Staples launches British invasion - Staples, The Office Superstore Inc.'s joint-venture with Kingfisher PLC

Discount Store News, Jan 4, 1993

Staples' move across the ocean to England this year is small enough not to shake the British retail community, but it does foretell the beginning of a Yankee invasion.

The partnership agreement between Staples and Britain's Kingfisher plc, finalized less than eight weeks ago, could result in the addition of up to 100 Staples stores in the United Kingdom in five years.

This year, Framingham, Mass.-based Staples will debut four office supply superstores in the United Kingdom in a 50-50 partnership deal with Kingfisher, one of Britain's most diverse retailing companies. Among Kingfisher's holdings are Woolworth's (U.K.), B&Q, a home improvement chain, Superdrug, a drug store chain and Comet home electronics stores.

The exact locations of the four U. K. units have not been disclosed. However, the units will resemble typical U. S. Staples stores, said Beth Stone, manager of public relations for Staples. She said the stores will be approximately 20,000 sq. ft. and contain 5,000 skus of merchandise, pretty much Staples' typical U.S. mix of goods.

Each store will be called "Staples the Office Superstore."

Kingfisher and Staples are considering the initial four U. K. stores a test. Should they prove successful, "the possibility exists for there to be up to 100 stores in the U. K. in five years," Stone said.

Negotiations on the Staples/ Kingfisher deal started seven months ago, and bring to two the number of partnership arrangements Staples concluded last fall. The first one was for a 48% stake in a small German office supply retailer, the five store MAXI-Papier.

Staples' other international venture, Business Depot of Toronto, Canada, is two years old. Staples holds a 20% stake in Business Depot, with the option of continuing to acquire more equity and eventually to assume complete ownership of the chain.

Like Toys "R" Us, perhaps the most successful American retail chain with stores outside the continental United States, Staples learned that a knowledgeable partner is vital to success overseas.

Staples chairman Thomas G. Stemberg said, "Kingfisher's knowledge of the U.K. retail market and our expertise in the office superstore industry create a sound opportunity for joint growth and expansion."

The benefit is also on the other side of the ocean. Said Kingfisher chairman and chief executive Geoffrey Mulcahy: "We are very pleased to be entering the growing office supply market in the U. K. Staples' expertise in the office superstore industry will allow us to bring good value office supplies to the U.K. consumer."

For now, at least, Staples will be the lone U. S. office retailer to venture across the Atlantic.

Despite speculation recently published in England's Retail Week, Staples will not soon be joined in the U. K. by Office Depot, the largest U. S. office supply chain with a year-end 1992 store count of 285 stores.

Gary Schweikart, manager of public relations for the Delray Beach, Fla.-based chain, said Office Depot has no plans to go to England.

We've made no announcements regarding expansion beyond the U.S. and Canada," said Schweikart, noting that Office Depot continues to expand "aggressively" across Canada.

OfficeMax, Kmart's office superstore subsidiary, is a likely competitor to Staples in the U.K., however.

Last year, OfficeMax - now with 260 U. S. stores as a result of its acquisition of BizMart - registered the OfficeMax name in the United Kingdom and Mexico, positioning itself for future expansion beyond the continental United States.

OfficeMax president and chief executive Michael Feuer would not comment on the company's U.K. plans.

All he would say is that OfficeMax has "a whole bunch of opportunities out there," referring to the U.K., Eastern Europe and Mexico. He has no plans at this time to take OfficeMax to Canada.

OfficeMax's 1993 plan does include a vault over the Atlantic to Puerto Rico and a leap across the Pacific Ocean to Hawaii. The chain also is looking at a number of sites in Alaska.

Even with the acquisition of BizMart's 104 stores, to be completed next month, OfficeMax plans to add another 55 stores this year. Specific sites were not disclosed.

Schweikart of Office Depot also would not identify Office Depot's 1993 expansion plans for Canada or the United States. He did say that Office Depot will open 60 stores this year, including "a couple of new markets." Currently, Office Depot operates nine stores in western Canada, in Alberta, British Columbia and Manitoba.

This year, Office Depot will open in Detroit with a group of stores. Last month, the chain entered the Chicago market.

So far, the only potential international battleground for U. S. office chains is Canada - between Staples and Office Depot - and so far, they are miles apart. Office Depot operates stores in western Canada, and Staples is in the eastern portion.