The Staples-Office Depot Merger: How Should CPOs Respond?


Over on our sister site, Chief Procurement Officer, we recently started a series analyzing what a merger of the Big 2 office supply firms, Staples and Office Depot, would mean for buyers. If your company has substantial US operations, you’ve likely sourced office supplies from either of these 2 firms, and the ramifications – and learnings – for CPOs go far beyond the proposed deal.

CPOs should indeed be wary of the implications and be prepared for countermeasures,” Pierre Mitchell, Spend Matters Chief Research Officer, wrote in his post introducing the series. Supply management professionals “are not going to necessarily just roll over if the combined entity comes back with post-merger synergies that include a price increase.”

While federal regulators have recently blocked consolidation in other industries, Staples’ plans to take over Office Depot remain on track, according to recent reports from company officials. Substantial competition exists in the low-end B2B market, including Wal-Mart, Costco, Sam’s Club and BJ’s, Staples said, especially when you consider online competitors such as Amazon, which is actively cheering on the deal.

“Shouldn’t it relish in a dead loss cost to them from a big breakup fee?” Pierre asks of Amazon in his second post. Not necessarily. A “Big 1” rather than a Big 2 would mean slowed competition for lower prices, allowing Amazon to keep its prices higher while still trying to undercut super-Staples.

So what can CPOs do to stave off a price increase in this proposed office supply landscape? How can you manage your market basket when you lose your bidding leverage to a market of one national supplier in the US?

Pierre has the answers in the third and fourth parts of his series, as well as in his responses to the numerous comments readers have left in a heated discussion following these posts. Add your voice and prepare yourself today!  

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