Staples Inc. (NASDAQ:SPLS) is the world's largest office products company, generating $24.3 billion in sales in 2009, up 5.2% from 2008. Not only is the company ahead of its closest competitors in terms of revenue -- Office Depot (ODP) had revenue of $12.1 billion (a 16% decline)) and Officemax (OMX) had sales of $7.2 billion (down 12.8%) -- but it is the only one to have positive profits in 2009 -- Staples profits were $739 million.
While Staples is the overall leader, it has embarked on several initiatives to extend its lead. For its physical retail locations, the company has significantly remodeled older stores while introducing smaller store formats in less-populated areas. To increase its margin, Staples has increased the mix of private label offerings (i.e., Staples brand products) and emphasized the purchase of products directly from manufacturers instead of distributors.
In 2008, Staples acquired Corporate Express N.V., one of the world's leading suppliers of office products to businesses and institutions, with hopes to increase its presence in the international market. The acquisition has also helped the company's performance in the sluggish economy as it put less pressure on the company's North American retail business.
North American Delivery: Under this segment, Staples has its Contract, Staples Business Delivery, and Quill businesses. Its Contract operations serves mid-sized businesses and organizations through Staples Business Advantage and Fortune 1000 companies through Staples National Advantage. Staples Business Delivery operations combine the activities of the direct mail catalog business, Staples.com web site, and its Canadian Internet sites. Lastly, Quill is an Internet and catalog business that targets small and medium-sized businesses.
International Operations: Staples' International Operations has retail stores, catalog, and contract businesses in 23 different countries in Europe, South America, Asia, Australia. The company has 328 stores in seven countries.
In July 2010, Staples completed the acquisition of Corporate Express N.V. ("Corporate Express"), one of the world's leading suppliers of office products to businesses and institutions. 
Domestically, the demand for office products is correlated with many different measures--white collar employment, small business spending, and national GDP--which are all indicators of the overall health of the macro-economy. In a sluggish economy, consumers and businesses cut back on spending to save money and tend to purchase fewer supplies, hurting the demand for Staples' products. A high white-collar unemployment rate also decreases the demand for office supplies. Despite economic pressures, Staples was able to have positive sales growth in 2009.
One hedge against a dependence on the domestic economy is growth in the company's international business, especially in developing countries like China and Brazil where economies are growing and no established office supply retailer dominates.
Staples' standard superstore is significantly smaller than those of Office Depot or OfficeMax and houses much less of its inventory on-site. Instead, Staples operates 4 distribution centers across the United States to supply its retail stores on a timely basis and keep a stock of backup inventory. Part of Staples' efficiency comes from this distribution network operating in conjunction with Staples' small store format. Hence, Staples saves significantly on leasing costs, and has greater leeway to place stores in the most effective locations near their target customers.
The comparatively larger size of distribution centers allows Staples to make larger purchases with volume discounts, and their close relationships with vendors allows the time of delivery to match closer with demands so goods don't take up floorspace in distribution centers. This centralized handling and receiving system leads to significant savings on administrative and labor costs, and allows store associates to concentrate on store presentation and customer service.
Staples offers a bevy of private label products and has begun directly sourcing many products (i.e. purchasing directly from manufacturers instead of through distributors). Private label products are usually priced lower for consumers than comparable national brands, yet offer higher profit margins to the retailer than brand name items.
Staples is the world's largest office products company.
In the office supply market Staples has three main competitors: