Throughout 2006 and into 2007, Staples has faced significant challenges against competitor superstores including Wal-mart which has taken on an increasingly competitive role in supplies for small business. North American Delivery, the fulfillment center area of Staples, posted a 24% gain in revenue and is on its growth plan that management defined for investment analysts in 2006.
While the North American sectors of the business are mixed in results, the growth of International Operations has been significant during 2006 and into 2007. With an 11% increase in sales in 4Q06 alone which had been factors for exchange rate fluctuations, Staples continues to successfully expand into the UK and German office supplies, furniture and computer retailing sectors.
The market and environmental factors that are influencing Staples are the broader globalization of competitors' supply chains which...
Wal-mart's aggressive use of vertical integration of supply chains is a case in point. A second major factor is the use of predatory pricing on the part of both national and regional competitors throughout North America, a practice Staples has fortunately not embraced. A third factor is the commoditization of furniture and computers through the use of accelerated supply chains and pricing strategies at market penetration over profitability. Staples finds itself globally in an environment that is populated with competitors that are convinced there is price elasticity in commoditized products, yet has adverted price wars on their path to profitability. Additional market factors are the under-served UK and German retailing markets oriented to the small businesses in these countries and the economic policies of these nations favoring small business
