Workplace360: Could you provide a brief history of the company?
Darren Lloyd: United UK was established as a legal entity, formed through the merger of three traditional office products resellers: One Stop Supplies in London (founded by Kevin James); Hertsmere Group Services (HGS) in Leighton Buzzard (owned by Clive Sanders); and Origin Bristol, which was my company.
We got to know each other through our affiliation in dealer groups. I can’t recall all the jiggery-pokery of the mergers, but we worked together in the same group, each leading a different discipline. As you do in these groups, we talked about how to build a better, more scalable business and started trading officially in 2008.
W360: You’re now part of Office Friendly, I recall.
DL: Yes. We’ve always been part of a collective. We like being social and the friendship you build in these groups is nice. You also never stop learning about your business or picking up valuable insights from others. When I first joined OfficeSmart, I was one of the smallest dealers. I looked up to companies like Langstane and Scope and wondered how my operation could grow to their level.
We are passionate about sustainability and the environment but didn’t fully understand how to advance until we engaged with Office Friendly’s Weaver programme. Completing two levels of the programme has been the catalyst for our sustainability journey and has given us an accreditation we can present to clients. But we’re not finished – not by a long shot.
W360: Back to the merger…
DL: It was a formal merger that resulted in the formation of a limited liability partnership, which was new at the time. We received legal, tax and financial advice and it was the easiest way of bringing the businesses together into a corporate structure, without having to conduct extensive due diligence. It also avoided having to deal with any skeletons one of those entities may have had in their closets.
This structure allowed us to combine the good bits – customers, trade, stock and employees – of the legacy businesses while leaving behind any old debts or issues. It gave us a clean start under United Managed Office Services, owned by the three original entities.
W360: What revenues did you kick off with?
DL: Initial sales were around £7-£8 million but we all know what happened in 2008. The financial crisis hit and many of our clients were large institutions and we lost some. We didn’t achieve the expected synergies or rationalise our operations quickly enough. By mid-2009, we faced a pinch point and had to make tough commercial decisions. We downsized to one warehouse in Leighton Buzzard and used Spicers as our traditional wholesaler, moving forward on a stronger footing.
W360: Were you still very much office products back then?
DL: Without a doubt. 50% of our focus was on OP, including toner, ink and paper. We always aimed to cater to larger accounts that valued our proposition, offering a mix of printed materials, bespoke items and general commodities.
W360: Hence the ‘Managed Office Services’ part of the name.
DL: Yes, exactly. Even though we dropped the Managed Office Services bit in 2019, it remains a fundamental part of our proposition – managing the commodities and consumables for businesses.
W360: How did you get into our industry?
DL: I was a failed sportsman. It’s the classic football story. At 14, I signed with Arsenal and then West Brom, where I spent four to five seasons. Then I had a horrific knee injury that ended my career.
I went back to Bristol and knocked on the door of my old under-11s football coach, Bob Boyd, who ran a stationery company. He gave me a wonderful job in the warehouse; I think I lasted about six and a half weeks. I told him I wanted to be in sales, but he sent me out in the delivery vans instead, which also probably only lasted six weeks.
So, I found a job ad in the Bristol Evening Post that said something like “earn a million pounds a year” selling vacuum cleaners out of Avonmouth docks. So off I went and got the job. When I told Bob I was leaving, he offered me a commission-based sales role and I started with a small patch in Bristol.
W360: How did that pan out?
DL: I didn’t have a clue what I was meant to be doing, but I could speak to people. I started to understand the industry, trade, products and customers and did reasonably well. Bob then sold the business and I kept merrily working as a salesperson on the road with a slighter larger territory than I’d started with. But two years in, it experienced some financial difficulties, and I thought, “I can do all this myself.”
I borrowed £30,000 from Bob, bought a van for £2,000 and spent £28,000 with Kingfield [which later became Kingfield Heath and is now evo], which gave me an account straight away. I rented a small warehouse in the city, with no computer system and handwritten delivery notes.
W360: When was this?
DL: 1992. In the first year, I did £662,000 in turnover. The second year was £1.2 million. I brought in some van drivers and old friends and grew it from there. I don’t know if I know anything more today than I did then (laughs).
W360: I’m sure you do. What was the company size when you merged with the other two?
DL: I was the smallest element at about £2 million.
W360: Is Kevin still involved?
DL: Initially, our leadership structure was me overseeing sales and marketing, Clive managing procurement, inventory and supplier relationships and Kevin handling finance. This setup worked until around 2019, when our growth stagnated. We began exploring new leadership structures and adopted the Traction – Entrepreneurial Operating System, which we adapted into the United Operating System. This gave us a structured framework to manage and run the business effectively.
