Office Depot’s New Tech Aims to Boost In-Store Service and Omnichannel Access
Office Depot is leveraging some of its newest hand-held technologies as it adjusts its operations during the COVID-19 crisis.
The retailer, which also operates the Office Max chain, said its stores remain open as essential businesses specializing in school and office supplies, offering online ordering and delivery options, too. In addition, it has added a curbside pickup service amid the pandemic, which makes use of the company’s new hand-held TC51 devices from Zebra Technologies.
“We recently implemented a curbside pickup program to better meet the needs of our customers and help them get what they need safely,” Jonas Stillman, Office Depot's director of store systems, told CO—. “This functionality was built out on our TC51 devices within a few days and has been a tremendous success.”
Office Depot last year transitioned from an iOS-based to an Android-based platform that allows the company to develop its own specialized applications designed to streamline workflows and improve customer service. After a thorough testing process, Office Depot selected and rolled out the Zebra Technologies TC51 handheld device, based on feedback from workers.
Meanwhile, Office Depot’s delivery drivers are carrying Zebra’s TC56 touch computers to facilitate contactless delivery through the company’s proof-of-delivery application.
Expanding omnichannel capabilities
Office Depot has been using technology to put more selling power into the hands of its store-level workers as it expands its omnichannel capabilities amid burgeoning online orders.
The company is seeking to enhance the service levels in its 1,300 stores to provide a point of differentiation against rivals such as Staples and online sellers like Amazon, while at the same time making it as easy as possible for customers to buy product whenever and wherever they choose.
That push comes as Office Depot announced in January a partnership with Shipt, the delivery service owned by Target, to offer same-day delivery of office supplies from Office Depot store locations in 200 markets.
Taken together, the moves reflect strategic maneuvers by the chain to enhance the convenience it offers customers as the digital economy challenges office supply merchants, and as rival Staples adds co-working experiences to differentiate its own model.
A report from Zacks Equity Research noted that Office Depot has leveraged technology and automation efficiently, which is gaining traction in its e-commerce efforts.
“The recent collaboration with Shipt … to provide a quick and convenient shopping experience, is commendable,” the report said.
It has allowed us to shift labor from tasks that were not customer-facing to having more staff doing what they should be doing, which is selling more product.
Jonas Stillman, director of store systems, Office Depot
Automating tasks like inventory tracking and shelf-space planning
Office Depot has rolled out a suite of applications that its store-level workers can use to assist in the sales process when interacting with customers, and for operational functions such as inventory tracking and store planogram verification. The applications automate and consolidate many of the functions that previously had been done with a pen and clipboard or were performed on other systems.
“It has allowed us to shift labor from tasks that were not customer-facing to having more staff doing what they should be doing, which is selling more product,” Stillman told CO— in an interview at the National Retail Federation conference in New York.
The consolidation of applications on the single mobile device has also allowed the company to eliminate the use of paper for all store operations, he added.
The devices help employees provide better service to customers on the sales floor through applications such as a product lookup tool that allows workers to easily view details about any item the retailer offers. It also provides operational details about each product, such as where it belongs in the product planogram, whether or not it is available in the stockroom, and, if so, where in the stockroom it’s located. That particular app is used about a million times per day in the stores, Stillman said.
Another practical app that can help store-level workers drive more sales is the omnichannel application, which can be used to facilitate customers’ online orders for in-store pickup, or online orders that can be shipped to a customer’s home or office from the stores.
For store managers, the devices allow them to view store sales levels throughout the day — something that previously required them to go to a back office.
The device also includes applications that aren’t directly connected to product sales, such as skill training applications, and video messages from Kevin Moffitt, chief retail officer of Office Depot, that are designed to focus workers’ energy. The messages are broadcast to workers each time they log into their mobile device.
“It’s a message from him to make sure that all 25,000 associates in our retail stores are on the same page as far as what our priorities are,” said Stillman. “This device has helped us enable that, because all of our front-line associates have one of these devices in their hands.”
Stillman stressed that even though the devices have helped the company automate some of the functions that previously had been done manually, Office Depot has not reduced its store-level staffing, opting instead to have workers spend more time interacting with customers.
