Staples 2014 Annual Report Download - page 96

2 STAPLES Form 10-K
iPART I
ITEM 1. BUSINESS
Staples, Inc. and its subsidiaries (“we’’, “Staples’’ or the
“Company’’) is a world-class provider of products and services
that serve the needs of business customers and consumers.
We are committed to providing superior value to our customers
through a broad selection of products, easy to use websites
and mobile platforms, an integrated retail and online shopping
experience and a wide range of copy and print and technology
services. 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, and we currently serve businesses of all sizes and
consumers in North America, Europe, Australia, South America
and Asia. Our delivery businesses account for a majority of our
sales and many of our delivery customers place their orders
online, making Staples one of the largest internet resellers
in the world. We operate three business segments: North
American Stores & Online, North American Commercial 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 P -
Segment Reporting in the Notes to the Consolidated Financial
Statements contained in this Annual Report on Form 10-K.
Strategy
Our vision is every product your business needs to succeed.
This reflects a multi-year effort to evolve our business to
be the product destination for businesses while meeting
the changing needs of customers in a rapidly evolving and
competitive marketplace. We view the industry in which we
sell our products and services as large, fragmented, and
diversified. We reach our customers through contract, online,
and retail sales channels. Our retail stores primarily target small
businesses, home offices and consumers. Our public websites
primarily target small businesses and organizations with up to
20 office workers. Our contract businesses primarily serve
mid-size businesses and organizations with 20 to 500 office
workers, as well as larger regional customers and Fortune
1000 companies. Our ability to address our customers’ needs
expands our market opportunities and increases awareness
of the Staples brand. Serving customers in a global business
allows us to benefit from a number of important economies of
scale, such as enhanced efficiencies in purchasing, distribution,
advertising, and general and administrative expenses.
Our top priority is to continue to improve the service and
value we offer customers in a highly competitive industry,
by expanding our assortment in categories beyond office
supplies, enhancing our ecommerce platforms, accelerating
growth in our delivery businesses, and building momentum in
our multi-channel Copy and Print business. We remain focused
on optimizing our retail square footage in North America
through store closures, downsizes and relocations, and
improving the productivity and efficiency of our store network.
Additionally, we are engaged in a multi-year effort to change
the way we work and aggressively reduce costs to fund our
growth initiatives. We are on track to eliminate approximately
$500 million of annualized global costs in 2014 and 2015
combined. Our biggest opportunities for cost savings are in
areas like supply chain, merchandising, store operations and
real estate, marketing, salesforce, business process and IT
outsourcing, and customer service.
On February 4, 2015, we announced that we had entered
into a definitive agreement to acquire Office Depot, Inc. The
acquisition will better position us to serve the changing needs
of customers and compete against a large and diverse set of
competitors in a range of categories beyond office supplies.
The transaction is subject to customary closing conditions,
including antitrust regulatory clearances and Office Depot
shareholder approval. Assuming such conditions are satisfied,
the transaction is expected to close by the end of calendar
year 2015.
North American Stores & Online
Our North American Stores & Online segment includes the
company’s retail stores and Staples.com businesses in the
U.S. and Canada. Our strategy for North American Stores &
Online focuses on offering easy-to-shop stores and websites
with quality products that are readily available and easy to find,
and courteous, helpful and knowledgeable sales associates
to support customers across all channels. Our goals are to
continue to be a destination for core office supply categories
like ink, toner and paper and to build scale and creditability
for products and services beyond office supplies, such as
copy and print services, facilities and breakroom supplies, as
well as a full assortment of vertical focused solutions to serve
industries like retail, restaurants, health care and education.
Our associates are trained to deliver excellent service by
engaging with customers, focusing on solution selling, and
encouraging customers to shop across channels.
We operate a portfolio of retail store formats, tailored to the
unique characteristics of each location. Our North American
Stores & Online segment consisted of 1,364 stores in the
United States and 315 stores in Canada at the end of fiscal
2014. In an effort to improve store productivity and effectively
manage our cost structure, we are closing, downsizing and
relocating stores. As part of our plan to close at least 225 stores
in North America by the end of fiscal year 2015, we closed
169 stores in fiscal 2014 and expect to close approximately
60 stores in fiscal 2015. In addition, over the past few years
we have reduced the size of our store prototype from 24,000
square feet to 12,000 square feet and incorporated enhanced
omnichannel features to better address changing customer
needs and the dynamic and competitive environment in which
we compete.