Office supply superstores add to recession woes for smaller shops.

Office supply superstores add to recession woes for smaller shops

A new Office Depot outlet will open in Montebello on Aug. 20, another carbon copy of the massive warehouses that are repro-ing their way across Los Angeles County and threatening small office supply stores.

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"The smaller stores are being hit really hard," said Steve Royea, vice president of Beverly Hills Office Supply.

The competition is not about to let up soon. Staples, one of the region's largest office supply club chains, plans to open up to 15 new Southern California stores by the end of the year, half of those in Los Angeles County.

The Southland office supply industry still won't be saturated, though. By the end of the year, there will be about 50 warehouses in the region, but the area is capable of supporting 85 such stores, said Patrick McCormack, vice president and analyst at Dean Witter Reynolds, the New York-based brokerage firm.

Still, as the giant stores proliferate, smaller ones are getting squeezed.

"Those small stationers are the ones that are really going to get pinched," McCormack noted.

Some are fighting back to thrive despite the growing competition.

"We are getting more aggressive as far as seeking out business from existing clients and offering a higher level of service than the clubs can possibly hope to compete with," said Dan Gruen, telemarketing manager at Belfair Office Supply in West Los Angeles.

But some stores are going out of business, though sources say this phenomenon might also be attributed to the recession.

Royea said he was aware of at least four office supply stores in the Los Angeles area that have recently vanished with "more on the way." Meanwhile, the large office supply clubs have "deep pockets and can weather the pricing storm until they've driven out all of the competition," he said.

"We're having to cut overhead to the bare bones," Royea added.

Yet the big warehouses claim they aren't intentionally trying to take business away from smaller stores. "We're not in business to wipe out the little guys," said Todd Krasnow, vice president of marketing for Staples. "It is very difficult for traditional stores to compete in supply."

But the big warehouses can't fill every niche in the market. Small stores can provide services that large warehouses aren't equipped to offer, said Gary Schweikhart, spokesman for Boca Raton, Fla.-based Office Depot.

An owner of a smaller scale store attested to this. "If a customer goes and tries a club, usually within two or three months they're back," said Alan Bennett, owner of American Office Products in Santa Monica. Customers return because service at the large clubs "is lousy," he added.

Consequently, "we don't feel there's much impact by them," Bennett said.

The Southland map is speckled with office supply warehouses. Staples and Office Club are the two major chains dotting Los Angeles County and they are competing to see who can first fill in Los Angeles County with their stores, McCormack said.

"Staples can probably be the market leader in the number of stores by the end of the year. It's really a race to get stores into the market," he added.

Office Club currently has 10 stores in the county, and Staples has 18 in Southern California. Office Club stores average 21,000 square feet and carry about 3,000 items each, while Staples stores are 17,000 square feet and stock 5,500 items in each store, officials say.

PHOTO : The giants flex their muscle