Office Depot Has Big Plans for Japan

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TOKYO -- Office Depot plans to open eight stores in Japan this year and to boost the company's "relatively low brand recognition" in Japan, said Gary Steuck, the company's acting country manager.

Steuck, who left Lands' End, Japan, where he was CEO, three years ago, said Japan's economic woes have made apparel a tough business but that "for our targets, small and medium-size offices, the economy is okay.

"I think there are large opportunities for office products and supplies that the many successful small and medium-size businesses need to buy. So I'm not concerned.

"We have two strategies for our two brands - Viking, which markets via catalog and the Internet, and it is a national brand here, and Office Depot which is primarily store-based with catalog and Internet support."

Office Depot's focus is to "aggressively open stores in Tokyo." The company already has two large stores here, one in Gotanda and the other on the Ginza, and will focus on mid-size stores that will stock 7,000 to 8,000 items covering "almost all our categories -- paper to technology."

Retail expansion in Japan is one of the top four items for company capital investment, Steuck said, noting that Japan "is the second largest market in the world," while the U.S. office supply market is too crowded to allow much growth.

"International expansion will be the largest component of our total growth," Steuck said.

The European market, he said, is larger than Japan's for Office Depot because the company has been there much longer, since the mid-nineties.

Viking has been in Europe even longer and "is very strong" in key markets like Germany, the UK and France.

"We've only been in Japan for two-and-a-half years and see a lot of opportunity here," Steuck said.

He said the Internet is a key component for any business-to-business company worldwide, and especially in Japan.

"One problem I see is that U.S. firms don't know much about Japan," he said. "Two years ago you could say with some justice that Japan was two years behind the U.S. on the Web and a lot of U.S. businesses still think so. But that's no longer true. Japan is catching up with the U.S. in terms of BTB Internet buying."

Few people in the United States know that, Steuck said, "so part of my job is to educate American businessmen about the opportunities of the Web business in Japan. So everybody in the BTB environment needs to have an aggressive Internet strategy here.

"We do. We launched both brands on the Web last fall and their activities are increasing month by month. And we've done that with only limited advertising, mostly through catalog mailings and newspaper inserts."

Steuck said both brands should be able to compete successfully with Askul and Kaunet, the two leading Japanese brands in this area, because, "We can offer consumers a choice among retail, catalog and Internet."

They have some advantages since they can buy some products from their parent companies who make them," he said. "But we have the advantage of being the world's largest office products company with large systems and great buying leverage."

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