Staples, Inc. and subsidiaries pioneered the office products superstore concept
and is a leading office products distributor. We opened the first office products
superstore in Brighton, Massachusetts in 1986 to serve the needs of small businesses.
The office products industry has experienced significant growth since 1986 as
the industry has expanded to include a variety of retailers, dealers and distributors,
including other high-volume office supply chains.
We operate three business segments: North American Retail, North American Delivery
and European Operations.
We view the office products market as a large, diversified market for office
supplies and services, business machines, computers and related products, and
office furniture.
Although there are no clear demarcations among customer groups, we target four
principal end-user groups: power users (customers spending over $500 per year
in office products excluding computers and furniture; primarily home-based businesses,
home offices and teachers); small businesses and organizations with up to 50
office workers; medium-size businesses and organizations with between 50 and
500 office workers; and large businesses and organizations with more than 500
office workers. We effectively reach each sector of the office products market
through three sales channels designed to be convenient to the needs of our customers:
retail stores, catalog and internet. Our ability to address all four major end-user
groups increases and diversifies our available market opportunities; increases
awareness of the Staples name among customers in all four end-user groups, who
often shop across multiple sales channels; and allows us to enjoy a number of
important economies of scale, such as increased buying power, enhanced efficiencies
in distribution and advertising, and improved capacity to leverage general and
administrative functions.
Merchandising
We sell a wide variety of office supplies and services, business machines,
computers and related products, and office furniture. While our buying and merchandising
staff uses integrated computer systems to perform centrally the vast majority
of our merchandise planning and product purchasing, some of our business units,
particularly Quill, our Canadian operations and our multiple European businesses,
leverage our global buying and merchandising staff along with their own staff
to meet their more localized buying and merchandising needs.
We have approximately 8,000 stock keeping units (SKUs) stocked in each of our
typical North American retail stores and approximately 15,000 SKUs stocked in
our North American Delivery fulfillment centers. We also offer approximately
70,000 SKUs to our customers through the Internet, including Internet access
points in our North American retail stores. In order to minimize unit costs
and selling prices, we sell most products in multi-unit packages. The pack sizes
are designed to be large enough to be cost effective without being burdensome
to our small business customers.
Competition
We compete with a variety of retailers, dealers and distributors in the highly
competitive office products market. Our target customers have historically been
serviced by traditional office products dealers. We believe we have competed
favorably against these dealers in the past because we generally offer lower
prices and a broader product selection. We compete in most of our geographic
markets with other high-volume office supply chains, including Office Depot
and OfficeMax, that are similar in concept to us in terms of pricing strategy
and product selection, as well as mass merchants such as Wal-Mart, warehouse
clubs, computer and electronics superstores such as Best Buy, and other discount
retailers. In addition, both our retail stores and delivery operations compete
with numerous mail order firms, contract stationer businesses, electronic commerce
distributors, direct manufacturers and local dealers.