Office Depot's New Prototype
Jul 8, 2004 10:15 AM
In a stealth development program involving only a few executives, Office Depot quietly reinvented the office supplies retail model in the past year. The first of its Millennium 2 format stores, which the chains says are less expensive to open, more efficient to operate and easier to shop in, opened last week in Venice, Fla.
Office Depot plans to add 80 to 100 new stores this year based primarily on the M2 concept and realign its North American real estate profile to expand into areas where it doesn't have a strong presence -- including Massachusetts, New York, New Jersey and Pennsylvania.
The new stores, averaging 175,000 square feet of selling space, will include relocations, new construction and the incorporation into the network of 50 to 60 of the Kids 'R' Us portfolio it acquired from Toys 'R" Us in March, says Joe Jeffries, director of store operations.
Remodel costs are expected to be $250,000 to $300,000, compared with $350,000 to $400,000 typically associated with Office Depot remodels, says Jeffries.
How can it achieve such dramatic results? For one thing it has redesigned the copy area using 50 percent less space with no loss of revenue. Popular items are bulk-stacked on pallets to reduce labor, with the number of pallets increasing five-fold. A pod format and clear sight lines makes it easier for customers to find what they need, says Jeffries.
"The guiding principle was to further differentiate ourselves from competitors in a market where many customers can't even remember the name of the last office supplies store they visited," says Chad Mikula, director of North American retail. "Millennium 2 will distinguish us -- and save us money."
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