Pandemic compels office-supply retailer to focus more on CompuCom managed services division
Office Depot is joining the growing list of retailers laying off large swaths of its workforce as COVID-19 keeps its stores shuttered and distribution centers idle. The bright spot, though, is its managed services unit, CompuCom, which is doing relatively well and could prove to be a lifeboat in choppy post-pandemic waters.
The Lowdown: In filings with the U.S. Securities and Exchange Commission, Office Depot revealed that it’s laying off more than 13,000 staff — mostly in its retail stores, retail operations, and distribution centers. The cut jobs are part of a restructuring expected to finish by the end of 2023.
The Details: Office Depot’s restructuring plans come as no surprise; the pandemic is exacerbating retailers’ struggles to compete amid a shift to online marketplaces and changing consumer and business buying patterns. The company, which generates $11 billion in sales annually, says the changes and layoffs — which include closing an untold number of stores and distribution centers — will save as much as $860 million annually by the end of 2023.
The bright spot in the Office Depot story is CompuCom, the once-struggling managed service division it acquired in 2017 for $1 billion. CompuCom, like other managed service providers, is seeing an increase in demand for support as companies try to cut fixed costs and cope with the sudden shift in operations caused by the pandemic. Office Depot reports that the unit is performing well and showing signs of growth.
The Impact: CompuCom was seen as a bit of an experiment on the part of Office Depot. Like other office-supply retailers, such as Staples, Office Depot sought a B2B presence and a means to offset competition with Amazon’s retail operation. CompuCom, now leaner and profitable as a result of shedding some components, may prove that managed services can become not just a revenue augmentation but also a replacement for flagging retail and legacy product sales.
Background: In addition to the layoffs and restructuring, Office Depot is trimming its overall global operations. The company sold its Office Depot Nordics division, which oversees retail operations in Sweden, Norway, Denmark, and Finland. The division’s CEO bought the unit, taking 450 employees off the Office Depot books. It’s unclear if the jobs included in the sale are counted in the layoff total.