Office romance takes an interesting turn with the confirmed marriage of OfficeMax and Office Depot. This consolidation is an inevitable outcome for yet another challenged retail category, but what it says about the category is concerning and what it portends for the remaining players is anything but certain.
But why is this marriage necessary? These two brands were unable to remain relevant and differentiated enough to stay independent. To some extent, there was simply a marketplace contraction resulting from unprecedented economic pressure coupled with serious overcapacity and intense competition from new channels. Yet it is also the unintended result of an inability to create meaningful separation among similarly positioned competitors.
The real issue for this category is the extraordinary sameness that exists, and the fact there are just too many stores selling too much of the very same stuff. As a result, consumers have had the impossible task of understanding what three very similar brands -- OfficeMax, Office Depot and Staples -- actually stand for.
On one level, the sameness in this category is no different than in so many other retail categories (think Home Depot vs. Lowe's or JCPenney vs. Kohl's or Best Buy vs. Circuit City) where categories and brands are interchangeable. But in the office-supply space, the sameness does feel more pronounced.
The fact that both competitors have the word "office" as a key part of their name doesn't help. The fact that the products sold tend to be more functional than fanciful creates less opportunity for true distinction, even accounting for their respective private labels. And the experiences are also pretty much the same. I sense that what happened to this category is the key players became more focused on each other than on serving customers. In doing so, they copied each other and battled for market share instead of innovating.
So what must the newly merged OfficeMaxDepot do to become more relevant and create a meaningful and distinct position vs. Staples, and for that matter, Walmart, Costco and Amazon? Is it just a matter of competing on assortment? Or price? Or service? Or location? Or experience? Can "smart marketing" fix this?
All of that can certainly help, but to me "smart marketing" is first and foremost about clearly defining the customer you want to serve and organizing every facet of your brand and company around serving that customer. Retail companies that get into trouble are almost never truly customer-centric in their orientations. They start out this way, but over time, they get distracted or fall in love with new directions that seem more enticing. Rarely do these companies put the customer at the center of every decision they make. But customer clarity can be liberating and can lend tremendous focus to every activity. It will be fascinating to see if OfficeMaxDepot can apply this discipline, and quickly.
Still, some say the biggest winner in all of this will be industry leader Staples, which will benefit from marketplace and consumer confusion. Staples stock jumped on rumors of the pending merger -- an indication of the market's sentiment. And its announcement of an agency review on the very same day is evidence of further disruption on the horizon.
In retail it has always been an evolutionary process, where survival of the fittest is very much in play. The strong survive and the weak die. As former Sears CEO Arthur Martinez used to remind us, today's peacock is tomorrow's feather duster -- and he kept a feather duster on his desk as a constant reminder.