As we assessed our challenges, we realised some issues were related to our existing leadership. To address this, we decided to promote key employees to leadership roles, allowing us to step back gradually from daily operations. We appointed Graham Bourton, who had worked with Clive at HGS, as Managing Director. Joanna Pethard took on the role of Sales and Marketing Director; and Chris Innes, who joined us from a technology business we acquired pre-COVID, became Operations Director. Chris’s technology-driven approach has notably enhanced our productivity.
The final piece of the management puzzle was bringing on board a Chartered Accountant as CFO so that as the business grew in scale, we had the right advice in-house to enable Kevin to step aside. After a nine-month search, we hired Steve Johnson in April this year.
W360: So that’s the management team. Give us the elevator pitch about United UK.
DL: Our elevator pitch is simple: we save clients time and money by delivering on our promises and making life easier. Although it may sound a bit highbrow, this commitment is evident in every aspect of our sales proposition.
When we receive an order, we commit to fulfilling it to the standard and level expected. That’s why our scoreboards track ‘promises’ instead of orders. We look to consolidate the supply chain, reduce the vendor base, enhance delivery efficiency, lower product costs, remove the cost of doing business and promote sustainability.
In essence, United UK is defined not just by the products we sell but by the value we add. If you’re a client purchasing repeat items within our categories, we’ll manage those products for you and deliver added value throughout the process.
W360: From what I’ve just seen in your warehouse, catering is a huge business for you. That puts you in direct competition with Bunzl and Nisbets [which was acquired by Bunzl at the end of May this year].
DL: Catering supplies and equipment represent a £12 billion market in the UK. We ventured into this space when a client asked us to stock their pots and pans. It was a steep learning curve, but we applied our value-added principles, and the reaction was incredible.
Offering our service and delivery guarantees in a category with an average order value of £300 rather than £90, higher gross margins and repeat business changed the dynamics of our operation.
W360: What fundamental attributes does your business need to provide such a wide range of seemingly disparate products?
DL: There’s a commonality of products across the range. If you apply traditional thinking, you have the front-of-house and back-of-house products. For back-of-house, it might have been a box of paper; now, it’s a pack of blue roll.
Front-of-house is no different. Think about a piece of crockery used by a hospitality organisation with bespoke details – similar to a letterhead or a printed golf ball we used to handle.
While you need embedded product knowledge and sourcing expertise, our Vantage Audit sales concept is fundamentally the same. We’re just applying it to a different range of products and market sector.
W360: Would a large hospitality company tell you where to source certain products, or would you source them?
DL: It varies. For example, they might have a deal with a pottery firm for crockery and work with their menu scientists to design it. In these cases, we’ll handle the logistics – what we call ‘ship through’ – essentially adding a shipping cost to a low-margin product.
In the hospitality sector, companies often have unique requirements tied to their standard operating procedures. They might, for instance, have an agreement with Diversey for chemicals as specified in their operating manual and dictate the margin or case rate. However, we’ll also handle another 800 products for them, buying and selling at our margin to ensure a blended mix that delivers the service they want.
W360: So where is the company now? It seems there have been significant changes from 2019 to the present.
DL: Looking backwards, you can’t avoid talking about COVID. Back then, we operated on a completely outsourced model. We didn’t have our own warehouse; instead, Spicers handled the procurement, managed inventory and dispatched it on a ship-direct basis.
W360: Everything?
DL: Everything.
W360: You dodged a bullet there.
DL: (Laughs) It was clunky, but in reality, it did what it said on the tin. Originally, we felt that if we were just a front-end sales machine, it would make us more valuable, and we could shift and lift it to a bigger player that saw us as a market disruptor.
In hindsight, we should have seen the chinks. Spicers often had inadequate inventory levels, likely due to its cash-flow problems, and couldn’t deliver the passion and service we were aiming for because it really operated as an outsourced 3PL.
When COVID struck and Spicers went under, it left us with £2 million worth of inventory trapped in its Park Royal warehouse in North London. We were suddenly without stock, vehicles or picking and packing methodology. The only thing that saved us was that our customers were all closed.
Following Spicers’ collapse, EY sold our inventory to Paragon Group [now Grenadier Holdings]. To get back on track, we secured a £1.7 million CBILS loan to purchase new stock and began placing orders, but lead times were extensive, ranging anywhere from six weeks to 40 weeks.
The next hurdle was finding a place to store our stock. After reviewing various 3PL options, we chose Kinaxia Logistics in Rugby for its state-of-the-art warehousing facilities, signing a pick, pack and ship contract, with shipping handled by DX Delivery.
W360: Did you lose any customers in that period?
DL: No.
W360: Remarkable.
