Staples 2007 Annual Report Download - page 76

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.
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 operating
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 K in the Notes to the 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. 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 retail and delivery businesses attract different customer groups with distinct purchasing
behaviors. Our retail stores target home offices (customers spending over $500 per year on office products excluding
computers and furniture, including home-based businesses and teachers), and small businesses with up to 10 office
workers. Our retail stores also serve a customer group we refer to as ‘‘casual consumers’’, who shop less frequently than
home office and small business customers. Our catalog and Internet businesses primarily target small businesses and
organizations with up to 20 office workers. Our Contract business targets medium-size businesses and organizations with
between 20 and 500 office workers as well as Fortune 1000 companies. Our ability to address customer groups with
different needs increases and diversifies our available market opportunities; increases awareness of the Staples brand
among customers in all segments, 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.
We strive to provide superior value to our customers through a combination of everyday low prices, a broad
selection of products, high quality and innovative Staples brand products, convenient store locations, easy to use web
sites, reliable and fast order delivery, and excellent customer service. Our strategy is to maintain our leadership in the
office products industry through our focus on three principles: differentiating ourselves by delivering on our brand
promise: we make buying office products easy; achieving industry-best execution; and expanding our share in every market
where we operate.
North American Retail
Our North American Retail segment, consisting of 1,738 stores throughout the United States and Canada at the end
of fiscal 2007, generates the majority of our sales and profits. Our North American retail stores are located in 47 states,
the District of Columbia, 10 Canadian provinces and 2 Canadian territories in both major metropolitan markets and
smaller markets. We operate multiple retail formats tailored to the unique characteristics of each location, including our
20,000 square foot prototypical ‘‘Dover’’ superstore, representing the majority of our U.S. store base; a 14,600 square
foot format designed for rural markets; and a 10,000 square foot store suited to dense, urban markets such as New York
City. The customer-friendly ‘‘Dover’’ design appeals to the customer with an open store interior that gives the customer a
better view of our wide selection of products, making it easier to find what they are shopping for. Currently, we operate
more than 750 ‘‘Dover’’ stores, and have implemented key elements of the ‘‘Dover’’ model in the majority of our prior
store formats. We are also currently testing a 4,000 square foot stand-alone copy and print shop format to address the
attractive quick-print market opportunity. This store is designed for prime, urban locations with a full-service copy and
print offering and a 1,200 stock keeping unit (SKU) supplies assortment.
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. Store associates are trained to deliver excellent service through our ‘‘Easy’’ service
model, which encourages engagement with customers and solution selling. As part of our strategy of delivering on our
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