Staples launches Expo too small-business market

DSN Retailing Today, June 7, 2004 by Mike Troy

PHILADELPHIA -- Staples has taken its familiar brand promise of making things easy for small businesses to another level by extending a retail strategy known as Business Expo to five Philadelphia area stores.

The Expo initiative is an effort by the $13.2 billion global office supplies company to reach a market for business infrastructure products and services that includes things such as multiple line phone systems, computer servers and tablet PCs, high-output networkable copiers and custom-designed, commercial-grade office furniture. By providing a turnkey solution for customers who are establishing small businesses or expanding existing ones, Staples is extending itself beyond simply selling customers consumable products to reinvent its own business model.

"I know how hard it is to run a small business," Staples founder and chairman Tom Stemberg told those in attendance at the grand-reopening of a downtown Philadelphia store that was converted to the Business Expo concept. "The mission of Staples in general, and Business Expo in particular, is to make your life easier. Staples Business Expo is really about taking easy to a whole new level."

The downtown location and eight others like it in Eastern Pennsylvania are intended to function as one-stop solutions centers, according to Stemberg.

"Look at this as a hub and spoke. We are going to have nine stores that serve as showrooms for our 60 or so Staples stores in Eastern Pennsylvania," Stemberg said.

Although the type of product and services offered at Business Expo are substantially different from Staples' conventional stores, the overall layout of the stores is similar. Customers will find the familiar copy and print center in the front of the store, adjacent shelves loaded with office supplies and pallets of copy paper. The most visible changes relate to a Hon brand furniture department, a technology area at the rear of the store where business servers and computers are displayed, and three kiosks in the center of the store for Microsoft, Nortel and Hewlett-Packard. The store also has Gray carpet throughout and a half dozen overhead signs that call attention to Staples's ability to install and maintain products such as copiers and computer network.

The biggest difference in the store relates to the customer service model necessary to ensure Staples can deliver against its more elaborate definition of easy. To do so, supplier-fund sales representatives work side by side with Staples employees in key Business Expo departments. In addition, three regional Staples sales executives with responsibility for furniture, technology and computers each have a staff of 10 outside salespeople who call on local businesses. The salespeople are aided in their efforts by local stores where employees are trained to refer customers with elaborate product and service needs to a Business Expo store. Approximately 400 leads were generated by Philadelphia-area stores the week prior to the opening of the five new Business Expo stores.

Staples is sure to face challenges executing a strategy that is more complex because of the addition of high-end products and greater service levels, but the company has had some time to work through the kinks. The first Business Expo stores were opened quietly on the outskirts of Philadelphia in the fall of 2002. Those units looked like attractively remodeled Staples stores with additional product segregated in the middle of the store.

"All of the Expo merchandise and services were located in the center of the store because we thought that was the best way to highlight the newness," said Jane Beiring, senior vp of Staples Business Expo.

While the concept proved effective, Staples rethought the merchandising and determined that a better approach would be to integrate the Expo products within the stores' main departments. As a result, the high-end, networkable copiers are adjacent to table-top models, and computer network systems are adjacent to the technology assortment. To give the second-generation Expo stores a more professional look while simplifying maintenance, gray carpeting was added.

Either way, they bear little resemblance to the earliest Staples stores and demonstrate how far the office superstore concept has come in the technology age.

"Stores in the early days had concrete floors and warehouse shelving," Stemberg recalled.

Despite such a modest selling environment, the stores thrived because the broad selection of office products and low prices in a retail setting was new to small business customers. Office superstores proliferated and in roughly 15 years since the first Staples opened, the company and competitors Office Depot and OfficeMax were operating more than 3,000 stores. The stores had grown to resemble one another in terms of size, product assortment, pricing strategy and service offerings, and increasingly operated in the same markets.

"We knew we really had a problem when a customer came to us and tried to use one of our direct competitor's credit cards," Stemberg said.