DL: We knew we had to adapt. As we emerged from lockdown and demand increased, managing the 3PL partnership became increasingly difficult. Its costs and margins rose, and we found that a significant portion of our gross margin was being eaten up by management fees to the 3PL. In response, we initiated a project in early 2022 to build a warehouse. By the end of the year, we were up and running.
We have a strong track record of doing what’s necessary and solving problems and 2023 was a very successful year for us; 2022 wasn’t bad either.
W360: What were your sales?
DL: In 2023, our group sales reached £21 million, with healthy profit levels to maintain investment in the future.
W360: When we walked around the warehouse, you said you have a relatively small number of customers. Is it you being choosy or are there simply not that many out there?
DL: I reckon there are over a quarter of a million potential customers in our market space. The key factor is their size. Larger companies tend to have the types of problems we can solve, such as vendor rationalisation.
We especially value multi-site businesses because we can offer financial control, product range rationalisation, vendor base consolidation and streamlined invoicing – all wrapped in a brilliant sustainability and CSR package. We provide detailed reports on the carbon footprint of products, packaging and other factors, which are increasingly important for governance and compliance. Customers spending upwards of £25,000 value our proposition.
W360: That’s not a lot.
DL: It’s not, but you know the saying: from small acorns grow mighty oaks…
W360: What’s your USP?
DL: I think a USP only becomes a USP when it’s a combination of factors, rather than just one element. I would say we’ve got the widest range of products and world-class services. And we get it and understand you. That’s what we’d say to our clients.
W360: Those reading this won’t have had the benefit of seeing your vast array of products, some of which I don’t even recognise. How do you describe the range?
DL: The weird and the wonderful is everything you might need in a pub, except for the food and drink. Essentially, it’s a non-food consumable service for any kind of hospitality environment.
W360: Are all of your current customers in that hospitality space?
DL: No. We also serve clients in the financial, legal and professional services sectors.
W360: So they probably take more of the traditional product ranges.
DL: There is some crossover. Everyone needs essentials like toilet paper and cleaning supplies. Plus, many businesses now have better beverage and food stations, so we provide items such as cutlery and crockery. These have increasingly replaced the staplers and lever arch files we used to sell.
Clients seek value not just through the quality of the products but also through control over their usage, expenditure and pricing. They also want detailed reporting.
W360: We’ve always had that reporting capability, but you seem to have taken it to another level. Your competitors too.
DL: I think we’ve just packaged it. I’ve just received an email campaign from Amazon Business which emphasised price reductions, operational cost savings and reporting and control. They’re targeting SMEs with this message.
When you’re speaking to a financial director overseeing 40 sites across the country, they need assurance of product quality, pricing and service. That message of consistency and control is powerful and resonates strongly with larger businesses.
W360: Talking about Amazon Business, how do you compete when it could play in your sandbox?
DL: I attend numerous industry and sector seminars. I recently went to one that included a topic on Amazon. The first slide was titled How to compete with Amazon. I hoped it would end there because the next slide should have been, “Don’t bother.” It’s not our market space.
We recommend Amazon to some of our clients or even purchase items from Amazon on their behalf if it fits their procurement needs. We are not all things to all people. We are all things to somebody, and that’s where our value lies.
We prefer not to play Amazon at its own game but at something that makes them feel uncomfortable such as bespoke products and managed services. In this way, Amazon does a great job of elevating our pitch and highlighting the services we offer.
W360: We still have traditional OP vendors out there, of course. How do you view their fortunes?
DL: The data from our Vantage Audits and the latest GfK reports for traditional office supplies is quite terrifying. Each sector is affected in various ways, with a growing demand for different products. For traditional OP, I believe the range will continue to shrink, becoming increasingly commoditised, and overall volumes will likely keep declining.
W360: You’ve mentioned Vantage Audit a couple of times. What is it exactly?
W360: We brand it as our sales-proven process. The Vantage Audit is a framework designed to help salespeople effectively present to prospective customers. It’s a six-step process that includes engagement, discovery and an audit.
We work closely with the client to explore ways to reduce their pricing and vendor base, among other things, by conducting a detailed audit of their expenditures with full transparency and due diligence. This involves signing an NDA and taking away all their invoices for analysis.
Our promise is a 20% reduction in 20 working days – it’s the grand guarantee that comes with our proven process and includes both soft and hard costs. For example, if you’re dealing with 15 suppliers and receiving 100 invoices a month and only get one from us, that’s a significant saving. It’s a comprehensive rationalisation programme.
W360: At the end, they get a report and can choose not to use you.
DL: The work is free of charge, carries no obligation and requires little to no effort on their part. These are our three key points when we talk about the Vantage programme. For every appointment we attend – and we don’t do enough – one in six will lead to an audit. From those audits, we’ll get the account.
W360: Let’s talk about priorities for your organisation moving forward. I read recently you have a target of £100 million in annual sales.
