When is the last time you circulated a paper memo around the office? Everything's done digitally now, right? No, we're not totally paperless (and may never be) but just imagine what digital communication is doing to the demand for office supplies. Think of legal pads, folders, file cabinets, copiers, fax machines, white boards, paper clips, staples, staplers... Heck, think about offices. Businesses are cutting back all around.
Sure, the big three — Staples, OfficeMax and Office Depot — have tried to fill in the losses with sales of digital devices, but competition in CE is arguably even tougher than in traditional office supplies. The digital revolution is just one trend negatively affecting office superstores. Certainly the economic downturn hasn't helped. Lots of companies have closed offices, trimmed supplies budgets and/or asked workers to telecommute and deal with the expenses themselves. And then there's the competition from general big box superstores, Amazon.com and warehouse clubs.
Staples recently reported a 32 percent plunge in second-quarter earnings, according to MarketWatch (and that figure included an unusually high tax refund). A big factor was the hit they took internationally, especially in Europe where the company plans to trim 300 jobs.
Staples used the term "sales trends" in explaining its troubles, suggesting long-term problems, according to David Penn, a Forbes contributor. In addition to the economy, Mr. Penn sees "larger tectonic movements that have been rearranging the retail sector in ways that have, and will likely continue, to work against the Staples, Office Depots, and OfficeMaxs of the world."
"We're taking a hard look at each of our businesses, and we plan to make significant changes to improve results," said chairman and chief executive Ron Sargent as reported by MarketWatch. "We're also building a plan to reallocate resources, take advantage of our best growth opportunities, and drive increased cost savings."