XPD’s Officestore franchise plans have met with fierce scepticism in the industry. Can the company carry it off?
When founding director of XPD James Wilson announced plans to grow an Officestore-branded franchise into a 200-strong army of stores in the UK within three years, the reaction in the industry was bafflement to say the least.
With the UK’s largest retail player Staples boasting a store total just topping 140, Wilson’s hopes seem rather hopeful. Yet the XPD founder claims he has a novel idea that will be warmly received by independent dealers and retailers alike.
Wilson’s grand plans are based on conversions of existing OP retail outlets to the national Officestore brand or, in some cases, the establishment of stores with existing OP dealers that want to move into retail.
The initial Officestore outlet, with franchisee Ulster Business Equipment, was scheduled to open late January in Belfast (a little behind schedule – the original opening date was 14 January), and 12 other stores are said to be in negotiation.
"The Belfast store will be followed by a store in London’s Bishopsgate and another in Cheltenham in February, and then we will add clusters of three or four to the surrounding areas," Wilson told OPI. Speaking of Officestore’s longer term goals, he adds: "We hope to have 50-100 stores in the UK and Ireland over the next 12 months and another 200 stores within three years."
Wilson claims that the response so far from existing retailers has been "very positive", but scepticism throughout the industry over his business plans, and whether enough dealers and retail outlets would be ready to sign up, is breeding.
Although Staples itself has refused to comment on the issue, one detail that has fuelled open cynicism among other industry players has been XPD’s estimations of store conversion costs. As a guide, Wilson believes that the cost to convert each store of around 1,000 sq ft will be between Â£5,000 ($9,400) and Â£10,000. But insiders have baulked at the low estimate, aligning it closer to what XPD’s former partner Office 1 would likely pay to convert a store in Romania or Bulgaria.
Wilson denies that he has used Office 1 estimates, however, saying the figures are a result of his own research. In fact, he claims he garnered no useful experience from his former partnership with Office 1, which was called off in November by mutual agreement because the two parties’ retail franchise models were deemed by the other to be "unsuitable".
Wilson says: "Office 1’s model is based around start-ups in markets where there is not a lot of expertise. We are setting up in a market where there are 5,000 already-established and knowledgeable dealers."
Office 1 CEO Mark Baccash remains unconvinced about the use of his company’s information in the Officestore project, but adds: "We are rather hardened to this kind of thing, having done business in Senegal and Mozambique where this is rather current. The UK, Mozambique, Senegal – what the hell, it is all the same and we take it philosophically."
Wilson inherently maintains his idea is fresh. In his promotional pamphlet, he describes Officestore as "the first dealer group that has sought to bring the benefits of a cohesive national brand AND traditional dealer group benefits to the independent retail stationer." Office 1, whilst a retailer is not a dealer group, he claims, and Office Club, whilst a dealer group, is not a retailer.
It will be extremely interesting to see if XPD can, against inevitable odds, pull off its franchise in a highly developed market such as the UK.
But, in the wider context, whether a business succeeds or fails, philosophically is the only way it can be taken.