Why is Starbucks planning to expand their brick and mortar while stores like Staples and Office Depot are planning to dismantle some of theirs?
Observers might say that the office supply industry is the culprit. There are too many office discount/retailers in the same market. That answer is partly correct. However, that answer is really no help to the bottom line of these businesses. It could also be said that the coffee retailer is selling more than just coffee related goods in its stores, and that their model is different from the classic Office Depot warehouse/retail model.
Well, these observations are true. Office Depot and Staples could offer coffee at its stores and they do have an online presence. Unfortunately, they need better strategy than coffee and tables to increase sales per store, or sales per square foot. In an age of global shift to the web, it is remarkable that Starbucks is thriving regardless with little on-line presence, while many retailers struggle in spite of a significant on-line investment.
Before office suppliers and their stockholders decide that they invested in the wrong business form, perhaps we should determine why prospective customers visit a Starbucks vs. an Office Depot or Office Max. The last time I shopped at an Office Depot, I was looking for envelopes and pens. There were also other paper related products on display, but few if any sales people available to assist me in dealing with my modern office needs. There were people ready at customer check out–where the money is collected–but few in the store shelves–where I make my decision to buy.
My last Starbucks visit was different. I got in a line with other customers to order a beverage and/or pastry designed to my specs. After sitting down at one of the tables provided, I checked my email or spoke with other customers while enjoying Starbucks products and services. What I came for was a pleasant break, good coffee (tea in my case) and time to email or communicate with friends or strangers. These were simple requests, but Starbucks was able to provide them expertly. You say the coffee retailer is providing their customers more than coffee, or tea. Well, you are right. They help them become more productive while enjoying that part of their working day (the break). They have taken the time to understand the changes taking place in our office culture and coffee-break routines, and have provided a marketable solution.
Other than providing a bin of supplies, the chain office-supply company does little to help office workers solve today’s office problems. There is another larger problem with a more difficult solution that we are all facing today, which is not being addressed – the change from paper-based culture to on-line-based office culture.
Instead of tables and friendly conversation, Staples could offer office-enrichment staff who, for free, provide suggestions on how to better-use the stuff they sell on their shelves or web site. Or, they could show us an example of how their in-store staff helped a customer prepare a sales tweet from an old database. Office Max could demonstrate how to effectively use the “cloud” and your smart phone to make sales presentations, or sell books. When you think about it, a chain supplier like Office Depot provides little more than one gets ordering on-line. Maybe that is why I, and others, are not spending as much time there as at Starbucks.
Staples recently opened a smaller, 5,000 SF store in Denver that they hope will address some of these new issues that office workers face. The Starbuck model contains a lot of good examples for most sellers of goods and services. Business models are changing constantly. Often the change is slow; at other times, the change is lightening fast, but the movement is always ongoing.