Friday Dec 09, 2022

After nearly 2 decades of decline, what’s next for office supplies stores? – Retail Dive


The pandemic has turned millions of consumers around the country into office managers, fashioning workspaces out of portions of their homes and stocking them with all the things necessary to get their jobs done. 

Under different circumstances, the work-from-home movement could have led (and might yet) to a renaissance for office supplies retailers. While large corporate buyers have long relied on commercial dealers — the largest of which also happen to be tied to the largest office supply store brands — consumers depend on retail for their home office needs. 

But for years they have been buying less from the retail specialists, namely Staples and ODP Corp’s Office Depot and OfficeMax banners. Store numbers and sales have steadily been shrinking, only to run into the disruptions of the pandemic.

Along with traffic decines, the COVID-19 crisis brought with it both a remote work revolution and an accelerated shift in spending with e-commerce and generalist players, both of which offer convenience and highly competitive pricing.

As the category adjusts to new trends, Staples and ODP are having an existential moment. The former, owned by private equity firm Sycamore, has been in pursuit of ODP and its retail business. A deal would leave just one major player left to dominate a shrinking, changing, uncertain retail sector.

Ever-smaller sector

Office supply stores as a sector employ some 60,000 people and bring in $10.3 billion in revenue in the U.S., which is projected to decline roughly 2% a year through 2026, according to research firm IBISWorld. 

The firm noted that office supplies stores as an industry have suffered “consistent revenue declines” every year going back to 2005, due both to competition and the digitization of work itself. The industry declined by an average annual rate of 6.7% since 2016. The rate of bleeding fell to 6% in 2020 and to 0.9% in 2021, according to IBISWorld.

Data from Euromonitor also shows a steep decline at office supply and stationary stores over the past five years, with the market contracting by 38% between 2016 and 2021.

Today, Staples controls the largest chunk of the sector, with more than 47% market share, according to IBISWorld. ODP, with its banners, is No. 2 with 36% share. They are the last two specialists with any substantial share of the market. Euromonitor also places Staples and ODP at No. 1 and No. 2 in market share, respectively. 

At those banners, foot traffic was falling even before the pandemic. According to Creditntell data provided to Retail Dive, total annual visits fell by the millions across the Office Depot, OfficeMax and Staples banners in 2019. 

Not surprisingly, traffic fell even more steeply in 2020 as the pandemic forced store closures and kept safety-conscious customers away. But in 2021, traffic rebounded, surpassing even 2019 levels at all three major office supplies box banners.</…….


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