In its second-largest acquisition, Amazon buys the company for $970 million.
Staples is viewed as among the most forward-thinking in using the web with bricks-and-mortar stores to achieve business goals.
That was easy. Those three words are more than a marketing slogan for Staples Inc.-they summarize the office supplies retailer’s business strategy.
Staples has built its company around making shopping handy for the time-crunched, price-sensitive small business owners that make up about 90% of its customer base. And the chain is viewed as among the most forward-thinking in using the web in concert with its more than 1,800 North American stores to achieve its business goals.
“They are best in class when it comes to cross-channel integration,” says Sahir Anand, research director at retail consultancy Aberdeen Group. “They realize the customer doesn’t care or need to worry about where a product is coming from, they just need to be able to purchase it easily.”
Staples not only has made it easy for its customers to shop both in stores and on the web, it regularly encourages them to use both channels. The company compensates store managers so they won’t view Staples.com as a competitor, and recently made internal changes aimed at accelerating the delivery of new web and cross-channel features.
It also has made a big investment in web-connected kiosks in stores that let consumers view and buy from Staples.com. And it updated its e-commerce site last fall with a ship-to-store tool and access to store inventory.
It’s all part of winning the loyalty of small business owners, says Pete Howard, senior vice president of Staples Business Delivery, which provides office products and services to small business customers via Staples’ e-commerce sites, catalogs and telesales.“We know the typical small business owner shops online and in stores and we want them to do both with our brand,” Howard says. “We know web shoppers pop into stores and we want them to come to us, even if they have to drive by a competitor.”
That’s a smart strategy because multichannel shoppers buy more. In a recent survey by research firm Retail Systems Research, 56% of retailers said customers who shop across multiple channels are more profitable than those who shop only one. And about half of those retailers said multichannel shoppers are significantly more profitable.
The strategy seems to be working for Staples. For its fiscal second quarter ended Aug. 25, total sales increased 9% to $5.5 billion compared to $5.1 billion a year earlier. What’s more, as Staples increased sales during the economic downturn, its two main rivals have struggled: Office Depot’s total sales fell 22% in the second quarter to $2.82 billion and Office Max reported a 16.5% year-over-year drop to $1.66 billion.
Staples also has taken the top spot in office supplies on the web. Its 2008 web sales totaled $7.7 billion, a 38% increase from 2007, in part because of its July 2008 acquisition of Corporate Express. Those results make Staples the second-leading U.S. online retailer behind only Amazon.com Inc. Office Depot ranks fourth and Office Max sixth.
Staples’ success has not come without investment. Staples was one of the first to deploy web-enabled kiosks in its stores in 2001. Now every Staples store has at least one kiosk and many have two, Howard says. Staples has trained associates, Howard adds, so the kiosks produce results.
“Store associates know when it’s time to take a customer to a kiosk, like when we don’t have an item available in a store,” he says. “And, they know to use them to research products for shoppers and to look up prior orders to see, for example, what kind of ink and toner the customer needs.” Howard says.
Unlike many retailers with store kiosks, Staples allows shoppers to place web orders from the kiosks and pay in the store. The kiosk prints out a bar-coded receipt for the web order that the shopper takes to the checkout where the bar code is scanned along with other products.
Very importantly, Staples has made the decision to give the store the credit for purchases made via kiosks, which Anand of Aberdeen says is a smart way to ensure associates will use the kiosks to save a sale.
Part of Staples’ cross-channel strategy is to encourage its customers to shop both in stores and online. It uses its Staples Rewards program to determine how a customer shops and then promotes channels the customer is not using. For example, it might drive web customers to retail locations by offering them e-mail coupons to use Staple’s Copy&Print; centers in stores, while offering store and catalog customers discounts for Staples.com.
Part of the reason Staples is successful in the Internet era is that it focused on integrating channels from the days when multichannel meant stores, catalogs and call centers. “In the beginning 1-800 Staples was our delivery channel and we had stores,” Howard says. “But we always focused on cross-channel. Customers could go to our prepaid desk in stores and order something via catalog. Call centers could always look up to see what was in stock in stores.”
And so, when Staples launched its e-commerce operations, the retailer extended that approach to the web, Howard says. “To us it’s not that difficult” he says. “Just focus on what makes it easiest for the customer.”
To Staples, that means enabling a traveling businessman to look up store inventory online or place an order and pick it up in any Staples store. Customers can create business cards, stamps and appointment cards online and pick them up in a store the same day. They can also have Staples’ weekly circular, which is posted online, sent to them via e-mail.
And Staples strives to create a seamless brand by offering the same discounts online as it does in stores. “We make a big effort in this,” Howard says. “Generally, if we have a laptop promotion in a store, you’re going to see it online as well.”
Speedy site changes
Staples can update its web site with promotions and new features quicker than ever today because of a process it implemented this year to help it prioritize e-commerce initiatives.
Staples now breaks projects down into distinct planning and implementation stages and uses its dedicated groups of analysts, programmers and marketers to customize business development and design plans. Better communication translates into faster site upgrades: Projects that used to take a year now take about six months.