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With the slow return-to-office after the COVID-19 pandemic as people continue to choose to work from home, and with the explosion of e-commerce giants such as Amazon, office supply retailer Staples has found itself in a financially difficult spot in recent years.
The office supply sector generates $10.3 billion in revenue annually, but is expected to see a yearly 2% revenue decline through 2026, according to business publication Retail Dive.
“Demand declines in core paper and printing products may accelerate because the level of employees returning to the office has been fewer than originally expected,” according to Wall Street ratings agency S&P Global.
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“Further, offices are likely to use less paper-based processes and opt for more digitized tools when employees return, so we do not believe office printing will return to pre-pandemic levels.”
S&P, in its analysis, predicted revenue will stay flat in 2024 and only increase by single digits in 2025.
“The office stationary and supplies market has been under some pressure as businesses have cut back to save money,” said Neil Saunders, an analyst and managing director of retail at Global Data.
Consumers drawn to alternatives Target and Walmart
Consumers have been drawn by alternatives such as Target and Walmart for things such as back-to-school supplies, Saunders said, while business clients have been attracted to services offered by Amazon.
“Staples is currently undergoing a transformation and implementing a new operating model designed to better align with evolving customer trends and patterns,” said Staples spokesperson Dina Mortada, though she did not offer specifics.
The company said in a June filing with the state that it was eliminating up to 124 positions, but the actual number of people losing their jobs will be “much lower,” Mortada said.
“Staples has created new roles and is encouraging affected employees to apply for these and other open positions within the company to retain as many team members as possible,” Mortada said in an email.
In general, the office supplies category has done better than specialist stores in recent years, according to NPD Group, a consumer insight firm.
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Staples competitor Office Depot has faced the same issues, noting challenges from multiple sectors.
“The office products market is highly competitive and we compete locally, domestically and internationally with office supply resellers, including Staples, internet-based companies such as Amazon.com, mass merchandisers such as Walmart and Target, wholesale clubs such as Costco, Sam’s Club and BJs, computer and electronics superstores such as Best Buy, food and drug stores, discount stores, and direct marketing companies,” reads a Securities and Exchange Commission filing from the ODP, the owners Office Depot.
What Staples is changing
Last year, Staples said it would accept Amazon returns at all its locations, meaning unpackaged, unlabeled Amazon items can be returned at the office supply retailer. Staples also offers UPS shipping services at all its stores.
“These various options turn our Staples stores into a shipping destination for small businesses everywhere,” said Marshall Warkentin, Staples’ chief marketing and merchandising officer, in an interview with the National Retail Federation, a trade group.
Those “remote services” span shipping, printing, tech support and “travel services” such as passport photos and TSA PreCheck enrollment, Warkentin said.
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
Email: [email protected]; Twitter:@danielmunoz100 and Facebook
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Source Link: https://www.northjersey.com/story/news/business/2024/07/02/staples-faces-nj-layoffs/74270586007/
