Staples, the office supply store that got off the ground with a little help from Mitt Romney, announced this week that it is closing 60 stores worldwide (including 15 in the U.S.) as part of a restructuring effort to halt sliding profits. The once-dominant company is facing stiff competition from online retailers like Amazon, which is slowly pushing Best Buy and other big-box stores out of business. Staples is also adjusting to a new corporate environment in which companies are using printers and desktop computers less, relying instead on iPads and other handheld devices. To its credit, Staples has a robust online presence, and some say its announced plan to downsize its physical presence and focus on online operations is a feasible way forward. Can Staples adapt to the digital economy?
Yes. Staples is already adjusting: It's a "sign of good leadership" that Staples is "taking proactive steps to protect" its business, says Seeking Alpha. Staples is still the king of office supplies, and still enjoys healthy profits, which means that it has a cushion going forward. "Staples is restructuring as the winds change, not afterward," which may make all the difference.
"Staples restructuring offers a buying opportunity anew"
No. Soon no one will want what Staples sells: "I wouldn't be so psyched if I were a Staples shareholder," says Cody Willard at MarketWatch. With the advent of cloud computing and the tablet, the corporate world is increasingly becoming paper-free. "You don't need a highlighter for anything on an iPad. You don't need a 3M Post-it for your iPhone. Five years from now, I predict that copier sales will be a fraction of what they are today." The only hope for Staples is that Mitt Romney loses the election, "rejoins Bain, and takes Staples private."
"Staples is doomed"
And it still has Amazon to compete with: Staples may have a sturdy online operation, but "it remains to be seen what Staples will be able to add beyond its facilities and break-room supplies, copy and print, and technology products," says Rick Aristotle Munarriz at The Motley Fool. Staples must diversify its offerings and become "more of the 'one stop shop' experience that Amazon has become over the years." Meanwhile, Amazon is horning in on the office supply industry, and "eating into the turnaround prospects for Staples." Staples' conundrum "isn't something that the company's 'easy' button can easily fix."
"Is Amazon hurting Staples?"