Will Staples’ new concept Connect with small business owners?

Discussion
Photo: Staples
Feb 11, 2020
Matthew Stern

Staples is trying out a new concept in hopes of creating a store experience that cannot be replicated online.

The new initiative is called Staples Connect and has been launched in six existing locations in Massachusetts. Staples Connect features an area where customers can host or attend free events called SpotlightSpace. It also has a podcast studio with a soundproof booth and on-hand professional recording assistance. There is a coworking space called Staples Studio, which requires a membership to use and features shared and private offices, meeting rooms and community kitchens. The store also sells a range of tech, printing and other professional services in addition to the small business-focused product assortment.

Staples’ major competitor, Office Depot (which has owned one-time competitor OfficeMax since 2013), began transforming itself into a one-stop-shop for SMB services a few years ago to combat waning brick-and-mortar foot traffic. 

Early in 2018, the rival to Staples launched its BizBox: Powered By Office Depot store format meant to provide services and support to SMBs. Later that year, the chain rebranded the format as Workonomy and introduced enhancements such as a coworking space in the pilot location.

Staples, for its part, has been pursuing a rebranding effort to establish itself as a chain focusing on business services rather than products. Billing itself as “The Worklife Fulfillment Company” starting in March of 2019, Staples began producing podcasts, e-newsletters and a free quarterly publication aimed at business customers called Staples Worklife shortly thereafter. 

Staples Connect’s subscription-based coworking space may raise eyebrows, as the extent to which coworking spaces can turn a profit is a matter of debate.

A 2019 study by Deskmag reports that only 43 percent of coworking spaces generate a direct profit from their operations, as had been the case for the preceding three years. It did specify, however, that the number jumps to 90 percent when looking at coworking spaces that have more than 200 members, are more than a year old and do not subsidize their operations through other businesses.

DISCUSSION QUESTIONS: Does a concept like Staples Connect position the chain for a comeback or is this too little/too late? What do you make of incorporating coworking spaces, given the difficulties with ROI the model has shown to date?

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19 Comments on "Will Staples’ new concept Connect with small business owners?"


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Cathy Hotka
BrainTrust

There are some great ideas here, but the collapse of WeWork should provide some cautionary advice. That said, this looks like Kinko’s for the modern age and it could be a hit.

Suresh Chaganti
BrainTrust

Good concept, but they certainly missed being proactive on this. They could have so easily been the Airbnb for meeting rooms and private offices.

Shep Hyken
BrainTrust

Sounds like a combination of an incubator and a small office space. I like the idea of attracting customers to use space that is surrounded by everything they need to run their business. Could Staples Connect be their “office away from the office” or the customer’s actual office space? That’s a question that comes to mind. Can Staples do the same thing that Starbucks did in their stores, creating meeting spaces? I’ll bet there is plenty of space in may of their stores to try this concept out. Take advantage of it. Give something to the small business community and they will ideally reciprocate with their wallets.

Dave Bruno
BrainTrust

I love everything about this idea, except for the fees. Staples has a lot of work to do to bring people back to their stores, and the ideas described in Matthew’s report are all very strong ideas. I just think requiring subscription fees (at least on day one) is a big mistake. This is an opportunity to add real value to your customers’ lives. Why not prove the value and bring them in, banking on the added store revenues to offset the costs? If the spaces are wildly popular, perhaps then I would consider charging people. Or why not just charge for premium services, like podcast studio time — as opposed to charging for access to a desk?

Ben Ball
BrainTrust

I thought Starbucks already owned the “worklife fulfillment” space — but I digress. This sounds like the spawn of a union between Starbucks and office condo operators like Regent. Kind of an “office space for everyone”? Maybe more of an Admiral’s Club meets FedEx Office? I’m not sure what to make of it, but it just might work. I wonder what the utilization rate required is to make the stores profitable. If they could survive off rural/rurban traffic it could be the Dollar General of office space. I guess the problem I’m having is that something neither fish nor fowl usually doesn’t taste all that good when you bring it to the table. This will be interesting to watch though!

Dr. Stephen Needel
BrainTrust

I’m having a hard time thinking this makes financial sense – I am not sure they are offering something unique.

David Weinand
BrainTrust

They have to do something, that’s for sure. WeWork is still a great concept as long as someone can make the math work. I’m not sure the Staples folks are the ones to do it but small businesses still represent the majority of the businesses in the U.S. so if Staples markets this right and come up with a model that is fair to the customers and can eventually make Staples money, I like their chances.

Camille P. Schuster, PhD.
BrainTrust

The Office Depot innovation mentioned in this article has not made it to my local store as far as I could tell so maybe there is time for Staples. However six stores in Massachusetts is only enough for a small concept test. Offering services in-store with assistance is a great idea for small businesses. However the price point of the services will be an issue for small businesses. Selling the necessary tools and products is a great idea so that after learning how to do something, it can be done at the business location. Finding qualified people to help the business owners at every location around the country will be a challenge and require an investment in training. The plan has potential but it will be an expensive venture to do it well.

Ryan Mathews
BrainTrust

Sounds like too little too late to me. As with any new format, the first question ought to be, “who is the target customer?” And the second question. of course is, “are there likely to be more of them tomorrow than there are today?” It’s tough to answer either one of these questions in a way that justifies the capital outlay here. As Ben Ball correctly points out FedEx Office and Starbucks already exist and, as Cathy Hotka noted, the collapse of WeWork causes one to pause a bit. Also, suppose for a moment that part of the business is viable — and that’s a HUGE suppose. It may cover its expenses, but can it turn Staples itself around? I think the answer is, sadly, no, because the market has outgrown the core offering.

