F.t.l.: Tom Verhaert (Kick And Rush), Michel Van Bavel (Van Bavel) and Thibaut Fontaine (Kick And Rush).
At the beginning of June, the Belgian promotional products agencies Kick And Rush and Van Bavel – Enjoy Giving merged to become the Kick And Rush Group. With an estimated overall turnover of 30 mil. Euros, the group is now one of Belgium’s biggest promotional products agencies. The CEO of Kick And Rush, Tom Verhaert, will run the newly formed organisation. Verhaert spoke with eppi magazine about the reason for the merger, a changing market and the plans for the future.
Mr. Verhaert, Kick And Rush and Van Bavel, two players on the Belgian promotional products market, recently joined forces. What was the motivation of the two companies to merge?
Tom Verhaert: Over the past few years, Kick And Rush has invested big-time in digitalisation and the corresponding tools like web shops or hosting as well as stock, payment, procurement and shipping management, reporting and after sales. We also stabilised the previous merger – five years ago we had acquired the Belgian operation of Supremia. Having a tool that is scalable and observing a market that is consolidating and that needs to consolidate one way or the other, we were open to further mergers or acquisitions.
Van Bavel was in a different situation: They needed a digital tool, like the one we have, while at the same time being strongly involved in the drop shipment business with individual customers and being the provider of creative solutions. We were focused on the French-speaking part of Belgium, Brussels and France, while Van Bavel were more focused on Flanders, so it was a good fit very quickly in terms of businesses coming together as well as in terms of people. The company founders and owners, Michel Van Bavel and Thibaut Fontaine, have known each other for a long time and even though they were competitors, they trusted and respected each other. So, it was quite an easy and natural process. Financially, you always strive to be able to fall back on enough synergies and the companies were a pretty good fit as well.
I am very pleased that two historical figures in our market, who have quite a journey behind them, have come together. Thibaut Fontaine founded Kick & Rush in 1995, Van Bavel looks back on more than 70 years of company history. Both Thibaut and Michel will remain on board as significant players in the company regarding growth and defining the strategy.
How will the new company be organised regarding the daily operations, headquarters, offices, warehouses etc.?
The only overlap in physical offices was in Antwerp where both of our companies had offices. The one that will remain is the Van Bavel office, which will become the Kick & Rush Antwerp office.
The headquarters are still in Wavre, hence we are keeping two offices in Belgium – one in the south, one in the north. We will keep an office in Paris as well as our back office in Mauritius, which lends us flexibility and this will also be extended over the coming years. The warehousing is consolidated, the main warehouse is namely located in Wavre and we have another one in France. The sourcing teams are also being combined. There are very strong and experienced teams on both sides, which gives us a lot of opportunities.
Out of the box: Van Bavel had decades of experience in finding creative product solutions.
What will your total headcount be?
Around 80 people: one third of them based in Mauritius, a team of five in Paris, five people in the logistics centre and the rest evenly spread between the two offices.
How did the teams react to the merger?
Of course, they have a lot of questions, but for me, the fit is immediate. My recent meeting with both teams shows that we really have an asset in terms of people. We are in the service industry, we are only as good as the people who work for us. We are developing tools, but ultimately we are offering a service and conveying a message.
If we take a look at the industry, there have been many mergers over the course of the past years. What are the reasons for this – in general and also in terms of your company specifically?
In an industry that is as price-focused as ours, the margins are under pressure and there is always a smaller competitor, who can do it cheaper. This means the business needs to evolve so that it has a few actors, who are more robust. Promotional products agencies need to move away from the product-only paradigm towards a service paradigm, which we have actually done over the past few years by adding service on top of the products that we were selling.
Now it is even moving in a new direction: It is no longer purely about service, but also about consulting. Customers need advice to do physical marketing in the correct way. So they will enter partnerships with people, who can provide them with advice on the right story, the right tool in a sustainable and socially responsible way with a lot of governance justifying whatever is being done. After having added a whole series of services such as warehousing, web shops etc., the next step is positioning ourselves as such a consultant, while leaving room for creativity. We think that the small players will not be able to cope, because of the investments in technology alone – it is very expensive to build the tools and it takes the size we have to do it.
What’s more, it’s not only the corporates, who will look for advice: you have a whole series of smaller customers who still want to do physical marketing the right way, so you need to find a way to service all of these as well. There again, technology will play a key role in the coming years.
Implementing haptic advertising the right way also includes a growing number of tasks regarding sustainability and the respective supply chain management.
Yes. The big buzzword for us is transparency: providing a full overview and complete control of what is going on in the supply chain. And making choices based on data, measurements and knowledge about the impact of a product and what is going to happen with it in a second life.
Of course, against this backdrop the Corporate Sustainability Due Diligence Directive (CSDDD) that recently came into effect also plays a role. Although at the moment we think our customers will probably be wave three, which means the directive will be in full effect for them in five years, they know that they will have to measure many things in their supply chain anyway soon.
So, we are providing our customers with this service today already. However, this goes much further than us merely determining the CO2 balance of a product. We think it is important to be enlightened about what is going on in recycling, regarding the second life of the items or being able to create some projects based on the recycling of materials.
So we are offering the customers a whole journey, which has an impact on the people within our companies as well. People, who used to merely import items up to now, will need to become advisors. So, there is a lot of training going on and a lot of transformation within the teams too.
What was the initial reaction from the market when you announced the news?