The new applications and devices required minimal training, he said, because the company worked hard to make sure they were intuitive and mimicked the flow of the previous processes.
Office Depot is also deploying 3,500 new TC56 devices from Zebra Technologies to its warehouses and delivery operations, said Norm Parker, who oversees Office Depot's supply chain field support teams.
Similar to the consolidation of functions on the in-store devices, the supply chain devices also will combine legacy warehouse functions in a new suite of applications that can be accessed on a single device.
Office Depot’s supply chain also will use a software application called Workforce Connect that will facilitate push-to-talk telephonic communications between distribution centers and between the distribution centers and the corporate office.
“Through our investment in Zebra technology devices, we have seen improved productivity, accuracy and delivery performance across our private fleet and fulfillment operations, which have contributed to an enhanced customer experience,” said John Gannfors, chief merchandising and supply chain officer for Office Depot.
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Published May 19, 2020
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Enhanced Fulfillment Service Provides Orders Now in 30 Minutes or Get $5 Off Next Qualifying Purchase
BOCA RATON, Fla., June 28, 2021--(BUSINESS WIRE)--Office Depot, a wholly owned subsidiary of The ODP Corporation (NASDAQ:ODP), a leading provider of business services, products and digital workplace technology solutions through an integrated B2B distribution platform with an online presence and approximately 1,100 stores, today enhanced its in-store and curbside pickup option to 30 minutes at Office Depot and OfficeMax stores nationwide.
Customers can take advantage of this free and convenient best-in-class service by simply placing a qualifying order online at officedepot.com or via the Office Depot mobile app and selecting "Store and Curbside Pickup" at checkout at least two hours before the store’s closing time. For in-store and curbside pickup orders not ready in 30 minutes, customers will receive $5 off their next qualifying purchase1. Visit officedepot.com/pickup for complete details.
"As work models and learning environments continue to evolve, customers are looking for solutions to meet their school and business needs in near real time to maintain productivity," said Kevin Moffitt, chief retail officer for Office Depot. "We are making a promise to our customers that online and mobile orders will be available for in-store and curbside pickup in 30 minutes – guaranteed. By improving our fulfillment time from 1 hour to 30 minutes, we are reinforcing our commitment to speed and convenience."
A one-stop solution for all business and learning needs, Office Depot offers customers office supplies, technology, cleaning and breakroom products, furniture, printing solutions and more through a variety of additional fast and convenient shopping and fulfillment services, including:
Same-Day Delivery: Qualifying orders are available for same-day delivery! Simply place an order, choose a delivery window that’s convenient for you, and the products will be delivered to your door in as little as one hour.
Same-Day Printing Services: A wide portfolio of print solutions including flyers, signs, posters, banners, marketing materials and more, are available for same-day pick-up! Qualifying orders must be placed in-store or online for in-store pickup by 2:00 PM local time and Same-Day Service must be requested at time of order.
Free Next-Business Day Delivery: Spend $45 or more on qualifying orders and get free next business-day delivery.
Office Depot Automatic: Choose from products such as coffee, water or office supplies, set a delivery schedule and let Office Depot take care of the rest. Your supplies can come automatically when you need them, for as long as you need them. And, you can easily modify, skip or cancel your product subscription at any time.
Tap & Pay: For fast and simple checkout, contactless mobile payment solutions including, MasterCard, Visa, American Express, Discover, Samsung Pay, Apple Pay, Android Pay and more, are accepted at Office Depot and OfficeMax stores.
About Office Depot
Office Depot, LLC is a wholly owned subsidiary of The ODP Corporation (NASDAQ:ODP), a leading provider of business services and supplies, products and digital workplace technology solutions to small, medium and enterprise businesses, through an integrated business-to-business (B2B) distribution platform, which includes world-class supply chain and distribution operations, dedicated sales professionals and technicians, online presence, and approximately 1,100 stores. Through its banner brands Office Depot® and OfficeMax®, as well as others, the company offers its customers the tools and resources they need to focus on their passion of starting, growing and running their business. For more information, visit news.theodpcorp.com and follow @officedepot on Facebook, Twitter and Instagram.
