STORES Magazine - July 2008 - (Page T14)

2OO8 • TOP 1OO retailers POWER PLAYERS • OFFICE SUPPLY superstores t’s one thing to be a Power Player within a retail segment, as Office Depot, OfficeMax and Staples certainly are. It’s an altogether different thing to be a power in retailing. One way to illustrate the distinction is to take a closer look at the office supply superstore share of market — approximately 10 percent. By way of comparison, contract specialists have a 21 percent share of the office supply market, specialty stores 20 percent and mass merchants 18 percent. The Federal Trade Commission doesn’t read the statistics this way, however, and has adamantly opposed any alliance, union, merger, marriage or other combination of domestic office superstore retailers – even though each of these companies’ market share is in the low single digits: Staples (4 percent), Office Depot (3.4 percent), OfficeMax (2.3 percent). Nipping at their heels is FedExKinkos, which features the copying, printing and other services found at a typical office supply superstore. As a result of FTC recalcitrance, all the companies have had to seek unique solutions to achieve the bulk necessary to remain competitive in the U.S. market. Staples and Office Depot have looked abroad for partners, while OfficeMax is still dealing with the after-effects of its acquisition by timber company Boise Cascade. Staples already has extensive overseas operations, including a foothold in China (where it has partnered with UPS) and the 2007 opening of its first store in India. Last month, Staples announced it had reached an agreement to acquire Corporate Express, a Netherlands-based contract dealer in office supplies. The four-month campaign yielded a $2.7 billion deal that Staples executives hope will put further distance between the retailer and its rivals. Faced with sluggish sales in its North American division, Office Depot is entering I 37 19 POWER PLAYERS • DRUG STORES heap prescription drugs from the likes of Wal-Mart (which claims to have saved consumers more than $1 billion since rolling back pharmaceutical prices in September 2006), Target and major supermarket chains aren’t worrying the large drug store chains. For the most part, CVS, Walgreen and Rite Aid have ignored the bargain-basement approach to pharmacy pricing, absorbed the punch from the competition and moved on. What’s of more concern to this segment are the reimbursement rates on Medicaid prescriptions delineated in the Deficit Reduction Act of 2005. The large drug store chains have deep enough pockets to deal with the low rates, but reduced revenues could precipitate a wave of pharmacy closings in rural areas and low income communities, where marginal locations are pushed into the “underperforming” category. One industry survey indicates as many as 11,100 pharmacies could C Company CVS Walgreen Rite Aid 2007 Revenues (000) $76,329,500 53,762,000 24,326,846 Comp-Store Rx Sales 5.2% 9.5 1.7 Comp-Store Sales Front-End Sales per Store 5.3% 5.8 0.7 $12,113,870 8,964,815 4,808,627 7 WWW.STORES.ORG T14 STORES / JULY 2008 http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - July 2008

STORES Magazine - July 2008 Contents Executive Editor's Page President's Page Dearth of Retail Creativity What Shoppers Think Wow, Is That a Wawa? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Merchandising Strategy Concept2Watch Point of Sale Outsourcing Human Resources Top 100 Retailers Store Design RFID IT Operations Systems Managements LP Vantage Point Newsbeat Cover Story Emergency Response Systems Background Checks LOEB Retail Letter Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - July 2008

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