The Ofiice Superstore Case Study

1648 words 7 pages
1) How would you classify the office superstore industry? Who are the competitors? What are the characteristics of this industry that lead to this conclusion?
Today’s office superstore industry in the United States provides a convenient one-stop shopping experience for small businesses and individuals with home offices. The main competitors in the industry are Office Depot, Staples, and Office Max. All of them offer a variety of office supplies, as well as computers, office furniture and other business related items.
Office Depot is the largest office superstore chain in the United States. Office Depot is first in total number of stores, first in average sales per store, first in average weekly store sales, first in total delivery sales
…show more content…

Even if the market were broadened to include other office supply retailers, the situation is unlikely to change. Like customers of supermarkets and department stores, customers of office supply stores benefit from being able to buy a large number and variety of products on a single visit. The full price to an office superstore customer of acquiring these products is the amount paid to the store, plus the customer’s noncash costs of shopping. These noncash costs include the value of the time required to visit the store, gather information about products and prices, and shop. Since each visit to a store involves a fixed cost, customers prefer to purchase a bundle of items on each visit, especially low cost “consumable” items that need to be purchased regularly.
The fact that office superstores actually have higher prices in metropolitan areas where they face no competition proves that they can charge anticompetitive prices without causing customers to travel anywhere else for office supplies. Staples and Office Depot advertisements usually vary dramatically from one area to another. The proposed merger will lead to an office store monopoly in 15 markets; and in another 27 metropolitan areas, the number of competitors will be reduced from three to two. In other areas, where Staples and Office Depot had planned to compete, the projected competition will be completely eliminated by the merger.
5) How is the Herfindahl-Hirschman Index (HHI)