The ODP Corporation and Office Depot are trademarks of The Office Club, Inc. OfficeMax is a trademark of OMX, Inc. CompuCom is a trademark of CompuCom Systems, Inc. Grand&Toy is a trademark of Grand & Toy, LLC in Canada. ©2021 Office Depot, LLC. All rights reserved. Any other product or company names mentioned herein are the trademarks of their respective owners.
1Excludes tax. No cash back. Other restrictions apply. See email for coupon terms and conditions.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210628005100/en/
Office Depot closes deal to buy OfficeMax
NEW YORK (Reuters) - Office Depot Inc ODP.N on Tuesday closed its deal to buy smaller rival OfficeMax Inc OMX.N but both U.S. office retailers reported third-quarter results that missed Wall Street's profit targets, underscoring the challenges the combined company will face.
The retailers also named the two firms’ chief executives as co-CEOs of the combined company while the search continues for a permanent replacement.
Last week, the retailers received regulatory approval for their $976 million deal. It aims at cutting costs, consolidating stores, boosting clout with suppliers and improving their chances of fighting market leader Staples Inc SPLS.O, as well as online and discount rivals.
Uncertainty around the timing of the Federal Trade Commission approval made it challenging to find a new CEO by the time the deal closed, the committee in charge of the search said. But it expects to complete the process in the “near future.”
Janney Capital Markets analyst David Strasser had expected the combined company to name a new CEO today, but did not read too much into the company not doing so.
“These things don’t happen based on a schedule of office. They happen based on schedules of the people involved,” Strasser said.
Despite the lackluster report cards from the companies due primarily to weak sales, he said the combined entity “is ultimately a better company,” citing a stronger balance sheet. The deal is also good for the industry as it will take out excess capacity, Strasser said.
Neil Austrian, chairman and CEO of Office Depot, and Ravi Saligram, president and CEO of OfficeMax, will serve as co-CEOs in the meantime.
The combined company will use the name “Office Depot, Inc” and will trade on the New York Stock Exchange under the symbol ODP. It will continue to operate from both Boca Raton, Florida, and Naperville, Illinois, until a new CEO is on board and a final decision on a headquarters location is made.
Office supply stores are fighting a battle for relevance, with shoppers increasingly buying their paper, toner and technology online from Amazon.com Inc AMZN.O, drugstores or mass merchants. Analysts covering office supply stores have long called for consolidation in what they see as a cluttered sector whose sales crumbled during the last recession.
The combined company would have had revenue of about $17 billion for the 12 months ended September 28. It expects to incur about $200 million in one-time operating costs this year, and up to an additional $400 million in integration costs and $200 million to $250 million in capital spending over the next three years.
By the end of the third year following the close of the merger, it expects cost savings in the upper half of the previously estimated $400 million to $600 million range.
OfficeMax directors Joseph DePinto and William Montgoris, and five Office Depot directors, including Kathleen Mason and Justin Bateman, have decided not to seek appointment to the combined company’s board.
OfficeMax’s third-quarter net income fell to $30.4 million, or 34 cents a share, from $433.0 million, or $4.92 a share, a year earlier. Excluding store closure charges, merger-related costs and a host of items, OfficeMax earned 15 cents a share, falling short of analysts’ average estimate of 22 cents a share, according to Thomson Reuters I/B/E/S.
Office Depot’s net income, after preferred stock dividends, was $133 million, or 41 cents a share in the third quarter, compared with a net loss on that basis of $70 million, or 25 cents a share, a year earlier. Excluding items, it earned 2 cents a share, missing the estimate of 6 cents a share.
In office depot one all
Office Depot’s President on How “Mystery Shopping” Helped Spark a Turnaround
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Peters (in the middle) with Office Depot employees
Photography: Courtesy of Office DepotThe Idea:
The office products retailer was measuring customer service using metrics— such as the cleanliness of bathrooms—that didn’t drive sales. Its new president is trying to fix that by retraining the staff and transforming the company.
