2. The second factor is rivalry among existing firms.
* Office Depot’s major competitors include: IKON Office Solutions, Staples, United Stationers, OfficeMax, and Wal-Mart Stores. The competition among these firms is highly intense. Another competitor is Fedex Kinko’s (14% of the market segment) * Staples, Office Depot and OfficeMax) comprise about 11% of the market combined. * print and ship services are approximately 17%, ranking it as one of Office Depot's most profitable offerings * Office Depot, Staples and Officemax are the market leaders in the office supply industry. However they only account for 10% of the market. The rest is divided widely between supermarkets, wholesale retailers, discount stores (including Wal-Mart) and smaller independent companies. * Office Depot has made efforts to increase its profitability by offering copy and print services, * One advantage Office Depot has over Staples is its international market. * Company has integrated copy and print services into retail and commercial businesses. Staples provides those services as well= intense competition among rivals. * In an effort to increase their sales, Office Depot decided to implement direct sourcing, which allows companies such to offer its own line of private label goods, and branded goods. Office Depot and Staples are very competitive in this regard, with about one-fifth of all goods sold coming from respective private labels. * We buy substantially all of our merchandise directly from manufacturers and other primary suppliers, including direct sourcing of private brand products from domestic and offshore sources * We offer customer loyalty programs that provide customers with rewards that can be applied against future Office Depot purchases or other incentives. * We currently offer general office supplies, computer supplies, business machines and related supplies, and office furniture from national brands as well as our own private brands. * Most stores also contain a Copy & Print DepotTM offering printing, reproduction, mailing, shipping, and other services. Also, we maintain nationwide availability of a PC support and network installation service that provides our customers with in-home, in-office and in-store support for their technology needs. * Our North American Business Solutions Division sells nationally branded and private brand office supplies, technology products, furniture and services by means of a dedicated sales force, through catalogs and electronically through our internet sites. We strive to ensure that our customers’ needs are satisfied through various channel offerings. Our direct business is tailored to serve small- to medium-sized customers. * sales representatives contribute to customer loyalty by building relationships with customers and providing information, business tools and problem-solving solutions to them. * offering a broad selection of nationally branded office products, as well as private brand products and services. Our selection of private brand products has increased in breadth and level of sophistication over time. We currently offer general office supplies, computer supplies, business machines and related supplies, and office furniture under various labels, including Office Depot®, Viking Office Products®, Foray®, Ativa®, Break Escapes™, Niceday™ and Worklife™ * office supplies specialty stores faced heightened competition from discount department stores, warehouse clubs, supercenters and e-commerce websites, which have undercut demand and eroded the industry's sales.
Threat of new entrants:
Most office supplies are commoditized products, which have little brand loyalty. This, along with low end user switching costs, little government regulation, and easy access to suppliers and distribution channels, is conducive to the entry of new players into the market. Larger players benefit from scale economies that allow them...