Office Depot recently posted positive earnings for a second quarter in a rowؙ—a sign of life for a retailer that’s been crushed under stiff competition from Amazon. The reason? Not thinking like a retailer.
CEO Gerry Smith very deliberately touts his company as an omni-channel provider of business services—marketing, administrative, and technical—all under the umbrella of its Workonomy platform. Now, the company is attempting to nudge its way into the shared workspace economy with the Workonomy Hub, rentable desk and office spaces within Office Depot stores.
“The vision from the beginning is how do we utilize the assets we have?” Smith says of the latest step in the retailer’s transformation. “We’re not trying to be WeWork and go to the high-end of the market. We want to be right in the mid-tier.”
The Workonomy Hub’s pilot location launched in Los Gatos, California, in August. Office Depot wouldn’t share specific membership numbers, but their prices are competitive—a dedicated desk or a private office goes for $400 and $750 per month, respectively, compared to $475 and $700 per month at nearby WeWork spaces in San Jose.
The differentiating factor Smith is gunning for with the Workonomy Hub is that it will be a catchall location for business owners: office space attached to an office supply store and its services. Office Depot acquired IT management company CompuCom Systems last year for $1 billion, a clear stake in the ground of Office Depot’s commitment to moving beyond retail.
“The most important piece as we talk to customers is, they need services,” Smith says. “They need someone to help them run their services. Not very many people can go in and say, ‘Hey, I can do your copy and print for you.'”
Expanding into the collaborative workspace economy makes smart use of Office Depot’s dwindling brick-and-mortar stores. The company has shuttered around 300 locations over the past two years, so the Workonomy Hubs could be an economical solution to staving off further closures while upping the cachet of a rather ho-hum shopping experience.
“When we really did the analysis and said, ‘What do we really sell?’ we realized that we had excess space from a store perspective,” Smith said. “[My wife and I] actually lived in Los Gatos before we moved down to the Florida, so I knew the store, knew the market. It’s impossible to get office space in Los Gatos, and the store was old and needed some juice.”
That said, Office Depot has a steep hill to climb to gain traction in an industry so dominated by WeWork, which has more than 14 million square feet of space worldwide. Office Depot declined to offer any clear roadmap on how it’s going to edge its way into the market or where new locations may be. But if choosing Los Gatos is an indicator, Workonomy Hubs may be where there’s not direct competition but still considerable demand.