Worcester Business Journal

8 Worcester Business Journal | December 5, 2016 | wbjournal.com BY SAM BONACCI Worcester Business Journal Digital Editor us, so we are going out there and get- ting after it." What remains to be seen is whether this new Staples will be different enough from the old company to make a difference. In the digital age of online orders and a steady decline in office supplies such as paper and toner, it may be too little too late. The new Staples The middle market comes up in nearly every conversation Staples has with its new strategy. While technically just one part of the new strategy, it is clear that it is central to Staples moving forward. The company began pursuing this market in the early 2000s – getting about 5 percent penetration through its office supplies – but now has a strategy to tap into even more of the market. The angle is offering products and services outside of core office supplies, through means such as a recently announced partnership Managed by Q to connect small businesses to more than 100 on-demand office services. These beyond office supply sales (BOSS) include everything from tech- nology to cleaning to printing services and in the mid-market segment account for $70 billion in business services com- pared to $10 billion in office supplies. "We are trying to bring together not just selling products but services," Doody said. "The more we have real- ized over time that this market is changing the more it pushes us to go to different areas of growth." And tapping into these BOSS sales also means changing stores to offer ser- vices such as a deal with Boston coworking space firm Workbar to put the flexible office spaces inside of Plan B After its failed $6.3B merger with Office Depot, Staples pushes forward with cuts, focus on small businesses T here is no easy button to move Staples forward following the collapse of its merger with Office Depot. But there is a Plan B, and it is the new Staples. Within hours of the announcement of its failed merger with Office Depot in May, Staples presented its plan to trans- form the Framingham company beyond office supplies. The plan focuses on serv- ing the middle- market of busi- nesses sized between 10 and 200 employees, while right-sizing the rest of the company and making the most of its retail loca- tions. Make no mis- take: This may be plan B, but it's now the only plan Staples has and the company is fully committed to it. "We had to have a plan B. We were hoping we weren't going to have to announce it," said Joe Doody, vice chairman and president of North American operations. "Here it is. Plan B. And we are driving now plan B, and the marketplace isn't going to wait for Staples stores. These varieties of services are about increasing the relevancy of Staples to the customer and boosting foot traffic, said Doody. "Our traffic has been declining, and we need to find more ways to get more traffic into the stores and Workbar is an example of one of the ways to do that," he said. These plans, and the other two pillars, were impressive to have laid out and ready to go following the failed merger, said Oliver Wintermantel, an analyst for Evercore ISI Group, and solidified the company as better positioned than Office Depot. Cutting the fat But not every part of new Staples is about moving into new ground, some of it involves retrenching and solidifying its base. This means cuts amid the compa- ny's retail locations, which have been going on for some time with 345 stores, or 18 percent, closed since 2011. The company is on track to close 50 stores this year, and with 225 store leas- es expiring in the next five years, Doody said there will be more opportunities to get store numbers to the right size. The cuts aren't just in America, with the company hoping to sell off all its stores outside of North America, having sold $9.70 $5 $10 $15 $20 9/'14 3/'15 9/'15 2/'16 5/'16 8/'16 11/'16 Price per share 12/29/15 -$17.61 Although Staples' stock price has been trending downward for the last two years, it took a decided hit after the failed Office Depot merger in May and has yet to recover. Stock drop Source: Yahoo Finance Joe Doody, president and chairman, Staples North America Announces 50 store closing to happen in the first year May 10 CEO Ron Sargent steps down. He led the company for 27 years. June 14 Staples partners with Workbar to open three in-store coworking spaces. Sept. 14 Interim CEO Shira Goodman becomes president and CEO. Sept. 26 Staples announces expanded mobile phone repair services with greater TekDry partnership. Oct. 6 Staples launches licensing program to allow companies to launch Staples-branded products and services. Oct. 19 Partners with Managed by Q to connect small businesses to more than 100 on-demand office services. Nov. 17 Plan B milestones Since its merger with Office Depot failed in May, Staples has been rolling out numerous initiatives as part of the organization's plan B. Initiative Date Source: Staples

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