International operations, involving a full array of distribution channels, extend to 23 countries. Along with rival companies Staples and Office Club, Inc. The three companies were founded within months of each other in in three different corners of the United States—Office Depot in Florida, Staples in Massachusetts, and Office Club in California.
All of them saw opportunities in selling office supplies to small businesses at bulk discount rates that had previously been the privilege of larger companies. Buying directly from manufacturers instead of wholesalers and keeping overhead low, a discount retailer could offer goods from 20 to 75 percent off of full retail. Another trend that proved advantageous for these three companies was the advent of warehouse-style discount retailers in the s; what Price Club had done for general merchandise and what Circuit City had done for consumer electronics, Office Depot, Office Club, and Staples sought to do for ballpoint pens and legal pads.
The company opened its first retail store in Fort Lauderdale in October , and it proved successful enough that two more Office Depot stores appeared in Florida by the end of the year. Sher did not have long to savor his success, however, for he died of leukemia scarcely a year after his first store had opened. He was succeeded as CEO by David Fuente, an experienced retail executive whom Office Depot lured away from Sherwin-Williams, where he had been president of the paint stores division.
Office Depot gained the distinction of being the first of the three original discount chains to turn a profit for a period of four consecutive quarters, which it did during the last two quarters of and the first two of The company achieved its success with stores that resembled nothing so much as warehouses. Office Depot held an edge in that commercial rents were lower in the South than elsewhere in the United States, allowing the company to build exceptionally large stores and still keep overhead costs relatively low.
In , Office Depot grew dramatically, expanding beyond its regional base in the South into the Midwest. Much of that expansion was financed by the sale of 3. The office supply discount field became more crowded and competitive in the early s as other companies, including OfficeMax and BizMart, joined the lucrative industry. With the struggle for market share becoming more vigorous, Office Depot and Office Club decided to merge in The merger, therefore, proved advantageous to Office Club as well.
In , the company saw its sales of office machines, including personal computers, begin to grow by leaps and bounds, and the company began to emphasize this side of its business more strongly. The company has claimed in the interview that 10 percent of all fax machines sold in the United States were sold by Office Depot. In addition to the outlets acquired from Office Club, the company opened 57 new stores in At about the same time, Office Depot saw its sales of office machines, including personal computers, begin to grow by leaps and bounds, and the company began to emphasize this side of its business more strongly.
In December , Begelman claimed in an interview that 10 percent of all fax machines sold in the United States were sold by Office Depot. Store layouts were redesigned so that more machines could be put on display. HQ Office International, Inc. Office Depot immediately replaced the HQ Office International name with its own and began expanding its presence in Canada, opening two stores in Manitoba.
Office Depot's entry into the Canadian market set the company up for an eventual confrontation with Business Depot, a small chain based in eastern Canada, in which Staples held a minority stake. In addition to expanding into new geographic areas, Office Depot began expanding its customer base.
Originally catering to businesses with 20 or fewer employees, Office Depot decided to attract larger business by acquiring contract stationers and integrating them into its retail business. In the next year the company bought three more contract stationers. Having successfully moved into the established retail office supply market, Office Depot was confident they could challenge the existing system that served larger businesses. CEO David Fuente told Forbes in May , "We're all selling the same stuff; we're all selling legal pads and pens and pencils, and we all buy from the same place.
The real difference in performance is going to be: Are you pricing them better? Giving better service? Delivering better? The difference is not in the strategy but in the execution. Two years later, however, Office Depot had yet to see big returns on its investment. Integrating the contract stationers into their core retail business had cost more than expected, but Office Depot remained confident that the more diverse customer base should make the investment worth it in the long run.
By Office Depot had grown to stores, which still followed the company's original concept--warehouse-like buildings that stocked office supplies at 30 to 60 percent off manufacturer's list prices. The company's closest competitor, the Kmart Corporation subsidiary OfficeMax, was only half its size. Not satisfied, Office Depot planned to double the number of its stores in the next five years.
As these companies were number one and two, respectively, among discount chains, questions about antitrust violations were quickly raised. The Federal Trade Commission FTC found that the combined company would control prices in many metropolitan areas and that in cities where Office Depot and Staples competed head to head, prices might be expected to rise 5 to 10 percent.
In response, the two companies agreed to sell 63 stores to OfficeMax to open competition in certain areas, a proposal that had to be approved by the FTC. They also argued that, with only 5 percent of the office supply market, their merger was not threatening.
Unappeased, the FTC argued that office superstores are a market to themselves and that Office Depot and Staples controlled 75 percent of that market. The FTC sued to stop the deal, and in late June a federal judge granted a preliminary injunction to block the transaction. At this point, Staples and Office Depot abandoned their merger plans, conceding defeat. Aside from this failed merger, the mid- to late s were noteworthy for Office Depot's steady expansion of its overseas operations.
From to the company opened stores in Poland, Hungary, and Thailand under licensing agreements, and in Mexico, France, and Japan through joint ventures. In Office Depot bought out its joint venture partner in France and it did likewise in Japan the following year. Also important to this international push was the August acquisition of Viking Office Products, Inc. Based in Torrance, California, Viking was the largest direct-mail marketer of office products in the world.
It operated 11 delivery centers in Europe and Australia. Also in Office Depot added to its growing channels of distribution with the launch of its first web site, www. The company's first European e-commerce site, www. Office Depot ended the decade with stores in the United States and Canada, and 32 overseas.
Disney World Corporate Officers. Ym Headquarters. Goodwill Corporate Office Corpus Christi. Office Depot was founded in and opened its first store in Fort Lauderdale, Florida. In late , David I. Fuente assumed the post of Chairman and Chief Executive Officer of the fledging company, and took Office Depot public in Office Depot, Inc. Patrick Sher and two partners found Office Depot, Inc. NASDAQ:ODP is a leading provider of business services and supplies, products and technology solutions through its fully integrated omni-channel platform of approximately 1, stores, online presence, and dedicated sales professionals and ….
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