Office Depot Opens First Small-Format Prototype Stores

By Alan Wolf On Sep 3 2001 - 6:00am




Office Depot has opened the first two of 11 planned prototype stores that may represent the office supply chain's format of the future.

According to the company, the footprint of the new units is "radically different" from the warehouse superstore format of the 1980s and 1990s that typifies most category killers. Instead, the new prototype creates a circular flow of traffic that allows customers and employees to see the scope of the store from any vantage, and enables them to access all areas easily and conveniently.

The first two experimental stores opened last month in Palm Beach Gardens, Fla., and Engelwood, Colo., with the balance to be rolled out by the end of 2001. The company said it plans to study the performance of the prototypes during the next 12 months in order to make "any necessary adjustments" before making further decisions on the pilot program.

"We are excited to offer our customers a physical layout that will allow them to explore the entire store and get in and get out quickly, while finding exactly what they need to run their businesses more effectively," said Jerry Colley, the chain's president of North American retail stores.

Besides the new footprint, the prototypes benefit from brighter overhead and in-rack lighting, improved product placement throughout the store and a heavy focus on solutions selling. Other new store features include:

  • A central technology center for ordering custom-built PCs or Internet service.

  • A glass-enclosed education center at the rear of the store for employee training on new products and services.

  • New 3-D technology enabling customers to custom-configure office furniture based on room dimensions, with simple touch prompts.

  • An enhanced copy and print center for specialized business services, including computer installation and rentals.

  • Customer service assistance buttons to summon store personnel.

In addition, the prototypes incorporate elements that were recently added to or upgraded within existing Office Depot stores, including cleaner signage and aisle markers, increased private-label merchandise and an array of reference charts on technology products.

"Our mission is to impress our customers so much that they want to buy from us again and again," Colley said. "We are confident that customers are going to love shopping at our new stores."

Office Depot, which operates 829 superstores in the United States and Canada, ranked ninth on TWICE's 2001 Consumer Electronics Registry with $3.1 billion in CE sales last year, directly ahead of Kmart and directly behind chief competitor Staples. OfficeMax, the No. 3 player in the office supply chain trilogy, ranked 15th on the TWICE CE Registry.

The new format comes at a critical time for Office Depot, which, like OfficeMax and Staples, is pressured by soft demand, compressed CE prices and a glut of stores. Indeed, each chain has been forced to close stores and curtail expansion as the weak economy takes its toll on small businesses and tens of thousands of office workers in companies of all sizes.

But for Office Depot, the prototype stores and other recent initiatives launched by newly appointed CEO Bruce Nelson could mark the beginning of a comeback. As UBS Warburg managing director Aram Rubinson observed in a research note, "Office Depot has begun to stage what could be a dramatic turnaround…[although] it took a management shakeup and a long string of disappointing results in order to bring it forth."

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