Interview Synopsis

Staples – office supplies demand dynamics and profitability outlook

  • Credit
  • Consumer
  • North America

Staples’ business fell by 50% “overnight” once the COVID-19 pandemic hit, according to a former senior executive at the company. In an Interview with Third Bridge Forum, the specialist told us that while they expect this year’s growth to be higher than 2021, it will unlikely hit 2019 levels.

“Nothing in the works” to suggest office supply industry growth by 2023

The specialist said Staples is the “strongest player” in the office supplies industry. However, we were told it faces a “battle” for market share with Office Depot, WB Mason, Amazon and local and regional dealers – the latter of which have become more significant over the last couple of years. 

We heard that Amazon’s USD 10bn Amazon for Business offering has had a “significant impact” on the industry. The specialist said it is picking off the more “profitable tail spend” from competitors’ customers, although it has yet to directly win share from them.

Meanwhile, we were told Staples’ SMB segment is performing stronger than other parts of the business. The specialist said the company has also had success with buying regional dealers, which have taken advantage of Staples’ buying power whilst still operating independently. We also heard that while traditional office supplies still contribute “significantly” to the profitability of the industry, it is no longer a “growth segment”. 

Predicting when workers will fully return to their offices is the industry’s “billion-dollar question”, according to the specialist. They do not anticipate industry growth until a greater percentage return to work, with New York and San Francisco highlighted as two areas with low occupancy. 

The specialist said Staples could remain an industry leader “through 2023 and beyond” if employees return to offices and there are no further disruptions. However, they said there are “a lot of costs, not only the cost of product” that are impacting the business. Supply chain issues, inflation and rising fuel prices are having a “significant impact” on some segments of Staples’ business such as its B2B services, we were told.  

The specialist also sees “nothing in the works” that will accelerate growth in the industry over the next two years, and warned that if Staples fails to bring its costs under control, it could leave the door “open” for Amazon.  

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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