In the beginning of the year I talked about the announcement of Staples and Office Depot potentially merging forces.  To this day, the Federal Trade Commission (FTC) is still against the merge, looking to prevent the industry from being completely taken hostage by The Imperial Forces, fearing the merge will only encourage a monopoly in the industry and pose threat of price increases for consumers.  These two retail giants provide office supplies to both large businesses and many consumers based on their footprint, product/service offering, and longevity in the market.  The FTC claims they would own the market if the merger went through and could potentially hurt other businesses chances to compete and impact the industry on the whole. 

However, I still believe that Staples and Office Depot are expanding their focus to other commodity areas like technology, facilities products, copy center solutions, and beverage services; just to name a few.  Although a price increase within office supplies is always possible, it is highly unlikely.  The potential buying power of Staples and Office Depot should only leverage the ability to negotiate more competitively with manufacturer’s allowing for additional concessions for consumers.  In addition, with companies like Wal-Mart, big wholesale clubs, and Amazon, competition is thriving as well for basic office supplies.  The challenge however, is that the companies are still struggling to provide the same type of dedicated account support for large accounts.

What I find interesting lately is the other concerns in the galaxy this merger may affect.  Retailers are keeping their fingers crossed that this merger does not happen, panicked that if the merger goes through, there is a likelihood of store closings in regions with multiple real-estates in close proximity.  Causing unattractive store fronts and retailers to lose the rent on these several thousand footage locations.  Also, what about all of the jobs that would potentially be lost should this come to fruition?  Although workers could have the ability to move from store to store, this would probably not be viable for everyone and the overall workforce would likely be downsized, going hand in hand with store closures.  Unfortunately that is just the mark of the beast…or that way of the dark side.

Another rumor I am hearing is what will happen to Office Depot if this merger is not executed?  Office Depot has never really surpassed its bad wrap after merging with Office Max.  Sales have continued to decline and my experience has told me service quality has not been to par lately.  When engaging with customers, I still hear Staples as the leader in this business.  They are innovators and strategic thinkers, marketing savvy and always one step of the competition.  To be honest, they will go on with or without this merger and will most likely give a little help to Office Depot if this does not go through.

Hence, this only supports my thought that this merger is not a real threat.  It should encourage competition to flourish for office supplies, allowing Staples and Office Depot to nurture their new passions in other areas.  They may seem like the Darth Vader of the industry looking to seek control and a strong force to be considered, but there is still opportunity for the little guys, or the rebel forces- if you will, to work their way up the food chain.
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Leigh Merz

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