Staples buys Office Depot for a whopping 6.3 billion dollars
By Carson Sangala
It was announced on Feb. 4 that Staples plans to purchase one of its main competitors, Office Depot, for 6.3 billion dollars. On Nov. 5, 2013 Office Depot and Office Max merged into one chain of 1,912 locations. When Staples finishes the merge with Office Depot, all the major brick and mortar office supply stores will be under the same ownership.
Staples plans to keep the Office Depot name on current locations, and simply claim ownership rather than homogenize the two into one massive chain. Some consumers are concerned that this may lead to a monopoly; however competition will still be present through online sales from retailers such as Amazon.com. Online retailers have become a large part of the office supply market, in the past ten years online retailers have gone from making up 7 percent ($2.6 billion) of the sales in 2004 to making up 24 percent ($9.2 billion) of sales in 2014. It is estimated that the combined sales of Staples and Office Depot are to exceed $39 billion.
Initially, between the two chains there will be over 4000 locations, but Staples CEO Ron Sargent told the Huffington post, “We have plans to close 225 locations this year”, and Office Depot CEO Roland Smith stated that his company has plans to close 135 stores by the end of this year. “I think it will be good for both companies, but I’m concerned it may create a monopoly,” said Jermaine Riley, Schoolcraft student. “Online will always be able to provide competition, all of the things we can get at stores we can get online…I think for both companies to survive they will need to adapt to the online market, or they may end up like Radio Shack and Borders. Overall I think the merge is a good decision in the short term, but I’m concerned about the long term”.
While there hasn’t been any official statements about whether or not either company plans to continue closing this number of stores yearly, there has been speculation that both chains will continue to down size and focus primarily on online sales in coming years.