Back in 1921, Morris Wolf and Harry Hecktman pooled their resources to buy the Utility Stationery store in the Loop.
It was a family operation from the start with Hecktman, first cousin Wolf and most of Wolf`s eight brothers working long hours to build the business.
Wolf and Hecktman might scarcely recognize their business now. Computers are scattered everywhere, the retail business was abandoned long ago, there`s a new name, and a distribution system has spread like an octopus` tentacles with its head at the gleaming new corporate offices in Des Plaines.
But they`d recognize the bosses at United Stationers Inc. Wolf`s son, Howard, is chairman, and Howard`s cousin, Joel Spungin, is president. Jerold Hecktman, Harry`s son, is vice president of advertising and sits on the board ofdirectors along with his brother, Melvin.
The firm has changed its name once and its headquarters several times, and it has switched emphasis from retail to wholesale, tripled the size of its office products catalogue and, three years ago, changed from a private to a public firm.
It`s hard to tell which has changed more, the company or the products it sells.
”We`ve gone from the first catalogue in 1935 featuring ink wells, fountain pens, blotters, green eyeshades to our current one that has calculators, televisions, copy machines–anything that you would find in an office,” said Wolf, 59, who joined the company in 1948 after serving a teen apprenticeship in the Loop store. ”I came in as the boss` son.”
Spungin joined the firm in 1957, also after serving a teenage apprenticeship filling orders, stocking shelves or sweeping floors. He joined at about the time the company began emphasizing its wholesale business. What United does is buy products from the manufacturer and resell them to local office products distributors.
After that basic shift to wholesale, the company outgrew its facilities on West Monroe Street, moved to West Lake Street and expanded across the street, then down the block. Spread out through three downtown sites, the firm built a modern plant in Forest Park and moved into it in 1970.
It was in 1967 that the company first used a computer, a move that would be a key to its future success and partly responsible for United Stationers`
becoming the nation`s largest independent wholesaler of office products.
”We were the first in the industry to start using a computer,” Wolf said. ”We used it for order entries, for invoicing, to keep track of inventory. But we were still in three locations. In 1970 we put it all together when we built a 200,000-square-foot building in Forest Park.” At about the same time, the company changed its name from Utility to United.
That sprawling warehouse at 1900 S. Des Plaines Ave., in the western suburb, still serves the company, but as just one of seven regional distribution centers around the country. Two more are under construction, and the firm has 32 local distribution centers nationwide.
While the sheer geographic growth has been spectacular, the financial statistics have been equally impressive.
”When I joined the firm in 1948, we were doing about $2 million a year in sales,” said Wolf, who employs 2,000 employees nationwide. ”By 1970, it was $15 million. Last year, sales were $437 million.”
Success spurred expansion, and expansion begat further success. The 200,000-square-foot Forest Park warehouse has been expanded to 320,000 square feet.
In the new plant, the company began not only using a computer but also using WATS lines to initiate reorders with customers. ”Before that, they called in to us whenever they felt like it,” Wolf said. ”This enabled us to smooth out the flow (of orders).”
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United has kept pace with the rapidly changing state of the computer industry.
”Now, a salesman for a retailer selling paper clips can call right into our computers and check the inventory in our warehouse and be able to guarantee delivery,” Wolf said. ”In effect, we become his warehouse.”
The company formally discontinued its retail arm in 1978 when it sold Utility stationery stores.
”One consistent part of our business has been the integrity of our operation,” Wolf said. ”The trust that they put in us is important. As we grow as his source, he`s putting part of his business in our hands. If we fall down, he falls down.”
If the retailer falls down, it hurts United. To ensure the viability of their customers, United offers them a host of what it calls ”value added”
services that they either can`t do themselves or would find too expensive.
”For us to grow, the industry must be healthy,” Spungin said. ”You have to give back to the industry what we have learned.”
The company offers marketing expertise in the form of radio or television ad formats, promotional suggestions and materials, and perhaps the biggest asset of all: the 700-plus-page catalogue imprinted with the retail customer`s name.
One such retailer who has watched United grow has been Joseph Schmidt, president of Atlas Stationers Inc., 227 W. Lake St.
”They have been very aggressive and innovative over the years,” Schmidt said. ”We`ve been very pleased with our dealings with them. When they were smaller, they used to have dinners for the dealers to discuss ideas and what our needs were to improve the relationships between us.”
