Staples presentation

Slide 1

Bradley Caudill, Kristi Meier, Brianna Smith, Danielle Topper

Prior to StaplesFragmented industry in 1985No store existed like StaplesRegular stores sold office suppliesManufacturers made different suppliesLarger retailers obtained heavy discounts on office suppliesSmaller retailers obtained minimal discounts, if anyNew technology being introduced to American businesses

Founding of StaplesTom Stemberg, 36-year old retailer Wanted to create office supplies supermarketWide varietyWarehouse type buildingDeep discounted itemsGrocery stores & Toys R Us used for his idea

Founding of StaplesStaples target market - small businessesBasic value proposition - guarantee lower prices, especially to small businessesStaples was a unique name - their own brandWanted manufacturers/wholesalers to deliver straight to StaplesKeep inventory and costs low Raised issues with prior relationships with other companies

Founding of Staples (Cont)Keep track of individual items profitability No other business did this at the timeList price and Staples price listed on receipts Show customers how much they were savingFirst store - opened in Brighton, Massachusetts on May 1st, 1996

How They SucceededMany copiers and competitors in industry after Staples establishmentPrice wars ensuedMany imitators were filing for bankruptcyStaples stores 35% smaller than Office DepotTop three companies at time - Staples, Office Depot, OfficeMax

Possible merger with Office Depot failed in 1977Federal Trade Commission stopped merger from taking placeWorked out in Staples favor

SWOT Analysis Strengths WeaknessesStrong customer focus Efficient inventory managementProvide training to staffSell products at a low priceProviding a wide rangeSkillful management teamSlow in entering the markets (smaller towns)

Failed to focus on customer needs (During price war)

Information system is not sufficient

SWOT Analysis (Cont) OpportunitiesCheap real estate in small townsGrowing of industry demandFocus on differentiation from other companiesExpansion to the BRIC-countries Threats

Low customer switching cost

Low industry entry barriers

Highly competitive industry and market

Fragmented industry structure

Concept store easy to replicate

Expensive real estate in city

Class DiscussionBased off of the SWOT analysis, in your groups discuss what recommendations you guys can come up with?

Basic Financial InformationSector: Consumer cyclicalIndustry: Specialty retailMarket Cap: $7.3BBeta: 1.53 (Industry Avg = .95)Correlation Coefficient (with S&P500): -.008352 wk range = 8.04-16.84BBB- morningstar credit ratingCurrent price (4/13): $11.25

Update SectionFebruary 2002, Ron Sargent became CEOTom Stemberg stepped down to become chairmanWith the new CEO,Staples slowed expansion & Product line rationalizedFrom 2003-2006, staples refocused on attaining profitable growth2008-2009 global financial crisisStaples continued to be the strongest of the big three office supplier retailersStaples, Office Depot, Office Max

Staples Today1,907 retail stores, 104 distribution and fulfillment centersUnited States and internationallyCompetitors Office Depot, Essendant, AmazonLooking to merge with Office DepotSocial Media FeaturesCollaboration with WorkBar

ReferencesHill, C. W. & Jones, G. R. (2013). Strategic Management: An Integrated Approach (10th ed.). Mason: South-Western.Welcome to Financials.morningstar.com. Welcome to Financials.morningstar.com. N.p., n.d. Web. 13 Apr. 2016.Yahoo Finance-Business Finance, Stock Market, Quotes, News. Yahoo Finance. N.p., n.d. Web. 14 Apr. 2016.