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Staples Adding Mobile, Building Tablet Biz

Nantucket, Mass. – Staples will roll out a pilot wireless program to about 500 stores by year’s end while building out its nascent tablet business.

Staples’ retail president Demos Parneros said the expansion comes as the company is cutting the size of its flagship stores by 15 percent, from 18,000 square feet to between 15,000 square feet and 16,000 square feet on average.

Staples will pare back its furniture selection to accommodate the CE expansion within a smaller footprint, he told analysts at a Jefferies & Co. conference here on June 22. Stores will be converted or closed as 500 lease renewals, or one-third of its store base, come up over the next three years.

Staples had trialed a small-scale mobile pilot 10 years ago but did not pursue it, Parneros said. The current effort, which has been tested in 100 stores, is configured as a in-store three-carrier shop featuring phones and plans by AT&T, T-Mobile and Verizon Wireless. The wireless departments are manned by dedicated staffers who are hired and receive extensive training by a third-party provider which shares in revenue. Staples plans to roll the concept out quickly to 400 stores in time for back-to-school season, and will add it to another 100 locations in the fourth quarter.

Similarly, Parneros expects to have eight to 10 tablets and e-readers in stores by Christmas, including devices from Hewlett-Packard and HTC. Staples currently carries four models including Amazon’s Kindle, Barnes & Noble’s Nook and Motorola’s Xoom. “We’ll have anything not Apple in our stores,” he said.

Customer reaction and adoption has been good, he noted. “It’s a really good business right now,” he said of e-books, while the tablet products “work well” and are generating “a lot of demand.”

Parneros said Staples will also “double down” on Monster’s Beats headphone line following a successful holiday program and a less popular trial of Bose models, which weren’t a good fit for the office supply channel.

He added that while 100 stores have an accentuated CE assortment, he doesn’t want to turn Staples into a consumer electronics chain. “There’s a lot of growth from wireless and tablets, and we want to be relevant, but that’s not our bread and butter,” he said.

He also offered that the No. 1 office-supply chain isn’t dwelling on a possible merger between its two channel rivals, No. 2 Office Depot and third-place OfficeMax, after the Federal Trade Commission rejected its own attempt to acquire the former in 1996. He added that the two chains have many overlapping locations, “which would be good for us if anything went down.”