When I became the leader of Office Depot’s retail stores in the United States, in 2010, the first thing I tried to do was figure out the meaning of a puzzling set of facts. Our sales had been declining, and although that’s not unusual in a weak economy, they had declined faster than the sales of our competitors and of retailers in general. At the same time, the customer service scores our third-party mystery-shopper service was reporting were going through the roof. This didn’t make any sense. How could it be that we were delivering phenomenal service to our customers, yet they weren’t buying anything?
To understand these contradictory data points, I decided to do some mystery shopping myself. I didn’t wear a suit. I didn’t wear a blue Office Depot shirt like the ones employees wear in all our U.S. stores. Instead I wore a faded pair of jeans, a T-shirt, and a baseball cap. I didn’t tell anyone I was coming to visit, and in most cases I didn’t let anyone know afterward that I’d been in the store. What I wanted was to experience Office Depot in the same way our customers do. Over the next several weeks I visited 70 stores in 15 or more states.
At each location I followed the same routine. First I pulled into the parking lot and just watched customers go in and out for a few minutes. When I went into the store, I’d spend 20 to 30 minutes observing what was going on. I’d talk to customers, in the aisles and as they were leaving the store. Some of the most interesting conversations took place when I followed people out who weren’t carrying shopping bags and asked them why they hadn’t bought anything. Some of them gave me an earful.
I could tell you a lot of stories about the things I saw, but two scenes stand out in my mind. In one store I watched an employee argue with a customer about whether or not we carried a calculator that her son needed for first grade. An employee arguing with a customer—it was unbelievable.
At another store, I parked and saw an associate leaning up against the brick facade smoking a cigarette. Meanwhile, customers were walking out without any bags. This employee did nothing—he just watched them leave empty-handed. At that point I had a tough decision to make: Should I blow my cover and alert the store manager, or should I stay silent? I sat in the car a few minutes, thinking it over. Finally I decided, I just can’t let this go.
I went into the store and looked at the stanchion that stands at the front of every location, displaying the name of the manager and his or her picture. Guess who the store manager was? Yes—the guy smoking outside the store. So I went up to him and introduced myself, and we had a good long talk. He was ashamed of his behavior—and he was sweating during the conversation. He promised he’d do a better job of taking care of customers, and I promised to keep in touch. Even today we exchange e‑mails every month to discuss his performance.
Get In, Get Out
During most of my visits, though, I managed to stay incognito, and I came away having learned a big lesson: Our mystery-shopping scores were correct. You know what was flawed? Our scoring system. We were asking the wrong questions. We were asking, Are the floors clean? Are the shelves full of inventory? Are the store windows clean? Have the bathrooms been cleaned recently? Think about that for a moment: How often do you go to the bathroom while shopping for office supplies? It turns out that customers don’t really care about any of that. Those factors don’t drive purchases, and that’s why our sales were declining. It would be easy to blame our associates for ignoring shoppers, but under the system we’d built, they weren’t doing anything wrong. They were doing exactly what we’d asked them to do—working to keep stores clean and well stocked instead of building relationships with customers.
My conversations with customers gave me three insights into how we should transform our business to become more competitive: One, we had to reduce the size of our stores. They were too large and too difficult to shop in. Two, we had to dramatically improve the in-store experience for our customers. That meant retraining our associates to stop focusing on the things our existing system had incentivized them to do and focus on customers instead. Three, we had to look beyond office products to provide other services our customers wanted. They wanted copying, printing, and shipping. They wanted help installing software and fixing computers. We needed to expand our offerings if we were to remain relevant to our customers.
Talking directly with dozens of customers also reminded me of a cold, hard fact: They have many choices. Office products are a $300 billion industry, and the top three players—Staples, Office Depot, and OfficeMax—account for less than 10% of that. Approximately 65% of our customers are small and midsize businesses, and buying office supplies doesn’t add value to what they do. It’s a chore. They want to get in and get out—they care about convenience above all else.
Less Stocking, More Selling
On the basis of that feedback, we began to transform our business. It’s probably one of the most challenging journeys I’ve taken in my life. We started by designating two test stores, one in Chicago and one in south Florida.
