Staples Strategy: New Branding, More Stores
By Alan Wolf -- TWICE, 6/9/2006
New York — Staples is celebrating its 20th anniversary with $16 billion in revenue, 11 percent compounded growth and 1,780 stores in 21 countries.
But take away its international operations and institutional delivery business and it is still an uphill slog for the office supply chain.
While its $9 billion domestic retail division has been posting solid high single-digit sales gains, comp-store sales have been soft amid tough competition from channel rivals Office Depot and OfficeMax — as well as CE retailers of all stripes.
As president/COO Mike Miles told TWICE during a PiperJaffray analyst conference here this week, “Consumer electronics is a big part of our business and has been one of the most rapidly growing categories.” Specifically, “machines,” as Staples classifies CE, vs. traditional office supplies and ink cartridges, represent fully 40 percent of the retail mix, with notebook computers leading the sector in growth rate.
While CE margins leave much to be desired, Miles acknowledged, they drive traffic and afford “better attachment selling” of more profitable products like cables and ink. And to better highlight Staples’ CE assortment, “We’re always looking at different store configurations and different layouts,” he said.
From a macro perspective, Staples is trying to differentiate its brand by adding the word “easy” to its marketing communications to associate the company with a hassle-free experience. Hence, Staples’ recently redesigned Web site is labeled “The easy way to shop,” and its rebate offers are “easy rebates,” Miles explained.
Staples is also looking to fill the void in 11 major markets where it currently has no retail presence, including Denver, Houston, Las Vegas, Miami, Minneapolis and St. Louis. It’s also extending its presence through alternative channels, such as the 1,000 supermarkets featuring Staples aisles.
On the product front, the chain is building its private-label Staples brand, which is expected to account for 20 percent of the sales mix this year, and is boosting its level of direct-sourced goods, which currently stands at 5 percent of the assortment.
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