Officeworks could be about to get even bigger.
Officeworks could be about to get even bigger. Photo: Janie Barrett
Officeworks’ cavernous stores may become even larger as the office supplies category-killer adds new products and services such as drones and 3D printing, and expands its existing range.
Officeworks managing director Mark Ward said his biggest problem is not finding new sources of growth, but choosing which growth opportunities to pursue – and finding room to accommodate an ever-expanding range.
While the core office supplies market is worth about $11 billion a year and has been flat or in decline for several years, Officeworks has racked up 4.6 per cent compound annual sales growth at a compound annual growth rate of 10.4 per cent over the last six years, emerging as one of the strongest performers in Wesfarmers’ retail stable.
“We’re a $1.8 billion business in a $55 billion market with plenty of room to grow,” says Officeworks managing director …
“We’re a $1.8 billion business in a $55 billion market with plenty of room to grow,” says Officeworks managing director Mark Ward. Photo: Luis Enrique Ascui
“I think we’ve grown because we’ve been continually adapting to the market and customer preferences and behaviours,” Mr Ward told Fairfax Media.
“If you keep doing that I don’t think there’s a reason you shouldn’t be able to keep growing – if you think you’ve run out of runway you probably have and we don’t believe that.”
Mr Ward believes the potential market for Officeworks is worth $55 billion a year and includes traditional office supplies such as stationery and office furniture as well as electronic products, wearable technology, cleaning supplies and equipment, food and beverages, and art and craft supplies.
“We believe that there are still a lot of opportunities in the market place in the products and services we provide now, and in the products and services we’ll provide in the future,” he said, citing growing demand and new applications for emerging technologies such as 3D printing and drones.
“We are not worried about finding that growth. We’re a $1.7 billion to $1.8 billion business in a $55 billion market with plenty of room to grow,” he said. “Sometimes our biggest problem is choosing what things to do and what things to not do.”
Every year Officeworks needs to find space to accommodate between 1000 and 2000 new products. In the past it has done this by changing store layouts, improving store merchandising and in some cases, stocking products online rather than in its 160-odd bricks and mortar stores.
Officeworks is now considering opening larger stores to accommodate its expanding offer, which ranges from 4000 units in its smallest 200 square metre store in Sydney’s CBD to about 12,000 SKUs at its largest 2700sq m store in Browns Plains in Queensland.
New stores could be between 3000 and 4000 square metres, similar in size to a large supermarket, compared with Officeworks’ current average size of 1200sq m.
“With category expansion and as we learn more and understand more about what customers are looking to us to provide to them, then we may need to make a decision to move to bigger stores,” Mr Ward said.
Mr Ward said Officeworks was also sizing up potential acquisitions and offshore expansion, but had no immediate plans to follow stablemate Bunnings overseas.
“Other than watching and understanding, our focus is on operating in the $50 billion-plus market that we know is in front of us,” he said.
Following Bunnings’ acquisition of British retailer Home Base in February, Officeworks is no longer part of Wesfarmers’ home improvement division and Mr Ward now reports to Wesfarmers finance director Terry Bowen rather than Bunnings chief executive John Gillam.
“It’s been a really pleasing arrangement for us and for me personally to work for John and maintain my close association with the Bunnings team,” Mr Ward said. He worked for Bunnings for almost 30 years before taking the helm at Officeworks after Wesfarmers’ 2007 acquisition of the Coles Group.
“I’m looking forward to having a new board that has a different set of eyes and ears on our business.”