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USA Office Supply Retailer Staples sees increase in sales but decrease in profits

March 12th, 2009

Category: Retail Business News

The world’s largest office supply chain, Staples released 4th quarter 2008 results showed a 14 percent drop in profit from the previous year. This comes on an actual increase in overall sales but of less profitable items.
The retailer sells a variety of items in it’s retail stores from consumables such as paper, toner cartridges, and ink to infrequent purchase items such as furniture and computers.
Mike Miles Staples COO

Mike Miles Staples COO

Staples COO Mike Miles states a reason for the reduction in profit:
“Demand for furniture and technology remains very soft while consumables, like ink, toner, and paper are performing much better,”
There may be some lessons to be learned here for all retail businesses. The USA is experiencing problems with it’s economy before other places in the world such as Australia. If we see conditions deteriate to a USA level there may be some things retailers wish to do:
  1. Dont be afraid to increase sales levels even if profit margins slip.
  2. Make sure to stock and promote consumables as the demand is less elastic than higher end items.
  3. Track profit and sales levels by types of items to realize what is happening at the store level.
  4. Be proactive and do what it takes to attempt to keep current sales levels.