Blurb: Office Depot now under investigation in Colorado

From the Denver Post:

The Colorado Attorney General’s office is investigating Office Depot’s pricing practices through its U.S. Communities contract program, which allows public agencies to join already negotiated low-bid contracts, according to an Office Depot spokesman.

Colorado is the fourth state to launch an investigation into Office Depot’s pricing policies.

The Cherry Creek School District, which was contacted by the attorney general’s office, said it audited its purchases of 21,549 items over two years, finding that it was overcharged about $2,000.

Just another in the long line of investigations piling up behind our favorite big-box superstore. And by “favorite” I mean…well, you know.

Big Box News: Office Depot Gets a Lifeline is reporting that long-foundering big-box dinosaur Office Depot is receving a cash injection from private investers to the tune of $350 million. According to the article:

With the recession and stiff competition — especially from behemoths like Wal-Mart (NYSE: WMT) — the fortunes of the company have been rough. So, Office Depot has worked aggressively to restructure the operations, such as by closing down stores and slashing headcount. So, the cash infusion will certainly be helpful.

Stiff competition, eh? Yeah, I’m pretty proud to be a part of that. As much as it makes me smile a little on the inside to see a dastardly company reap what it sows, I do feel a little bad for the employees who are out of work whenever a big-box store shuts down. Hopefully soon the companies behind these outdated relics will realize the easier, cheaper, greener way to go and transfer to an online format. Though by then it will probably be too late. Sorry, Office Depot. We were here first.

It’s official: Georgia ends contract with Office Depot

According to the Atlanta Journal-Constitution, after a back-and-forth legal dilemma lasting many months, state officials in Georgia have made it official: the state is ending its relationship with Office Depot over deliberate mispricing.

State officials recently terminated a multimillion-dollar contract with Office Depot after the company repeatedly overcharged and mispriced items for state employees, the head of purchasing confirmed Tuesday.

The company does about $40 million a year with the state and had been Georgia’s sole office supplier since March. Employees at the state’s 129 agencies used purchasing cards to buy everything from printers to desks on the company’s state of Georgia Web site.

Brad Douglas, commissioner of the Department of Administrative Services, said he found mismarked items on the site months after the company was notified there were problems.

“This supplier simply failed to perform,” he said.

Officials at Office Depot refused to answer questions, instead providing a brief statement saying the company has “worked continuously, and in good faith, with the State of Georgia.”

Good faith, Office Depot? That’s not how I remember it. Filter this blog by “Big Box News” and see how many articles are about Office Depot doing something shady. Oh wait, I did it for you. And that number is 10 stories in the past 3 months. That’s a lot of time to be in the news for something most people consider boring. (I personally find the sale and discussion of office supplies quite thrilling, thank you very much.)

Regardless, this is a step in the right direction. The more people who cease to deal with a dishonest corporation, the less likely that corporation is to stay in business. Simple economics, but apparently too far over the heads of Office Depot. I still don’t understand what’s so hard about “treat people the way you want to be treated” as a rule for a business. Some people never learn, I suppose.

Article: Continued Slump Seen for Office Depot

Over at, the web division of the Erie Times News, columnist Malcolm Berko has some dire predictions for Office Depot. In addition to their nefarious dealings, which we have covered at this blog in great detail, there are also a lot of elements of this once-great company that call its future into question. Some of Berko’s highlights?

1. Nearly 80 percent of its customers are small businesses and the economic slowdown is forcing these firms to reduce purchases, become more efficient and to search for less expensive products.

2. Office products are a lucrative $350 billion market and are attracting the attention of big box merchants. But, ODP has failed to acquire the scale advantages or supply chain efficiencies to compete with these lower cost providers.

3. Office Depot’s management really “stinx.” Proof of the stink is the ignominious failure of management’s multiyear plan to improve profitability, remodel stores, expand inventory of private label merchandise, streamline operations, improve efficiency of store employees, and increase working capital.

Since the article is primarily focused on the big-box world, I won’t fault Berko for not mentioning the upswing in reliable, affordable online retailers. A common oversight, but one that big-box giants are going to be hard pressed to ignore for long. In the meantime, as much as it warms my heart, this article is nothing new. It’s just nice to see more and more people taking notice of how these corporate mega-stores are losing ground in the ongoing race for your office supply dollar. Soon we won’t have to talk about them at all.

Big Box stores finally coming around to the idea of “value?”

A recent article at Forexyard addresses the idea of “value” for the consumer being the highest priority for shoppers right now. This means not only the lowest price, but quality products and reliable service. It also states that, begrudgingly, Big Box retailers are coming around to this idea. I say too little, too late.

Analysts expect Staples and rivals Office Depot and OfficeMax Inc to play the “value-for-money” card prominently to woo recession-weary customers this season.

But “value” does not necessarily mean offering cut-rate goods.

“Simply lowering price doesn’t stimulate demand,” Piper Jaffray analyst Mitchell Kaiser said, adding, “it’s going to be all about offering quality products at a reasonable price.”

Companies agree.

“Fitting the right price points and giving customers a great value will be more important in the current economy,” [President and COO of Staples, Inc. Michael] Miles said.

Really, Staples? You’re just now figuring out that maybe customers want more than a low price tag? Not that any of the Big Box places are notorious for giving a great deal, but it’s always been true that service and selection are some of the areas where they just can’t compete with the online guys. Now that the economy is rough and their profits might suffer, they’re turning to the idea of providing actual value? Sounds like a cop-out.

