Staples Is Trying To Revamp Its Business By Becoming More Like Amazon
The retailer has been a leading global distributor of office supplies for decades, but its same-store sales have declined or remained flat for seven consecutive years now.
Here's how Staples is planning to turn its business around:
1. The company is closing stores. In the face of declining store traffic, Staples says it will close 225 stores in North America by the end of 2015. The closures amount to about 12% of its more than 1,800 stores in North America. The move is expected to save the company $500 million as more and more people are shopping online.
"Our customers are using less office supplies, shopping less often in our stores and more online, and the focus on value has made the marketplace even more competitive," Ronald L. Sargent, Staples's chairman and chief executive, said on a call with analysts last week.
2. Staples is driving a massive expansion online. While Staples' physical stores are losing money, the company's online sales are surging. Specifically, Staples' same-store sales fell by 7% in the fourth quarter ending Feb. 1, while online sales grew by 10%. Staples.com now accounts for half of the company's total sales.
The retailer has been driving its online growth by expanding its Staples.com inventory five-fold over the last year to 500,000 products. Sargent said the company will continue adding thousands of products every day and expects to triple inventory to 1.5 million products by the end of this year.
The expansion includes new categories for Staples, such as industrial products for restaurants and retail stores as well as household items like coffee.
"We're increasing our investments to drive growth online and in categories beyond office supplies [while] aggressively reducing square footage in our retail store network," Staples Chief Financial Officer Christine Komola told analysts.
3. Staples is reinventing its brand. The company has changed its logo and launched a new advertising campaign to transform its image from a paper and printer supplies store to an "everything" store as competition grows from mass merchants like Amazon and Wal-Mart.
The campaign's tagline is "Make More Happen, and the new logo replaces the staple-shaped "L" in "Staples" with items of furniture, stepladders, water bottles, and other products to show that the store offers more than just office supplies.
For example, a rubber boot replaces the staple in this ad:
- Financial inclusion made easy for India’s small merchants with Paytm’s pioneering QR codes and Soundbox
- A 24-year-old stock trader who made over $8 million in 2 years shares the 4 indicators he uses as his guides to buy and sell
- My fiancé and I picked out my engagement ring together before he proposed, and I don't regret missing out on the surprise
- Two Mukesh Ambani-owned companies are among India’s top 5 valuable brands
- TVS, Ather, Ola hike prices of electric two-wheelers as new subsidy norms kick in
- IKIO Lighting sets IPO price band at ₹270-285/share
- Royal Enfield sales rise 22% in May at 77,461 units
- GST collection rises 12% to ₹1.57 lakh crore in May