Many of the changes we made were done behind the scenes, in parts of the business that customers don’t see. We altered the way our supply chain operates so that we could accept deliveries from vendors even when no one was in the store to sign in the merchandise. We began separating stock onto U-boats (the narrow stocking carts we use in aisles) assigned to different parts of the store and delivering the U-boats to an optimal spot—marked with an X on the floor—to minimize the labor required by associates to stock shelves. We also divided the store into zones and began having the same associates stock the same sections repeatedly. Becoming expert in one area of the store allowed them to restock faster, reducing labor.
Many people think that in order to improve service, you need to hire more frontline workers. But in fact, by finding ways to reduce the time employees spend on functions such as stocking shelves, we’ve been able to repurpose their time for selling to customers. Each of our stores employs 18 people on average; by finding ways to work smarter, we’ve been able to save 80 hours a week—the equivalent of hiring two full-time salespeople but at no added cost.
Once our associates had more time to serve customers, we needed to ensure that they knew how. We simplified our sales process from five steps to three—it’s now called ARC, for “Ask, recommend, and close”—and trained them to implement it. We taught them to ask customers open-ended questions. Our research indicated that in certain departments—such as furniture—sales go up by more than 100% when associates with really good product knowledge are assigned to those zones. So in addition to sales training, we invested in product training.
When a retailer delivers poor service, many people are quick to blame the employees. In my experience, it’s more complicated than that. We have 22,500 associates in our retail organization; one of the things we did as part of our change program was to have every one of them take a test built on the Myers-Briggs Type Indicator to help us understand their skills, behaviors, and attributes as they relate to serving customers. An interesting thing we found was that we’d been hiring people who were most comfortable with their backs, rather than their bellies, to the aisle. Roughly one in five associates preferred performing tasks on merchandise over interacting with customers. A challenge we faced in rolling out these initiatives was how to help those workers become comfortable with the ARC culture—or, frankly, to help them find other meaningful jobs within the company if they couldn’t acquire the right selling skills.
Smaller Is Better
You can’t drive changes like this overnight. Our business has been around since 1986, and that’s a long time for employees and customers to establish expectations and behaviors. These changes won’t be completed in the next month or the next quarter—maybe not even in the next year. In addition to the two “lab” stores in Chicago and Florida, we’ve rolled out 30 pilot stores, and we’re seeing encouraging evidence of an improvement in sales. We’re also hearing positive anecdotal feedback from customers and associates. (There has been a dramatic improvement at the store where I caught the manager smoking outside: Today it is one of the top performers in the company.) We hope that by the end of 2011, 325 of our stores will be utilizing the new system.
We’ve also made progress in shrinking the size of our stores. Today they average 24,000 square feet. We’ve already had success with new stores of 15,000 to 17,000 square feet. We are introducing a small-format store that’s about 5,000 square feet. It carries only 5,000 SKUs—compared with 8,500 SKUs in our traditional stores—but because they’re our most popular products, they represent 93% of what we sell in a traditional store. This format will allow us to be in downtown markets like New York City or in remote markets where we wouldn’t consider putting a large-format store.
As we work to make these changes, I still try to visit our stores as frequently as possible. It’s really the only way you can know how your business is doing. You have to see how customers are being treated, and you can’t rely on reports or scores or hearsay—you have to experience it yourself. If you think your company is doing well with customer service, ask yourself, Am I really sure? Do I know what the customer experiences?
What I pay attention to most of all is how many people are leaving the store without a shopping bag. I’d be glad if people came to our stores to browse, but this is not a browsing industry—people are shopping with a very specific purpose in mind. If they don’t make a purchase, something has gone wrong. If we can reduce this “balk rate” by just 10%, it will have a meaningful impact on both our top-line revenue and our margins.
You also have to make sure you’re measuring things that really matter to customers. I can tell you from firsthand experience what happens when you measure the wrong things. I always try to remember that we need our customers more than they need us—and we’d better act like it.
Our mystery-shopping scores were correct, but our scoring system was not. We were asking the wrong questions.
We found that we had been hiring people who were most comfortable with their backs, rather than their bellies, to the aisle.
A version of this article appeared in the November 2011 issue of Harvard Business Review.
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