Office Supply Retailers

Low-price operators are gaining market share in the current economic environment, and that’s as true in office supply merchandise classifications as it is in grocery and H&BC categories.

Staples, Office Depot and OfficeMax have heretofore dominated the field by offering just about everything a small business or home business needs at prices that local stationery stores couldn’t match. Now the big-box operators, supercenters and wholesale warehouses are cherry-picking office supply classifications and undercutting the Big Three as consumers and businesses shop around for the best price. The impact has been a double whammy for office supply dealers: suffering as their customers struggle during the recession and battling increased competition from low-price competitors for whom office supplies are non-core.

These competitors also have much deeper pockets. Costco’s sales last year were $72.48 billion — 58 percent more than the combined revenues for Staples, Office Depot and OfficeMax. The latter two suffered declines in sales; Staples managed to boost revenues by 7.3 percent, but saw profits drop 19.1 percent.

Staples’ performance was boosted by its acquisition of Corporate Express, the Dutch company specializing in contract sales of office supplies. Staples’ domestic stores sustained a string of comparable-store sales declines and the company has cut new-store openings 25 percent from 2008 levels. Office Depot is closing 112 stores this year while OfficeMax, which shuttered 130 stores over the past three years, is looking to increase partnerships such as the one with Safeway, which put its office supplies in more than 1,600 supermarkets.