Depot hits UK retail space
Office Depot enters UK high street in a deal with Dixons
Office Depot has entered the UK retail market in a six-month store-in-store trial with leading consumer electronics group Dixons.
The first two Office Depot stores-in-stores opened at PC World outlets in early February and a further four such formats are planned to open over the next couple of months, including smaller format trials in a couple of Dixons’ Currys stores.
The move marks Depot’s first foray into the retail channel in the UK, where it operates the successful Viking Direct brand and a contract business.
John O’Keeffe, Office Depot’s Commercial Director UK and Ireland, told OPI that Depot had not been specifically looking to move into the retail space, but that an opportunity which came up to partner with Dixons had been "too good to pass up".
"We felt that while they are the PC/hardware experts, we have the expertise in the office supplies and furniture categories," he said. "They have a strong small business customer base and we’re keen to develop a more comprehensive shopping experience for that type of customer."
The concept provides for a fully-branded Office Depot area within PC World stores, stocking both stationery lines and furniture. The areas will range from around 1,000-2,000 sq ft (100-200 sq m) depending on the size of the store.
The stationery offering covers about 520 items and is a mix of Office Depot brands and national brands, although it appears to be weighted towards private label products.
Furniture includes a range of seating and desk options and is backed up by an in-store CAD service that allows customers to design their office layout on the spot. Depot is also offering a full installation package.
The stores-in-stores are being staffed by Office Depot employees and O’Keeffe said that there would be between four to six staff during peak weekend periods.
The agreement with Dixons would certainly appear to represent a low-risk entry into the UK retail sector for Office Depot and mirrors similar initiatives by Depot and the other big boxes in the US.
In the UK alone there are more than 160 PC World stores meaning that, if the partnership was to be extended, Office Depot could potentially have a greater retail footprint in the country than Staples (around 130 stores) in a relatively short space of time. And that’s not taking into account approximately 500 Currys and Currys.digital stores across the UK and Ireland.
Dixons did attempt to offer an office supplies assortment a few years ago in PC World, but pulled back on the category in 2008 as it focused on its core consumer electronics lines.
Partnering with Depot this time around enables it to offer customers an office supplies choice again. But this time, it’s with Depot’s own staff on the shop floor, presumably able to offer a better customer service as well as general merchandising and assortment expertise.
Questions could be raised as to why Depot has gone to market in the UK with the Office Depot brand as opposed to the more widely-known Viking Direct brand. Not from any image issues with the Depot brand, but from a business viewpoint, the Viking name would tie-in snugly with the small business customer base that PC World has said it is aiming to cater for in this agreement. It would also have provided a timely boost for the Viking brand which Depot is trying to revamp to cater for a new, younger customer base in Europe.
"We chose the Office Depot brand because it is our retail brand and we have been able to leverage the experience, branding, layout and product knowledge of our colleagues in France and, of course, the US," stated O’Keeffe simply.
It is also possible that Dixons had competition issues, as the Viking brand is already selling technology products online in the UK and other European markets.
While the exact nature of the commercial relationship between Depot and Dixons is not known, what it has done is bring top level Depot and Dixons management together around the same table. Have they mooted some kind of closer cooperation if the current pilot proves to be a success?
With rumours emanating from the US of a Depot private equity buyout or even a merger with OfficeMax, it’s not inconceivable that Depot’s shareholders (current or future) could look to offload the profitable European division, and a tie-up with Dixons might not be out of the question.