What's Office Depot's future

[FrankMoore99]

I know Office Depot has been closing stores and it seems like they have been shutting down stores for 10+ years now. And they are closing stores that seem like they should be profitable (Davis, California for example) and are keeping stores open that seem like they should have closed years ago (still have 4 stores in the Reno market along with 2 Staples stores in a market that warrants 2-3 office supply stores, Napa, California still has both Office Depot and Staples, and both West Monroe and Monroe, Louisiana have an Office Depot). But there is literally no information about Office Depot store closures list on the Internet.

Here are the few I have found that have recently closed this year:
Downey, California-OfficeMax (the town also has a Staples)
Placerville, California-OfficeMax (this one hurts because it is my closest office supply store and it hurts because it was the only office supply electronic store in the area. The closest office supply store to Placerville is 20 miles away in Folsom, which might actually be pretty close for these stores.)
Nampa, Idaho (the town also has a Staples)
Alamo Ranch, San Antonio, TX-OfficeMax (becoming a Barnes and Noble store and there are other Office Depot stores nearby)
Richland, Washington (near another Office Depot store in Kennewick)

In the past few months (last year):
Davis, California
Sheboygan, Wisconsin
Alton, Illinois
Chicago-Hyde Park, Illinois
Columbus, Indiana
Escondido, California
San Diego North, California
San Bernardino, California
Salt Lake City-University, Utah

Are these stores unprofitable, or is Office Depot being forced out of these places because a new store is opening in those spaces?? Does Office Depot plan to reopen in any of the markets they closed in with smaller stores?? Will Staples plan to open their own stores to replace these closed stores?? How many stores will they and Staples close before it reaches the ideal amount. Do they have plans to remodel and downsize the spaces of their existing stores?? Here's my blogpost which explains more on the subject: https://haydenbusinessblog.blogspot.com ... order.html

[Super S]

The Longview, WA Office Depot at the Triangle Center closed in 2020, it replaced an older OfficeMax location on the Kelso-Longview border (which was demolished for a road widening project) and the Triangle location has been vacant except for the seasonal Halloween store every year since.

There aren't really any other stores of this kind locally, but there are two Walmarts, Target, and Fred Meyer, all of which have similar products at much better prices. And the internet often has much better prices on many of the same supplies.

I can't think of a time where I have really missed Office Depot or Office Max, and they strike me as a chain that is going through a long, slow death. It kinda reminds me of Sears/Kmart.

[ClownLoach]

You could make the same post for Staples. Identical waves of stores that should be profitable that are closing.

What I would remind everyone of is the majority of these stores are approaching 20 and 30 years old. In my experience, most big box store leases have planned rent increases that are substantial at those marks.

That could easily take these stores, which do maybe 25% of what they did back in the era of $3000+ desktop PC bundles, into the red.

On top of that, these buildings are higher rent today than what the office stores have in their increased lease.

This makes both worth more dead than alive.

The landlord has zero incentive to negotiate a decrease because they can get even more than the office store is paying.

And the office store has every incentive to sublease to growing companies.

That's why they are closing.

[storewanderer]

I've been surprised they haven't closed more locations. Office Depot keeps limping along in Reno. Multiple locations. These stores have a trickle of customers but they don't have many customers, transaction sizes are small, and the employees seem bored. The product mix feels uninspired but the stores are neat and organized. Their pricing seems very high.

I think they will just keep shrinking and shrinking.

From my view looking at stores the Office Depot Stores are much better assorted and stocked than the Staples Stores. They also seem to have slightly more employees (like 4 at a time instead of 3 at a time) than Office Depot. Staples are pretty awful. Staples has had a very serious steep decline from what it once was. Office Max was never great.

[ClownLoach]

I've been surprised they haven't closed more locations. Office Depot keeps limping along in Reno. Multiple locations. These stores have a trickle of customers but they don't have many customers, transaction sizes are small, and the employees seem bored. The product mix feels uninspired but the stores are neat and organized. Their pricing seems very high.

I think they will just keep shrinking and shrinking.

From my view looking at stores the Office Depot Stores are much better assorted and stocked than the Staples Stores. They also seem to have slightly more employees (like 4 at a time instead of 3 at a time) than Office Depot. Staples are pretty awful. Staples has had a very serious steep decline from what it once was. Office Max was never great.

It's all low rent and low desire by other retailers to take their space. That's why they're still open. A market like Reno may be more retailer friendly than landlord friendly, so they can beg for a rent reduction and get it still.

I can tell you that for over the last decade there were lists circulated to brokers by both Staples and ODP of stores available for immediate sublease. The lists seemed to contain pretty much every good location. You signed the deal and they immediately closed their doors. I also have seen open and active Staples, Office Depot/Max stores listed online as available for lease takeover. One was a Staples in Newport Beach that did recently close, not sure who is taking the lease. It had been available on LoopNet (a broker site) for quite some time.

[storewanderer]

I've been surprised they haven't closed more locations. Office Depot keeps limping along in Reno. Multiple locations. These stores have a trickle of customers but they don't have many customers, transaction sizes are small, and the employees seem bored. The product mix feels uninspired but the stores are neat and organized. Their pricing seems very high.

I think they will just keep shrinking and shrinking.

From my view looking at stores the Office Depot Stores are much better assorted and stocked than the Staples Stores. They also seem to have slightly more employees (like 4 at a time instead of 3 at a time) than Office Depot. Staples are pretty awful. Staples has had a very serious steep decline from what it once was. Office Max was never great.

It's all low rent and low desire by other retailers to take their space. That's why they're still open. A market like Reno may be more retailer friendly than landlord friendly, so they can beg for a rent reduction and get it still.

