Office Depot’s New Millennium

Office Depot Inc. (Delray Beach, Fla.) has unveiled a new store concept it’s calling Millennium2 (M2).

The company said the new concept has been developed from the ground up by a cross-functional task force hand-picked by Office Depot chairman and ceo Bruce Nelson. The task force was given one mandate: Reinvent the retail model by creating a store that is less expensive to open, more efficient to operate and easier to shop.

“By building on the things we have learned from Office Depot’s Millennium pilot project and combining them with extensive market research and a healthy dose of home-spun ingenuity, we are able to offer our customers the most enjoyable and satisfying shopping experience in the industry,” Nelson said. “M2 is intuitive, logical and designed specifically for the way people make purchase decisions.”

The products are grouped in highly visible, strategically located “pods,” with core supplies at the outer perimeter of the store (signed for optimal visibility and easy purchase) and furniture and technology at the center (to better support consultative sales and the area in which the majority of staff will be located during peak buying hours).

According to Nelson, M2 plays a central role in the implementation of Office Depot’s seven corporate strategies, most notably addressing the company’s number one objective: realigning the North American real estate portfolio.

“In 2004, Office Depot is embarking upon one of the most ambitious expansion plans in company history,” Nelson said, an intent to open between 80 and 100 new stores this year. “We will leverage the M2 format along with our recent purchase of Kids ‘R’ Us locations to enhance Office Depot’s presence in existing core markets and provide immediate access to large areas of the country in which we do not currently have a strong retail concentration, such as Massachusetts, New York, New Jersey and Pennsylvania.

“As we roll out these new stores, customers in the Northeast — for the first time — will have a choice, an alternative to the only place they’ve been able to purchase office supplies,” Nelson added. “And what they will find is an Office Depot store that represents a true ‘destination experience’ — one that is warm, colorful and exciting and reflects the latest thinking in everything from product layout and adjacencies to graphics, replenishment and service.”

Overseeing the M2 launch on a daily basis is Rick Lepley, recently named executive vp of North American Retail, the person responsible for putting together the original M2 project team.

“We looked at M2 as a rare opportunity to begin with a clean slate,” said Chuck Rubin, executive vp and cmo. “The result is a series of innovations that make M2 unlike any other format in the retail industry.”

According to Rubin, these advancements include: a new, more vibrant and cheerful graphics and color palette; a store layout based on modularity and “pod” structure to assure easy navigation; high steel fixtures at outer walls and increased shelf depth to maximize holding power at point of sale; bulk-stacking high-velocity items to reduce labor and reinforce value statement; and the use of new in-store information technology.

Lepley noted that M2 is also a practical solution for rolling out the new store format or utilizing it as part of a remodel program. “To justify the launch, we needed to address the financial aspects that govern retail, including costs associated with opening, maintaining and staffing a store,” he said. Remodel costs are expected to be between $250,000 to $300,000 per store, as opposed to the $350,000 to $400,000 typically associated with Office Depot remodels. And new store build-out costs are expected to be less expensive.