Staples Clamps Onto Grocers

The company added nine countries to its international roster last year and plans deeper penetration throughout South America, Eastern Europe and China this year. The nine additional countries are China, through a JV; Denmark, Austria, Switzerland, Poland, Hungary, the Czech Republic, Argentina and Brazil.

It now operates in 21 countries on four continents and plans additional growth abroad and throughout North America. North America remains its strongest suit. It added 17 new stores in the US and four in Canada during 2004 and plans another 75 here and 20 in Canada this year. Chicago is at the forefront of US expansion with a total of 20 set to be in place by the end of this year. Eight are already in operation, and 12 are expected to be operating by the end of this quarter.

A refocusing that began in 2003 is showing better than expected results, according to Ron Sargent, president and CEO. Total company sales rose to $14.4 billion in 2004, an 11% increase over the previous year. Stores realized increased traffic and inventory turns reached 5.6. During a 4Q and year-end 2004 conference call, Sargent said Staples was growing five times faster than its competition.

Differentiation of brand is one reason for the growth, according to Sargent. That is being accomplished through its "We make it easy to buy" effort, which includes, but is not limited to Easy Rebates, which was launched last fall, and an ad campaign featuring an "Easy Button," to stress its problem-solving products and services.

So far, a million customers have obtained rebates via the web since the program was instituted. Staples plans to make obtaining rebates even easier, Sargent says. As for the "Easy Button" advertising campaign, he said customers are calling to find out where they can buy the button. "Stay tuned for that," he suggested.

For holiday 2004, digital cameras were added to the product mix. They were accessible and equipped to work so customers could try them out. In addition, all sales associates were trained in knowledge of the products. The result was add-on sales that Sargent says allowed Staples to "outperform the competition" in this category. Copy centers, printer cartridges and business software were among the top sellers for Staples.

Contract business, eCommerce, and mobile certified technicians are three additional areas of business that performed well in 2004 and are expected to accelerate this year. "We added 33,5000 contract accounts in 2004, tripling that business over the year before," Sargent said.

Certified technicians, a program of mobile tech-savvy employees to help customers install wireless systems, eliminate computer viruses and assist with other technical problems, are now operating throughout the Northeastern US. This service is expected to be available in all US regions by the end of the year. Online sales increased 25 percent in 2004, garnering $3 billion in sales. It is another area of anticipated growth.

For 2005, revenue growth in the low double-digit range is forecast. Currently Staples operates approximately 1,680 office superstores. Sargent claims "market leadership around the world" based on its combination of retail sales, eCommerce, catalog and contract business.