Staples (SPLS) has been really struggling as of late, as have all office supply stores. The superstore concept is starting to fail in the face of competition from stores like Dollar Tree (DLTR), Walmart (WMT) and Amazon (AMZN), not to mention Uline.
SPLS management had a great idea, though — set up U.S. Postal Service outlets inside Staples stores.
Wouldn’t it be great if you could not only buy shipping materials and supplies at Staples, but actually ship them from inside the store? It would be a time-saver for people who didn’t then have to slog to the nearest post office, and wait in line for the USPS’ oh-so-exceptional service.
The consumer gets convenience. SPLS gets much-needed incremental revenue.
Naturally, the American Postal Workers Union could not permit this.
You see, in the 82 trial locations, the outlets were staffed with lower-paid, non-union workers. Well, the APWU went nuts, trying to convince people that it would “destroy your local post office” and that it was a “bad deal for consumers.” They also said it would “lead to privatization of the post office.”
As if any of these things would actually be bad for consumers.
Not only that, but then the union lobbied the American Federation of Teachers to boycott Staples. That meant less teachers buying school supplies for the coming school year.
The result? SPLS cancelled the program.
A Win for … Nobody
Everyone loses, including the USPS. The consumer indeed must slog to the local USPS and endure its oh-so-exceptional service. SPLS stock loses a potentially decent source of revenue.
And the USPS … well, it “protects union jobs,” right?
Because now, SPLS could look to augment its partnership with UPS (UPS). Furthermore, consumers who are already annoyed with the USPS will continue to find alternatives … like UPS.
The post office is losing money every year. Actually, forget just years — the Postal Service just lost $2 billion in a mere three quarters. Leave it to the public sector union to try to protect the most inefficient service this side of Amtrak by forcing people to use the government’s monopoly.
This is a great opportunity for SPLS stock, but only if its crisis management department and public relations people are on top of things.
Staples already offers packaging and shipping solutions with its UPS partnership. I would double down on pushing this service, but with this little addition. Obviously, UPS didn’t feel threatened by the USPS relationship, so I would offer everything the Postal Service does (with a small markup to generate revenue), let people leave their packages and letters at the store, from which they would be delivered to the local USPS at day’s end.
Got a package? Pack it. Weigh it. Choose UPS or USPS shipping. All that can be calculated with existing solutions. Let the customer choose.
In short, become a private mailing service just like all the others out there. People want convenience and they will pay for convenience. They will avoid the USPS at all costs.
This is the problem with public sector unions. They negotiate with the very people they lobby to get put into power, so the negotiation is not at arm’s length. When it comes to situations like this, the union will always put itself over its customers — you and I.
The union does not care about us. It only cares about its union dues.
Too bad for Staples, and for SPLS stock. I’d avoid it … and all office supply stocks at this time.
The opinions contained in this column are solely those of the writer.
As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of Asymmetrical Media Strategies, a crisis PR firm, and PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at email@example.com and follow his tweets at @ichabodscranium.