What's Office Depot's future

[ClownLoach]

It is important to note there has been significant store closure/abandoned new store site activity by Office Depot in the Reno Area:

1. Office Max- closure (pre merger) Northtowne Lane Reno
2. Office Max- closure (pre merger) Disc Drive Sparks
3. Office Depot- closure (pre merger) South Lake Tahoe, CA
4. Office Depot - abandoned new store site - Prater/McCarran Sparks (now Planet Fitness)
5. Office Depot - abandoned new store site - Carson City- Market Street next to Wal Mart (now vacant lot)
6. Office Max- closure (after merger) South Virginia St.- Reno
7. Office Depot- closure (after merger) Harvard Way - Reno (remodeled a year or two before it closed... was Office Club in the early 90's and basically unremodeled until right before closing...).

Why exactly we ended up with so many of these stores is anyone's guess.

Staples did enter South Lake Tahoe and Carson City fairly early but didn't enter Reno until much later, until the industry was already in decline, and never even got to Sparks.

That is very interesting. Are there a lot more businesses per capita in the Reno area than in other places that use office supply stores?? Where did Office Depot, Max, or Staples propose new stores that were abandoned (never-built) in the Sacramento area?

Remember that 90% of abandoned sites never emerge from retailer-landlord NDA agreements. I know so many just from my last company but I would never reveal them because NDA. Lease negotiations are always under NDA. The only time you ever will find out is when they make it to the altar and then someone decides to walk away after which is about 10% of the time and usually has to do with unanticipated problems.

[storewanderer]

It is important to note there has been significant store closure/abandoned new store site activity by Office Depot in the Reno Area:

1. Office Max- closure (pre merger) Northtowne Lane Reno
2. Office Max- closure (pre merger) Disc Drive Sparks
3. Office Depot- closure (pre merger) South Lake Tahoe, CA
4. Office Depot - abandoned new store site - Prater/McCarran Sparks (now Planet Fitness)
5. Office Depot - abandoned new store site - Carson City- Market Street next to Wal Mart (now vacant lot)
6. Office Max- closure (after merger) South Virginia St.- Reno
7. Office Depot- closure (after merger) Harvard Way - Reno (remodeled a year or two before it closed... was Office Club in the early 90's and basically unremodeled until right before closing...).

Why exactly we ended up with so many of these stores is anyone's guess.

Staples did enter South Lake Tahoe and Carson City fairly early but didn't enter Reno until much later, until the industry was already in decline, and never even got to Sparks.

That is very interesting. Are there a lot more businesses per capita in the Reno area than in other places that use office supply stores?? Where did Office Depot, Max, or Staples propose new stores that were abandoned (never-built) in the Sacramento area?

Remember that 90% of abandoned sites never emerge from retailer-landlord NDA agreements. I know so many just from my last company but I would never reveal them because NDA. Lease negotiations are always under NDA. The only time you ever will find out is when they make it to the altar and then someone decides to walk away after which is about 10% of the time and usually has to do with unanticipated problems.

Both abandoned sites mentioned above were announced to the public. Carson had a coming soon sign and Sparks had a newspaper article and construction permits pulled.

I don't know why we got so many of these stores; I think Office Depot liked the Reno market since Staples wasn't in it until very late (close to 2010).

[FrankMoore99]

That is very interesting. Are there a lot more businesses per capita in the Reno area than in other places that use office supply stores?? Where did Office Depot, Max, or Staples propose new stores that were abandoned (never-built) in the Sacramento area?

Remember that 90% of abandoned sites never emerge from retailer-landlord NDA agreements. I know so many just from my last company but I would never reveal them because NDA. Lease negotiations are always under NDA. The only time you ever will find out is when they make it to the altar and then someone decides to walk away after which is about 10% of the time and usually has to do with unanticipated problems.

Both abandoned sites mentioned above were announced to the public. Carson had a coming soon sign and Sparks had a newspaper article and construction permits pulled.

I don't know why we got so many of these stores; I think Office Depot liked the Reno market since Staples wasn't in it until very late (close to 2010).

How are the two Staples store performing in the Reno area?? Are they performing better than the Office Depot stores? What is the best performing Office Depot store in Reno/Sparks?? How is the OfficeMax in Elko doing, being in a small market of only 47,000 people in its entire area??

