Staples 2006 Annual Report Download - page 74

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We are pursuing the opportunity to sell office products through other retail channels and have rolled out a Staples
aisle in more than 2,400 grocery stores, where we feature a high percentage of Staples brand products. This initiative is
designed to capture incremental sales and strengthen our brand.
North American Delivery
Our North American Delivery segment is comprised of three business units: “Staples Business Delivery”, “Quill
Corporation,” and our Contract business, operating under the names “Staples National Advantage” and “Staples
Business Advantage.”
Staples Business Delivery: Our Staples Business Delivery operations combine the activities of our direct mail
catalog business, operating since 1990, our Staples.com web site, and Canadian Internet sites. Staples Business Delivery is
primarily designed to reach small businesses and home offices, offering next business day delivery for most office supply
orders in major metropolitan areas. We market Staples Business Delivery through catalog mailings, direct mail
advertising, a telesales group generating new accounts and growing existing accounts, and Internet and other
broad-based media advertising.
Quill Corporation: Founded in 1956 and acquired by Staples in May 1998, Quill is a direct mail catalog and
Internet business with a targeted approach to servicing the business product needs of approximately one million small
and medium-sized businesses in the United States. To attract and retain its customers, Quill offers outstanding customer
service, Quill brand products, and special services. Quill also operates Medical Arts Press, a specialty internet and
catalog business offering products for medical professionals.
Staples National Advantage and Staples Business Advantage: Our Contract operations focus primarily on serving the
needs of medium-sized to large businesses that often require more service than is provided by a traditional retail or mail
order business. Through our Contract sales force, we offer customized pricing, payment terms, usage reporting, the
stocking of certain proprietary items, and full service account management. Our Contract operations are divided into two
businesses. Staples National Advantage is a nationwide Contract business selling to large multi-regional businesses.
Staples Business Advantage primarily sells to medium-sized and large regional companies. We initially established the
Contract business through acquisitions, and since that time have entered certain metropolitan markets through the
expanded sales and distribution capabilities of Staples Business Advantage. StaplesLink.com, which offers the highest
level of procurement functionality available on our web sites, meets the online procurement needs of our Contract
customers. In 2006, we began to leverage our sales force and delivery network to offer copy services to our Contract
customers. We operate three dedicated copy facilities to service the copy and print needs of corporate accounts, and plan
to open several more Contract copy facilities in 2007.
Our strategies for North American Delivery focus on customer service and customer acquisition and retention to
grow our delivery business and increase its profitability. We continue to focus on improving our perfect order metric,
which measures the number of orders that we fulfill on time and without error. We have established customer service
standards to improve recovery of service failures and to make it easy for customers to resolve any issues with their orders.
We are also working to enhance our distribution capabilities to support rapid growth in our delivery businesses by
expanding the number of multi-business fulfillment centers and reducing the number of single business facilities, in order
to enhance our ability to provide next business day delivery to more markets. We continue to expand our sales force as
we increase our market share and sell a broader assortment of products and services to new and existing customers. We
also plan to continue to enter new geographic markets, add new products and services, and consider small, “tuck-in”
acquisition opportunities to drive sales growth in this segment of our business. In addition, we continue to drive
profitability by increasing our customers’ average order size and the percentage of orders placed electronically. Rapid
growth in higher margin “share of wallet” categories such as janitorial and break room supplies and copy and print
services are designed to drive profitability in each of the three business units in North American Delivery.
International Operations
Our International Operations consist of retail stores, catalog and Internet businesses operating under various names
in 19 countries in Europe, South America, and Asia. As of February 3, 2007, we operated retail stores in Belgium,
Germany, The Netherlands, Portugal, and the United Kingdom. In addition, we operate catalog and Internet businesses
in Argentina, Austria, Belgium, Brazil, China, the Czech Republic, Denmark, France, Germany, Hungary, Italy,
Luxembourg, The Netherlands, Poland, Spain, Sweden, Switzerland, and the United Kingdom.