I can tell you that for over the last decade there were lists circulated to brokers by both Staples and ODP of stores available for immediate sublease. The lists seemed to contain pretty much every good location. You signed the deal and they immediately closed their doors. I also have seen open and active Staples, Office Depot/Max stores listed online as available for lease takeover. One was a Staples in Newport Beach that did recently close, not sure who is taking the lease. It had been available on LoopNet (a broker site) for quite some time.

There have been a couple of real estate efforts by Office Depot in Reno area.

The "newest" Office Depot in Reno is on Kietzke in what was the original 1996 Michael's building (they built a new building behind the old one). There is some musical chairs there. I can't remember exactly when but it was probably in the 2014 or so period. The original 1996 Office Depot of that shopping center is in what is now Natural Grocers (who only uses about half of the old large Office Depot space). The original Michael's/current Office Depot space has what I'd call a really bad parking lot, a weird little triangle. For Michael's this was terrible. For Office Depot with little traffic it is somewhat okay.

Then down in Carson City the ~1996 Office Depot previously took up its space as well as a space next to it that is now US Foods. In maybe 2018 Office Depot did a remodel to cut its store in half and sublease the other half to US Foods. That is a former 70's Albertsons but may not entirely be the original building.

[Super S]

You could make the same post for Staples. Identical waves of stores that should be profitable that are closing.

What I would remind everyone of is the majority of these stores are approaching 20 and 30 years old. In my experience, most big box store leases have planned rent increases that are substantial at those marks.

That could easily take these stores, which do maybe 25% of what they did back in the era of $3000+ desktop PC bundles, into the red.

On top of that, these buildings are higher rent today than what the office stores have in their increased lease.

This makes both worth more dead than alive.

The landlord has zero incentive to negotiate a decrease because they can get even more than the office store is paying.

And the office store has every incentive to sublease to growing companies.

That's why they are closing.

They don't always get more in rent...

The Longview store I mentioned was a relocation of a former Office Max. It was open at that site for only a few years and closed in 2020. The Office Depot space is sandwiched between a Big 5 Sporting Goods store and an AutoZone, the building was originally Ernst and then Ace Hardware, which was previously in the Office Depot space, which then consolidated into the current AutoZone. It has been vacant for almost all of that time except when Spirit Halloween opens seasonally, and it's extremely unlikely they are paying more in rent for that. In the same center, a Bed Bath & Beyond is already being filled by a Marshalls store. Not sure why the old Office Depot space is still empty as it's closer to the main road and more visible.

I kinda wonder if Office Depot had a longer lease that they are just riding out as I think it was Office Depot themselves that decided to close that location.

[veteran+]

I've been surprised they haven't closed more locations. Office Depot keeps limping along in Reno. Multiple locations. These stores have a trickle of customers but they don't have many customers, transaction sizes are small, and the employees seem bored. The product mix feels uninspired but the stores are neat and organized. Their pricing seems very high.

I think they will just keep shrinking and shrinking.

From my view looking at stores the Office Depot Stores are much better assorted and stocked than the Staples Stores. They also seem to have slightly more employees (like 4 at a time instead of 3 at a time) than Office Depot. Staples are pretty awful. Staples has had a very serious steep decline from what it once was. Office Max was never great.

Yup!

Same here, Office Depot far superior to Staples on everything!

[babs]

At this point they should just let Staples and Office Depot merge. During the original merger proposal, weren't they going to use the name, Staples, the office depot? Go for it! The only thing they seem to be competing against each other is who can close more stores. In my area, there are only two Staples left. Amazon and their own eCommerce sites have pretty much taken over the office market. The only thing we occasionally use Office Depot for are some printing jobs but the quality has diminished forcing us to look elsewhere.

[ClownLoach]

At this point they should just let Staples and Office Depot merge. During the original merger proposal, weren't they going to use the name, Staples, the office depot? Go for it! The only thing they seem to be competing against each other is who can close more stores. In my area, there are only two Staples left. Amazon and their own eCommerce sites have pretty much taken over the office market. The only thing we occasionally use Office Depot for are some printing jobs but the quality has diminished forcing us to look elsewhere.

ODP (literally the name of the former Office Depot parent) has finally decided they have no interest in merging with Staples. Staples was taken over by private equity which is why they now operate in the classic PE manner: low investment, no payroll, weird "get rich quick" schemes like renting counter space to Idemia and now becoming an Amazon return desk. They don't pay any attention to the actual operations and let them stagnate, and any cost increase results in a closure.

Once again I'm sure everyone can point out examples here and there of their Staples or their Office Depot, but I've personally seen the memos to real estate brokers that got passed along. For the last decade the majority of both chains stores have been available to take over the leases on. Once again that doesn't mean it would be worth taking over if say there's only 3 years term left and then you need to fully renegotiate with the landlord, that's how it winds up closing and sits with temporary tenants like a Halloween store. But in general both companies spared no expense to try to clobber each other in the 90's and 2000's, signing leases focused more on how to be across the street from their rival versus being financially viable to be in that location for decades. Obviously the best options for other retailers at this point have probably been picked off as many of these sites have gone to Sprouts, Total Wine, TJX and even Target. Whatever is left is probably more difficult to work with in lease term remaining, landlord cooperation etc.

Now you have those situations like overvalued leases they're leaving, undervalued leases they can sub out and make more money than the actual store did, and landlord situations where better stores they do want to keep are getting booted anyway. So they wind up with pretty much the worst locations nobody wants that happen to break even or make a puny operating profit. I used to work with many Office Depot people and they shared that the spread between locations in rent was shocking, sometimes one store paid 5X the rent of another store a few miles away simply because it was placed to "get after" a Staples.

What both chains need to figure out is what they could sell that would bring in traffic again, but I think they are more focused on real estate than retail now.