[storewanderer]

Remember that 90% of abandoned sites never emerge from retailer-landlord NDA agreements. I know so many just from my last company but I would never reveal them because NDA. Lease negotiations are always under NDA. The only time you ever will find out is when they make it to the altar and then someone decides to walk away after which is about 10% of the time and usually has to do with unanticipated problems.

Both abandoned sites mentioned above were announced to the public. Carson had a coming soon sign and Sparks had a newspaper article and construction permits pulled.

I don't know why we got so many of these stores; I think Office Depot liked the Reno market since Staples wasn't in it until very late (close to 2010).

How are the two Staples store performing in the Reno area?? Are they performing better than the Office Depot stores? What is the best performing Office Depot store in Reno/Sparks?? How is the OfficeMax in Elko doing, being in a small market of only 47,000 people in its entire area??

I don't think either Staples does well but they are still open where many others have closed so maybe they do okay.

Elko is a remote market with a large variety of mid level type retailers present but a strong economy fueled by mining with many young families. At the present time I think clothing is saturated in Elko, there are too many people selling clothes there. I think the new tiny Kohls pushed it over the edge on clothing. But other retail types in Elko are solid. I keep hoping the Office Max will go away so Smiths can expand its undersized store there but it doesn't seem to be going anywhere.

When Raleys downsized its store there the Marshalls went into the 25k square feet Raleys gave up. Raleys is not doing much business in Elko with its downsized store after making the stupid decision to close the pharmacy. Surprised it is still worth it to them to send a truck out there. At least it gives another option to customers and has some better quality stuff than the rest of the stores there have.

[ClownLoach]

Remember that 90% of abandoned sites never emerge from retailer-landlord NDA agreements. I know so many just from my last company but I would never reveal them because NDA. Lease negotiations are always under NDA. The only time you ever will find out is when they make it to the altar and then someone decides to walk away after which is about 10% of the time and usually has to do with unanticipated problems.

Both abandoned sites mentioned above were announced to the public. Carson had a coming soon sign and Sparks had a newspaper article and construction permits pulled.

I don't know why we got so many of these stores; I think Office Depot liked the Reno market since Staples wasn't in it until very late (close to 2010).

How are the two Staples store performing in the Reno area?? Are they performing better than the Office Depot stores? What is the best performing Office Depot store in Reno/Sparks?? How is the OfficeMax in Elko doing, being in a small market of only 47,000 people in its entire area??

LOW RENT. That is why those stores survive. Rural area rents are very low.

A slow, low volume store in small town USA that pays very little rent many times is more profitable than the busy big volume store in the big city that pays big rent.

So "how are they doing" is too basic a question to answer. Profit vs revenue are two very different things and the winner on one end might be the loser on another. When I visit smaller towns I'm sometimes surprised to see how this shakes out. About ten years ago I was in St. George, Utah and they had two Staples stores, one on each side of town. Meanwhile Staples had already pulled out of my city which was at the time one of the fastest growing cities in America with a population that far eclipsed sleepy St. George. I'm sure revenue here was high and profit low as rents were skyrocketing due to all the growth. Meanwhile rents were so low in St. George that they could afford two stores with a tenth of the population.

Think about how you would do financially if you had to live in the high rents of Manhattan, the moderate rents of a suburb, or the low rents of a remote small town. You'd probably need to be a Doctor or Lawyer or business Executive to afford that Manhattan apartment for $5,000 a month for one bed one bath in a tiny space, you'd get double the size of apartment for half that rent in the suburbs, and maybe $1,250 to rent a whole house on the rural area. But then how much would you make in the rural area where jobs are scarce and low paying? That is the best way to think about the stores. There is no clear answer as to how one does versus another because so many other factors from rent, energy cost, labor cost, taxes and fees, transportation cost, and more differ widely between stores even in the same chain. If you asked me for example if I think the very busy and highly successful 45,000 Sq ft Ralphs Fresh Fare in the Long Beach, CA Marina does well versus the new 100,000+ Sq ft Smiths Marketplace in the far corner of Henderson, NV, I'd say that it is probably almost impossible to compare the two. I would bet they both bring in comparable revenue totals based on my close observations of both stores. But the costs are going to be wildly different for everything else, the transactions are completely different, and it's a crapshoot as to which is the true higher performer when it comes to profitability, it really could be either one.