Ken Morris
BrainTrust

I believe Staples can succeed with this concept. The idea of incorporating the coworking space can work for them because the economics are different if you already own and are repurposing the real estate. Working from home can be a challenge for many of us. Virtual companies in the services space are thriving in the new economy but the home office has its challenges and I see this as a potential alternative to the home office that would be low cost, well-stocked and convenient for most workers.

Ken Lonyai
BrainTrust

Staples has some nice ideas that may add a few percentage points to revenue, but nothing to turn the tide of where it’s headed.

Everything we’ve looked at buying from Staples is far more costly than alternative sources online. Many non-mainstream items are kept in very low inventory, so buying locally can be hit or miss. So just like others (Macy’s comes to mind) that are looking for every, dare I say, gimmick to salvage an otherwise broken business strategy, there’s nothing of real business value here.

Get the basics right with inventory, pricing, delivery, and customer service or nothing else matters. Nothing.

Gene Detroyer
BrainTrust

I don’t know if this will work. I don’t know the economics for the either Staples or the customers. But what I do know is that Staples can not exist selling products out of real estate-based properties.

So how do I take the equity I have established over many years and use it to some advantage? They are thinking correctly. They have the real estate, which is essentially worthless in terms of selling products and finding a solution to add value. No matter if successful or not, more retailers should be thinking this way.

Doug Garnett
BrainTrust
16 days 14 minutes ago

I like the broad concept. Ever since Kinko’s was assimilated, we’ve missed the “branch office” concept.

What about the subscription? Co-working spaces are successful all around the country and the world. For exactly the reasons that the branch office concept works — there is a huge customer need for it.

WeWork was a co-working scam. A big idea taken too big by pricing a premium service at discount prices. There wasn’t ever a chance for it to work.

But all around the country co-working spaces have been around for a couple of decades and have succeeded. Whether it’s small clusters of hair/massage salons or office space with shared resources, it works. Just not the way WeWork attempted to turn it into their very own get rich scheme.

I wish Staples well — so much depends on execution. I’m skeptical about the podcasting space and “professional” sound people — they shouldn’t over-promise. But the core idea is solid.

Neil Saunders
BrainTrust

It is good to see Staples pivoting from selling “things” to selling “services.” I can see a range of these ideas being useful, especially things like professional podcast studios and co-working spaces. That said, there are other options out there so Staples will need to work hard to create awareness and to differentiate.

Given that the spaces are all in existing stores – which will continue to make some money from selling other products and services – I see this as helpful in generating a reasonable ROI. The problem with companies like WeWork is that they invested very heavily in expensive property, took on debt to do so, and overexpanded in a wave of hype. This doesn’t really apply to Staples, whose plans I see as being far more modest and grounded in reality.

Mark Price
BrainTrust

As I take a look at Staples Connect, I really don’t see any competitive differentiation from the broad range of colocation facilities available. The podcast and recording support strikes me as something that is a bit unique, but not enough to make a difference. The biggest factors with colocation are convenience, quality of facilities and the range of other businesses that are working in that location.

I am not sure that Staples Connect can scale fast enough to gain momentum, and the company must be very careful about locations in order to not select overcrowded areas. All in all, this effort appears fraught with potential pitfalls.

James Tenser
BrainTrust

Staples is facing an all-too-common chain retail challenge: Too many square feet chasing too few shopping trips. Converting some of that excess space into havens for value-added services seems like sound reasoning. But is there a sufficient customer base?

Staples Connect is positioned as a “third place” concept for folks who are serious about meeting up and getting work done. It offers access to business equipment and technical advice, but it’s not a full-time office space. So why would I subscribe? I rarely need to work outside my home office these days except to attend industry events.

A pay-as-you go model (with an online reservations app for workspaces) would make more sense. I could see renting a podcast studio for 1-2 hours per week — but how quickly would the fees exceed the cost of setting up the gear at home?

The potential of Staples Connect comes down to a single question for me: How much revenue can it generate per square foot?

Liz Crawford
BrainTrust

Great idea! I bet it’ll be more successful in urban areas, where space is at a premium. Also, Staples offers a competitive advantage over Starbucks in that there aren’t baristas shouting, “Next!” Also, there are private rooms and office services and of course, supplies. I do agree with Dave — the fees are a mistake.

Peter Charness
BrainTrust

This is going to be a tough one. Lately I’ve seen vacant store fronts/spaces being converted into non-branded shared offices, and they are really operating like pop ups. So the alternatives are out there for this offering.

Christopher P. Ramey
BrainTrust

Convincing customers to visit your store is a challenge. Convincing them to pay and stay is the Holy Grail.

The concept isn’t new. But the execution and programs behind it are innovative.

It’s a comfortable space priced lower than Regus or most other similar programs. The programs mimic a corporate environment where you have an entire team backing you.

Staples Connect should be successful.

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Braintrust
"I love everything about this idea, except for the fees. "
"Staples is facing an all-too-common chain retail challenge: Too many square feet chasing too few shopping trips."
"Get the basics right with inventory, pricing, delivery, and customer service or nothing else matters. Nothing."

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