brand strategy

Paper Cuts: Staples Closes Stores in Shift to E-tailing

Posted by Dale Buss on September 26, 2012 04:07 PM

For decades, pundits have been saying that the rise of the computer would vanquish paper to the trash shredder of history. But they haven't been right.

Maybe, that is, until now. Because the whole issue of the feasibility of paper products may have reached a tipping point with the news that Staples is realigning its retail and e-tail strategy in a massive rethinking of its business.

The company announced that it "will integrate its retail and online offering, increase investment in its online businesses, reorganize its operations, implement leadership changes, initiate a multi-year cost savings plan, and restructure its International Operations."

Specifically, it plans to slash its U.S. store footage by 15 percent and invest the savings in its e-tailing business. In addition to shrinking its U.S. retail footprint, it's closing 45 stores in Europe. It's also rebranding its Australian business "as it continues to move toward one global brand."

Add the strategy shift to the hasty retreat in bricks-and-mortar space also being undertaken by rivals OfficeMax and OfficeDepot, and you may finally have a situation where the need for paper truly is being obviated by the latest digital advances.

“Our vision is to establish Staples as the single-source product authority for millions of businesses,” stated Staples chairman and CEO Ron Sargent. “We are building on the strengths that are the foundation of our success by focusing on five key priorities: accelerate growth in our online businesses; fully integrate retail and online; improve retail store productivity; restructure our International Operations; and return cash to stakeholders.”

"The No. 1 reason for softness in this business is the iPad," Gary Balter, retail analyst for Credit Suisse, told the Wall Street Journal. "Look at how much less we print today."

Yes, look at it. Staples executives certainly are. Their turnaround plan includes closing 30 of their 1,500 U.S. stores and reducing the size of others, in large part reflecting the simple reality that we need less paper and fewer implements for using it as younger consumers, especially, move more and more of their business and personal lives onto purely digital platforms.

But Staples' moves aren't purely defensive or designed only to attempt to cope limply with the sea change in its core business that finally has arrived. The company also has been doing a brisk business online — it claims it's the No. 2 internet retailer after Amazon — and wants to bolster that operation against incursions by competitors, including in the mobile space.

And it wants to move beyond purely offering office products online. It isn't clear what categories the chain might have in mind for e-tailing expansion, but clearly the precedent is there for an online retailer that is known for one type of product expanding beyond that category. Amazon, of course, which began only as a retailer of books and DVDs, is Exhibit No. 1 for how successful a product-diversification strategy can be.

Meantime, Staples' strategy will be saving a few trees.

Comments

wyatt Buchanan United States says:

It’s funny how quickly the Dems said "blame Romney" because of his work at Blain. Hmmmm... 3/12 years of "blame Bush" and now we are blaming the global recession and store closings on a guy who was not even in office.

Sounds desperate and more of the Democrat blame game to me.

September 27, 2012 09:45 AM #

Comments are closed

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