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Master Case: Ratio Analysis: Office Depot: Overview

Concept Title: Office Depot – Overview

Office Depot (Stock Symbol ODP) is one of the largest retailers of office supplies in the United States. The company has 978 stores in 19 countries and Sales of $10.263 billion in 1999 with a net income of $257 million.

Office Depot started out in 1986 from Florida, at a time when warehouse retailing did not exist.

The office supplies segment and small independent office product suppliers were the only players in this industry. Warehouse retailing, therefore, brought in a welcome change as it offered the buyers a wide variety of brand names, office products, computer hardware, software and office furniture and accessories all under one roof.

ODP reaches its customers through three business segments: Stores, Business Services Group and International. Target customers are small firms, home offices, and individuals. Nearly one-third of its sales come from its Business Services Group, which offers contract services and delivery to large businesses.

ODP’s key focus is on customer service; it aims at being as close to the customer as possible in order to satisfy customers’ needs in the best possible manner. Management has a policy of receiving and accepting orders through fax, phone, Internet, catalog and retail stores. The distribution network ensures quick availability of products at retail stores and also allows free delivery to customers the next working day. The key to success, in this business is the ease of ordering and delivery.

The company’s online division started in January 1998. Management aims at capturing 80% of the online office supplies market share and would also like to convert catalog and order-by-phone customers into online customers.

Offering discounts is also a common feature at retail outlets and is a big customer attraction. Besides offering discounts in the form of everyday low prices, the company also aims at reducing prices of many of its traditional office supplies. This strategy is in line with giants in other retailing segments, that is, a preference for being a price leader rather than a follower.

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