Albertsons Takes Store Within Store Route Again

It sounds like Albertsons is smitten with the strategy of co-branding, and I believe it makes good sense in their core business - food. I am convinced that the more retailers try to compensate for the Wal-Mart factor the more they risk losing focus. I can't understand why a retailer would consider office products as a store within a store opportunity. I think we can define 'convenience' to a degree, but this doesn't make much sense to me. Shouldn't food retailers play their game better and differentiate with service, quality and superior fresh offerings or even a great private label...instead of featuring printer cartridges and fax paper? Am I missing something?

Michael P. Schall, President, Strategic Marketing LLC

I highly admire this approach when it's done properly. It adds another well-known national brand next to hundreds already filling the shelves. The trick is making the Office Depot section inside an Albertsons store accurately reflect full-size Office Depot stores in terms of cleanliness, selection, and in-stock status. If the plan is to service the section with existing clerks, they'll need special training and knowledge. Then, as the store experiences employee turnover, that Office Depot expertise will have to be passed on. Time will tell.

M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

The office supply business has become fiercely competitive among the category-killers themselves (Staples, Office Depot, Office Max), and their competitive strategy has been to focus on service and store environment improvements. Surely Office Depot runs the risk of tearing those efforts down in a "once removed" store-within-a-store concept. That said, such arrangements do help mitigate the convenience issue that still plagues Wal-Mart and offer an alternative for the better Albertsons shoppers.

Carol Spieckerman, President, newmarketbuilders

Sorry, but I don't get it.

Store within a store makes sense when the store is the brand. For example, Starbucks, Hallmark, Dunkin' Donuts, etc. That brings credibility and differentiation with a unique product offering. Toys-R-Us and Office Depot are destinations for buying toys and office supplies because of their category killer status. They generally do not have uniquely branded products that Albertsons would not otherwise have access to, and it will be impossible to duplicate their core benefit (breadth of selection) in the store within a store setting. The most Albertsons can hope to get from this one is some limited novelty and differentiation ("Safeway doesn't have one") and a little borrowed interest/credibility for their own limited offering of widely available brands. Sounds like a long run for a short slide to me.

Ben Ball, Senior Vice President, Dechert-Hampe

The cool reception this is receiving surprises me a little bit. I can see definite advantages for Office Depot as customers already on a shopping trip might be more inclined to pick up their home office or school supplies rather than making a separate trip out. Similarly, if the arrangement extends what is on offer to those doing their grocery shopping and saves them the time and effort of going to yet another store, that feels like a good thing as well. I disagree with the objections and will be interested to see how it all works out.

Bernice Hurst, Contributing Editor, RetailWire

There may be some benefit to Office Depot by gaining a different point for distribution, however, it won't be that great other than another point of sale for commodity products. I see no benefit to Albertsons whatsoever. Office supplies, whether from Office Max or Office Depot or off the shelf from somewhere else, really are commodities with little to absolutely no brand differentiation. This can't even be cited as a real example of "co-branding". Take the names and swap them between Office Max or Office Depot and you will not know the difference nor will it make any real difference to the consumer. And, frankly, I don't see the product connection to the supermarket.

This is nothing like a potential product connection with Starbucks or Krispy Kreme that could bring some exclusivity or differentiation to the stores. Even these attempts really bring little in the long run because they rarely offer exclusivity.

Borrowing someone else's brand doesn't necessarily lend itself to an enhancement to your own brand. The best results come from building loyalty and customer demand to your own brand.

'Scanner'

I'll admit, this one seems like a stretch. I guess there are a lot more details to discover before any of us can say whether this will work. This can be a good thing for Albertsons IF Office Depot is responsible for the carrying cost of the inventory. Think of the reduction in Inventory Cost Albertsons can realize as a result of this, (if the consignment model is how this is really structured). They still have the product to meet customer needs, can make some incremental margin, but now have lower risk in a line that is traditionally one of the slower moving lines in the superstore. Office Depot picks up more convenience shops for pens, pencils, post-it notes, etc., items that won't necessarily drive the destination trip to their stores (or Staples or Office Max, if they're more conveniently located).

'bmcgrego'

I have to assume this deal made some financial sense for Albertsons, but of course there's no way of knowing how it was structured. I hate to say it, but this "store within a store" concept is beginning to sound like "loyalty cards" 15 or so years ago. When everybody picks up on this concept, and everybody has their own "store within a store" grouping, where's the differentiation? As for Albertsons, it does seem like a bit of a stretch at first glance, but hey, they're doing something. Ships weren't meant to sit in port. I hope it works for them.

Warren Thayer, Editor & Managing Partner, Frozen & Dairy Buyer