Staples 2003 Annual Report Download - page 40

We believe our distribution centers provide us with significant labor and merchandise cost savings by centralizing
receiving and handling functions and by enabling us to purchase in full truckloads from suppliers. We also believe that
the reduction in the number of purchase orders and invoices processed results in significant administrative cost savings.
Our centralized purchasing and distribution systems also permit our store associates to spend more time on customer
service and store presentation. Since our distribution centers maintain backup inventory, our in-store inventory
requirements are reduced, and we operate smaller gross square footage stores than would otherwise be required. A
smaller store size reduces our rental costs and provides us with greater opportunity to locate stores more closely to our
target customers.
We continually work with our vendors to improve our business relationships. StaplesPartners.com allows suppliers
access to important supplier information, including supplier metrics, purchase order data, sales and inventory data, EDI
information and transportation routing information. This site has improved the speed and accuracy of information,
reduced our communication costs and improved our suppliers’ understanding of doing business with us.
Over the last several years, we have made incremental progress in our supply chain through improvements that did
not require significant changes to our processes. In 2003, we expect to begin to implement a comprehensive plan to
improve our supply chain performance as we look to improve our processes across all functions. The key objectives of the
plan include improvements in our demand creation and inventory management processes as well as optimizing our
distribution network.
Marketing
We pursue a variety of marketing strategies to attract and retain target customers. These strategies include broad-
based media advertising such as television, radio, newspaper circulars, print and internet advertising, as well as catalogs,
e-mail marketing, a loyalty program and a sophisticated direct marketing system. In addition, we market to larger
companies through a combination of direct mail catalogs, customized catalogs and a field sales force. We change our
level of marketing spending as well as the mix of media employed depending upon market, competition and cost factors.
This flexible approach allows us to optimize the effectiveness and efficiency of our marketing expenditures.
With the implementation of our Back to Brighton strategy, we realigned our marketing efforts to focus on our core
customers: small businesses and power users. The marketing strategies emphasized our strong brand and leveraged all of
our delivery and retail vehicles to send a consistent message to our core customers. We expanded the size of our sales
force in both delivery and retail segments. During fiscal 2002, we continued our print advertising program but at a
reduced and more targeted level as we shifted our marketing expenditures from mass media to more targeted direct
marketing and to our loyalty program. Going forward, we intend to focus our marketing message on our brand promise
that Staples makes buying office products easy.
We also have a naming rights agreement with L.A. Arena Company, LLC, which owns the Staples Center, a state of
the art sports and entertainment complex in downtown Los Angeles, which opened in 1999. This agreement provides us
with marketing, promotional and signage rights, community-based programs and various amenities in the Staples Center
for 20 years.
Associates and Training
We place great importance on recruiting, training and providing the proper incentives for quality personnel. We
recruit actively on college campuses and also hire talented individuals with experience in successful retail operations.
Additionally, current associates are rewarded for recruiting new associates.
We consider customer relations and our associates’ knowledge of office products and office-related capital goods to
be significant to our marketing approach and our ability to maintain customer satisfaction. Associates are trained in a
number of areas, including, where appropriate, sales techniques, management skills and product knowledge. We have
continued to make an investment in computer-based, multi-media training programs to upgrade staff selling skills and
improve customer service at our retail stores and delivery operations. Much of the training targets sales of capital goods
such as fax machines, copiers, furniture and computers. Store management trainees advance through the store
management structure by taking on assignments in different areas as they are promoted. Store and call center associates
prepare for new assignments through Staples and third party designed training modules, written manuals, video
instruction and self-testing.
As of February 1, 2003, Staples employed 29,912 full-time and 27,904 part-time associates.
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