Buyer Centric Office Depot


Recently, Office Depot Inc. (ODP), one of the leading suppliers of office products and services across the globe, announced the opening of a new Inside Sales Organization facility in Austin, Texas, thereby creating 200 jobs in the region.

With this new facility, the company intends to concentrate more on the needs of small- and medium-sized business. The company’s consumer centric approach will bring in huge potential for growth and will augment sales in the long run.

Moreover, considering the current macroeconomic environment, it is a smarter move as the decline in business and consumer spending has slowed the demand for big-ticket items, such as business machines and other durable products.

Following the same rationale, one of the company’s competitors, Staples Inc. (SPLS) entered into a partnership with Martha Stewart Living Omnimedia Inc. (MSO) and the office and consumer products group of Avery Dennison Corporation (AVY).The aim of the partnership is to retail a new prouct line for the home office as there are no such big brands, which can offer goods to cater to the needs of the home office space.

Earlier, Office Depot announced that it will reopen 13 remodeled stores in Houston, Texas. The remodeled stores are tailored according to consumer preferences so that their shopping time is reduced. The stores are designed in such a way that on the left hand side one can find Copy & Print Depot and other technology products, whereas the right hand side will display supplies. The cash counter is positioned at the front side of the stores.

The company, in order to drive sales, has undertaken several initiatives including improvement in customer in-store shopping experience, investment in Copy & Print Depot and Tech Depot services, remodeling of stores and introduction of smaller format stores, and margin improvements through rationalization of stock keeping units and product pricing.

Currently, we maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, Office Depot holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

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