[FrankMoore99]

Both abandoned sites mentioned above were announced to the public. Carson had a coming soon sign and Sparks had a newspaper article and construction permits pulled.

I don't know why we got so many of these stores; I think Office Depot liked the Reno market since Staples wasn't in it until very late (close to 2010).

How are the two Staples store performing in the Reno area?? Are they performing better than the Office Depot stores? What is the best performing Office Depot store in Reno/Sparks?? How is the OfficeMax in Elko doing, being in a small market of only 47,000 people in its entire area??

LOW RENT. That is why those stores survive. Rural area rents are very low.

A slow, low volume store in small town USA that pays very little rent many times is more profitable than the busy big volume store in the big city that pays big rent.

So "how are they doing" is too basic a question to answer. Profit vs revenue are two very different things and the winner on one end might be the loser on another. When I visit smaller towns I'm sometimes surprised to see how this shakes out. About ten years ago I was in St. George, Utah and they had two Staples stores, one on each side of town. Meanwhile Staples had already pulled out of my city which was at the time one of the fastest growing cities in America with a population that far eclipsed sleepy St. George. I'm sure revenue here was high and profit low as rents were skyrocketing due to all the growth. Meanwhile rents were so low in St. George that they could afford two stores with a tenth of the population.

Think about how you would do financially if you had to live in the high rents of Manhattan, the moderate rents of a suburb, or the low rents of a remote small town. You'd probably need to be a Doctor or Lawyer or business Executive to afford that Manhattan apartment for $5,000 a month for one bed one bath in a tiny space, you'd get double the size of apartment for half that rent in the suburbs, and maybe $1,250 to rent a whole house on the rural area. But then how much would you make in the rural area where jobs are scarce and low paying? That is the best way to think about the stores. There is no clear answer as to how one does versus another because so many other factors from rent, energy cost, labor cost, taxes and fees, transportation cost, and more differ widely between stores even in the same chain. If you asked me for example if I think the very busy and highly successful 45,000 Sq ft Ralphs Fresh Fare in the Long Beach, CA Marina does well versus the new 100,000+ Sq ft Smiths Marketplace in the far corner of Henderson, NV, I'd say that it is probably almost impossible to compare the two. I would bet they both bring in comparable revenue totals based on my close observations of both stores. But the costs are going to be wildly different for everything else, the transactions are completely different, and it's a crapshoot as to which is the true higher performer when it comes to profitability, it really could be either one.

The OfficeMax store in small town Placerville recently closed. And many other OfficeMax and Staples stores have closed in small towns with low rents.

[FrankMoore99]

How are the two Staples store performing in the Reno area?? Are they performing better than the Office Depot stores? What is the best performing Office Depot store in Reno/Sparks?? How is the OfficeMax in Elko doing, being in a small market of only 47,000 people in its entire area??

LOW RENT. That is why those stores survive. Rural area rents are very low.

A slow, low volume store in small town USA that pays very little rent many times is more profitable than the busy big volume store in the big city that pays big rent.

So "how are they doing" is too basic a question to answer. Profit vs revenue are two very different things and the winner on one end might be the loser on another. When I visit smaller towns I'm sometimes surprised to see how this shakes out. About ten years ago I was in St. George, Utah and they had two Staples stores, one on each side of town. Meanwhile Staples had already pulled out of my city which was at the time one of the fastest growing cities in America with a population that far eclipsed sleepy St. George. I'm sure revenue here was high and profit low as rents were skyrocketing due to all the growth. Meanwhile rents were so low in St. George that they could afford two stores with a tenth of the population.

