Eye on Retail: Office Supply Retailers
Consolidation, the Changing Workplace and Smaller Venues May Be the Ticket for the Office Supplies Sector
The abundance of office supply retailers and competition from the likes of Amazon, Walmart and Target has caused some concern for the health of that sector. But while consolidation of the big three (Staples, Office Depot and Office Max) into two may be in the future, there is definitely the possibility for growth.
As Staples and Office Depot are trying to refocus efforts on product mix and markets, they are also seeking to decrease store size, since the importance of securing lower rental costs is important and their larger stores usually have several thousand square feet more than what is needed. Remaining competitive in a sector that has slowed in growth is vital.
Staples has already reduced its superstore size from 24,000 to 15,000 square feet. With the introduction of smaller city stores of about 10,000 square feet, Staples has been focusing more on their copy/printing areas (3,000- 4,000 square feet) which enables them to concentrate more on high-margin services rather than lower profit office supplies. With the introduction of their EasyTech PC repair center, which also offers tutorials, Staples has further increased its chances for higher revenue.
But on the office-supply side, Staples has greatly increased its less expensive private label offerings, which represent 27% of total sales, a number that’s growing every year. Between the attention to in-store services, private-label products, and smaller stores, Staples appears to be on the road to greater efficiency.
Office Depot is following a similar path in hopes to gain greater efficiency and profitability. Its smaller 5,000-square-foot stores are about 1/5 the size of its current behemoth stores. These compact stores average about 90% of sales previously reported for their bigger counterparts, even though they carry half the inventory. Plus the stores have retained all their employees. The store “culture” is also changing—the retraining of staff in providing better customer service and greater product knowledge is key in attracting and keeping a customer base.
Another growing segment on the American landscape is the home-office market. According the U.S. Bureau of Labor Statistics, over 24 million people work from home and there are currently almost 20 million home-based businesses in the U.S., and that number is expected to increase. This feeds into the need for viable office supplies and services that the likes of Staples and Office Depot provide.
Job-seekers looking to gain a foothold into this retail sector should be on the lookout for these new opportunities. Recruiting firms who focus on retail provide the perfect opportunity for both client stores looking to fill their ranks and people searching for work in this changing sector.