Can a revamped Office Depot compete with digital?

Discussion
Photo: Office Depot
Sep 27, 2016

It’s been a tough couple of years for the brick-and-mortar office supply industry as the remaining big chains do their best to stay relevant with online juggernauts eating up market share. But Office Depot, one of the last office supply chains standing, is hoping to breathe new life into its physical retail presence.

Last week, Office Depot re-opened a location in Carson City, Nev. that it redesigned and is calling a “Store of the Future,” according to the Reno Gazette-Journal. On the same day, the chain opened another location in Palm Beach, Fla., according to the Palm Beach Post. Office Depot intends to implement the format in 24 stores by the end of 2016 and has a target of 100 stores in 2017.

The concept attempts to give shoppers an easier and more personalized experience, featuring new services alongside a sleeker look. Services available at the new concept include workplace design advice and IT help. These are intended to better serve the needs of customers with home offices.

There is no word on the depth of the skills or training of those giving the advice as part of Office Depot’s new service offerings. But the chain no doubt hopes that the promise of services will draw traffic, given the tendency of today’s shopper to forego office supply stores in favor of shopping online. And with Amazon rolling out IoT-enabled home office devices that auto-replenish CPG supplies, Office Depot is looking to differentiate on physical services rather than wrestle against Amazon’s online ecosystem.

As Office Depot tries to find creative ways to meet home office needs, it has simultaneously been attempting to court a younger customer. Beginning this school year, Office Depot partnered with Pocket Points, an app that awards students discounts at affiliated retailers if the keep their smartphones turned off during class.

DISCUSSION QUESTIONS: Can Office Depot’s store redesign that features enhanced services make the chain more competitive with its online competitors? How should Office Depot best promote its services to make the stores a destination?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"There is a benefit to being one of the last big box stores standing and, in the end, there is a good, smaller-sized business to be had."
"Offering services is a great idea, however I’m not thinking these services are the right answer."
"If workplace design and IT help are the cornerstones of the new Office Depot design, then I am concerned with their viability."

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17 Comments on "Can a revamped Office Depot compete with digital?"


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Peter Charness
BrainTrust

There probably isn’t a single item in an Office Depot that can’t be purchased online (private-label commodity product aside), so assortment and price isn’t likely the winner here. They will have to face the fact that their addressable market is now smaller and be profitable along a reduced scale of revenue potential. There is a benefit to being one of the last big box stores standing and, in the end, there is a good, smaller-sized business to be had.

Tom Dougherty
Guest

In short, no, this won’t make Office Depot anymore competitive than before. The idea of a workplace when you don’t have an office has been co-opted by others, including FedEx and now Amazon. Today many of us simply work from home and just need the tools to accomplish that.

The bigger issue is that Office Depot and its failed merger partner Staples are in that vague zone where they are making small changes, but not big ones. Both are searching for new CEOs and the direction they both need to take is to be something completely different. They are in danger of becoming as relevant as Circuit City and RadioShack.

Adrian Weidmann
BrainTrust

Competing for the office supply business through physical stores is quite a challenge. Office Depot is smart to use services to draw shoppers rather than try to compete head-to-head against Amazon’s IoT initiatives. Office Depot should leverage the fact that Millennials and those younger tend to reject ownership and prefer shared experiences. Office Depot should become a shared office environment that supports all of your business requirements not unlike what FedEx has done with their Kinkos stores. Why not introduce the pop-up store concept inside of Office Depot? I’m sure a number of big brands would participate — Canon, Lexmark, HP, Samsung. In short, making the store a shared business office environment and a working destination will give Office Depot a differentiator and chance to succeed.

Tom Redd
Guest

Office Depot is on the right track. They need to make sure that all the basics for the home office are close so store wandering is not necessary. They also need to carry the best brands along with the low-end stuff. Some home office people (like me) like better paper, pens, etc. Being able to grab it at the Depot vs. waiting for Amazon is a solid WIN.

Gene Detroyer
BrainTrust

In order to experience all these new niceties, one must find a reason to go to the store in the first place. When it comes to office supplies, I can’t find a reason to get up from my desk and go to the store when everything I need can be obtained online.

Gene Detroyer
BrainTrust

The better idea is Staples’ experiment with converting part of their stores into shared work spaces.

Tom Dougherty
Guest

They are too late. Office supplies moved online too many years ago for a brick-and-mortar revamp to make any difference. It is high time we stopped talking about brick-and-mortar and online as competitors. For retail to succeed it needs to embrace today and forget yesterday.

The market has changed permanently and the online experience continues to improve exponentially. The model of a destination office supply store only works in case of a 24-hour emergency need. Anything beyond that and the customer will choose online. It’s not as if anything they sell is aspirational or emotionally self-defining.