Think about how you would do financially if you had to live in the high rents of Manhattan, the moderate rents of a suburb, or the low rents of a remote small town. You'd probably need to be a Doctor or Lawyer or business Executive to afford that Manhattan apartment for $5,000 a month for one bed one bath in a tiny space, you'd get double the size of apartment for half that rent in the suburbs, and maybe $1,250 to rent a whole house on the rural area. But then how much would you make in the rural area where jobs are scarce and low paying? That is the best way to think about the stores. There is no clear answer as to how one does versus another because so many other factors from rent, energy cost, labor cost, taxes and fees, transportation cost, and more differ widely between stores even in the same chain. If you asked me for example if I think the very busy and highly successful 45,000 Sq ft Ralphs Fresh Fare in the Long Beach, CA Marina does well versus the new 100,000+ Sq ft Smiths Marketplace in the far corner of Henderson, NV, I'd say that it is probably almost impossible to compare the two. I would bet they both bring in comparable revenue totals based on my close observations of both stores. But the costs are going to be wildly different for everything else, the transactions are completely different, and it's a crapshoot as to which is the true higher performer when it comes to profitability, it really could be either one.

The OfficeMax store in small town Placerville recently closed. And many other OfficeMax and Staples stores have closed in small towns with low rents. Why did Placerville's close?? Was it unprofitable, did its lease expire, is a new tenant replacing it, or did Office Depot not want to drive its truck to Placerville anymore?

[ClownLoach]

How are the two Staples store performing in the Reno area?? Are they performing better than the Office Depot stores? What is the best performing Office Depot store in Reno/Sparks?? How is the OfficeMax in Elko doing, being in a small market of only 47,000 people in its entire area??

LOW RENT. That is why those stores survive. Rural area rents are very low.

A slow, low volume store in small town USA that pays very little rent many times is more profitable than the busy big volume store in the big city that pays big rent.

So "how are they doing" is too basic a question to answer. Profit vs revenue are two very different things and the winner on one end might be the loser on another. When I visit smaller towns I'm sometimes surprised to see how this shakes out. About ten years ago I was in St. George, Utah and they had two Staples stores, one on each side of town. Meanwhile Staples had already pulled out of my city which was at the time one of the fastest growing cities in America with a population that far eclipsed sleepy St. George. I'm sure revenue here was high and profit low as rents were skyrocketing due to all the growth. Meanwhile rents were so low in St. George that they could afford two stores with a tenth of the population.

Think about how you would do financially if you had to live in the high rents of Manhattan, the moderate rents of a suburb, or the low rents of a remote small town. You'd probably need to be a Doctor or Lawyer or business Executive to afford that Manhattan apartment for $5,000 a month for one bed one bath in a tiny space, you'd get double the size of apartment for half that rent in the suburbs, and maybe $1,250 to rent a whole house on the rural area. But then how much would you make in the rural area where jobs are scarce and low paying? That is the best way to think about the stores. There is no clear answer as to how one does versus another because so many other factors from rent, energy cost, labor cost, taxes and fees, transportation cost, and more differ widely between stores even in the same chain. If you asked me for example if I think the very busy and highly successful 45,000 Sq ft Ralphs Fresh Fare in the Long Beach, CA Marina does well versus the new 100,000+ Sq ft Smiths Marketplace in the far corner of Henderson, NV, I'd say that it is probably almost impossible to compare the two. I would bet they both bring in comparable revenue totals based on my close observations of both stores. But the costs are going to be wildly different for everything else, the transactions are completely different, and it's a crapshoot as to which is the true higher performer when it comes to profitability, it really could be either one.

The OfficeMax store in small town Placerville recently closed. And many other OfficeMax and Staples stores have closed in small towns with low rents.

Which probably means that their lease expired and the landlord wanted to pursue a higher traffic tenant instead of offering a new lease. Office supply stores do not bring much foot traffic to a shopping center. Rents are partially determined by traffic data. If you look up retail lease space on websites like Loopnet you'll find that they always have some kind of data around cars per hour and so forth. The retailers all know what the traffic is around other retailers, for example if that Staples became a Dollar Tree it would be significantly busier and bring up sales for all the other stores in the strip mall. Then the landlord could offer new vacancies at a higher rent. If that Staples became a Trader Joe's it would bring incredible levels of traffic and the landlord could raise rents substantially thru the entire center. Thus, if a office supply type store is getting low rent and their lease is up there really is little incentive for the landlord to renew them as the odds are they can get a higher quality tenant to replace them. Vice versa, if there are a lot of retail vacancies in town that have been sitting then the landlord would be better served offering an extension at the same low rent to Staples or whoever else to stay if they want to. As long as the site is cash flow positive then there is really no reason to leave if you're that Staples or Office Depot.

