Staples Inc.’s plans to acquire Office Depot Inc., is a sign that the office supply industry is losing ground to discount stores and ecommerce merchants.
“There is no need for all these stores, that and the fact that Walmart, Target and Amazon are beating them on price,” said Stuart Rose, managing director of Tully & Holland Inc . “Stores are expensive, Amazon just prices its stuff lower, Staples says they match the Amazon price, but they don’t always do that.”
Rose added that there is simply too much retail; people are shopping differently than they were 30 years ago.
“For Office Depot, it’s a good buy, for Staples it means probably several years of consolidation and hard work,” said Rose. “They can’t ignore their online competitors; it’s going to be tough to integrate two companies.”
Rose said Staples better positioning themselves to compete with online retailers is going to be difficult.
“The biggest risk is getting it past the FTC for anti-trust purposes, it’s going to be billions of dollars to re-brand Office Depot, that’s a big cost, people who use stores are individuals,” said Rose.
Rose said Staples will have to compete with Amazon and its efficient warehouses and that Staples has expensive real estate.