Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Office supply products vendor Staples Inc. will be acquired by investment firm Sycamore Partners for $6.9 billion, as Staples management decides to take the company private in an era when shoppers are abandoning brick and mortar stores in favor of online retailers like Amazon.com Inc.
New York-based Sycamore Partners will add Staples to its stable of brick and mortar retailers such as the home décor seller NBG Home, defunct clothing retailer The Limited, department store chain Belk Inc., and variety store chain Family Dollar. The Staples transaction is subject to regulatory and stockholder approval, and is expected to close no later than December, 2017, Sycamore said.
Staples' board has unanimously approved the offer, saying it is the best way to enhance share value for stockholders, following an extensive search of various alternatives, Staples Chairman Robert Sulentic said in a statement.
Framingham, Ma.-based Staples has been looking for ways to plug leaks in its foundering financial results. In 2016, the company tried to merge with its rival Office Depot, but a federal judge put the kibosh on that plan, agreeing with the Federal Trade Commission (FTC)'s complaint that the combination of office supply stores would violate antitrust rules.
The store has seen its annual revenues fall in recent years, reporting that annual company sales fell three percent in 2016 to $18.2 billion. The company shuttered 48 stores last year in North America, but still ended 2016 with 1,255 stores in the U.S. and 304 stores in Canada. Staples sold off its U.K. retail business last year and its European operations in February 2017.
Staples' large store footprint is a microcosm of the larger problem plaguing U.S. retailers, namely too much physical space to support end demand. The U.S. has 24 square feet of retail space per capita, five to six times higher than Britain and France. Unsold or slow-moving store inventory is proving a drag on U.S. GDP growth, although retailers are slowly eating into that inventory by closing stores.
Sycamore did not indicate how it planned to find new profits in Staples' business model in a world where Amazon continues to expand its share of retail sales by flexing its massive scale and efficient e-fulfillment techniques. However, the firm said it had confidence in Staples CEO Shira Goodman and her management team and planned to partner with them to accelerate profitability.
In a statement, Goodman said the deal would give the struggling chain additional resources to continue to operate. "The Sycamore Partners team shares Staples' entrepreneurial spirit and long-term vision," Goodman said. "This transaction will enable us to drive greater value for our customers and immense opportunity for our business."
But finding ways to make Staples profitable again could be a problem, because any given sector just has room for a few large retailers, and two of them usually happen to be Amazon and rival Wal-Mart Stores Inc., said Philip Evers, logistics professor at the University of Maryland's Robert H. Smith School of Business.
"If you look at a particular category, whether it's office supplies, fashion, or electronics, there are typically two—or maybe three—strong big-box retailers nationwide, and recently the online retailers have been taking over one of those top positions."
For example, as Amazon has built a large share in the electronics marketplace, Best Buy is the only remaining major competitor, leaving other firms to fade away or retrench.
Despite the challenges of running a brick-and-mortar company in the online age, Staples does have several advantages, Evers said. It has a large presence serving businesses and government institutions, he said. That is a valuable stream of revenue, since those contracts are executed almost exclusively over the company's website as opposed to its stores, allowing Staples to fulfill those orders through its efficiently run DCs.
Staples' roster of storefront properties may also be a valuable asset, since it gives the company a base for fulfilling online orders through in-store pickup as part of an omnichannel strategy, Evers said. "Brick and mortar's not dead. Amazon itself is moving into that sector in many ways, whether it's buying Whole Foods or building their own stores," said Evers.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.