How Staples is angling for ‘new relevance’ with services on top of office supplies
Rather than pens and computer paper, business retailer Staples these days derives foot traffic from its services like printing, shipping and passports.
Most recently, that includes a pilot with Verizon to sell phones and devices in-store, plus business-specific services like internet and phone plans. President of Staples U.S. retail Marshall Warkentin said the company introduced the partnership in five stores earlier this year and will expand it to 30 stores later this summer.
“They’re looking for access to our small business traffic, and for us, it rounds out our technology offering. We’re able to provide services like internet, cell phone packages and everything Verizon offers to small businesses, within our stores,” he said.
Once a mainstay of the Fortune 500 list, Staples lost ground in office supply sales during the mid-2010s amid competition from e-commerce players. An attempt to acquire Office Depot and Office Max in 2015 failed when the U.S. government shot down its $6 billion bid on antitrust grounds. It also led to a $250 million breakup fee. The company then pivoted to a B2B strategy and was bought by Sycamore Partners in 2017.
As a private company, Staples doesn’t share revenue or profit figures. But its future relies in its ability to provide business services out of about 945 locations that are within five miles of roughly 90% of the U.S. population. Printing is the main driver, with stores handling about 1 million business customers each year. It also powers printing from the design service Canva to allow users to pick up items in store. In 2022, it introduced same-day passport photos and processing services. And about 200 stores also offer TSA PreCheck enrollment, yielding about 1 million approvals a year.
Warkentin spoke with Modern Retail about recent developments in the Staples service category and its overall strategy. This conversation has been edited for length and clarity.
How does Staples think about integrating services and retail?
“You see the movement from what we call traditional categories like office supplies and paper-based business to technology, services, shipping, travel and other elements of how people do business that lend themselves really well to services, or going somewhere to get something done.
Print is certainly the first element of that. As a small business, I still need to print a menu if I’m a restaurant. I still need to print a big banner in front of my business that says ‘I’m open.’
We continue to invest in our print capabilities. For example, in the last two weeks, we created a print-while-you-wait capability in all of our stores, where you can print an outdoor banner and have it done same day. That’s something most businesses can’t do. We have 945 locations where we’re able to do that. That’s just one example of services that we continue to offer and are growing well for us right now.
Travel is also a really cool one. That allows us to create new relevance in the store. We do passport photos, over a million of those a year. Then we convert that [foot traffic] to product sales: luggage, travel accessories, tech for travel, headphones. All of that is part of the story of new relevance moving to services-based, which allows you to sell more products and helps us evolve from some of those core categories that are more in decline.”
What are the biggest growth drivers at Staples right now?
“Our biggest performing categories tend to be related to services. Our travel business is growing double digits for us, which is a byproduct of Covid as people are traveling more again, including for work.
We’re also seeing meaningful growth in our mail and ship business. We attach a product with shipping supplies and packaging. All that is growing because people, especially small businesses, still need to ship things as part of the e-commerce world.
Another interesting category is recycling. We recycle tech, and we’ve recycled ink and toner for years. That role for us as a retailer is a meaningful traffic driver. You could say these are nontraditional categories, but they’re attached to services, and that’s really where our strategy resides.”
What are the biggest home office trends right now, and how does Staples take advantage of them?
“I lived through that phase of Covid where purchases of home-related work-from-home products — furniture, chairs, printers, technology like laptops — were unprecedented. Our e-commerce business definitely played a huge role. Both our stores and e-commerce were considered necessary retailers at that time for the working segment.
What’s happened now is we’re starting to see a cycle of replenishment that’s occurring. Some companies are moving more towards working in the office, but a lot of hybrid remains. The role of having a place to go — to get certain services, to ship something or to pick something up — is still important.
Small businesses becoming more home-based has contributed to growth for us in other areas. For example, we have a service called iPostal. It allows a small business — or a household, but mostly small businesses — to have a Staples store as their business address. It’s a way to protect me if I’m working from home and don’t want to use that address as my business address. Sometimes, you can have a nice downtown address with a high-profile location. We take all your packages and mail. That’s been growing consistently since we introduced it, especially out of Covid as people continue to work from home.”
From a merchandise perspective, what categories are you most focused on growing right now?
“Specifically, tech products. When people think of Staples, many still think of us as an office supply superstore. But as we introduce more technology, our laptop, desktop and tablet business is one of our fastest-growing categories. That’s something we need to keep growing as we transition perception from office supplies to working and learning in a digital way.”