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Will The Pandemic Kill Staples And Office Depot For Good?

Traffic trends for retailers Staples and Office Depot have analysts and brokers uncertain about the future for the brick-and-mortar retail office goods segment.

"Looking at both brands, there is a clear narrative guiding the conversation around the sector — how can it survive? And there is some legitimacy to this concerned perspective,"'s Ethan Chernofsky wrote this week after releasing store traffic data on Staples and Office Depot. 


The report came a few weeks after Office Depot's parent company rejected Staples' bid to acquire its competitor for $2.1B, USA Today reported. The report indicated Office Depot was open to some sort of merger of retail operations through a joint venture, but neither news lifted the negative outlook for the office goods retail segment. 

Even before the coronavirus pandemic, both brands reported average monthly visits that were down by more than 5% year-over-year in 2019, data shows. Office Depot took a bigger hit with visitor traffic counts down by 7.4% on average in 2019, compared to Staples' 5.7% drop. 

Average monthly visits for both brands fell by at least 19% in 2020 after the pandemic further stymied retail traffic nationwide. 

Even though both retailers experienced improved traffic numbers in the final months of 2020, with Staples down only 7.7% year-over-year during the week of Dec. 7 and Office Depot down 13.3% that week, brokers handling shopping centers and analysts warn the fate of both concepts is on shaky ground.

Store closings in the segment have been routine, with Office Depot noting in its most recent third-quarter 2020 earnings report in November that year-over-year it had 73 fewer stores operating due to the closure of underperforming locations. UBS reports the retailer has 1,250 stores. 

Any center with a legacy office product concept is already on alert about the risk of losing Office Depot and Staples as a tenant in the future, said Venture Commercial Vice President Ryan Smith, who consults landlords across Dallas-Fort Worth on grocery and large retail center anchors. 

"Anytime I am looking at a project, I say to myself we need to start planning today as if this tenant won't be here in the next five years," Smith added. 

Smith said office goods retail is going through what Borders and Barnes & Noble bookstores experienced in the mid-2000s when digital book sales gradually challenged the retail segment's brick-and-mortar experience. Now, like Borders, office retail is no longer a staple tenant for shopping centers wanting long-term stability.

And unlike Target, Costco and other full-service retail concepts, Staples and Office Depot don't offer a one-stop shopping solution. At Target, a person can buy a computer and groceries in one place, Smith pointed out. But once inside an office supply store, you are limited to options that you can already buy online or somewhere else. 

"Their concept just doesn't have a place as it once did in the market," Smith told Bisnow

More closures or a possible bankruptcy from either company would mean a wave of spaces to backfill around the country. Smith is prepared to brainstorm with clients what types of tenants — from soft clothing retailers to gym and entertainment concepts ― are capable of filling in these larger retail spaces, which often can be around 30K SF. 

The other alternative is restructuring the spaces by cutting them into smaller units, but there's a downside to that plan as well.  

"You need to consider the cost it is going to take to repurpose the box for two tenants," Smith said. "And I've always told my guys, you can probably spend close to $1M separating storefronts, utilities and tenant improvement allowance dollars for two tenants as well as commission fees."