Depot France adopts multi-channel focus

OPI took the opportunity this week to meet Michel Milcent, Regional VP Office Depot Southern Europe, at the company’s distribution centre at St Martin de Crau in the south of France.

The St Martin facility will be celebrating its 10th anniversary next year. The site, with more than 18,000 sq m (180,000 sq ft) of storage space, provides delivery to Depot’s Business Solutions Division (BSD) and Viking business for all customers in the south of France. Depot’s 53 retail stores in France have their own distribution channel.

Milcent, a former Xerox executive, took over as Managing Director of Office Depot France in 2006 and was handed the Regional VP role last year after Depot brought France into its Southern Europe region, which already included Italy and Spain.

Apart from the US, France is the only market where Office Depot has a true multi-channel strategy comprising contract, retail, internet and mail order.

The majority of Office Depot France’s annual sales are from BSD contract business, largely thanks to the 2003 acquisition of Guilbert, at the time the leading contract stationer in Europe.

With retail the next biggest channel, marketing messages tend to be centred on developing the Office Depot brand. Therefore, while Viking still has a role to play in the market at the moment, it is unlikely to benefit from the massive promotional activity that is currently going on in the UK following the recent re-brand.

Depot France has been on a BSD recruitment drive recently and has dramatically increased the number of reps in a channel where it goes toe to toe with Lyreco and, to a slightly lesser extent, with Fiducial Office Solutions and Staples.

Milcent says that Depot is gaining new customers in a French market that is essentially flat this year. Furniture, especially, has been doing well, up 15% so far this year. Guilbert had made a number of furniture-related acquisitions over the years and now Depot has its own 10,000 sq m (100,000 sq ft) dedicated furniture distribution centre in Survilliers just outside Paris that handles all orders in France for Office Depot and Viking.

The public sector, where prices are constantly being driven down, continues to be a problematic area, according to Milcent.

“Office Depot and the other main office suppliers provide a high level of service which certain customers – although they appreciate these services – don’t seem to want to pay for, and this is not good for our industry,” he stated.

Milcent added that there have been some cases where neither Depot nor Lyreco has bid on a major public sector tender due to the lack of achievable margin.

“There are instances where you need to walk away from business – there’s no point chasing a contract that will end up losing you money.”

The focus on the retail side in the last few years has been to develop the Office Depot City store concept in Paris. There are now 28 of these smaller format stores in the French capital and they have proved so successful that it wouldn’t be a surprise to see the US retail division look at introducing a similar type of store over there.

The French retail experience has also played a part in the development of new franchised stores in the Middle East with Kuwait-based partner Alshaya. A number of the French retail team have been involved in modelling and merchandising the stores in Kuwait, Dubai and Saudi Arabia.

Milcent is a firm believer in developing the retail side of the business in order to achieve a true multi-channel presence and has a goal of 100 stores in France – although he didn’t specify a timeframe for achieving this, partly due to the difficulty in finding suitable retail locations.

Retail growth, he says, will be a combination of more City stores – with an expected move into other major cities in France – and the continued expansion of the traditional store network. A larger format store recently opened in Grenoble, the first new superstore in the country for six years. At around 1,200 sq m (12,000 sq ft), these are more mid-size stores than the former big box-style stores, reflecting a downsizing trend that has been seen in most mature markets.

Milcent is unphased by the ambitions of local franchiser Bureau Vallée, which now has more than 160 stores across the country.

“Bureau Vallée goes to market with a discount message. That’s not what Office Depot’s retail offer is about; we’re focused on providing a range of solutions for small business customers and we are also supported by a very strong mail order and internet business.”

He points to aspects of the Depot offer such as Copy and Print, furniture solutions, custom stamps, and new services such as website design which set Depot apart from the competition in France.

He is also convinced that Office Depot will become the location of choice for small business’s technology requirements. Retail stores are currently being refurbished to give a greater presence to the technology offering, not just hardware, but higher margin add-ons such as software, tech services and accessories.

Sales of smartphone and tablet accessories have been progressing nicely, says Milcent, but Depot still lacks the attraction of being able to offer Apple hardware products such as the iPad and Mac PCs and laptops, an increasingly common choice for small business customers in France. This is something that his team is looking at, he adds.

“It’s all about a technology package for customers who may not be all that tech-savvy,’ he says. “I’m not interested in just selling a €400 laptop that customers can find in their local supermarket chain. We’re providing a solution that includes advice on the most appropriate products, software for business needs such as accounting and computer security, corresponding furniture, installation services, and so on.”

He could well have a point. While the consumer market is fairly well catered for in France with multiple retailers such as Carrefour, Auchan and Leclerc, and specialist CE chains like Boulanger and Darty, on the business side there isn’t a clear national rival that springs to mind and there would certainly appear to be potential for development there.