With the proliferation of white-collar jobs, service industries, and information systems, the stationery business has been booming, Spungin and Wolf agree.
The Wholesale Stationers Association (WSA), a trade association of stationery wholesalers and manufacturers, reports an 18.5 percent sales growth for the industry since 1977. The National Office Products Association reports a 13.3 percent growth of office products sales during the same period. but United reports a 26.6 percent growth.
The growth the company has experienced has come not so much at the expense of competitors as it has from the shift from manufacturers` selling more to wholesalers than direct to retailers, Spungin said.
Where once the manufacturer sold directly to the end-user in commerce, wholesalers are gobbling up more and more of that market because they sell to retail outlets who in turn offer a greater variety and can sell smaller quantities.
While United salesmen are out selling their package of marketing, promotion and catalogue to retail stores, United is also hustling the manufacturers to let the company sell their products.
”We`re working at all time to get the manufacturer to use us,” Wolf said. ”When Canon chose us, it was when they decided to go to the office products channel. It was a change in their philosophy, and it opened up a whole new market for us.”
With a web of regional distribution centers with capacities in excess of 230,000 square feet each, United can dispatch about 90 percent of its 2,100 items to local distribution centers for delivery the day after an order is placed.
”Their branching strategy has been excellent,” said John Danglade, executive vice president of the WSA. ”The regional distribution centers backed by the smaller centers have been tied in with the growth of retail. Their wisdom has been in being at the right place at the right time.”
While much of the firm`s success can be tied to hopping onto the computer bandwagon early, Wolf says the computer industry is undergoing a ”period of adjustment.”
”But it`s still a growing industry,” he said. ”Some of the smaller companies may not make the change.”
”As the industry matures,” Spungin added, ”it becomes better and more viable for us.”
Since 1977, United earnings have grown at 25 percent a year. Sales were $83 million in 1977 and reached $437 million last year.
”Part of their growth can be traced to attracting superior people,”
Danglade said. ”They are excellent business people who maintain a good relationship with the customer and have been able to both attract and develop top-flight people.”
In the company`s third quarter, ended May 31, it reported sales of $139 million, an increase of 21 percent from $115 million in the year-ago quarter. However, net income dropped from $3.6 million a year ago to $2.8 million. Earnings per share were 20 cents, down from 26 cents for the year-ago quarter. For the nine months ended May 31, the company made $10.5 million, a 13 percent increase over the previous year`s period on sales of $421 million, a 27 percent increase. Earnings per share for the nine months were 76 cents, up 3 percent from last year`s 74 cents.
Earnings have been hurt by ”increasing pressures on gross margin, plus planned investments in computer capability, systems development and marketing programs, as well as higher interest expense,” Wolf said in announcing the third-quarter results in the first week of July.
United`s track record has garnered some admiration from analysts.
”Any distribution business is a business of detail; they really understand that, and they execute the details well,” said Loran Braverman, an analyst with the New York office of Merrill Lynch. ”It`s not difficult to understand what makes a good distributor, it`s just a hard thing to do. And the success always shows up in the numbers.”
Braverman says she expects United earnings to get back on track in the next fiscal year, predicting a 20 percent increase.
In late 1983, United acquired Johnson & Staley, Inc., a Nashville-based wholesaler of office products to college bookstores, retail office products dealers, department stores and mass merchandisers.
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About the same time, United formed MicroUnited to sell computers, peripherals, accessories and software. This year, it bought Delaware Valley Pen Sales Inc., a Philadelphia- based writing instruments wholesaler. Along with United Stationers Supply Co., the firms are all subsidiaries of the parent, United Stationers Inc.
After expanding its operations for 25 years, United went public in late 1981. It opened at $16.25, has split twice since then, and closed Friday at $xx.xx in over-the-counter trading.
”We describe wholesaling as bounce,” Wolf said. ”How well you do depends on how well you bounce in adapting to outside conditions.”
So far, United Stationers has been on the acquiring end of acquisition, and it is not looking to be swallowed up in the merger mania–unless the price is right.
”We`re still having a good time,” Wolf said. ”We`re about 50 percent family-owned. If the price is high enough, we`re available–but we have a very high price.”