Office Depot To Buy OfficeMax? And Then There Were Two
Looks as if Office Depot is going to buy OfficeMax. That purchase would combine the #2 and #3 office supply retailers, leaving only the new entity and Staples (currently #1), in an industry that has been pretty much undifferentiated and, in the industry’s terminology, “overstored.”
We’d like to give you some engagement and loyalty facts about these category players, but we can’t. We stopped measuring them as a Retail Category in our annual Customer Loyalty Engagement Index last year. First, because there were only three national chains left, and second, because the expansion into the category of previously non-traditional, now more and more becoming more and more consumers’ default channels, of online retailers. (Amazon) and price clubs (Costco), have created problems for the three (soon-to-be 2) brick-and-mortar chains.
Office Depot, OfficeMax, and Staples – or their category – are not the only victims of big-box shrinkage. It’s a symptom of the slowing of the economy and the quickening of the internet. Four categories we’ve measured in past years have gotten so “compressed” in terms of the actual number of competitors, there’s no longer a reasonable inventory of national brands to examine – which is why the Retail Electronics category disappeared from the Index several years ago. This year, including Retail Office Supplies – Drug Stores, Price Clubs, and Packaged Ice Cream also disappeared from the list.
Like other Big Box stores, all the companies in the Office Supplies category have cut back: closed stores, process re-engineered operations and, like every other sector that was unable to find some level of emotional engagement to hang their brand on, price-promoted, price-promoted, and then did more price-promoting.
But the market and brand realities are that you can’t build your market on constant low-lower-lowest pricing strategies and coupons (traditional or electronic), and expect your offering to be seen as different or better or more highly-engaging than the competition – who’s doing precisely the same thing. If all you stand for are cheap “copy paper” or “paperclips” you’re pretty much a placeholder – a name everyone knows but don’t know for anything in particular. You occupy shelf space – or in the case of Office Depot + Office Max and Staples a lot of shelf space – but have absolutely no (brand) advantage in the marketplace.
It’s been said that evolution is individual and devolution is collective, and there’s a lot of proof for that. Individual brands know how to emotionally engage and evolve. Collections of placeholders, well. . . Is it so hard to picture this migration: Big-box to small-box, to no-box at all?
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