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Three Ways 3D Printing Will Disrupt Retail

BY Dan Berthiaume

Once again a move by our innovative friends at Amazon.com has prompted me to write a Tech Bytes column. Amazon’s latest interesting venture is the launch of an online marketplace for items created by 3D printer. Currently, the online 3D printed products store includes more than 200 items in categories such as jewelry, toys, home décor and fashion accessories. The new store will feature design templates for product individualization and 3D preview capability.

This is one small step toward what should be a significant disruption of retail, and most other areas of life, by 3D printing technology. I’d like to offer a few general (and highly speculative) thoughts on potential ways 3D printing will disrupt retail.

Giving Consumers Full Control

3D printers allow consumers to create fully functional, three-dimensional products. The level of control consumers already have to dictate product demands to retailers will evolve to something unprecedented. Amazon is already offering design templates, but as the sophistication of both 3D printers and the consumers using them grows, at some point consumers will likely be able to design and print the products they desire from scratch.

This will change the entire definition of “pull” retailing. Retailers will need to become extremely nimble in how they anticipate and respond to the needs of the customer, while internal silos between departments such as marketing and distribution will become untenable. However, 3D printers will not only disrupt the consumer side of the retail equation.

Reinventing the Role of the Retailer

Consumers dictating the exact specifications of the products they want to buy, or perhaps even creating their own unique new products and having them printed out, will reinvent the role of the retailer. Stores will likely become showrooms, with customers sampling model items and then printing goods to meet exact specifications.

On the e-commerce side, near- or real-time fulfillment of online orders will become a possibility. “Smart” 3D printers may allow customers to automatically reorder (or even reprint) goods, bypassing the need for visiting a website or store. The supply chain will also be disrupted, with virtually no need for wholesalers and manufacturers having much more opportunity to directly compete with retailers for consumer sales. Inventory stocks will be dramatically reduced, which should be a positive for retailers’ bottom lines.

Entering the Great Unknown

Of course, 3D printers today are at the same phase in their development as PCs were in the 1970s or mobile phones were in the 1980s, meaning they will undoubtedly be used in ways nobody today could even think of. While presumably some product categories, such as beverages and health/beauty care, would not lend themselves to 3D printing, keep in mind NASA has developed a prototype 3D pizza printer as a convenient means of feeding astronauts in space.

3D printers have also successfully printed materials ranging from human tissue to firearms. It is impossible to say right now exactly how 3D printing will disrupt retail in the next 20, 10, five or even two years, but significant disruption is assured.


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Synergy savings keep climbing at Office Depot

BY CSA STAFF

Office Depot softened the blow of weak second quarter sales by bumping up the pace of 400 store closings to drive greater than expected operating profit growth and expense savings related to the merger with OfficeMax.

Office Depot merged with OfficeMax last November and shortly thereafter announced plans to close 400 stores by the end of 2016. The total number of closings remains intact, but the company now expects to close 165 of the stores this year compared to an earlier forecast of 150 closings in 2014. The estimate of expense savings related to the closures was increased to $100 million from a $75 million estimate share at the end of the first quarter.

In total, Office Depot estimates the optimization of its North American store portfolio combined with other savings will result in annual run-rate synergies totaling $700 million. That figure is well above the $400 to $600 million range shared when the deal was announced last year and the $675 million estimate shared at the end of the first quarter.

Because the expense saving are being realized faster than initially forecast, the company’s is growing adjusted operating income faster than planned in the absence of any top line growth.

"During the second quarter, our team executed exceptionally well, which enabled us to deliver merger synergies more quickly than anticipated," said Roland Smith, chairman and CEO of Office Depot. "We are very pleased with the integration of legacy Office Depot and OfficeMax as we create a culture focused on achieving our critical priorities in the near and long term. As planned, we have completed our analysis of the North America retail store optimization strategy and have continued to make progress on the development of our unique selling proposition. Based on accelerated synergies and improving execution, we have updated our full year 2014 outlook for adjusted operating income to be not less than $200 million, an increase from our prior outlook of not less than $160 million."

Despite progress on the expense front, sales remain challenging for the company’s retail, commercial and international divisions. On a consolidated basis, sales for the second quarter increased to $3.8 billion from $2.4 billion, reflecting the inclusion of OfficeMax results. However, on a pro-forma basis, looking at results as if both companies existed on a stand-alone basis, sales declined from $3.9 million.

Pro forma sales at the 1,870 unit North American retail division declined 5% to $1.46 billion and same store sales declined 3% due to reduced traffic. On a positive note, the division reported an operating loss of $6 million that was better than a prior year loss of $22 million.

Sales at the company’s North American Business Solutions division declined 1% to $1.5 billion, on a pro forma basis while the operating profits ticked up to $59 million from $53 million. International sales were essentially flat on a pro forma basis with the division’s loss declining to $2 million from $6 million.

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Wal-Mart to offer personalized — and faster — online experience

BY Dan Berthiaume

Bentonville, Ark. — Wal-Mart Stores Inc. is updating its website with new features and enhancements to provide shoppers with a more personalized, faster and improved shopping experience.

The updated web includes a feature that shows shoppers products they may like based on their previous purchases, and also personalizes the homepage for each shopper based on location, local weather conditions and past search and purchase history. It also includes a “My Local Store” section that allows shoppers to see promotions at their local stores,

Other upcoming changes include a faster customer checkout, a revamped store finder and a more flexible screen.

Wal-Mart is trying to stay competitive with Amazon.com and also capitalize on growth that has been occurring in its e-commerce sales while brick-and-mortar sales have stagnated.

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