Office supplies: discount stores take the lead.

Office supplies Discount stores take the lead

Have you checked recently how much all those pens, paper clips and manila folders are costing you?

According to the National Office Products Association, you'll spend approximately $1,000 per employee per year on office supplies -- enough to make you start paying attention to your Post-it pads and pencils.

And that's what Staples, the pioneer of the discount office supply industry, and area competitors like Office Club are doing. They're redefining the office supply industry by offering everything you need for the office at an average savings of 50 percent off list price.

Although open in the Los Angeles market less than one year, Staples, the industry founder, has already become the largest discount office supply retailer in Southern California.

The Boston-based chain has 100 stores nationwide, including 21 stores in Southern California. Plans call for a total of 30 stores here by year end.

"We target small to mid-size businesses with up to 100 employees, and the density of businesses that size in the Greater Los Angeles area is enormous," says Staples chairman Tom Stemberg.

"We've got a huge selection of product, warehouse club prices and an exceptional management team. We're confident we can serve the needs of our customers better than any competitor."

This strategy is paying off. In the 10 months since Staples has been here, it has acquired 10 HQ Office Supply Warehouse stores in Southern California. Long Beach-based HQ recently sold off its two remaining California stores to Bizmart in Northern California.

The typical Staples store is 16,000 square feet, stocking items ranging from pens, paper and business machines to computer peripherals, furniture and cleaning supplies.

"We have a compelling story to tell small businesses in this area," says Ed Thomas, vice president and general manager of the California region. "They can come to Staples for every office item, as well as for copying services and telefaxing. Staples also offers a complete catalog and next day delivery service. And unlike our competition, we never charge a membership fee."

When Tom Stemberg came up with the idea of applying the discount warehousing strategy to the $100 billion office products industry, he was president of Connecticut based First National Supermarkets. He was looking for a large, fast-growing business that was underserved by modern distribution channels.

Stemberg felt confident that his formula for cutting costs, buying in volume and slashing prices would work for the highly segmented office supply industry. He also knew his concept would be quickly copied and he was determined to lay a solid foundation for future growth.

His approach has been twofold: hire the best available team and centralize distribution to significantly lower costs on product, labor and real estate. Staples' 130,000-square-foot warehouse in Fontana provides all Los Angeles area stores with daily deliveries.

With discount office supply superstores garnering greater market share, traditional office supply retailers are finding it more difficult to compete. Recent bank foreclosures, like that of the Save More On Office Supplies store in Encino, have become more common.

According to Stemberg, Staples' aggressive approach to expansion will help ensure that it becomes a market leader in every market it serves.

"We're committed to lowering the cost of office supplies for businesses in Southern California," he says. "Our growing network of superstores not only makes us more convenient, but it also increases our buying clout and spreads our costs over more stores, keeping prices low."

Staples became a public company in 1989, trading on Nasdaq under the symbol SPLS.

PHOTO : Discount chains have made a big impact on the Southland, selling items from paper clips to fax machines and furniture

Todd Krasnow is vice president of marketing for Staples.