ALBERTSONS OPENS OFFICE DEPOT SECTIONS

Stephanie Loughran

BOISE, Idaho -- Albertsons here recently began converting its current in-store school and home office supply sections into branded Office Depot sections.

The first department opened for business at the Albertsons-Osco on North Tatum Boulevard in Phoenix two weeks ago, said Karen Ramos, spokeswoman.

The retailer and the Delray Beach, Fla.-based office supply company formed an alliance earlier this month to install Office Depot store-within-a-store departments in 18 stores in the Chicago, Los Angeles and Phoenix areas.

Office Depot has a similar partnership with Stop & Shop Supermarket Co., Quincy, Mass., which offers Office Depot departments in 15 stores. While Office Depot is "always looking at additional opportunities to build the brand and look at other venues," no other partnerships with grocery chains are in the works, said Brian Levine, Office Depot spokesman.

Albertsons and Stop & Shop have few geographical regions that overlap, said Steve Chick, analyst, JP Morgan Chase, but "Albertsons seems to be following that same route in different geographical locations." Food retailers' trouble with registering more consumer shopping trips, which have been on the decline, he said, drives Albertsons to create these in-store departments. "It's a traffic draw," he said.

The partnership with an office supply company signifies that "people are looking to purchase and replenish home office supplies year round, and we hope to serve our customers through the year," Ramos said.

The Albertsons' Office Depot sections feature more than 700 home office and school supply products in a space ranging from 40 feet to 110 feet depending on store size, said Ramos. The pilot will appear in Albertsons-Osco stores in Phoenix; Jewel-Osco stores in Chicago; and Savon Drug in Los Angeles.

The section conversions will take place one store at a time, and the new sections will be complete by the end of October, she said.

"What's great is we're able to provide Office Depot's expertise in home office supplies and make customers' lives easier," Ramos told SN.

In-store partnerships that leverage the strength of well-known brands bolster store traffic, said Larry Johnston, chairman and chief executive officer, Albertsons, during a recent conference call with analysts.

"This is all about trying to make life easier for our customers," he said. "Our customers all tell us, if you make Albertsons more of a one-stop-shopping experience, we will shop there more often."

The retailer also has agreements with Toys "R" Us, Krispy Kreme and Starbucks.