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Office chains up RTA.

NEW YORK - Banking on the ongoing success they've had selling ready-to-assemble office furniture, Office Depot, Staples and OfficeMax all have moved forward with aggressive furniture-merchandising strategies designed to keep their cash registers ringing.

Last year, RTA furniture represented 13 percent of Office Depot's $4.2 billion in sales. OfficeMax, which had sales of $1.8 billion, attributed just under 13 percent of those dollars to furniture. Staples, with slightly more than $2 billion in sales, credits its furniture for generating close to 10 percent of its total.

Understandably, each chain plans on building an even bigger bottom line with the help of larger furniture departments set to showcase broader and deeper assortments that will climb the ladder from home office, all the way to commercial grade.

Each of the office superstores, which often compete head-to-head in key markets, is testing new furniture and furniture formats to differentiate themselves.

"We have been selling RTA furniture since our inception in 1986," says Chuck Searle, furniture buyer for Staples. "Today, my biggest challenge selling these products doesn't involve housekeeping or floor space. Rather, it involves keeping up with the competition, which means Depot and Max, and all the other retail channels that sell RTA products for home and small offices."

While devoting the lion's share of his selling floor to products from Sauder, O'Sullivan and Bush, Searle has taken on a new wood-veneer desk and hutch from Bassett, which at $439 and $164, respectively, represent the first RTA items from the traditional mm goods maker.

Staples is also stocking solid-oak and oak-veneer computer desk from Wood Craft priced at $406, and a solid-pine and veneer letter desk from Bertram & Macleod selling at $164.

To satisfy the customer who wants melamine, Staples imports a line from German-based 3K Mobel and also sells domestically made melamine RTA furniture from Yerger Bros.

Staples, along with OfficeMax and Office Depot, is moving up-market with wood veneer products from Bush Industries. At the high end, for example, Staples is stocking a wood veneer U-shaped work center from Bush tagged at just under $1,000.

OfficeMax, due for an infusion of cash from a stock offering, plans to add more units with the store-within-a-store furniture department it calls FurnitureMax.

"We are getting solid margins from our furniture sales and believe that as we move forward with FurnitureMax stores, which will feature higher-end goods, our business in this segment will become even stronger," asserted Jures Pagrabs, director of investor relations for OfficeMax

There are two FurnitureMax stores, both in the Cleveland area. Encouraged by initial sales, the chain expects to have 20 FurnitureMax units up and running by the end of this year, and as many as 65 in 1996.

OfficeMax meets the growing demand for modular, commercial-quality furniture with O'Sullivan Industries' Incredible Components collection.

"To allow customers to custom-design a work station from the 35 universal components that make up Incredible Components, OfficeMax has also installed an electronic kiosk that we helped develop," explained Mike O'Sullivan national sales manager of O'Sullivan.

Office Depot said it has a variety of furniture merchandising experiments under way, from larger furniture assortments within existing stores to free-standing, furniture stores.

According to Jim Meier, Ameriwood Furniture's corporate vice president of sales and marketing, Office Depot is doing something that could prove to be just as important: "Depot is also said to be making much more of an effort to have its salespeople tie the machine sale to the furniture sale."

"It certainly makes sense that if someone buys a new CD-ROM-based computer, they may have a need to buy some furniture to place it on," acknowledged a spokesperson for Office Depot. "We are working with our store sales force to be even more aware of the selling opportunities."

Staples and OfficeMax are also accelerating efforts in this area.

Kevin Sauder, vice president of sales and marketing at Sauder Woodworking, said, "I see a definite move on behalf of the office superstores to look for a larger number of unique items, including a larger assortment of commercial-grade furniture."

"The office superstores have certainly come a long way from the days when they basically only sold promotional-priced RTA," agreed Kurt Gelke, vice president of marketing and strategic planning at Bush Industries.

At A Glance

Office Depot

Headquarters: Delray Beach, Fla. Founded: 1986 Total Sales (1994): $4.2 billion Furniture as a percent of sales: 13% Number of stores: 448 Average store size: 30,000 square feet

Staples

Headquarters: Framingham, Mass. Founded:1986 Total Sales (1994): $2.1 billion Furniture as a percent of sales: 9% Average store size: 20,000 square feet

OfficeMax

Headquarters: Shaker Heights, Ohio Founded: 1988 Total Sales (1994): $1.8 billion Furniture as a percent of sales: 12.7% Average store size: 23,500 square feet
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Title Annotation:leading office supply stores increase their ready-to-assemble furniture offerings
Author:Allegrezza, Ray
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Jul 10, 1995
Words:794
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