Staples and the Death of Big-Box Competition

Kevin May Director, GRS Group (310) 614-9329kmay@grs-global.com @kmay_grs

Kevin May
Director, GRS Group
(310) 614-9329
kmay@grs-global.com
@kmay_grs

It wasn’t long ago when there were several large national big-box retail chains that sold a singular category item, such as books, electronics, toys and even men’s formalwear.

You can potentially add office supplies to that list.

There are reports that Staples could be selling off all of its 1,500 stores to competitor Office Depot. This is only one month after the retailer was acquired by private-equity firm Sycamore Partners for $6.9 billion. Meanwhile, Office Depot, which already merged with competitor OfficeMax in 2013, has fewer stores than Staples, at about 1,400.

This seems like a continuation of what has happened in retail for the last several years.

In the book category there is now only one brick-and-mortar chain, Barnes & Noble, which was solidified after the demise of competitor Borders. Bed Bath & Beyond used to have a formidable foe until Linens ‘n Things went out of business. Electronics chain Best Buy faced challenges from two chains, but Circuit City went out of business and smaller national chain HHGregg failed earlier this year. Two years ago Men’s Wearhouse, the leader in tux rentals and suits, bought out rival Jos. A. Bank. Dick’s Sporting Goods is the leader in its category after Sports Authority went under last year.

The pet category is one of the last holdouts for big-box variety, but Petco and PetSmart have even tried to merge.

There are a few reasons we have seen this trend. As documented by GRS earlier this year Amazon literally sells about everything now, and it does not seem like that will slow down any time soon. Meanwhile, before the advent of the online retailer’s dominance, mass-merchandise retailers like Walmart and Target, which have thousands of locations, sell many of the same products, at least in home furnishings and electronics and sporting goods.

The problem for retail real estate landlords, as it is in nearly all of these situations, would be store closures if Staples gets absorbed by Office Depot. After all, since the latter bought OfficeMax there have been a slew of store closings.

Shopping-center owners have been resilient and have found many alternative uses for these empty shells, such as fitness centers and health and education facilities. However, the process is trying, and vacancies, even if they are temporary, mean lost revenue.

About GRS Group

GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions. 

Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance.  We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies, and delivering customized solutions to assist our clients in achieving their investment goals.

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