They have already lost the game. It’s over. They should have tried to corner the online market a decade ago. Remember Steve Jobs warned that if you don’t cannibalize your own — someone else will.

Ori Marom
Guest

For Office Depot and for all other physical retailers the enhancements of services and the use of technology are good ideas but make for only half of the equation. The other essential half must be a strategy that would allow them to recover the associated costs, as when they can charge a premium over online prices.

I did not see such a strategy here (nor in the case of Toys “R” Us that was discussed yesterday).

Lee Kent
Guest

Offering services is a great idea, however I’m not thinking these services are the right answer. I am not sure who would go to Office Depot to design their office. And IT support? I am certainly not going to think of Office Depot for that.

Keep thinking though, you’re on the right track. For my 2 cents.

Steve Montgomery
BrainTrust

I admit that I have been an Office Depot shopper for many years. Initially it was because the internet was not an alternative and since then because I actually enjoy shopping/browsing in a physical environment rather than on a screen. I like trying out a new office chair by sitting on it rather than trying to decided what looks good on a website. That being said, I also buy some items from the web, but not as much as I gather some other commenters do.

Will their service approach work? I don’t know. I do agree with Lee that I am not giving up my local IT support shop for Office Depot’s new service.

As Peter stated, being the last one standing has a benefit. However, time will tell if that will be a sustainable strategy for Office Depot.

Mark Ryski
BrainTrust

Testing new formats and approaches is critical to discovery. I commend Office Depot and any retailer who undertakes these kinds of experiments in search of better ways to serve customers and ultimately deliver better business results. Whether the new store format delivers the outcomes Office Depot is hoping for is yet to be been seen, but regardless there will be learnings. Measuring store traffic and conversion rates will be very important in understanding the performance of this new store format.

Kai Clarke
BrainTrust

Office Depot is still fixed on the brick-and-mortar solution. Until they recognize that their target market is shifting to an online presence and demands an aggressive pricing structure to match, Office Depot will continue to lag. Kudos to them for focusing more on IT solutions and services. This is clearly an area of opportunity that their stores can leverage.

Jenn Markey
Guest
5 years 9 months ago

As a category expert vs. discount play Office Depot is on the right track, albeit too little, too late. Office Depot should become the go-to destination for the Soho market supporting all of their business needs like shipping, travel, remote office space, etc. As well, they should extend these same services to their corporate clients to help shore up their sliding B2B revenues.

Lee Peterson
BrainTrust

A young person I work with recently told me this: “I needed some paper clips and i was near an ‘office’ store (which shall go unnamed) so I walked in … it took me 15 minutes to even find the paper clips! I’m never going back, never.” So there’s a tough row to hoe for the office guys and it’s not just services, IMO.

I always thought a showroom store would be the best progression for the office stores to evolve to. Or at least test. “Showroom” meaning you shop a sample then either have it shipped to home or pick it up at the counter. And for what it’s worth, this idea tested really well with young people in our studies. We’ve actually discussed that idea with certain “surviving” office stores … but we got nixed. I guess they know a lot more than we do about the store of the future, and hopefully finding the paper clips.

Craig Sundstrom
Guest

While I wish them well, the fact that even after reading two articles, I can only identify a few cosmetic changes (larger signs, better lighting) and various ill-defined “services” doesn’t fill me with hope. As with Toys “R” Us yesterday, big box stores that have long been known for only two things (being big and being cheap) will have trouble convincing people they’ve suddenly become specialty retailers.

Ed Rosenbaum
Guest

It is obvious that both Office Depot and Staples have to do something to keep the doors open and the lights on. Selling paper, ink and office equipment is not going to do it. The equipment can be bought easier with a more knowledgeable staff at Best Buy. This might be a good idea. Time will tell. But the better thought about it is they are thinking and know they have to do something to stay relevant. The failed merger did not benefit either company.

Mark Price
BrainTrust
Mark Price
Chief Data Officer, CaringBridge
5 years 9 months ago

If workplace design and IT help are the cornerstones of the new Office Depot design, then I am concerned with their viability. What is needed is a new look at an old concept — capitalizing on the strengths of retail, the immediacy of the experience and the personalization — to differentiate against the online providers. Training of store associates must be the cornerstone, as well as a true customer first philosophy. Expanding services is part of the answer, but if the customer experience does not move along with it, and if the services are me-too, then the effort will be doomed.

wpDiscuz
Braintrust
"There is a benefit to being one of the last big box stores standing and, in the end, there is a good, smaller-sized business to be had."
"Offering services is a great idea, however I’m not thinking these services are the right answer."
"If workplace design and IT help are the cornerstones of the new Office Depot design, then I am concerned with their viability."

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