Many customers were pretty pleased to see that their partners are moving forward and questioning themselves. The suppliers were in some cases a bit worried and pragmatic, but also positive because suddenly they have a bigger contact point to talk to. Moreover, they too are looking at digitalisation, a better flow and putting an end to that paperwork that is making them lose money.
Which client groups will you be focusing on mainly and which added value and additional services are you offering beyond purely supplying products?
At the moment we have a significant share of customers that are serviced with drop shipments. They have a request, a need and we supply them with nice products. The second category is multinationals that require products and service. For example, we run programmes for Toyota Europe within several national markets. These customers require, among other things, control of the brand and items that fit their requirements in terms of environmental social governance. They need a web shop that is related to it, as well as reporting and CO2 measurement. And then, thirdly, you have the whole range of the 5.2 billion Euros that is spent on the merch business in Europe in small companies.
Right now, a lot is happening in order to serve the latter. Using the benefits of digitalisation, we can take them by the hand and offer them an easy-to-use web shop platform specially dedicated to small companies. Obviously, there is still always a certain amount of customer service required for this and our back office in Mauritius is helping us service these shops and remain scalable.
Last, but not least, we are creating initiatives around sports clubs. These initiatives are purely digital and enable us to bring our end users together with suppliers and produce on demand.
Back to the multinationals: These companies need a global service that at the same time takes the local footprint into account, because the markets differ greatly. This is where Kick And Rush’s partnership in the international Prominate group has come in handy so far. Will you remain a shareholder?
Yes, we will. By all means, if it is beneficial for the customers, we work together with our colleagues at Prominate in the individual markets, because we are indeed convinced that the requirements in Spain or Finland are better served by a local player, who understands them more readily, because they are so different. The real trick is to create this balance between having a programme, where you have centralised whatever can be centralised and have at the same time reduced the quantity of stock, because we think holding large centralised stock leads to many side effects such as obsolete products.
Hence, we help our customers make the right decisions as to which parts of the inventory should be held on stock centrally and additionally work with print on demand because that enables us to expand the catalogue, while at the same time avoiding dead stock.
Van Bavel was a member of the distributor alliance, WAGE, and Kick And Rush has been a long-term member of the Ippag cooperative. What about these memberships?
We have enlarged our operations in France, therefore we had to leave the IPPAG organisation, but we remain member of Wage for Belgium and France and member of Prominate for Belgium.
The group of companies supplies a large number of renowned Belgian and international customers.
Are there any other future plans you can disclose at this point in time?
We have a big agenda with good years in front of us. However, there is also a lot of inefficiency in the market with all that “paperwork” – all those emails that cost a lot of time. And even if the digitalisation is meanwhile well advanced in terms of the standard products on the market, one has not yet succeeded in digitalising processes for the production and delivery of custom-made products. We would like to make our contribution here and this is where a part of our future lies. We have to digitalise the special designs section – and here I am not exclusively talking about merch. A lot of markets are custom-made, the world is moving towards production on demand. So how do we make all the side issues digital and manageable so the processes are as efficient as those of Amazon and Coolblue for standard objects? That is the challenge.
We have tried to make sure the daily operations are as flowing and automated as possible to enable huge scope for driving uniqueness and to become a partner that provides that little extra in added value. Our operations are scalable now, they are fluent and whether you serve ten or 500 customers, the operating method and the amount of people involved are the same. And in the meantime, if you achieve this efficiently, you can use the resources of more people on the creative side to develop unique products – and that is where the future lies for us.
Especially since haptic advertising always competes against other forms of advertising media. How do you convince your customers not to cut down on promotional products?
End users realise very quickly – we have learned this over the last five years – that it is still important to stimulate people’s senses. People need to touch, they need to see, so physical marketing is very difficult to do away with. Thanks to a tool we can offer, developed by an independent company, where people see their return on investment in real time, we can prove that an impression made with an item is pretty cheap compared to digital media – so what would they cut?
The better we can prove the efficiency of our medium, the more people we can convince. I am sure the more digital the world becomes, the more the need and the desire for something tangible will grow. There is never going to be exclusively digital marketing. It is all about trust. What do you trust in digital today? Is it easier to prove that an item is real or a digital ad?
International Business: Kick And Rush manages global programmes with a local footprint for several multinational corporations.
In other words, the merger is also a step in the direction of positioning the company more sustainably?
All of the companies in our sector are facing low margins, the ratio between Ebitda and turnover is pretty low in most cases. So, our ambition is to create that bandwidth that is necessary and not just to be worth more.
The world is facing a great deal of uncertainty. Climate change is just one aspect. We have just seen what happened in Europe with Ukraine. Our industry will definitely not remain unaffected, whether it is a boat being blocked in the Suez Canal or other incidents. These occurrences will increase in number. Companies have to be agile and have the financial solidity and margins to be able to absorb those shocks. And we want to be a company that is future-proof in a context that will be much more volatile than it used to be.
It is not only just about being future-proof, it is about being future leading. We don’t act aggressively on the market, but we want to do something that makes a difference for the clients so they make the deliberate choice of opting for the Kick And Rush Group because of that difference. The discussions we are holding in the course of tenders today and the exchange we are currently engaging in with the customers point precisely in that direction. Customers want a partner that is genuine, transparent and solid and I think we are pretty geared up for the future here.
Till Barth spoke with Tom Verhaert.
photos: Kick And Rush Group
