By working with business partners and creating new store formats, this Canadian-based office supply and business machine retailer is growing in a down economy. Last year Steve Matyas, president of Staples Canada, had big ideas for 2008 and 2009. The plan was to open 20 stores during 2008 and another 15 during 2009.
Then the economy crashed. The company didn’t fare as bad as most, however, and managed to open 14 stores by the end of the year with plans to open five in 2009. Although it’s a smaller growth plan than what was expected, Staples Canada has still found new ways to grow.
“Our primary focus is making sure we’re able to continue growing the business with our existing customer base,” said Matyas. “With our best customers, we believe we’re getting somewhere in the order of 55% to 60% of customers shopping regularly with us.”
One of the ways in which Staples Canada is trying to increase its share of wallet is through direct marketing. Rather than being satisfied that the company’s existing customer base does the majority of their business with Staples Canada, the company is developing offers to incentivize customers to do more of their business there.
“Because we are good at keeping track of our business customers and what they buy from us, if a customer purchased a printer from us six months ago but hasn’t bought any ink, we will send them an offering to give us a try for ink,” said Matyas. “We do the same thing with paper.”
Staples Canada recently partnered with credit card giant CitiCard to create Citi Staples Easy Rewards Business MasterCard. The partnership gave the company an opportunity to create what Matyas refers to as “stickiness” with its existing customer base by giving them a reason to think of Staples Canada more often.
“The program allows customers to buy items and collect points to buy products at Staples, as well as at a couple of other partners,” he said. On the other hand, in light of the current credit crunch and its impact on small business owners, the new credit card presents an opportunity to provide them with another financial avenue to travel down to ensure they don’t end up in a cash flow crunch.
In addition, in response to customer feedback, Staples Canada has expanded its back-to-school merchandise selection to fit the lifestyle of the businesspeople that shop its locations during the day and transition into parenthood at night. “Customers were saying they’re not just businesspeople; they’re parents,” said Matyas. “We took a huge position in it, and the segment has continued to grow.”
Supporting vendors is as important to Staples Canada as supporting customers. When vendors have difficulty relinquishing stressed inventories, Staples Canada is there to pick up the slack. Purchasing distressed inventory also means Staples Canada is at the top of the list when vendors are looking to liquidate technology merchandise.
The company’s financial stability creates a win-win situation across the board. Not only does it bode well for maintaining strong relationships with vendors, it also enables the company to pass along savings to customers, creating a virtual cycle of feel-good purchasing.
“We can buy better, our customers feel they’re getting a better value, and they tell their friends about it,” said Matyas. “It increases our purchasing power as well, which is a big plus.”
Staples Canada also gathers its top two-dozen suppliers in the fall every year to discuss ways to grow the business while helping its suppliers and vendors grow theirs. The meetings also focus on ways to reduce the cost of doing business with one another.
“We become more profitable for them because doing business with us is less costly than with other retailers,” said Matyas. “In addition, they cut costs in the system, and we can share with our vendor partners the cost-cutting measures while continuing to reinforce our leadership as a low-cost provider.”
Another growth area for Staples Canada is in its store formatting. Its standard model is called the Dover concept, ranging between 20,000 and 25,000 square feet and typically placed in large urban markets. The second is the Barrington format. These stores are between 14,000 and 15,000 square feet and are located in smaller rural and suburban markets.
Staples Canada is looking at two new store formats as avenues of potential growth. The first format, the Ultra Small or Express, is between 8,000 and 10,000 square feet and is to be placed in markets with populations between 10,000 and 12,000.
“We’re determining if that footprint makes economic sense for us,” said Matyas. “If it ends up being successful, we’ve estimated it gives us an opportunity to add an additional 75 to 100 stores.”
The final format is called the Standalone Copy and Print Center, which would range in size between 2,500 and 5,000 square feet and is currently being tested in Montreal. Matyas said the stores are intended for dense urban areas with limited space but great need for professionals to get business cards, letterhead, and presentation brochures printed.
As Staples Canada continues to grow, Matyas said the biggest challenge he faces is maintaining the feel of a small company. As it stands, he knows the name of each member of the company’s store management teams, but it’s getting tougher to do as the store numbers increase.
“We have instituted a number of recognition programs to make sure people are credited for their efforts, ensuring they get the recognition not only from me but also our senior executives,” said Matyas. “We want to make sure our employees understand their contributions matter and that they are integral to the success and improvement of our company.”