I really wasn’t expecting to write another post about retail anytime soon, but this week the news came that Office Depot is closing some stores and moving its Viking catalog operations to the Office Depot catalog in the U.S. (I believe Viking also has a substantial business in Europe).

I guess this shows how difficult it is to get mergers to really work. A lot of times, instead of the whole being more than the sum of the parts, it turns out to be substantially less. One recent example that keeps bothering me is Sears’ acquisition of Lands’ End, which was a $2 billion catalog seller of clothing, with a very loyal customer base in the U.S.

I was delighted when that deal was announced, because it looked like it opened all kinds of positive possibilities. Sears was always weak in clothing, so it would potentially shore up a real weak spot in their stores, while giving Lands’ End instant widespread distribution.

At the same time, adding Lands’ End’s catalogs could help make up for what seemed like the ultimate bone-headed business move in the early 1990s, Sears’ shutting down their wide-ranging catalog operation just when the internet was making it possible to run such an operation efficiently. I assumed Sears would still have enough mail-order competency to get a lot out of that.

Of course, none of that worked out, and following its acquisition by K-Mart, Sears is now apparently unloading Lands’ End.

In reflecting on Office Depot/Viking, I can’t really say I’m surprised. I used to be a very loyal customer of both, but while not really “dissatisfied”, noticed I’ve been buying from each less and less in recent years. I’m not really all that certain even why. This shows how the little things in retail really do make a lot of difference.

It should be noted that I’ve always received very good service from both, indeed really outstanding service from Viking. It was obvious, however, that like bookselling, the catalog office supply business is horribly competitive; whenever I’d do business with any of their competitors, e.g. OfficeMax, Quill, etc., they were always very good as well.

I guess the lesson here is that, while so many mergers appear unwise, even when they seem to make sense, they can be very hard to pull off. I can’t help but wonder if the smarter way to do acquisitions is to buy much smaller operations that fill in specific gaps in technology, product or customers and don’t cause wrenching change to the whole company while being digested.

I’m sure the failure rate for these type acquisitions is fairly high, too, but executives aren’t betting the whole company in these instances, and when they succeed the payback may be much higher. It’s interesting that Cisco Systems, which is perhaps more of an innovator in business methodology than technology, is a very aggressive acquirer using this approach. Whatever it is they’re doing likely deserves some study by anyone considering a merger/acquisition.