Staples 2012 Annual Report Download - page 75

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Merchandising and Marketing
We sell a wide variety of office supplies and services, office machines and related products, computers and related products
and office furniture. Our merchandising team constantly reviews and updates our product assortment to respond to changing
customer needs and to maximize the performance of our key categories. Ink and toner remain important product categories, and
we offer our customers a wide assortment, an in-stock guarantee and a strong pricing message which is supported by our loyalty
programs. One of our top priorities is to significantly expand our product offering beyond core office supplies. Over the past few
years we have had success driving growth in adjacent product categories, such as facilities and breakroom supplies. These positive
results have reinforced our strategy and we continue to broaden our offering, focusing on categories including technology products,
medical supplies, safety supplies, packaging and shipping supplies, and office decor.
Our merchandising staff uses integrated systems to perform the vast majority of our merchandise planning and product
purchasing centrally. Some of our business units, particularly Quill.com, our Canadian operations and our multiple international
businesses, leverage our global buying and merchandising staff along with local staff to meet their specific buying and
merchandising needs. We purchase products from thousands of vendors worldwide and we believe that competitive sources of
supply are available to us for substantially all of the products we carry.
Our product offering includes Staples, Quill, and other proprietary branded products, which represented approximately
28% of our sales in 2012. We offer more than 10,000 own brand products and services, including an assortment of products with
various environmental attributes, which includes our “Sustainable Earth” brand products. Own brand products deliver value to
our customers with prices that are on average 10% to 20% lower than the national brand, while generating higher gross margin
rates on average than national brands. Our own brand strategy focuses on offering national brand quality at lower prices. We have
brought to market hundreds of new own brand products in the last year, many of which are innovative and exclusive to Staples.
Our sourcing office in Shenzhen, China supports our own brand strategy by driving high quality and lower costs, and by bringing
new products to market more quickly. In addition to our proprietary branded products, we also differentiate our core product
offering through exclusive third-party relationships. For instance, we now sell an exclusive and innovative line of Martha Stewart
home office products in our retail stores and on our websites.
In addition to products, we also offer a broad array of services, which represented 6.7% of our sales in 2012. This includes
copy and print services that we provide to our retail and delivery customers, as well as technology services that we provide through
our “EasyTech” business in North American Stores and Online. The market for these services is highly fragmented, and we believe
we have a significant opportunity to offer these services to existing customers and acquire new customers. Over the past several
years, we have upgraded the technology, signage, labor, training and quality of these services to increase sales by driving greater
customer awareness and differentiate our offering.
The following table shows our sales by each major category as a percentage of total sales for the periods indicated:
Fiscal Year Ended
February 2, 2013 January 28, 2012 January 29, 2011
Office supplies 43.9% 44.6% 44.0%
Services 6.7% 5.7% 5.3%
Office machines and related products 29.7% 29.4% 29.9%
Computers and related products 14.1% 15.2% 15.6%
Office furniture 5.6% 5.1% 5.2%
100.0% 100.0% 100.0%
We utilize a variety of marketing vehicles to drive brand awareness and sales of products and services to both new and
existing customers. These vehicles include broad-based media such as television, radio, newspaper circulars and Internet
advertising, including mobile applications and social media. Increasing our presence in social media is important as this is a new
and growing way for Staples to interact with and serve our customers. We also utilize catalogs, e-mail marketing, loyalty programs
and sophisticated direct marketing capabilities. In addition, we market to larger customers through a combination of direct mail
catalogs, customized catalogs and a field sales force. We change our level of marketing spend, as well as the mix of media
employed, depending upon market, customer value, seasonal focus, competition and cost factors. This flexible approach allows
us to optimize the effectiveness and efficiency of our marketing expenditures. We continue to improve our systems and capabilities
to track our customers' multi-channel purchasing behaviors and to execute more effective direct marketing and customer loyalty
programs to drive higher sales across all our channels.