Is Amazon Hurting Staples?

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Amazon and StaplesStaples (SPLS) is arming itself to face the enemy, and that's not rival office supply retailers Office Depot (ODP) or OfficeMax (OMX).

Rather, the superstore chain is turning its attention to online retail, where it will try to take on (AMZN).

Well, that's the plan anyway.

Funny Headlines

Staples issued a curiously headlined press release on Tuesday: "Staples, Inc. Announces Strategic Plan to Accelerate Growth."

The headline is amusing because a good chunk of the press release reads more like a staged retreat. Staples plans to reduce its retail square footage in North America by roughly 15% between now and fiscal 2015. The plan for this fiscal year involves closing 30 more stores than it opens and shrinking the size of 30 other stores by either downsizing the locations or moving to smaller spaces.

Accelerate Growth?

It gets worse in Europe where Staples now expects to close 45 stores and sell its European printing business.

Since when did "accelerate growth" become a euphemism for surrender?

Source: Staples, Inc.

Staples will be increasing its investment in online and mobile capabilities. A major part of that strategy is expanding its product lines to go beyond the current assortment of office supplies. It remains to be seen what Staples will be able to add beyond its facilities and breakroom supplies, copy and print, and technology products, but it's clear that Staples is hoping to be more of the "one stop shop" experience that Amazon has become over the years.

"I Need a New Toner Cartridge"

Office supplies seemed to be one of the few retailing niches that were Amazon-proof.

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Staples -- as well as Office Depot and OfficeMax -- has local advantages that Amazon can't match. Office supply stores have localized fleets that can deliver orders for free the next day. Amazon only offers free two-day deliveries to members paying $79 a year to be part of Amazon Prime.

There is often a sense of urgency with office supplies. The printer cartridge has run dry! The last ream of copy paper just ran out! I can't believe your office chair just collapsed like that!
However, apparently Amazon is a problem for this seemingly web-proof industry. What seemed a few years ago to be merely weakness in the face of a recessionary backdrop continues even as Corporate America is gradually finding its footing.

Amazon is eating into the turnaround prospects for Staples, Office Depot, and OfficeMax. Staples wants to be the one to fight back, but this isn't something that the company's "easy" button can easily fix.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of and Staples. Motley Fool newsletter services have recommended buying shares of and Staples.

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