Photo: Staples
Will branded services help lift Staples’ results?
Since the merger between Office Depot and Staples was blocked in May of 2016, each chain has raced to find a new approach to doing business. Staples appears to be taking an opposite tack from its main competitor in the challenging world of brick-and-mortar office supplies. Staples is experimenting, not so much with what can bring people into its stores, but with what services online and outside of the store it can sell under the Staples brand.
Staples is licensing its name to provider GRM Information Management Services to sell a branded line of business conveniences, reported Bloomberg, including secure online storage and document scanning. The company also intends to license its name for other disparate services, including business insurance and flooring.
One wonders if, by expanding into areas only tangentially related to office supplies and remote from physical retail, the chain is waving the white flag in the battle for brick-and-mortar office supply survival.
The office supply big box struggle is hardly new. For years, those with home offices have been moving to more convenient online sources for office supplies. But recently, the traditional business model has started looking worse. For instance, IoT-enabled smart devices capable of auto-ordering offer even less room for the remaining brick-and-mortar office supply chains to woo customers, or even draw customers to their websites.
One analyst went as far as to suggest, in an article on TheStreet, that Amazon should consider purchasing the flagging Staples chain as part of the e-commerce titan’s ongoing move into the world of physical retail (despite the legal scrutiny that such a move would draw).
But Staples’ remaining major competitor still appears to see hope for brick-and-mortar office supplies, albeit in a form different from the traditional big box storefronts. Office Depot has been attempting to modernize its physical presence to draw traffic and build loyalty. The store recently gave its “Store of the Future” concept an official debut. The concept is a smaller, more stripped-down with more on-hand home office-related services and more contemporary-looking signage.
Discussion Questions
DISCUSSION QUESTIONS: Do you see Staples’ diversification beyond brick-and-mortar office supply sales as a healthy move? Or do believe Office Depot’s strategy — i.e., putting more faith in the future of physical retail — is the stronger position?
Poll
BrainTrust
Bob Amster
Principal, Retail Technology Group
Camille P. Schuster, PhD.
President, Global Collaborations, Inc.
For the office supply superstores, there is no future in brick-and-mortar. They could open small centers that sell printer supplies but that is about all the market needs in an emergency run. Amazon needs to avoid the brick-and-mortar dilemma.
My advice is … Anything that interests Office Depot — do the opposite.
Both strategies can work to some extent. Having worked in the contract stationery business, as well as consulting to Staples years ago, I witnessed the diversification of pure-play retail by Office Max, Office Depot and Staples through the aggressive acquisition of contract stationery companies. What we are seeing Staples doing today makes sense as long as Staples expands into business areas that are synergistic with or complementary to its bread-and-butter office supplies business.
Similarly, Office Depot may be able to increase its retail business by modernizing stores and offering extended, related services and products within the four walls and online.
Boy, the Staples strategy is going to be a stretch to be sure. Both stores basically sell office stuff, pretty well the exact same stuff and at pretty well the exact same price. They sell staples and should stick with that.
In my experience both stores have good employees but neither store is stocked with truly knowledgeable salespeople who can do much more than see if they “have one in the back.” So for Staples to expand the “brand” into financial and high-level technical advice will be quite the trick. Kind of like the National Enquirer having a marriage advice column. If they do try it, they should rename it.
It is almost impossible for anyone to own this space.
I had not noticed that Staples had changed their strategy and I have been in the store. Same with Office Depot. They both look like business as usual to me.
That being said, the stores need to maximize the in-store experience. I was in the market for a new desk chair. Sitting in the chairs to see if the lumbar support was right was important. The in-store set up and help from both places was terrible. The in-store process was not pleasant in either case. There are opportunities for improvement and differentiation. As a customer, both retailers are still interchangeable.
Just went through the exact same thing, Camille. Before I saw your post, I was thinking of how nice it would be to have a “Your Perfect Office” store where there was evidence of creativity in what an attire active, functional office could look like for $500, another for $2,000, etc. The chairs and desks were just thrown in like it was a salvage warehouse.
A brand is a promise and the artifacts of a brand — goods and services — are the evidence customers use to evaluate whether that promise is genuine or hype. The ability to extend a brand into new areas is dependent on many things. In Staples’ case the dependencies include (but are not limited to) how well the stores perform in traditional functions, who the partners are for the new functions and how well they perform. Expanding past the stores is a challenging strategic approach, especially when you are depending on a partner to execute.
The truth is this is a tough category that functions like a commodity business. It’s also one everyone seems to compete with at peak seasons (holidays and back to school). The question is, if I need a case of printer paper or a pen, am I going to go out of my way to get them from anyone, or am I going down the path of least retail resistance? That’s the Office Depot challenge.
As for Staples, why on earth would I go there to by my flooring, and how often am I buying flooring in the first place? The Staples brand wasn’t built around flooring or financial services any more than it was around power tools, which it also tried to sell. I’d rather see either of the “big two” in this category try to reinvent a strategy based on real changes in the market. Doubling down on retail stores may not be the answer and, sorry Office Depot, you can’t redecorate your way to profitability. The merger thought was a good one — there is still one too many major players in this category.
In order for their brick-and-mortar presence to survive, Staples must diversify. I believe Staples (and Office Depot) should develop and create a “business office” service and experience environment in the same vain that FedEx has done with their Kinko’s acquisition. Creating an environment that caters to business people will bring relevance to their physical infrastructure. Coffee shops (Caribou, Starbucks, etc.) have become meeting points (Treffpunkts) for business meetings (physical and virtual) the world over. Open and communal office environments are springing up everywhere. These environments not only create a sense of entrepreneurial community but also provide an environment for collaboration and idea incubation. Staples and Office Depot will need to design and develop this type of destination environment to survive and grow.
Staples is a household name so extending its brand and offering to small business services could make a lot of sense. The Geek Squad business at Best Buy could be a good example for them to build toward. My concern is that the article implies that they are just licensing their name out to other providers. If this is a long term play to build the business, then they would be better served to truly understand the needs of their customers and then build out a suite of services delivered by Staples that deepens customer’s loyalty to the brand. Speaking of loyalty, connecting the services to the rewards program would also make a lot of sense.