Staples 2002 Annual Report Download - page 38

the purchase of over 130,000 office products and services. The site is available in all of our U.S. retail stores through
internet access points. Delivery orders are shipped from our delivery distribution centers and are distributed through
dedicated delivery hubs. In some markets, we also deliver products directly from our retail stores. We market Staples
Business Delivery through direct mail catalogs, a sales force primarily focused on generating new accounts and internet
and other broad-based media advertising.
Quill Corporation: Acquired by Staples in May 1998 and founded in 1956, Quill is a direct mail catalog business
with a targeted approach to servicing the business product needs of more than one million small- and medium-sized
businesses in the United States. Quill also sells office products using the internet channel through Quill.com. To attract
and retain its customers, Quill offers outstanding customer service, superior private label products and special services.
In July 2002, we acquired Medical Arts Press, Inc., or MAP, a leading direct marketer of specialized printed office
products and practice-related supplies to medical offices, and established MAP as an operating division of Quill. Our
acquisition of MAP provides us with an opportunity to sell traditional office products to MAP’s customer base and
expand Quill’s and Staples’ product offerings.
Staples National Advantage and Staples Business Advantage: Our contract stationer operations focus primarily on
serving the needs of medium- to large-sized businesses that often require more services than are provided by a traditional
retail or mail order business. We offer customized pricing, payment terms, usage reporting and the stocking of certain
proprietary items. Our contract stationer business is divided into two segments. Staples National Advantage is a
nationwide contract stationer business selling to large multi-regional businesses. Staples Business Advantage sells to
medium- and large-sized regional companies and has the flexibility to handle smaller accounts. We initially established
the contract stationer business through acquisitions, and more recently have entered certain metropolitan markets
through the expanded sales and distribution capabilities of Staples Business Advantage. StaplesLink.com provides online
procurement of office products for our contract stationer customers. To appeal to businesses which require high levels of
procurement control, StaplesLink.com offers the highest level of procurement functionality of our websites, including
customized pricing, payment terms, usage reporting and full service account management.
European Operations
As of February 1, 2003, we operated 188 retail stores in Europe. This includes 83 Staples stores in the United
Kingdom, 56 Staples stores in Germany, 37 Office Centre stores in the Netherlands and 12 Office Centre stores in
Portugal. The Office Centre stores in the Netherlands are different from a typical Staples store in that they generally
have a business-oriented membership format similar in concept to many U.S. warehouse clubs. In fiscal year 2002, we
opened 14 stores in Europe, and we plan to open approximately 20 new stores in fiscal year 2003, including an expansion
of the Office Centre concept into Belgium. Our European Operations segment also includes delivery businesses
operating under the Staples name in the United Kingdom and Germany, and an internet site in Germany. On
October 18, 2002, we gained access to the fast growing office products mail order market in France, Belgium, Spain and
Italy and strengthened our position in the United Kingdom through our acquisition of the European mail order
businesses of an office products seller. The acquisition expanded our European Operations segment to include leading
direct mail office products sellers that deliver office products and services directly to more than 800,000 small business
customers under a variety of different brand names, including JPG and Bernard in France and Belgium, Kalamazoo in
Spain, Neat Ideas in the United Kingdom and MondOffice in Italy.
We believe that Europe represents an important opportunity for us. Europe is the second largest office products
market in the world and relies more than the United States on the delivery channel as opposed to the retail channel. Our
retail business has experienced strong revenue growth and improved profitability over the last several years despite
economic and regulatory challenges and a difficult real estate market. With our recent acquisition in the delivery channel
and our existing delivery business, we believe that we are well positioned for success as a multi-channel distributor of
office products in Europe.
Merchandising
We sell a wide variety of office supplies and services, business machines, computers and related products and office
furniture. While our buying and merchandising staff uses integrated computer systems to centrally perform the vast
majority of our merchandise planning and product purchasing, some of our business units, particularly Quill, Canadian
operations and multiple European businesses, leverage our global buying and merchandising staff along with their own
staff to meet their more localized buying and merchandising needs.
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