Staples 2004 Annual Report Download - page 62

selling office products through other retail channels and developing innovative products. To strengthen our global
presence, we are making targeted investments in emerging markets such as eastern Europe, Asia and South America,
which we expect to become meaningful contributors to our long-term growth.
North American Retail
Our North American Retail segment, consisting of 1,426 stores throughout the United States and Canada at the end
of fiscal 2004, generated the majority of our sales and profits during fiscal 2004. Our North American retail stores are
located in 47 states, the District of Columbia and 11 Canadian provinces in both major metropolitan markets and smaller
markets. Our retail operations focus on serving the needs of small businesses and home offices.
Our strategy for our North American superstores focuses on several key objectives: offer an easy-to-shop store
environment with quality products that are in-stock and easy to find, with fast checkout and courteous, helpful and
knowledgeable sales associates; provide superior value to our customers through a combination of everyday low prices, a
broad selection of products, convenient store locations and hassle-free returns; and reduce operating costs to the lowest
level consistent with providing quality merchandise and service.
As part of our strategy of delivering on our ‘‘Easy’’ brand promise, we focus on several key categories for which our
customers rely on us to be an authority: ink and toner, paper, business machines, and copy and print services. For
instance, to make it easier to shop for printer cartridges, we expanded our cartridge offering and made them more
accessible to our customers. We also offer our retail customers the ability to make purchases on-line through in-store
Internet access points to acquire products that are not available in our stores. Customers can pay for these purchases at
the register or through our Internet access points and have the product delivered to their home or business.
Store associates are critical to our success and are focused on making shopping easy for our customers. Associates in
our stores are available to consult on purchases, particularly in our furniture, business machines and technology sections,
where customers often need assistance in decision making. Customer service has improved as a result of our efforts to
increase associate training on customer service and product knowledge, implement team-based bonus programs, better
match customer traffic with labor planning, roll out a new customer service model across the chain, and focus on
associate retention.
The majority of our stores benefit from the customer-friendly store layout we refer to as the ‘‘Dover’’ format. This
design was created to improve the appeal of the store to the customer and to open up the interior of the store to give the
customer a better view of our vast array of products. We continue to improve our Dover store format with on-going
refinements in product placement, store design and adjacencies. At January 29, 2005, we had 437 new and fully
remodeled Dover stores in North America and we had completed approximately 450 more limited store remodels to
benefit from key features of the Dover model at a much lower cost than a full remodel. In 2005, we plan to open the
majority of our stores in North America in the Dover format.
In addition, in 2003, we began opening certain stores in a smaller format. These stores are 14,600 square feet in size
and are designed to address smaller markets that we enter. At January 29, 2005, we had 17 stores in this smaller format,
and we plan to open approximately 10 stores in smaller markets in this format in 2005. In 2002, we developed a set of
strategies in the field to improve the bottom performing 20% of stores in our portfolio, and in 2004, we operationalized
these practices so that they are now a routine part of these stores’ activities.
Our growth strategy is to expand our store base in a prudent fashion to produce strong sales and yield high returns
on our investments. We believe that our network of stores and delivery businesses in various metropolitan markets
enhances our profitability by allowing us to leverage marketing, distribution and supervision costs. In determining where
to open new retail stores and actively market our catalog, we evaluate the concentration of small- and medium-sized
businesses and organizations, the number of home offices, household income levels, the availability of quality real estate
locations, competition and other factors.
We plan to open approximately 95 new stores in North America in 2005, compared to 77 new stores in 2004 and 67
new stores in 2003. The growth program for fiscal 2005 will continue to focus on filling in existing markets as well as
expansion into new markets where we see opportunities. In 2005, we will enter our first major new market since 2001, the
Chicago, Illinois market, with approximately 20 stores. We view Chicago as a large, under penetrated market with
attractive demographics, where we already have brand awareness and a delivery presence and can leverage our supply
chain network.
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