Staples 2007 Annual Report Download - page 77

‘‘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.
Our real estate strategy is to expand our store base in a steady and disciplined 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, we assess potential real estate sites through a stringent approval process
which evaluates the financial return for each store. Our evaluations consider such factors as the concentration of small
and medium-sized businesses and organizations, the number of home offices, household income levels, our current
market presence, proximity to competitors, the availability of quality real estate locations and other factors.
We plan to open approximately 100 new stores in North America in 2008, compared to 120 new stores in 2007, and
99 new stores in 2006. The growth program for 2008 will continue to focus on adding stores to existing markets as well as
expansion into new markets. We successfully entered the Chicago, Miami and Denver markets over the past few years,
and we are well positioned to enter several other major North American markets where we currently have no retail
presence.
North American Delivery
Our North American Delivery segment is comprised of three businesses: ‘‘Staples Business Delivery’’, ‘‘Quill’’, and
‘‘Contract’’.
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 our 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: Founded in 1956 and acquired by Staples in 1998, Quill is a direct mail catalog and Internet business with a
targeted approach to servicing the business product needs of 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.
Contract: Our Contract operations focus primarily on serving the needs of medium-sized and large regional
companies and large multi-regional companies 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 and payment terms, usage reporting,
the stocking of certain proprietary items, and full service account management.
Our strategies for North American Delivery focus on customer service, customer acquisition and retention, and
product penetration 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 enhance
our websites to drive efficiency and customer satisfaction with approximately 75% of our delivery sales processed online.
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. 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 sales and profitability. In addition to developing
our own internal capabilities, we continue to consider acquisition opportunities that either expand our geographic reach
or broaden our product and service offerings. Recent acquisitions provided us with the ability to add logoed merchan-
dise, industrial packaging supplies and IT services to our portfolio.
International Operations
Our International Operations consist of retail stores, catalog and Internet businesses operating under various names
in 20 countries in Europe, Asia, and South America. As of February 2, 2008, we operated retail stores in Belgium,
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