Office Supply Superstores

It’s one thing to be a Power Player within a retail segment, as Office Depot, OfficeMax and Staples certainly are. It’s an altogether different thing to be a power in retailing. One way to illustrate the distinction is to take a closer look at the office supply superstore share of market — approximately 10 percent.

By way of comparison, contract specialists have a 21 percent share of the office supply market, specialty stores 20 percent and mass merchants 18 percent. The Federal Trade Commission doesn’t read the statistics this way, however, and has adamantly opposed any alliance, union, merger, marriage or other combination of domestic office superstore retailers – even though each of these companies’ market share is in the low single digits: Staples (4 percent), Office Depot (3.4 percent), OfficeMax (2.3 percent). Nipping at their heels is FedExKinkos, which features the copying, printing and other services found at a typical office supply superstore.

As a result of FTC recalcitrance, all the companies have had to seek unique solutions to achieve the bulk necessary to remain competitive in the U.S. market. Staples and Office Depot have looked abroad for partners, while OfficeMax is still dealing with the after-effects of its acquisition by timber company Boise Cascade.

Staples already has extensive overseas operations, including a foothold in China (where it has partnered with UPS) and the 2007 opening of its first store in India. Last month, Staples announced it had reached an agreement to acquire Corporate Express, a Netherlands-based contract dealer in office supplies. The four-month campaign yielded a $2.7 billion deal that Staples executives hope will put further distance between the retailer and its rivals. Faced with sluggish sales in its North American division, Office Depot is entering India by partnering with Reliance Retail. The joint venture has acquired eOfficePlanet, which uses a direct sales force to peddle office products and services to businesses.