Officeworks has opened a giant megastore in Melbourne to help it take on Amazon

  • The new store is designed to help Officeworks compete with Amazon.
  • It is located in Mentone, which is roughly 21km outside the Melbourne city centre.
  • Products on offer include Apple equipment, standard stationery, and printers.

Officeworks has unveiled its latest defence against Amazon, opening the world’s largest office supplies store where customers can test pens, paint and office chairs while experimenting with voice technology and home automation.

The new store in Mentone in Melbourne’s south east is almost 6500 square metres, four times the size of the average Officeworks store, and carries about 35,000 products, more than double the number in a typical store.

It boasts the largest Apple range in Officeworks’ network, the largest print and copy centre, with massive printers for architects and designers, and more than 1000 square metres dedicated to office furniture.

Mentone customers will be able to book a home visit from Geeks2U, the tech services business Officeworks acquired earlier this month, and order customised sports and corporate gear from ONTHEGO kiosks. Officeworks has also taken a leaf out of Bunnings’ playbook, opening its first in-store cafe and playground.

Officeworks’ new managing director, Sarah Hunter, said the store was aimed at helping customers understand the breadth of Officeworks’ range of products and services, which has grown almost 30 per cent over the last five years to include new categories such as art supplies, educational materials, and internet connected devices.

If customers did not know Officeworks sold paint and easels, for example, they would not search for them online, which accounts for about 20 per cent of Officeworks’ sales.

“Its primary intent is to reimagine Officeworks’ product offer and … allow [customers] to visualise that and see us in a different light,” said Ms Hunter, who took the helm in January from long-serving managing director Mark Ward.

“The secondary benefit is distribution and the every channel benefits it brings.”

Same-day delivery

Because of the wider and deeper range, Officeworks plans to pick online orders for customers in Melbourne’s south-east from the Mentone store rather than from its distribution centre on the other side of town.

“That was not the primary reason we developed this concept but it’s certainly a very strong benefit for us … we can offer same-day delivery to the Mornington Peninsula area,” she said.

The new store, which takes the Officeworks network to 167, highlights the importance of bricks and mortar retailing amid increasing competition from pure-play online retailers such as Amazon.

“We haven’t seen a material shift in the competitive landscape from Amazon in the last 12 months,” Ms Hunter said, “but we recognise they’re a strong player and we are in a highly competitive environment, not just Amazon.

“So creating experiences and connections with our customers and helping them learn and understand what will work for them is absolutely critical.”

However, the shift to bigger boxes comes at a time when big box or category killer retailing is starting to come under pressure.

In a recent report, Online is Eating Big Box Retailing, investment bank Morgan Stanley said big-box retailers are underperforming as consumers shift online and to specialty stores, pointing to weak sales at Woolworths’ liquor category killer Dan Murphy’s.

Prefer convenience

Morgan Stanley analyst Tom Kierath said sales per square metre grew faster at small box retailers than big box retailers in the December-half.

“We think that consumers are shifting away from big-box retail formats as they increasingly prefer convenience and experiences that are better cultivated in a small-box environment,” Mr Kierath said.

Officeworks, however, was an exception, with sales per square metre growing 7.6 per cent in the half-year and total sales by 8.2 per cent to $1.1 billion, lifting earnings 11.8 per cent to $76 million.

Ms Hunter said Officeworks had been operating for almost 25 years in an increasingly competitive landscape and had evolved to meet customers’ needs.

“If we stick to our knitting we’ll continue to be a successful business and grow,” she said.

Ms Hunter, who oversaw the implementation of Coles’ demerger from Wesfarmers, declined to comment on renewed speculation Wesfarmers might be considering selling Officeworks or attempting another float after pulling the plug on a $1.5 billion initial public offering in 2017.

This article was originally published by the Australian Financial Review. Read the original here, or follow the AFR on on Facebook.

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