it comes to capital for small business.

“Big boxes are all struggling for relevancy,” Gentile says. They can’t close retail stores fast enough to stop the bleeding and it has added pressure to us because we need to adapt and accelerate our own technology so we can meet the demands that are being placed on us.”

Gentile says IS offers its members an extensive range of business products and services that deliver market capabilities and efficiencies similar to what its major retailer competitors are able to do for themselves.

“We just don’t have the albatross of retail breathing down our necks like they do, and we don’t have Wall Street breathing down our necks either,” he says. “We work collaboratively with all our industry partners to try to provide the needed resources for dealers to grow and compete.”

But pressures from the likes of Staples and Office Depot aren’t the only threats IS faces each day. Online-only retailers such as Amazon and mass merchandisers like Wal-Mart and Target have made significant inroads into turf once served almost exclusively by local independent office supply dealers.

“The term we use is the Amification of our industry. Everything is becoming Amazon or Wal-Mart,” Gentile says.
As a result, he says the industry’s familiar retail sales model could be on its last legs.

“Staples and Office Depot are the only two big boxes left standing and they are struggling for relevancy,” Gentile says. “Staples share price is down 17 percent from where it was last year, they’ve lost hundreds of millions of dollars of market capitalization and they are quickly realizing that retail is dead and they need to redefine themselves.”

Meanwhile, he says the landscape continues to change beneath them and IS and its members continue to move ahead as the broader sector endures “massive consolidation, restructuring and a refining of its go-to-market strategy.”

He acknowledges those changes have reduced the number of independent dealers IS represents. Those that remain, however, are more successful and have significantly increased their revenues, due at least in part to the advantages IS offers in boosting their long-term competitiveness, he says.

“Not many people predicted that cycle. In fact, they predicted the opposite,” he says, adding that IS members’ independence, resilience and adaptability have been “grossly underestimated” by the competition.

To grow and prosper, he says, IS had to evolve from being a traditional buying group into becoming a dealer services group. Under Gentile, IS moved its dealer members beyond their traditional retail trappings, reaching into previously unexplored territory that now includes such product categories as facility, break room, industrial, medical, safety and school supplies, among others.

Gentile and his board of directors, which comprises senior executives from nine member companies, work in concert to guide and support their membership through what has clearly become an ongoing transformation process. As the senior executive of a cooperative, he faces a set of challenges unique to his position at the head of a group composed of more than 400 other senior executives, each a leader in their own right.

On managing managers

According to Gentile, the good thing about running IS is that all its member companies are owned and operated by independent, entrepreneurial business people with strong connections to their local markets.

However, he cautions, “At the same time, the most challenging thing is they’re all independent and entrepreneurial.

“So, even though we’re all in the same industry, independent dealers each approach their specific business and markets uniquely and differently and we need to be open and respectful of that. I say my role is the chief cheerleader and coach and, affectionately, that I heard cats for a living.”

That’s very different from his previous life working at Boise Cascade Office Products, the predecessor of OfficeMax.

“Working for a Fortune 100 company, I had many levers to pull and buttons to push to implement corporate strategies that I had more control over than in my role today as the herder of all the cats.”

So, as the senior manager, how does one gain the trust and constituent confidence necessary to move a highly diverse organization forward when market pressures are pushing in the opposite direction?

According to Gentile, it’s all about having respect for individuals, an openness to understanding the differences in their operating philosophies and having the willingness and commitment to work together to forge meaningful change.

“The thing is, you need to get to know individuals first. Only then can you get to know their businesses and understand what they need. Then, what we have done is forged alliances and joint ventures with other vested and industry players, such as our wholesalers, our manufacturers and our trade associations, to develop programs and services that will enable the growth of those dealerships.”

That’s not something he does alone.

“We have to do it through collaboration. It’s why we call ourselves a cooperative — to get people to work together, to share a common purpose that is truly agreed upon and beneficial to all so we move forward.”

Redefining normal

Racked by a changing business landscape and challenged by the multiple needs of a diverse member base, Gentile stresses collaboration, stringent planning and the willingness to embrace ongoing change as keys to his and the cooperative’s success.

“I’m fortunate to have a very supportive board of directors that works as a team and we execute a disciplined strategic planning process,” he says.

In the past, Gentile says he and the board developed the cooperative’s strategic plans based on three-year cycles, but recently, even that relatively short timespan is proving itself to be too long.

“This year we did a two-year plan because we find the pieces on the chessboard keep changing. Six years ago we never would have had Amazon on the chessboard and six years ago we had four big-box competitors. Now there are only two.”

He cautions, however, that he has no time to become comfortable or complacent.

“We just have to keep redefining the new normal and move on. For example, because of all the new categories we have developed, we probably have as many non-office product manufacturers that we represent as we have traditional office product manufacturers.”

Looking ahead

While much has changed in Gentile’s world, there’s little time to lose sight of what might lie ahead.

“What’s keeping me up at night now is succession planning for our members, gaining access to capital for our members, staying current with technology and enabling our dealers to take advantage of the many programs and services we offer. Mostly though, I’m confident we will continue to evolve,” he says.

Finally, Gentile says, “I’m not saying you change for the sake of change, but you better be aware of what the change is. I’m from Boston and a big hockey fan and I tell our people that if you want to win, you need to go where the puck is going. We have to follow that puck. You can’t stand still and watch the game hoping it will come to you.”

Takeaways:

  • People value doing business locally.
  • Collaboration, planning and flexibility are key to success.
  • Respect the differences of individuals.

The Gentile File:

NAME: Michael Gentile
TITLE: President and CEO
COMPANY: Independent Stationers Inc.

Born: Boston, Massachusetts

Education: Earned a bachelor’s of science in education with a minor in business from the University of Massachusetts and completed the executive development program at Northwestern University.

What was your first job? I taught elementary school and specialized in teaching students with learning disabilities. There was a massive property tax cut and they laid off all us newly hired teachers so I went to business school.

How did teaching influence you today? I think I kept my sense of humor. I had to do that and try not to take things too seriously.

Who has been the biggest influence on your life? My Dad. He instilled in me a good, solid work ethic. He gave me a name I am proud of and (taught me) not to do anything to damage that name.

If you weren’t a CEO, what is something you have always wanted to do? I always found teaching very rewarding and have always thought that when I move on from my current position I’d like to go into some level of teaching and help young entrepreneurs.

Who do you admire in business? I tend to admire an independent dealer who is maybe doing $3 million or $4 million a year and employs a dozen people. I think more of that person than the Fortune 500 CEO.

If you could speak with anyone from the present or past, with whom would you want to speak with? Gandhi.

What is your definition of business success? Knowing that you’ve done your best to be fair and just and doing so with the utmost of personal ethics. It doesn’t matter how much money you have, how many employees you have, how many companies you’ve acquired or, as some executives tell me, how many companies they’ve shut down or people they’ve laid off. That really isn’t business success in my book.