Staples “M Line” an effort to escape brutal commoditization
As a long-time fan of stationery supplier Staples, I was intrigued to note that they are adding a whole new, more upscale, line of products called the “M Line”. The goal is to create a differentiated offer at a higher price point (though the prices seem pretty reasonable) to attract those among us who can use a lift to our mundane office lives. Business Week featured the line in a recent story.
A couple of points about this development intrigue me. Firstly, this is a great example of what we might call ‘attribute innovation’ in which companies target new offers at customer segments that are prepared to make different tradeoffs than others. In this case, Staples is designing items with a tad more style and cachet, at a higher price point, hoping that the new attributes will attract enough customers to make the extra design and distributions costs worthwhile.
Secondly, and this is supremely ironic, Staples is trying to escape the very commoditization they sparked when they basically put local retail stationers out of business. When I was starting my career (in the dark ages) stationery suppliers were mom and pop operations, who bought everything at huge markups from these huge, colorful catalogs. The prices were high, the selection usually not so great, and often you had to order materials to be delivered some time later. The 1986 opening of Staples, for stationery junkies like me, was like Christmas coming - huge variety of goods, much lower prices than I was used to, and long opening hours were all ‘wow’ factors. The founder was, just like me, frustrated with having to depend on small local stores for critical supplies.
Over time, however, the easy competition folded, and Staples began to have to duke it out with later competitors like OfficeMax and OfficeDepot who essentially copied its business model. Today, customers take low prices, convenient hours and lots of in-stock items for granted, leading the company to need to do something else. Too early to say yet if the new, upscale, offers will have the desired effect, but I wouldn’t be surprised if they do well, particularly among customers who would enjoy a little more pizzazz in their workaday surroundings.
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- Posted: Sunday, March 16, 2008
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It will be interesting to watch the industry chain dynamics on this one. We saw Staples lead the charge on what ended up as a consolidation of the stationery supply industry driven by a trend toward home office supply needs. If their M-line succeeds they may be agin leading the charge, this time in the refragmentation of the industry segment, as multiple players try to tease out large, higher profit segments from an increasingly less profitable market.
Staples has made some interesting choices in the past to escape the brutal commodization it “pioneered.” Check out the patent infringement and trademark infringement case in Federal Court, LA district surrounding its One-Touch branded staplers. They definitely took the “easy” route “developing” that product line.
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