For the same reason, if the store was losing money then it would likely be easy to negotiate a deal with the landlord to leave early and they probably would have closed during the mass culling of office stores in the 2010s. The landlord ends the lease early and forgives the lease penalty but wins by bringing in a more lucrative tenant.

As far as transportation goes, if there is a store "before and after" that location on the route from the warehouse then it doesn't make sense to close. These office supply stores do so little business they are getting maybe one or two deliveries a week, on a truck shared with two or three other stores. They get maybe four or five pallets of freight per load. No office supplies store is getting a full trailer.

The point that I'm trying to get across is that these questions cannot be answered by anyone from the outside of these companies. I know incredible amounts of information about my last company, and if I say one word I will be sued into the poor house under the non disclosure agreements they hand out. Thus nobody here knows who I worked for, nor have I ever shared any information that could be specifically traced back to that company. Keeping this store level information secret and proprietary is the only way any retailer can stay in business. If any other company could answer these questions about which store makes more money, more revenue, more profit etc. they would then be looking into the "Magic Mirror on the Wall" and would be able to plan their business to eradicate every competitor large and small. We would have a world that looks like the movie Wall-E where you see the Buy N Large Ultra Store next to the Buy N Large Mega Store in the Buy N Large Super Mall on Buy N Large Boulevard. I appreciate your passion and interest but aside from the vast experience on this board which is a lens for the anecdotal observations they provide you're not going to find specific information to answer those questions. Some companies keep the information so secured even the Store Manager is not given a full income statement (P&L) for their store.

[BillyGr]

LOW RENT. That is why those stores survive. Rural area rents are very low.

A slow, low volume store in small town USA that pays very little rent many times is more profitable than the busy big volume store in the big city that pays big rent.

So "how are they doing" is too basic a question to answer. Profit vs revenue are two very different things and the winner on one end might be the loser on another. When I visit smaller towns I'm sometimes surprised to see how this shakes out. About ten years ago I was in St. George, Utah and they had two Staples stores, one on each side of town. Meanwhile Staples had already pulled out of my city which was at the time one of the fastest growing cities in America with a population that far eclipsed sleepy St. George. I'm sure revenue here was high and profit low as rents were skyrocketing due to all the growth. Meanwhile rents were so low in St. George that they could afford two stores with a tenth of the population.

Think about how you would do financially if you had to live in the high rents of Manhattan, the moderate rents of a suburb, or the low rents of a remote small town. You'd probably need to be a Doctor or Lawyer or business Executive to afford that Manhattan apartment for $5,000 a month for one bed one bath in a tiny space, you'd get double the size of apartment for half that rent in the suburbs, and maybe $1,250 to rent a whole house on the rural area. But then how much would you make in the rural area where jobs are scarce and low paying? That is the best way to think about the stores. There is no clear answer as to how one does versus another because so many other factors from rent, energy cost, labor cost, taxes and fees, transportation cost, and more differ widely between stores even in the same chain. If you asked me for example if I think the very busy and highly successful 45,000 Sq ft Ralphs Fresh Fare in the Long Beach, CA Marina does well versus the new 100,000+ Sq ft Smiths Marketplace in the far corner of Henderson, NV, I'd say that it is probably almost impossible to compare the two. I would bet they both bring in comparable revenue totals based on my close observations of both stores. But the costs are going to be wildly different for everything else, the transactions are completely different, and it's a crapshoot as to which is the true higher performer when it comes to profitability, it really could be either one.

To add to that, it is also likely why some stores seem to continue to exist that would otherwise be expected not to.

Probably the best example is why so many Kmart locations lasted years beyond what was expected - that they often had set up leases for decades, and were thus paying rents more like the 1970's than the 2010's rates, and could thus remain profitable with far less customer traffic than would otherwise be expected or needed for the size of the store.

Also, likely applies to a few other stores here & there, like when we see a supermarket that has been in the same place for decades and everyone wonders why they haven't moved/expanded/replaced it.
If they happen to have also locked in these lower rates, they might not be able to succeed if they were to move and face much higher costs due to the new location.

