Office Depot's Bold Move Into Services is Paying Off
*By Chloe Aiello*
Services aren't just for tech companies ー retailers are also latching onto the recurring revenue trend. And for industry vet Office Depot, the services model promises serious growth.
"Our sales engine is rolling, we over achieved. We hit 10 percent year-over-year-growth. Importantly, our [\business-to-business\] division grew 6 percent year-over-year ー1 percent organically. It's the first time in over 10 years we've grown organically," Office Depot CEO Gerry Smith told Cheddar on Wednesday.
Office Depot ($ODP) stock soared on Wednesday after the office supply retailer impressed Wall Street with [stronger-than-expected quarterly earnings and revenue](http://investor.officedepot.com/phoenix.zhtml?c=94746&p=irol-newsarticle&ID=2375792). Office Depot reported 11 percent and 28 percent growth in services revenue for its retail and business solutions divisions, respectively. Office Depot also strengthened its fiscal 2018 guidance. Retail sales actually fell about 6 percent ー but thanks to growth in other areas of the business, Smith said he's not too worried.
"We are not a retailer, we are an omni-channel company," Smith said, underscoring the importance of services revenue and Office Depot's business-to-business division.
And while Office Depot already has a robust business-to-business division, it plans to keep diversifying by offering services for small and medium businesses ー like copy and print, tech services, and cleaning. The company is also piloting a program called "Workonomy," offering co-working space in existing retail locations.
Office Depot's services revenue and business-to-business play is more than just a growth strategy ー it's also a key component of the retailer's plan to stay relevant amid newer rivals ー like Amazon ($AMZN) ー which compete in many of the same industries.
"Think of us as a services platform, an economy hub, where people can come in and get the products they need. Traditional office supplies and products ー we are not going to abandon that, but we are also going to provide a lot of other products and services," Smith said.
For full interview [click here](https://cheddar.com/videos/office-depot-ceo-gerry-smith-retail-business-imperative-to-our-strategy).
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