Summary
1)Being first to market this concept could well be part of the solution of turning around relatively soft Q1 financials for ODP(NYS:ODP), SPLS(NMS:SPLS) and OMX(NYS:OMX). 2)Playing off the fact that consumers and businesses alike are often time-compressed, in-store pick up of web orders appears to be "low hanging fruit" for the first player to launch. 3)The concept would play exceptionally well during the high traffic Holiday season when time is at a premium and last minute shoppers can't be assured that an item ordered on-line will be shipped on time. 4)Finally, in-store pickup offers almost instant fulfillment and "prevents" the avid web surfer/competitive shopper from browsing lowest price sites that offer delivery only, giving the edge back to the brick and mortar retailer by having it available in-store even if the price is higher than the virtual sites.
Analysis
As online retailing continues to exponentially grow year over year, the ability for multi- channel retailers to harness the synergy created through brand loyalty across all channels looms even larger for topline revenue growth. Within the Office Supply sector, any one of the 3 principal players who jump on the bandwagon of in-store fulfillment of online orders could potentially find a significant differentiator within the business model and drive additional topline revenues, save the customer valuable time by ordering and paying first, save significant operating expense by eliminating the costs associated with fulfillment(UPS, RPS, private fleet vehicles) and finally, bring the customer into the retail store which could create opportunities for even more incremental sales with quick pickup items like pens, paper, ink and toner, or print services.
Office Depot, Staples and OfficeMax are already in the top 10 largest internet retailers with sales of $4.3 billion(3rd rank), $4.9 billion(2nd rank) and $2.8 billion(6th rank) respectively; this in itself might be a compelling enough reason to try to lure the customer into the retail store to create the incremental spending opportunities vs ending the transaction at the front door of the customer via normal delivery fulfillment. With somewhat less than stellar Q1 financials at OfficeMax and Office Depot, considering this initiative should at minimum, be on the Boardroom table. This is not a new concept as Circuit City(NYS:LOW) successfully pioneered it in 1999 to overwhelming customer applause. Other retailers such as CompUSA, Sears, and even struggling Radio Shack(NYS:RSH) have since adopted it to increase the opportunity to engage online customers more effectively into cross-selling and increased store purchases and Brand fortifiers.
If I were Ron Sargent, Steve Odland or Sam Duncan, I would have my merchants, marketers, supply chain and store operators seriously working on a feasability study of the model with application to the office supply sector. Quite often, the first horse out of the gate wins the race and obviously gets the most attention. Q1 has already shown that the economy(particularly the small and midsize business segment) is soft and could continue to be soft in Q2. Staples and Office Depot specifically referenced this fact in their Q1 Earnings release. None of the players can change the economy, but the "lead horse" can leverage a weak sector by being first, being different, and winning a larger slice of the share at the expense of the place and show competitors. Who will be the first?
