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Wednesday, June 27, 2001
 
2001 Small Business profiles

Supply of office stores swells

By Bill Kossen
Seattle Times business reporter


Betty Udesen / The Seattle Times
Staples' first store in Seattle is on 15th Avenue West near Magnolia. The Massachusetts company plans to have seven more superstores in the Seattle area by the end of this year.

First came Office Depot and Office Max. Now fast-growing Staples is setting its sights on the Seattle area, where it is opening eight office-supply superstores this year.

That could spell trouble for struggling Office Depot and Office Max. Both have closed dozens of stores nationwide this year.

And it could seem the beginning of the end for owners of the remaining small, independent office-supply stores in the area.

But while the rise of the big chains has put added pressure on them, some small office-supply owners don't seem too worried about Staples moving in.

"They mostly beat each other up," Mona Al-Haddad, manager of Stylus Paper & Pen in University Village, said of the "big box" competitors. "Whenever they go into the same market, they tend to just attack each other."

And despite troubles elsewhere in the country, Office Depot and Office Max aren't planning any liquidation sales here.

"The Seattle market has always been a very good market for us. We welcome the competition," said Mike Schultheis, district manager for Delray Beach, Fla.-based Office Depot's Seattle region.

"We won't change our strategy," added Steve Baisden, a spokesman for Cleveland-based Office Max. Nevertheless, the slowing economy and the proliferation of superstores in recent years are making it tougher for those selling office supplies, everything from paper clips and pens to computers and furniture.

Office Depot has closed 70 stores across the nation this year, none in the Seattle area. Office Max has shuttered 50 stores nationwide, none in this area.

Staples is going the other way, opening 100 stores nationwide this year. Staples, based in Framingham, Mass., had $261 million profit last year on $11 billion in sales.

It first set up shop in Washington in 1996, when it opened a store in Wenatchee. It added locations in smaller cities outside the Seattle area, such as Olympia, Marysville and Monroe, where there are few, if any, of its major competitors. It plans to have 17 stores in the state, including the eight in the Seattle area, by the end of the year.

"We gradually surrounded Seattle, and now we're coming in," Tom Stemberg, founder and chief executive of Staples, said in a recent interview. "There are still tremendous opportunities."

As it enters the Seattle market, Staples is still finding good locations overlooked by its competitors, Stemberg said. He pointed to the new Staples at 15th Avenue West and West Garfield Street in Interbay as a prime example; it's just north of downtown and near the affluent Magnolia neighborhood.

"It was a total void, even though the other guys have been here a decade," Stemberg said.

The "other guys" are Office Depot and Office Max, not Queen Anne Office Supply or the flagship Trick & Murray just north of downtown. Such small stores barely show up on the radar of the superstores.

But with their Web sites, thick catalogs and buying power that comes from being part of cooperatives that include hundreds of similar small stores nationwide, they say they can compete in price and selection with the big, big guys.

Betty Udesen / The Seattle Times
"There's not very many of us anymore," says Chris Bihary, co-owner of the small, independent Queen Anne Office Supply.

And they say their old-fashioned, personalized service, cozy stores and loyal customer bases can't be replicated. But, acknowledged Chris Bihary, co-owner of Queen Anne Office Supply, which opened in 1950, "It's an uphill battle. There's not very many of us anymore. You could count us on one hand."

There still are more than a handful, but the numbers have dwindled dramatically over the years. "It's such a difficult industry now," said Julie Harrison, president of Trick & Murray, the 96-year-old Seattle office-supply business believed to be the city's oldest office-supply chain, with four stores in the downtown area.

The arrival of Staples, Harrison said, is just another challenge for Trick & Murray, which has weathered the invasion of Office Depot and Office Max.

"One more (chain) isn't going to do that much damage," Harrison said.

Harrison expects Trick & Murray, which had annual sales of $3.5 million this past year, to make it to its 100th anniversary.

Though her company has had to trim its staff from 30 to 26, Harrison said, "We've done OK."

Bihary said business at the Queen Anne store owned by him and his wife, Jane, has improved in recent years. He attributes that to hard work, customer service, wide selection, competitive prices and community involvement. "We've had a Little League team for 25 years," he said.

The big chains are recognizing the value of such community connections, too. Office Depot's Schultheis said his company donates to local organizations, such as Junior Achievement. Stemberg said Staples will have "Green Office" departments featuring environmentally friendly and recycled products.

One thing the longtime local stores have going for them are loyal customers.

Mehrer Drywall of Seattle, which has about a dozen office employees, has been ordering its supplies from Stylus for more than 20 years. Stacey Booth, a Mehrer Drywall secretary, said she and her co-workers have no plans to shop around because the service and prices have been fine.

"We're a small company, too, so like to help support our fellow small companies," she said. Stylus has survived in part by changing with the times. With an Office Depot nearby, Stylus, formerly Sab-Tec, has supplemented its office-supply inventory with products such as fine diaries, picture frames, photo albums and world globes.

Added Al-Haddad, "We're selling way more (computer laser) paper. We're selling more fountain pens. ... They're making a huge comeback."

Bill Kossen can be reached at 206-464-2331 or at bkossen@seattletimes.com.

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