To me, if value to the customer isn’t your priority from day one, then you’re in the wrong business. There are lots of places to buy pens; if your end goal is to sell them then great, do that. But if you want customers that respect your brand, your store, your ideas, and the way you treat them, and ones that keep coming back to you for all their needs because they know you are going to meet them, then value needs to be at the forefront of your mind from the second you open your doors, metaphorical or not.

I’d like to see the Big Box guys get their act together, I really would. Competition is healthy and there will always be demand for instant satisfaction, where you can walk in and walk out with what you need. But until they can do that with a reliable degree of value for the customer, I’m not exactly terrified of my company’s future.

Big Box Watch: Plummeting Stock Roundup

Seems like all is not well in the land of the big-box retailer. According to a few articles passed my way this week, looks like almost everyone is in trouble.

First up is Staples, most recently seen violating overtime laws, which according to reported a record 33% drop in stock price from last year, despite claims of increasing sales. Like everyone, they are quick to cite the failing economy, and I will not deny them that. However, they also cite a lowering of demand for office supplies, which anyone who is in the industry can tell you simply isn’t true. No matter how many people you lay off, you still need enough pens for everyone who is left.

Also on the chopping block is Office Depot, which stock market blog Seeking Alpha lists as a stock to dump if you’re still holding on to any. Though it has recovered from its “economic crisis” plunge, OD stock is nowhere near where it used to be. And with long-term prospects not looking good and intense competition from online retailers, analysts are thinking this is as good as it’s going to get for the big-box chain. A last, dying gasp? Maybe.

All in all, it’s not a good time to be clinging to old business tactics. There’s a reason companies like this are called “dinosaurs”, and it’s not just because they’re old. They’re also lumbering, not too bright in many areas, and tend to get killed off by change.

Big Box News: Staples nailed for breaking overtime law

Business Management Daily has a breaking story on big-box office supply retailer Staples, citing a recent court decision in which the business was found in violation of overtime laws:

A federal jury in Newark has awarded $2.5 million in damages to 343 sales managers employed by office superstore Staples.

The court determined the retailer misclassified the managers as exempt from the Fair Labor Standards Act (FLSA) when they were not.  As a result, the managers were not paid overtime.

Staples maintained it carefully examined the situation to comply with the FLSA, but the jury disagreed. It ruled Staples willfully violated the overtime labor law.

The court has not yet decided whether it will exercise its option to double the damages, as it can in cases involving willful violation of the law.

In a world full of stories of the big-box guys cheating their customers, I hadn’t thought I’d find one where they also cheated their employees. Just another reason why online retailers are a viable alternative. We work all over the world, at all times, and are treated well for our services. Why? Because people are making the switch, and we don’t need to cut corners like the big boys.

Big Box Watch: Office Depot Closing Japan Stores

According to MarketWatch, Office Depot has closed 8 stores in Japan already, with the other 20 reported to be closing by the end of the year.

Office Depot was cited as saying the closures will cost about $13 million.
Office Depot Japan Ltd. opened its first store in 1997. The subsidiary will reportedly continue its mail-order and online sales and soon sell other private-brand goods now marketed overseas.
I really can’t figure out Office Depot. They seem to be having trouble at home and abroad. They face stiff competition from independent online retailers. They’re accused of impropriety across the board, and their stocks are sinking. Yet they tell everyone that they’re doing great, and that profits are up and any minute now they’re gonna surprise everyone. Well, I’m not going to hold my breath.

Big Box Watch: Bad business? Blame the economy!

The Nashville Business Journal just posted an article regarding Office Depot and their most recent disastrous financial unveiling. According to the Journal:

Office Depot Inc. on Tuesday reported a loss of $54.7 million, or 20 cents a share, in the first quarter, down from a profit of $68.8 million, or 25 cents a share, a year ago.

Total sales for the Boca Raton, Fla.-based office supply company for the quarter fell 19 percent to $3.2 billion.

The retailer attributed the loss to one-time charges related to its decision to close 107 underperforming stores during the quarter. Office Depot has 1,160 stores as of March 28.

…Company leaders said the battered economy and the resulting dip in demand for office products was a major factor.

“Resulting dip in demand for office products?” I don’t think so, Office Depot. Internet retailers of office products are doing just fine, thanks. Maybe it’s time to admit that the era of the big-box dinosaur is over when it comes to office supplies? Or maybe that the constantly increasing reports of wrongdoing might be having some effect on your business? Just a thought. But you go ahead and blame everyone else, I suppose. I’m sure we’re the crazy ones for not buying from you.

Big Box Watch: Whistle-blower files more claims of Office Depot overcharging

The Atlanta Journal-Constitution has posted an article that David Sherwin, the ex-Office Depot work and whistleblower who was fired for writing a “nasty email” to his employers, has filed cases with even more states in his ongoing crusade to take Office Depot to task for overcharging government agencies.

Georgia is the latest state where Sherwin, who claims Office Depot overcharged state and local government entities by $100 million a year, has filed a complaint. In the last 10 days, he has filed similar complaints in Colorado, Michigan and Arizona.

Attorneys general in Florida and Missouri are investigating allegations of overcharging following complaints filed by Sherwin.

He said he wasn’t going to stop, and it sure seems like he meant it. Great work, David. Keep it up.