Staples 2013 Annual Report Download - page 3

MAKE
more
HAPPEN
Fellow Shareholders,
In 2013, the Staples
®
team made
solid progress reinventing our
company. Our top priorities for the
year were to accelerate growth
online, expand our assortment in
categories beyond office supplies,
build scale and credibility in adjacent categories in our
commercial business, and drive sustainable growth in our
copy and print business. We also developed aggressive
plans to reduce costs across each of our businesses to
fund our growth priorities and to improve retail store
productivity by eliminating square footage through store
closures, downsizes and relocations.
We achieved most of our goals last year. We added new
eCommerce leadership and launched the biggest refresh to
staples.com
®
since 2005. We made our Web site faster and
easier to navigate. We increased customer engagement and
personalization with the acquisition of Runa. We opened
a new software development center in Seattle, and we
launched mobile- and tablet-optimized sites to further
improve the customer experience in this rapidly growing
part of our business. As a result of our investments in
staples.com, we accelerated sales growth from 4 percent
during the first three quarters of the year to over 10 percent
during the fourth quarter of 2013.
Our growth online has also been supported by our
expanded assortment of products. We started the year with
100,000 products at staples.com and many of these were
office supplies. At the end of 2013, we had over 500,000
products online and we’re just getting started. Today, more
than 80 percent of our sales at staples.com are to business
customers, and we’re becoming more relevant as we
continue to add new products in categories beyond office
supplies. During 2013, we added thousands of products in
areas like business technology, furniture, facilities supplies
and safety supplies. We also launched a wide assortment
of products to serve industry verticals like restaurants and
retail stores. To increase awareness that Staples has every
product businesses need to succeed, we relaunched our
brand late in the year. Our “Make More Happen” campaign
shows how Staples can help customers run their business,
and early feedback has been very positive. At the end of
2013, the expanded assortment on our Web sites in North
America was driving $5 million of incremental sales per week.
The reinvention of our $7 billion Contract business in North
America is also right on track. A few years ago, we expanded
our assortment and invested in sharper pricing and associate
training to accelerate growth in facilities and breakroom
supplies. In 2013, we drove strong double-digit growth in
this category for the third consecutive year. Today, Staples
generates nearly $2 billion of global sales from facilities and
breakroom supplies with about half of that coming from our
North American Commercial business. Our success driving
sustained growth and gaining market share gives us great
confidence that we can build scale and credibility in many
other categories beyond office supplies. To support this
initiative, we developed a new selling approach and added
more than 200 specialists to drive growth in adjacent
categories in 2013. In addition to facilities and breakroom
supplies, we’re focused on building momentum in categories
like furniture, technology, print and promotional products.
While we’re still in the early innings of this initiative, we’re
gaining traction, and our new team-based selling model has
received very positive customer feedback.
Copy and print sales in North American stores and online
were up in the mid single-digits in 2013. We continue to
drive growth online, in our retail stores and with our outside
sales force as we meet the evolving needs of business
customers. Many small- and medium-sized businesses
spend more on copy and print than on office supplies,
and Staples is best positioned to meet the needs of these
customers. We have an unmatched omni-channel capability,
and we’ve combined our retail and mid-market contract
sales force to aggressively pursue this opportunity. Our lead
generation is better. We’re driving incremental traffic to our
stores. And we’re better leveraging our online capabilities to
accelerate growth in this high-margin business.
Throughout 2013, we made good progress on our efforts
to reduce expenses and improve the productivity of our
existing businesses. At the beginning of the year, we
committed to driving $150 million in gross savings in North