DL: Yes, we’ve got a ten-year target, aiming to reach £100 million by 2030. This year, we’ll achieve £24 million, and I’m confident we can grow organically to around £40 million within that timeframe.
W360: So what would make a nice bolt-on acquisition for you?
DL: With Steve’s private equity background and extensive acquisitions, part of his role is to evaluate potential businesses financially. We’ve identified about 10-12 strategic locations around the UK where we’d like to establish a presence.
W360: Why is that important?
DL: For the last mile, we must be sustainable, requiring us to invest in environmentally friendly vehicles. Additionally, having our own delivery infrastructure will enhance our service offerings.
During COVID, deliveries went through courier services and while it’s now accepted in the marketplace, they won’t deliver to the 17th floor of a tower or put deliveries away at a client’s request. I firmly believe these concierge services will come back into play.
W360: Does this mean some hybrid 3PL combined with your own delivery service?
DL: We need to prove this in concept first; it’s still on paper. We need a minimum population of one million people within a 40-mile radius and at least 25,000 potential customers in any given location. Distribution would be a simple hub-and-spoke model and we believe this will add value. To achieve true sustainability, we need to control the entire supply chain, from start to finish.
W360: Since your business started as a merger, could it be on the cards again?
DL: We’ve spoken to a few companies in the geographic areas we’ve identified, most of which have been within the traditional OP space.
W360: I’m surprised you mentioned looking at OP companies, given that the bulk of your business is in other areas and the miserable picture you just painted.
DL: It’s a land and expand exercise rather than about product range or volume. If you look at some resellers and their client lists, there are still strong lifestyle businesses out there that could be under pressure soon. There are also lots of people that if you wrote them a cheque tomorrow would go on their merry way.
W360: Attracting external investment to acquire businesses requires cash, so this is a long play.
DL: We have areas where we see potential for improvement and believe outside investment could significantly boost our organic growth. That said, are
we in the right shape just yet? Probably not, and that’s why we brought Steve on board – to ensure that if someone came in and had a look under our bonnet, everything’s in order.
W360: What are your thoughts on the wholesalers?
DL: When managing a large SKU range, having a broad-range wholesaler to support us is crucial. Among these wholesalers, each faces its own set of challenges.
VOW, I think, is currently in the best position due to its legacy and product range. However, it struggles with updating its inventory quickly and clearing out outdated products. Fundamentally, however, you cannot be my partner and my adversary – it’s an extremely difficult balancing act for them.
As much as it believes in the omnichannel model, resellers don’t. The cannibalistic activities between Staples, its etailers, resellers, sales agents, Banner and now Complete diminish long-term growth opportunities. They’re killing their own margins. To truly be a partner, split the divisions and put firewalls between them. Ultimately, though, it doesn’t work for them. I think it is self-harming and one of its operations needs to go.
Emotionally, evo missed a real trick. When Spicers went under before this most recent collapse and Exertis Supplies was commodity-based, it had the chance to go to the marketplace and say, “We’re going to cuddle you. We’re here for you. We’re your wholesale partner.” Instead, it was seen as a margin opportunity and those trust ripples will go around the pond for a long time.
W360: Evo might argue that it needs the volume to provide resellers with the range and price they require.
DL: Evo’s cost to serve is obscene. I think VOW has about 1,700 accounts. I would change that to 50-100 accounts and aim to double sales. It has to be a partner and work with resellers.
On the other hand, Exertis’s new investment strategy looks interesting. Its focus on trade-only and reseller support is a good message. It needs a broader range of products and some managed services. However, I think Exertis is biding its time to make sure it gets things right. It’s an interesting dynamic for us. As for Spicers…
W360: Whether you achieve your target of £100 million by 2030 or not, you’ll be around 60 years old by then. What are your thoughts on exit or succession?
DL: Clive is already past 60 and we’ve been proactive about succession planning with our leadership team. Most are in their late 30s and Steve has joined as a bit of “grey” material (laughs). I genuinely enjoy what I do – it doesn’t feel like work.
The £100 million is an audacious goal but it’s really about saying aim for the stars. There’s always room for improvement and our goal isn’t just about hitting a revenue figure. We want to be recognised as the best in our industry – both as a great place to work and as a leading company in our field.
W360: If you get to £50 million or £100 million, Bunzl is going to get annoyed. Right now, you’re probably the size of a fly in terms of volume.
DL: I don’t think we even tickle – more like an insect on the back of one of its vans. This market space is massive and ready for disruption.
W360: But Bunzl is very acquisitive, and they buy small operations too…
DL: Everything has a price. But I like getting up in the morning and going and doing things.
W360: And long may that continue. Hopefully, I’ll get to see you hit £100 million.
