Mike Marusic won’t lie. The president and CEO of Sharp Imaging and Information Company of America would rather be in an auditorium, addressing upwards of 1,000 conference attendees regarding the company’s latest products and technology. Or casually chatting with dealers during a road show, getting their input into what they’re seeing in the market.
Coming off a banner 2019, capped by October’s watershed dealer conference in Las Vegas, Marusic saw unlimited potential for 2020, sparked by a suite of new smart office products. But what he and billions of other people couldn’t see was the coming pandemic. And then it became time to make new plans. Little did he know that future office was a lot closer than anyone could realize.
The pandemic shut off A3 activity like a fireman closing a hydrant. But it also gave rise to remote workforces and the opportunity for Sharp to proliferate its Windows collaboration display, Synappx smart office solutions, new A4 offerings and remote workforce technology bundles. And while Marusic can’t be there in person to extol the virtues of these growth opportunities, Sharp is enabling dealers to capitalize on some of the more nontraditional opportunities for growth.
We spoke with Marusic on these topics, along with the OEM’s partnership with NEC, the burgeoning demand for Dynabook laptops and how the company has worked with dealers and direct branches to navigate through an unprecedented period and emerge from the pandemic in a growth pattern.
Talk a little about Sharp’s business performance in 2020. What were some of the key variables driving your results?
Marusic: Like most companies, it was not a great year for us. On the whole, business was down around 15%. Based on what I’ve heard in the industry, that’s a pretty good performance. We’ve seen market data in which unit placements are down by one-third. We’re happy with our relative performance, but obviously we’re not performing as well as we’d like. With many varieties of businesses down, it poses a challenge, but we’re working through those things. Fortunately for Sharp, we’re pretty diversified. We have a lot of other product categories that can help pick up some of the shortfall on the business document side. We’re hopeful that 2021 turns out to be a lot better.
What were some of the highlights in 2020 for Sharp across all lines of business, particularly in the dealer channel?
Marusic: It was the introduction of our printer line. That is an area that’s really taken off in our industry, and it’s fair to say that we didn’t have the most robust product printer line a year ago. We started expanding the line, and being able to introduce those products really helped make a big impact on our business. That’s been a big part of our success. Another key is the dealer adoption of other products we offer. A year ago, we talked at our dealer meeting about getting into tangential businesses. We’re not asking them to get into completely new areas, but if you dominate the office, you’ll have that access to the customer.
We saw dealers picking up our Dynabook line of laptops as an entry point, along with our Windows collaboration display, which was a big part of what we’re trying to do this year. That was critical, as it allowed dealers to offset where print was declining and find their customers’ new needs. During the dealer meeting, we dedicated about 45 minutes to talking about what Microsoft Teams does and how it works. Fast forward to April 2020, every businessperson in America knows about it. Having a product that leverages Teams and provides a hybrid workforce the ability to conference from home with people in the office using a Windows collaboration display provided a huge advantage for a lot of our dealers. Watching that adaptation was interesting and exciting.
Sharp’s dealer conference in October 2019 was a rousing success. Is it a challenge to replicate that energy and enthusiasm while engaging with your reseller clients in a remote fashion?
Marusic: We’ve struggled with that, because it’s impossible to replicate the in-person experience. When we go out and talk to dealers, or have big events like road shows, it’s really fun to discuss the products we’re unveiling and get that immediate feedback. You can look people in the eye and see how things are going. The part we really miss the most is those off-topic conversations, when I get to talk to people unscripted. During meetings and road shows, you get to engage dealer reps and see their enthusiasm or lack thereof—you hear about what they like or suggestions for improvement. That interaction is irreplaceable. It’s a struggle to get that same experience on a webinar and produce that same energy level. We’ve talked about doing virtual shows, but I really haven’t seen one yet that’s been great. You don’t want to host one and have it come off flat, so we haven’t ventured down the road of doing a full virtual show. We prefer to focus on the shorter presentations, 45 minutes to an hour, to work with our dealers and provide training videos and seminars.
Are there any tentative plans to host an event during 2021?
Marusic: We don’t have any plans right now. The challenge is we need to plan these things out well in advance. With so much unpredictability, travel restrictions and requirements of individual states—not to mention how open people will be to attending events in 2021—it’s almost impossible to plan. I’m optimistic that as vaccines come out, travel will open up and people will be open to meetings. But it would be difficult to do a 900- to 1,000-person meeting at this juncture.
Can you provide some insight into how Sharp has endured the COVID-19 period, and how did the company pivot to ensure the needs of its reseller clients were being met?
Marusic: The way our company reacted was just great, and for me, it was our proudest moment at Sharp. We had the same struggles as everyone else; we had to move people out of our offices and go home. Amazingly, within the first week of April, we changed all our sales programs to accommodate the dealers’ requirements, because the initial goals were no longer realistic. We immediately changed all our credit terms with dealers and provided extended programs. We put out a six-week training program for all our dealers’ sales reps, devising ways to keep them active. This included incentives for the reps to complete the training, which helped offset their loss of compensation. We put all of that together in about a week and a half. The dealers can be the judge of how we fared versus others. I’m extremely proud of how many different departments came together to execute the project.
Our results were relatively strong for the past six months and a lot of it had to do with how quickly we supported the dealers. When the pandemic hit, our attention immediately went to the dealers to make sure that they were strong—if it’s good for them, it’s good for us.
Clearly, the pandemic was a catalyst for great demand of A4 devices, and Sharp released nine new models to its letter-sized printer and MFP stable last fall. How do you see the market for A4 evolving in the coming months?
