Staples 2013 Annual Report Download - page 92

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Merchandising and Marketing
We sell a wide variety of office supplies, business technology products and services, facility and breakroom supplies,
computers and mobility 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 categories, and we offer our customers a wide assortment of these products. as well as 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 team 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. In an effort to improve efficiency and profitability, we are in the process of aggressively streamlining our
pan-European product assortment. We purchase products from thousands of vendors around the world 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 2013. We offer more than 10,000 own brand products and services, including an assortment of products with
various environmentally friendly 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 is based on offering a portfolio of products that meet our
customers’ needs across a variety of product categories and price points. The largest portion of our portfolio focuses on offering
national brand quality at lower prices; in addition, we have developed a selection of opening price point products for more price
sensitive customers, and we have also developed a number of unique and innovative products to help differentiate Staples in the
marketplace. 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 higher 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.
In addition to products, we also offer a broad array of services, which represented 6.9% of our sales in 2013. 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.
The following table shows our sales by each major category as a percentage of total sales for the periods indicated:
Fiscal Year Ended
February 1, 2014 February 2, 2013 January 28, 2012
Core office supplies 27.5% 28.1% 29.4%
Ink and toner 20.2% 19.7% 19.5%
Business technology 15.2% 16.6% 18.0%
Paper 9.0% 9.0% 9.0%
Facilities and breakroom 8.7% 7.4% 6.5%
Computers and mobility 6.9% 6.9% 6.8%
Services 6.9% 6.7% 5.7%
Office furniture 5.6% 5.6% 5.1%
100.0% 100.0% 100.0%
In 2013, we launched a broad-based campaign utilizing a variety of marketing vehicles to drive brand awareness and
sales of products and services to both new and existing customers. These vehicles include 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 and digital marketing capabilities. In addition, we market to larger customers