Office Depot uses economy to refocus, rethink advertising

ORLANDO —The retail industry may be facing one of the most turbulent times in recent memories, but according to Chuck Rubin, president of Office Depot’s North American retail division, it is such challenging circumstances that lead to a reassessment of operations and the identification of new opportunities.

Office Depot is going through that process as it pursues what Rubin contends are significant growth opportunities in all areas of its business, despite the fact that today’s economic conditions have consumers cutting back, trading down and delaying planned purchases. “It no longer makes sense to build relationships with all customers,” Rubin said. “We must determine which customers are our most valuable.”

Such thinking has been around a long time in the retail industry and most operators these days offer some type of loyalty program to drive shopper frequency and transaction size. At Office Depot, the program is called Worklife Rewards and it will become an even more important tool for marketers going forward as conventional mass media become less effective and Office Depot seeks to establish deeper relationships with its best customers.

Through data mining and the analysis of transaction behavior, Office Depot is able to tailor specific offers to 100 different customer segments based on variables such as purchase frequency, seasonality and product preferences. Such strategies are necessary, according to Rubin, because national audiences are increasingly fragmented, they aren’t paying attention to messages and ads are getting harder to measure, yet rates haven’t declined.

These challenges, coupled with the fact that “some customers now actively avoid buying brands that saturate them with advertising,” are going to require new thinking on the part of marketers. Rubin indicated that reaching consumers in the future is going to require more effective use of such things as social media and product placement. “Campaigns consisting of just radio, television and newspaper ads are a thing of the past,” he said.

Rubin shared his thoughts on marketing and customer loyalty during a presentation at the 17th Annual Retailing Smarter Symposium sponsored by the University of Florida’s David F. Miller Center for Retailing Education and Research.

He joined Office Depot a little more than four years ago and during that time has been instrumental in charting a new direction for the company’s consumer outreach. The most significant example involves the retailer’s relationship with NASCAR, which began in 2005.

“When the opportunity first came up, we were skeptical, but NASCAR turned out to be a perfect fit,” Rubin said. “It is truly an integrated campaign that reaches our customers large and small.”

NASCAR also is an example of a platform that offers the company national exposure throughout the year because the racing season lasts 10 months and there are 36 major races each week. “It is measureable, has a positive return on investment and the over-riding majority of race fans have a more favorable opinion of Office Depot now that we are sponsors,” Rubin said.