Staples 2005 Annual Report Download - page 54

2
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.
The office products industry has experienced significant growth since 1986 as the industry has expanded to include a
variety of retailers, dealers and distributors, including other high-volume office supply chains.
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 L in the Notes to 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. Although there are no clear demarcations
among customer groups, we target four principal groups: home offices (customers spending over $500 per year on office
products excluding computers and furniture; including home-based businesses and teachers); small businesses and
organizations with up to 20 office workers; medium-size businesses and organizations with between 20 and 500 office
workers; and large businesses and organizations with more than 500 office workers. 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 ability to address all four major customer groups increases and diversifies our available
market opportunities; increases awareness of the Staples name among customers in all four groups, 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, convenient store locations, easy to use web sites and reliability and speed of order delivery. Our
strategy is to maintain our leadership in the office products industry by differentiating ourselves from our competition,
delivering industry-best execution and expanding our market share.
To accomplish this we are focused on delivering on Staples’ brand promise, we make buying office products easy,
which we launched in 2003 in response to extensive customer research that showed customers place a significant value on
an easy shopping experience. Our commitment to making it easy for our customers to shop is reflected both in terms of
the shopping experience and product offering. We have implemented initiatives in both retail and delivery to improve
the customer experience, infused the new brand personality in all of our marketing vehicles and stores, actively promoted
our new advertising tagline, “that was easy”, and increased the quality and value of our Staples brand products. For
example, to respond to the importance our customers place on courteous and helpful associates, we rolled out a new
customer service model across the chain to ensure a positive customer experience in our retail business. We have also
redesigned our web site to make it easier for customers to shop for products and services on-line. In addition, we are
growing our copy and print centers through enhanced service and technology, introducing innovative products that
customers can buy only at Staples, and helping customers run their offices by offering services such as computer repair
and installation of wireless networks performed by mobile technicians.
We are committed to delivering industry-best execution with a focus on improved service and profitability. Our
recent initiatives have included a focus on our domestic supply chain program. We have improved our overall end to end
order to fulfillment execution, including in-stock, fast checkout and perfect order programs. In addition, over the past
several years we have continued to focus on driving profitable sales growth; improving profit margins; and increasing
asset productivity. As a result, we have dramatically improved return on net assets, the primary metric we use to measure
shareholder value creation, and expect to continue to focus on financial performance improvement. We expect to
maintain our disciplined financial strategy, allocating resources between short and long-term investments and business
improvement programs.