Case Analysis: Staples

John DeLeon

9/18/13

Bus 189 Fall 2013

Case Analysis: Staples

Founded in 1986 by a man with years of experience in the grocery industry, Staples has become one of the most profitable retailers of office supplies. Tom Stemberg had a bright idea to make affordable office supplies more easily accessible to small business in the Northeastern part of the United States. After linking up with a long-time rival, Mr. Stemberg was able to raise enough money from venture capitalists and eventually open the first Staples location in Brighton, Massachusetts in May, 1986. Since then the company has lead the way of retail office supplies. Many competitors have entered the fold since, but Staples continuing high standards of customer service, product selection, location, and service innovation have given the company a competitive advantage in their market.

Within three years of opening, Staples had already grown to 27 stores and annual sales of $120 million, shattering the organization’s initial aspirations. The company had become the first choice for small businesses to get their office supplies. By picking locations where rent was cheap, focusing on serving the small businesses around the areas in which they opened their stores and direct marketing through a loyalty card program, Staples cornered the market of office supply retailing. However, anytime there is success, there is bound to be intimidators. Near the end of the 1980s, Staples faced three major competitors: Office Depot, Office Club and OfficeMax. Each store tried to imitate Staples’ original idea, yet put their own special twist on it. The primary strategy they used was to avoid entering the regions that Staples was already located, but as each entity grew, head-to-head competition became inevitable.

Staples had to continue evolving and began to do so with distribution centers. While this made carrying costs slightly more expensive, they were not forced to open much larger stores similar to their competitors, making their customers feel better about the shopping experience. Later on down the road when direct delivery to businesses and customers came into the fold, Staples again focused on making their customers’ experience second-to-none. Finally when online shopping began to take over how consumers made purchases, Staples was able to create