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Mergers don’t save companies that have lost their way.

MERGEREDITEDI have always questioned the logic of how two struggling companies can save themselves by merging and forming a much larger struggling company. Take the pending merger of Staples and Office Depot. Staples CEO Ron Sargent stated in The New York Times that, “Amazon just launched a business-to-business initiative so I am sure they are knocking on the door.” Where has he been?

We stopped ordering from Staples.com and switched to Amazon over a year ago because they just weren’t dependable. I wrote to Mr. Sargent about this. In fact, I sent him a ‘Not Easy’ button to get his attention. Never got an answer. When a CEO doesn’t even have someone on his staff respond to a customer complaint, it speaks volumes. The truth is, customer service is not about economies of scale, it is about an organizational commitment that starts at the top to making each customer transaction excellent and if problems arise, addressing them in a way that makes the customer feel valued. (Write Richard Anderson, CEO of Delta Airlines with a problem and someone gets back to you quickly and thoughtfully.) The lack of customer service is just lacking on Staples.com. Walk into a Staples store and try to find someone to help you? I used to look forward to going there. Now, well, it just isn’t easy.

Clearly, they are struggling and are trying to focus on high margin technology products. Ironically, this was the same strategy that Office Depot launched awhile back with the promise ‘The more you need. The more you need to know.’ Nice tagline but the only problem was no one in the stores were trained to deliver on it. More than twenty straight losing quarters later and another misguided CEO was gone. So, what was their solution? A merger with OfficeMax, after their proposed merger with Staples was turned down by the anti-trust folks. Now they are trying it again. As with all of these Hail Mary moves, thousands will lose their jobs and unprofitable stores will be closed. We have heard this story before and it rarely ends well. The truth is, unless there is a recognition that regardless of what they sell – paper, pens or computers – Staples needs to be in ‘the delighting customers business’, no acquisition, merger or restructuring will save them.

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