Retailers’ holiday promotions and a shift in consumer buying habits generates heavy demand for Monday deliveries by FedEx.
The office supplies retailer attributes the growth to new product lines and improved customer conversion.
But during a conference call with analysts, CEO Ron Sargent provided insight into Staples’ evolving omnichannel strategy. “We’re also building an omnichannel offering with the recent launch of buy online, pick up in-store,” he said. “This provides customers with the convenience of ordering from Staples.com and picking up available products within two hours at the nearby store of choice, and early results are running ahead of expectations.”
The buy online, pick up in-store program launched in July and comes at a time when same-store sales decreased 5%. The retailer announced it would close 40 retail stores in North America, bringing the total to 140 store closures for the year.
Another omnichannel effort, the in-store Staples.com kiosks—which let consumers order from Staples.com within physical stores—saw double-digit sales growth during the quarter. “Online customers are actually coming into the store and making purchases online and love the experience,” said Demos Parneros, president of North American stores and online.
Staples will also look to be more competitive in pricing. Sargent says Staples’ prices are on average 10% to 15% higher than its most aggressive price competitor: Amazon. “We have begun to sharpen pricing over the last six months,” he said. “We’re going to continue to sharpen pricing in key categories to ensure that we’re in a reasonable range of online competition.”
However, Sargent says, Staples offers more value than just price: free delivery, next-day delivery, no minimum order size and 5% back in awards for customers who spend over $1,000 a year. Staples has had success with a price-matching campaign for back-to-school shopping, and the retailer looks to expand that to match prices of items its competitors stock both in our stores and online.
For the second quarter ended Aug. 2, Staples reported:
- Online sales increased 8%.
- Net sales were $5.22 billion, down 1.7% from $5.31billion.
- Net income decreased 20.1% to $81.88 million from $102.53 million.
For the first six months of the fiscal year, Staples reported:
- Net sales were $10.87 billion, down 2.3% from $11.13 billion.
- Net income decreased 34.6% to $178.09 million from $272.46 million.