Office-supply giant Staples outlined a major restructuring plan last Tuesday that has big implications for its foreseeable future. The merchant will reorganize its global operations, which will include leadership changes and extensive cutbacks over the next three years. Like so many over-sized brick-and-mortar retailers that once basked in the glory of square-footage, Staples is now feeling the quake of a changing consumer landscape and is closing the doors to many of its stores in Europe and the U.S.
But the retail giant isn't down and out yet. Instead, it has seemingly caught on to the shopping habits of consumers which have migrated off the pavement and on to the web; Staples intends to funnel $250 million into the development and integration of its online and mobile presence.
"Our vision is to establish Staples as the single-source product authority for millions of businesses," said Ron Sargent, Staples' chairman and CEO. "We are building on the strengths that are the foundation of our success by focusing on five key priorities: accelerate growth in our online businesses; fully integrate retail and online; improve retail store productivity; restructure our International Operations; and return cash to stakeholders."
Do Staples Store Closures Mean a Better Staples.com Shopping Experience?Despite the closures, all is not lost for those who like to hand-pick their school supplies in person. The company plans to improve the profitability of its existing retail stores by reducing their square footage; Staples will downsize or relocate 30 stores in North America during fiscal year 2012, which could potentially mean a lot of inventory hitting the sale racks at a number of local Staples. (Perhaps these sales could in turn help the "hole-punched" company's profits; retail sales at Staples have dropped 3% to $2 billion during the second quarter of the year and are certainly a concern.)
But the opinions on whether the withdrawal from a preeminent brick and mortar position is a good thing are mixed. Citigroup analyst Kate McShane labeled the announcement a "disappointment," according to Reuters, saying that it's likely not "enough to combat the secular challenges the company is facing." Equally disappointed are investors. Following the announcement of cutbacks, Staples shares fell as much as 8.2%. Business Insider, however, feels that the steps are necessary in order for the company to continue to compete in the changing consumer market. "There is need like never before for certain big box retailers to accelerate store closures," the publication noted.
If there's no longer a need for "non-essential commodity goods" to be purchased in-store, then it makes sense for Staples to cut its losses and focus on online technologies. At the same time, though, this decision comes amidst rumors of a merger between OfficeMax and Office Depot. Business Insider posits that the Staples restructuring plan is partially in response to this eventuality.
So is Staples' new business plan enough to lift the struggling office-supply chain? Readers, do you shop for supplies exclusively online or in-store? If Staples offered a greater variety of deals online with this restructuring push, would you be more likely to use it as one-stop shop for office supplies, technologies, and the like?