Office Depot's move to smaller-format stores will allow retailer to customize product assortments regionally; chain opened 19 stores in 2012 of 4,800-6,700 sq. ft., compared with 10,000-sq.-ft. average of traditional store

, January 18, 2013 () – Office Depot's move to smaller-format stores will allow the chain to tailor product assortments to demand in individual regions and markets as it moves to a narrower mix of SKUs in brick-and-mortar locations, Alan Adams, senior director-customer relationship management marketing at Office Depot, told us Monday at the National Retail Federation show in New York.

The move to more tightly manage inventory comes as the chain opened 19 new outlets in 2012 averaging 4,800 to 6,700 square feet, compared with the 10,000-square-foot average of its more conventional stores. Office Depot plans to move 359 locations as leases expire to the smaller format during the next five years, including 245 by 2015, the company has said. The most recent small-store format locations have opened in Denver and in Memphis. Another 70 stores will shift to a "medium-size" format of 8,000-15,000 square feet during the same period in "higher-volume" locations, the company has said.

During the next three years, 37 percent of the chain's store leases will come up for renewal, the company has said. Office Depot will incur $60 million in capital costs for the smaller-format strategy through 2017, it has said. Office Depot plans to close 10 to 20 outlets this year, it has said. In 2013, Office Depot also plans to "downsize" or relocate 100 stores with expiring leases producing $20 million in cost savings, it has said.

"We're clearly trying to address different pieces of the customer need and there are many different segments of our customer base," Adams said. "The largest push is to find the best way to leverage the full power of the chain as opposed to thinking of it in an isolated way. These smaller format stores help in understanding the appropriate assortment and elements that our customers want." The smaller format, which plays up mobile devices, "makes something that's convenient for the customer and makes it easier to have the appropriate assortment they need right away," Adams said. -- Mark Seavy
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