Office Depot to open in Mexico; joint venture sees opportunity for 50 stores - forms partnership with Grupo Gigante to open chain of office supplies superstores - Brief Article

Discount Store News, Oct 17, 1994 by Laura Liebeck

DELRAY BEACH, FLA. -- Office Depot, the nation's largest office supplies retailer, will move into Mexico next year with Grupo Gigante as its partner.

Office Depot said it entered into a 50/50 partnership with Grupo Gigante last month to open office supplies superstores in Mexico beginning in early 1995. It will become the first office supplies retailer to open stores south of the border, joining a small group of American retailers that are already expanding into Mexico.

Neither company identified specific store locations.

George Handgis, a veteran retailer who had most recently been Office Depot's vice president of business services, has been named to head the joint venture. No other management appointments have been announced.

Grupo Gigante is one of Mexico's largest retail companies. It operates 190 stores in 49 Mexican cities including food, general merchandise and clothing outlets and has a joint interest in 47 Radio Shack stores. In 1993, Grupo Gigante reported sales of about $2.6 billion.

"The joint venture allows us to combine Office Depot's successful store format and marketing expertise with Grupo Gigante's solid operational structure and 32-year history of retailing in Mexico," said David Fuente, chairman and ceo.

Office Depot stores in Mexico will follow the company's typical 25,000- to 30,000-sq.-ft. layout, said spokesman Gary Schweikhart. Neither company has indicated what name the stores will carry.

"We just signed the deal and we're just starting to form the plans," said Schweikhart. However, he said that Office Depot sees an opportunity for as many as 50 stores in Mexico over the next few years.

The Miami Herald reported that Barry Goldstein, Office Depot's chief financial officer, said that "if it looks like there's room to open more, we'll open more." Goldstein noted that the retailer wants to get one or two stores open early in the year so they can be monitored. "The rollout strategy will depend on how the initial stores do," he said.

Office Depot's international operation currently consists of one store each in Israel and Columbia, under licensing agreements, and 18 in Canada.

It would seem that Office Depot's move into Mexico, coupled with new store openings in Columbia, will mean further expansion into Spanishspeaking countries, though nothing has been announced. Should that occur, Office Depot will join Wal-Mart in South America. Wal-Mart plans to open supercenters and Sam's Clubs in Brazil and Argentina.

Next year, Schweikhart said, Office Depot plans to enhance its operations in all three existing international markets. At a recently concluded Montgomery Securities meeting of analysts in San Francisco, Fuente said that the retailer will open 70 stores per year for the next few years. No specific breakdown was provided.

Office Depot operates 389 stores and expects to end 1994 with 420.