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Major Expansion Plans For Officeworks, Connected Home & Education

Retail conglomerate Wesfarmers has announced a major expansion of their Officeworks operation with the retailer set to expand into the Connected Home, Education and Created Design markets.

They also appear to be targeting Harvey Norman and JB Hi Fi’s commercial operations as well as Ikea’s office supply market, they are also set to expand their ‘Geeks2U’ service.

In a new filing with the ASX the Company has said that the “addressable” market for Officeworks based on their new categories and expansion plans is now $41 Billion Vs $20 Billion with their current operation.

Consumer electronic suppliers to Officeworks in particular PC suppliers are reporting that the retailers ‘Lowest Prices Everyday” is working with suppliers achieving higher average selling price returns than with Harvey Norman or JB Hi Fi who are demanding more margin, rebates and marketing dollars than Officeworks.

The retailer is also planning to target families and as such are investing in research to better understand home and family needs especially around the smarthouse market as well as a move into arts and crafts products.

The Company is also “modernising and expanding” their supply chain with a greater emphasis on online selling and digital platform upgrades.

The Company said that variable trading conditions are expected to continue, and that competitive pressure is expected to remain strong.

The retailers is also rolling out a new store operations enterprise agreement an area where Woolworths is facing headwind pressure from unions as they move to restructure their instore operations.

At December 2018 Officeworks, reported an 8.2 percent increase in total revenue to $1,100 million for the six months to 31 December 2018.

The business delivered an 11.8 per cent increase in earnings before interest and tax (EBIT) to $76 million.

The Company also delivered strong sales growth in-store and online, which management claim is evidence of a continued focus on their ‘every channel’ strategy and allowing customers a choice in how they shop.

Officeworks Managing Director, Sarah Hunter, said: “Our focus on offering customers convenient ways to shop, coupled with low prices across the widest range of products, and great service from our team, is continuing to resonate.

“During the half, we made a number of store layout and design improvements, further enhanced the online offer, and introduced new and expanded products and services across a number of categories, including the launch of 1200 new Print & Copy products.

“Looking ahead, we expect variable market conditions and competitive intensity to continue. Off the back of a strong first half, we will continue to invest in the customer offer and building the capability of our team for the long term.”

At the end of December 2018 there were 166 Officeworks stores operating across Australia.

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