Staples 2004 Annual Report Download - page 61

PART I
Item 1. Business
Staples
Staples is the world’s leading office products company. We pioneered the office products superstore concept by
opening 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.
Staples, Inc. and its subsidiaries (‘‘We,’’ ‘‘Staples’’ or ‘‘the Company’’) operate three business segments: North
American Retail, North American Delivery and International Operations. Additional information regarding our operat-
ing segments is presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations
contained in this Annual Report on Form 10-K, and financial information regarding these segments is provided in
Note L in the Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K.
Business Strategy
We view the office products market as a large, diversified market for office supplies and services, business machines
and related products, computers and related products, and office furniture. Although there are no clear demarcations
among customer groups, we target four principal groups: home offices (customers spending over $500 per year on office
products excluding computers and furniture; including home-based businesses and teachers); small businesses and
organizations with up to 20 office workers; medium-size businesses and organizations with between 20 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 customer groups increases and diversifies our available
market opportunities; increases awareness of the Staples name among customers in all four groups, who often shop
across multiple sales channels; and allows us to benefit from 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.
Our strategy is to maintain our leadership in the office products industry by differentiating ourselves from our
competition, delivering industry-best execution and expanding our market share. These three core elements of our
strategy are interrelated and highlighted below:
Differentiation: We are focused on delivering on Staples’ brand promise, we make buying office products easy, which
we launched in 2003 in response to extensive customer research that showed customers place the greatest value on an
easy shopping experience. Our commitment to making it easy for our customers to shop is reflected both in terms of the
shopping experience and product offering. We implemented initiatives in both retail and delivery to improve the
customer experience, infused the new brand personality in all of our marketing vehicles and stores, actively promoted
our new advertising tagline, ‘‘that was easy’’, and increased the quality and value of our Staples brand products. We are
also growing our copy and print centers through enhanced service and technology, introducing innovative products that
customers can buy only at Staples, and helping customers run their offices by offering services such as computer repair
and installation of wireless networks performed by mobile technicians. In 2004, we rolled out ‘‘easy rebates’’ which allows
on-line submission for rebates, eliminating the need to mail in forms and receipts. To further respond to the importance
our customers place on courteous and helpful associates, we rolled out a new customer service model across the chain to
ensure a positive customer experience in our retail business.
Execution: We are committed to delivering industry-best execution with a focus on improved service and profitabil-
ity. Key initiatives to drive improved execution include: our supply chain program; our overall end to end order to
fulfillment execution, including in-stock, fast checkout and perfect order programs; effective integration of acquisitions;
and a focus on maintaining a high performance management team. To further improve our return on net assets, we
continue to execute the three elements of our ‘‘Back to Brighton’’ business improvement plan that we announced in
2001: driving profitable sales growth; improving profit margins; and increasing asset productivity.
Market Leadership: We plan to expand our market share by continuing to grow our existing businesses, developing
new growth ideas and strengthening our global presence. Initiatives to expand our existing businesses include growing the
copy and print center and Contract businesses and entering major new geographic markets. New growth ideas include
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