Is Staples going out of business? Staples, a stalwart of the big box industry, announced in 2014 that it would close 140 stores in the United States and Canada. Because they concentrated on online sales and adapted their product range as traditional item sales declined, Grand & Toy, a highly esteemed Canadian office supply company, closed its retail locations earlier this year to focus on both conventional and online ordering.
Staples’ decline can be seen as a part of the overall decline of big-box retailers in the face of inexpensive online competitors. However, it can also be viewed as part of a broader trend of B2B sales moving online.
According to research, 88% of B2B customers prefer to buy a product online. This result is combined with the fact that B2B sales are roughly double the B2C sales statistics that receive all media attention. As a result, a significant shift in B2B purchasing occurs. This opens up incredible possibilities for manufacturers and other companies that supply other businesses to embrace eCommerce.
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Why are they closing Staples?
The largest chain of office supply stores in the nation is run by Staples, Inc. It primarily caters to small business owners and offers a wide variety of products at affordable pricing. In 1986, Staples invented this idea. After building its initial store in the Boston vicinity, it expanded quickly.
Later, the business began to branch out outside the Northeast; by the early 2000s, there were over 1,300 Staples stores spread across 45 states, the District of Columbia, and 10 Canadian provinces in big cities and rural towns.
The company operates a delivery company in addition to its retail operations. Under the Staples and Quill identities, it includes catalog and online companies. Additionally, it owns contract stationery businesses that ship office supplies to influential and medium-sized organizations.
Staples operates almost 200 retail locations in Europe, some of which are branded Office Centres in Portugal and the Netherlands and Staples in the U.K. and Germany. JPG and Bernard in France and Belgium, Kalamazoo in Spain, Neat Ideas in the United Kingdom, and MondOffice in Italy are just a few of the other office goods mail-order companies that the company operates internationally.
According to Stemberg’s concept, office supplies were to be distributed without an intermediary. Paper and other product makers have traditionally sold their products to one of the six largest wholesalers in the nation.
Following that, the wholesalers offered their products to retailers of stationery and office supplies. While stationers served small enterprises and people, dealers offered supplies to big corporations. However, the two levels of intermediaries between the manufacturer and the customer drastically increased costs along the way.
As of July 27, 2022, there are 1,029 Staples stores in the United States. California has the most Staples locations in the United States, with 140 locations accounting for 13% of all Staples locations in the country.
However, after a long history of mergers and acquisitions, Staples made a strategic decision last year that is expected to affect U.S. operations. Staples divested its branch offices in Germany, Portugal, Benelux, Finland, Norway, Sweden, Denmark, Austria, Great Britain, and Poland in 2021. It thus resulted in the brand’s extinction from most of Europe. The Staples brand will remain in use in the Benelux.
Individual Staples locations have been rapidly closing in the United States since 2015. This trend is expected to continue as the company pursues its European divestment.
In response to competition from online retailers, Staples announced the closure of nearly 140 U.S. locations in 2020. Today, in 2022, that competition has significantly increased, prompting the company to shift its focus to business-to-business transactions rather than brick-and-mortar operations.
Recent 2022 closures include Emporia, Kansas, in May; Framingham, Massachusetts, in June; Austin, Texas, in August; and others. It is expected by forecasters to permanently close in similar proportions to the closings since 2015.
Is Staples doing well?
Millions of consumers around the nation have been transformed into office managers as a result of the pandemic. It creates offices out of parts of their houses and outfits them with everything they need to execute their jobs.
The rise of the work-from-home movement could have led to a revival for office supplies dealers. Consumers rely on retail for their home office needs. Major corporate customers have historically relied on commercial dealers, the biggest of which is linked to the most prominent office supply shop brands.
However, they have been purchasing very little from retail specialists, namely Staples and ODP Corp.’s Office Depot and OfficeMax banners, for several years. Store numbers and sales have been declining steadily, only to be disrupted by the pandemic.
Along with increased traffic volume, the COVID-19 crisis also saw a rise in remote employment. Also, it leads to an acceleration of consumer spending with generalist and e-commerce companies, both of which provide comfort and meager prices.
Staples and ODP are going through an existential crisis as the category adapts to new trends. Private equity group Sycamore-owned former has been competing for ODP and its retail operations. A transaction would eliminate all but one significant competitor from the retail sector, which is shrinking, evolving, and unpredictable.
ODP Corp. and Staples have a notable and promising relationship in the office supply industry. This summer, ODP—which owns Office Depot and OfficeMax—decided to turn down all prospective suitors and maintain its independence. The choice was made following a lengthy process in which Staples had been pursuing a takeover since early 2021 for $40 per share, or $2.1 billion. (ODP claimed that in addition to Staples, the business turned down a different offer from an unknown entity.)
Additionally, ODP declined to sell off its consumer business. The company had been working on a proposal for more than a year. If it had been implemented, it would have divided its business-to-business and retail divisions into two distinct, publicly traded companies. They operate a B2B and a B2C business; the two are complementary. “The performance suffers when it is broken apart.”
But the relationship between Office Depot and Staples dates back much further. The Federal Trade Commission blocked the Staples-Office Depot merger in 2016. It is due to concerns that the merged entity would have too much political sway and influence in the business contracting market. This would hurt the competitive market. In 2015, Staples declared it would buy its rival Office Depot for $6.3 billion.
Did Staples go out of business in 2023?
With a market share of more than 47%, Staples currently has the most significant portion of the industry under control. ODP is in second place with 36% of the market, thanks to its banners. They are the last two specialists left with a sizable market share. Staples and ODP are ranked No. 1 and No. 2 in market share, respectively.
Financial transactions in the upcoming year will be influenced by what occurs in the fourth quarter. According to Gautham Vadakkepatt, director of the Center for Retail Transformation at George Mason University, “if this festive season fails to go well, then you’re likely to see more mergers discussions,” adding that independent stores could experience consolidations or even bankruptcies.
But what might genuinely come to the fore next year are merchants searching for a method. The method is to either make money or maintain their identity under a corporate umbrella.
“You are going to witness more mergers and agreements,” said the author, simply because that’s an exit option as the market circumstances become more arduous. You see a separation of the winners and losers in retail. ” Everyone believed that the demand pull-forward you saw from the COVID boost would continue, according to Vadakkepatt.
Conclusion
Staples is doing well financially. In terms of both site count and sales, it continues to be the leading office supply firm in the nation. However, the entity’s operational model is gradually moving away from brick and mortar due to its new concentration on business-to-business supply and growing competition from e-Commerce.
Most Staples sites in Europe have been permanently closed as of this article. Although the U.S. shift is anticipated to continue, the store will only selectively close some of its physical facilities here; Staples is reportedly only closing some of its U.S. locations.