And your apartment scenario is exactly what has happened - being here in NY, a bit south of Albany, we have areas that have rents for apartments reaching that 1/2 the Manhattan rate (and even a bit more), and many of them are being rented by people who have moved from that borough (since, if they still need or want access, there is a direct train multiple times a day to get them to the city, and even doing that a few times a month they are still saving money).

They think it's great, while those in the area that have been for decades think the prices are crazy, just depends on the perspective

[ClownLoach]

LOW RENT. That is why those stores survive. Rural area rents are very low.

A slow, low volume store in small town USA that pays very little rent many times is more profitable than the busy big volume store in the big city that pays big rent.

So "how are they doing" is too basic a question to answer. Profit vs revenue are two very different things and the winner on one end might be the loser on another. When I visit smaller towns I'm sometimes surprised to see how this shakes out. About ten years ago I was in St. George, Utah and they had two Staples stores, one on each side of town. Meanwhile Staples had already pulled out of my city which was at the time one of the fastest growing cities in America with a population that far eclipsed sleepy St. George. I'm sure revenue here was high and profit low as rents were skyrocketing due to all the growth. Meanwhile rents were so low in St. George that they could afford two stores with a tenth of the population.

Think about how you would do financially if you had to live in the high rents of Manhattan, the moderate rents of a suburb, or the low rents of a remote small town. You'd probably need to be a Doctor or Lawyer or business Executive to afford that Manhattan apartment for $5,000 a month for one bed one bath in a tiny space, you'd get double the size of apartment for half that rent in the suburbs, and maybe $1,250 to rent a whole house on the rural area. But then how much would you make in the rural area where jobs are scarce and low paying? That is the best way to think about the stores. There is no clear answer as to how one does versus another because so many other factors from rent, energy cost, labor cost, taxes and fees, transportation cost, and more differ widely between stores even in the same chain. If you asked me for example if I think the very busy and highly successful 45,000 Sq ft Ralphs Fresh Fare in the Long Beach, CA Marina does well versus the new 100,000+ Sq ft Smiths Marketplace in the far corner of Henderson, NV, I'd say that it is probably almost impossible to compare the two. I would bet they both bring in comparable revenue totals based on my close observations of both stores. But the costs are going to be wildly different for everything else, the transactions are completely different, and it's a crapshoot as to which is the true higher performer when it comes to profitability, it really could be either one.

To add to that, it is also likely why some stores seem to continue to exist that would otherwise be expected not to.

Probably the best example is why so many Kmart locations lasted years beyond what was expected - that they often had set up leases for decades, and were thus paying rents more like the 1970's than the 2010's rates, and could thus remain profitable with far less customer traffic than would otherwise be expected or needed for the size of the store.

Also, likely applies to a few other stores here & there, like when we see a supermarket that has been in the same place for decades and everyone wonders why they haven't moved/expanded/replaced it.
If they happen to have also locked in these lower rates, they might not be able to succeed if they were to move and face much higher costs due to the new location.

And your apartment scenario is exactly what has happened - being here in NY, a bit south of Albany, we have areas that have rents for apartments reaching that 1/2 the Manhattan rate (and even a bit more), and many of them are being rented by people who have moved from that borough (since, if they still need or want access, there is a direct train multiple times a day to get them to the city, and even doing that a few times a month they are still saving money).

They think it's great, while those in the area that have been for decades think the prices are crazy, just depends on the perspective

Kmart is a perfect example. They had a lot of newer, larger stores that had opened in the 90s including the Super Kmart Center formats. The newer stores were pretty much the ones that closed first because of substantially higher rents which meant they would require much more traffic and sales volume to turn a profit. Because Kmart was inept and unable to acquire the right merchandise to attract a wide audience, the limited traffic they could bring in was usually enough to sustain a old, small, dark, dingy 70s era store with low ceilings because it had low rent (or even no rent because it was owned). The new stores perished.

San Francisco is another perfect example. They still have some very old Safeway stores which are owned or have incredible lease deals with decades of low rent locked in. Safeway can and does sell these stores occasionally to developers, but they are not always able to negotiate a lease for a replacement store on the site. Despite the fact that the store plugged along and was very profitable for many decades, if it was paying market rent then there would be no possibility of turning a profit which means the site usually becomes 100% housing without ground floor retail.