Marusic: It’s a challenge for the industry to adapt to this period. When we first started meetings regarding the pandemic in April, I said that if this lasts 30-45 days, business will resume, and habits won’t change. Now we’re talking eight months, and people’s habits are going to change. Having gone so long without using A3 units, printers are going to be more prevalent within the office. We’re going to have this hybrid working environment for quite a while. The printers will become more and more important, and that’s going to pose new challenges to dealers because it’s a whole different model, support and compensation structure. It’s an important part of our strategy going forward, and we’ve introduced a number of new products. Honestly, I do wish I’d had those printers a little bit earlier. But we do have a great printer line that’s doing quite well. I think that’s going to continue to grow for the dealer community and all of the manufacturers.
Tell us a little about the remote work technology bundles the company announced in November. This seems to acknowledge that regardless of when the pandemic clears, remote work capability looms as a permanent business fixture.
Marusic: The remote trend was happening prior to the pandemic. Certainly, the younger generation likes the idea of a flexible work environment and remote work. At our dealer meeting, we talked about things like Synappx, the ability to work remotely, building the mobile workforce and moving that information with you. We saw it coming, but the pandemic changed everything. When the pandemic first hit, most people just took existing technology home. Maybe they had a desktop or laptop computer at home, along with a printer. This concerned IT managers, because they had no control over the equipment, no management capabilities and no security. Our work-from-home bundles are really designed to fix that problem. The bundles let IT managers know what equipment is out there as well as how it is secured and maintained. Security is a big factor. Fortunately, Sharp makes most of the products; we have our Dynabook notebook division, the desktop displays and printers. It was a natural fit. Add in the ability to leverage software. We turned to Tech Data a few years ago for our vendor-managed inventory. But now we have the ability to load software, print-configured devices and the like. I think it’s going to be a big part of every company going forward. Hopefully, we have the right offering for our dealers.
Sharp further underscored its commitment to the displays segment with the creation of Sharp NEC Display Solutions. Talk a little about the partnership with NEC and your expectations.
Marusic: Obviously, NEC and Sharp are two highly respected names in the display field. Our respective product lines overlay almost perfectly with one another. Where we have gaps, they’re really strong, and vice versa. Now that we’ve formed this new joint venture, we’re beginning to talk about how we can leverage it. It’s important to note that we retained our display business as Sharp; separately, we’ve invested in this new joint venture, the previous NEC business. It’s early, and we’re still looking at how we maximize this partnership. We’ll have some great stuff to talk about in a couple months.
It was an eventful year for Sharp Business Systems, with Joe McCormack named a senior vice president, along with the acquisition of ACE Office Solutions. How have your direct operations been faring during this challenging period?
Marusic: In Joe, I hired somebody from outside the industry who understood branch operating systems and had an IT background but wasn’t a copier person. Our organization has a lot of great copier and IT people, so I wanted a different perspective. We’ve got a professional management team in place that really gets how to structure the organization and give it focus. So from that perspective, we were doing quite well. But SBS is impacted just like everybody else with the volumes; as with dealers, our clicks are down. The nice part is, of all the groups, SBS is going to embrace the other Sharp technologies. The display business had one of its best years with SBS because a lot of people needed that collaboration capability with remote workers. They’ve also done very well with the Dynabook laptops and the desktop printers.
For total revenue, it’s been a challenging year, but the ability to diversify and leverage those technologies is promising. The goal heading into 2021 is maintaining momentum in going deeper with clients. I’m not talking out both sides of my mouth; we tell the dealers the same thing we tell our branches. The ability to diversify into other areas will be the valuable asset going forward. Obviously, the pandemic made us less aggressive with acquisitions, and we wanted to focus on our core business.
The pandemic has changed a lot of rules for doing business. What can dealers do to ensure they are maximizing their opportunities for growth under less-than-optimal conditions?
Marusic: It’s twofold. The first part revolves around how to sell. During the pandemic, I reached out to a couple of people and we put together a millennial development program for our younger employees. I asked them if they had adjusted to working from home. They kind of laughed at me and said, “This is our world.” They get video conferencing, so it’s no big deal. It occurred to me that, as a company, we spend a lot of time training and we’ve talked about training millennials and Generation Z to work our way. But I think it’s a great time for dealers to listen to their employees who really get social media. They’re using platforms like Snapchat and TikTok to communicate and socialize. While we’re not going to use TikTok to do a sale, it’s about the concept of remote conversation, forging a relationship without being face to face. That is a valuable tool that they certainly get, and I would encourage dealers to take advantage of it, because a lot of selling is going to occur in a hybrid way going forward.
The second part is product diversification. A common theme among dealers who are doing well is a strong IT business. They’re selling other technologies to existing customers to close that revenue gap. As we come out of this pandemic, it’s important to be a well-diversified dealer with the ability to sell all technology products. That’s very powerful. Sell them laptops, make sure you’re fully developing the managed IT services business and push products like the Windows collaboration display. If you get into those areas with your customers, when a lease expires with copiers, you’re not discussing CPC and price, you’re discussing the total value. These are two areas where dealers need to adjust to both, and we’re doing that ourselves.
What are you looking to accomplish in 2021?
Marusic: Much of it depends on the timing of the vaccines and how quickly people can return to the office. We’re focused on returning to our previous revenue levels. The ability to get those other products into the pipeline for our dealers and our direct operations is essential to resuming a growth pattern. The second key is encouraging our dealers to sell these other products. I’m hearing from dealers that they’re putting their toe in the A/V market and they’re getting traction, but they want to know how to build it out. We need to educate all our dealers to manage and sell these other categories; it’s a different business and the margins are different.
For Sharp, we need to grow and get that growth mindset back. How do you get everybody in your organization back and engaged? We don’t see many of our employees on most days; we operate at 50% capacity here in New Jersey. So we need to determine how to bring our culture and that excitement back into the office. It will be a challenge, but we can see the light at the end of the tunnel.
