Staples Case Analysis

Essay by getbackerUniversity, Bachelor'sA-, September 2006

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1. How would you characterize the office supplies industry in 1985? What was the approach of large distributors and wholesalers to the small business segment? Why? Who served large accounts? (10)

The office supplies industry in 1985 is highly fragmented and the market scope is broad. On the manufacturer level, there are various groups of companies that provide different categories of office supplies. On the wholesaler level, wholesalers, who are mostly large in size while few smaller ones exist, are the main distributors to big business clients and small retailers who buy in bulks either through direct channel or a network of dealers. Dealers, who vary in size, also sell directly to businesses while some dealers have retail presence. On the retail level, the market is even more fragmented, where there are many small retailers while having few big participants in the market. The small retailers have high-cost structure in comparison to discount merchandisers such as Wal-Mart since they buy in smaller lots and have lower sales volume; however, they have more varieties of product offerings.

In contrast, the big retailers have less product varieties. In sum, most sellers concentrate on selling products to general customer rather than filling a specific need.

Small businesses are generally ignored by distributors and wholesalers because they are perceived as insignificant in the market share and low in purchasing ability by the distributors and wholesalers. Therefore, small businesses primarily have to buy through dealers. Big businesses are taken care of by the manufacturers through catalogs or by dealers through a direct sale channel such as take order periodically in their offices.

2. What changes were taking place in the retail industry at this time? (10)

A big change in the retailing industry is the consolidation of the fragmented market. Instead of becoming a general...