</strong>Consolidating PR makes rebound easy for Staples

Championed by its CEO and validated by recent successes in everything from sales to slogans, the communications team at Staples is continuing to see its value rise.

Championed by its CEO and validated by recent successes in everything from sales to slogans, the communications team at Staples is continuing to see its value rise.

Staples was a pioneer in the office-supply supercenter market when it opened its doors in 1986. For years, it grew simply by opening new stores. Its marketing slogan, "Yeah, we've got that," differentiated it from smaller competitors with less-extensive inventories.

But when the recession hit in 2001, the old formula wasn't enough. The company re-evaluated what it was and how it could keep growing.

Ron Sargent took over as CEO in February 2002, and by late in the year, the company had a new marketing strategy and a new role for PR as well.

Paul Capelli joined as VP of PR in September 2002. His mission was to bring together corporate communications, marketing PR, and community relations into one functional area for the first time. His charge was to show how PR could become a major player in the marketing mix.

Today, as Staples prepares its largest new market foray ever - opening 20 stores in the Chicago area this year - its 10-person PR department is very much a part of the picture.

The team has helped the company get widespread attention for its new marketing mantra, "Staples. That was easy," and has brought together community relations, diversity initiatives, and environmental efforts into a new focus on CSR. And the team has pushed PR efforts to the local level, giving Staples higher visibility in the markets it serves.

Financially, the company's new marketing and PR efforts seem to be bearing fruit. Sales for the third quarter of 2004 - the latest data available - were up 26% to $209 million compared with the same quarter in 2003. Earnings per share of 41 cents were a 24% increase from the same period the prior year, and the company was forecasting earnings per share of 50 cents in the quarter ending January 29.

Overcoming obstacles

The PR team's road to growth hasn't come without some bumps, though.

When Capelli first arrived, environmental groups concerned with forest and logging issues, such as Forest Ethics, had targeted Staples and other office-supply stores. The groups were trying to prevent paper from being made by using wood from endangered forests. Staples was able to defuse that situation by reaching out to groups criticizing it.

"We embrace third parties," Capelli says. "We listen and try to work with them." By the end of 2003, Forest Ethics applauded Staples for issuing an environmental report while it criticized rival Office Depot for not doing the same.

Staples began this year embroiled in controversy after it pulled ads from news programs on Sinclair Broadcast Group's TV stations. Sinclair raised media eyebrows and elicited criticism during last year's presidential campaign by showing portions of a film that lambasted John Kerry.

Initial stories about Staples' decision to pull its ads framed it as one made due to customer complaints about Sinclair's politics. A liberal website, Media Matters, was soon trumpeting Staples' decision as a politically motivated one.

While Staples told the media that the decision had nothing to do with politics, "the message was not empathetic enough about what we did and why we did it," Capelli admits. "We had a third party driving inaccurate messages."

Capelli kept telling media that the decision had to do with media buying and that the company wanted to remain apolitical. Staples stressed that it had only stopped advertising on local newscasts on Sinclair stations, not on Sinclair altogether. "It took a second news cycle" for that message to start resonating in press reports, he says.

Gaining attention for the rollout of the new "Easy" concept was the latest PR challenge. Staples' market research showed that consumers wanted easy shopping and that the company could no longer distinguish itself from the competition simply by talking about price and selection, Capelli says. "Easy" has since become incorporated into operations and messaging.

"Everything that they do revolves around making things easy for customers," notes Joseph Feldman, an analyst who follows Staples at SG Cowan.

Staples has rearranged products on the shelves and changed its product mix to enhance the shopping experience for the small-business and home-office workers who tend to be its main in-store market.

"Their operations are performing better," says Philip Zahn, a retail analyst with Fitch Ratings in Chicago.

Getting the customers involved

But while the company was changing operationally, from a PR standpoint "you can't just go out and talk about being easy," Capelli notes. Something dramatic was needed to demonstrate the concept to customers.

The PR team came up with having a contest - inviting people to design the next great office product. All facets of company marketing, from direct mail to PR, became involved in what the company dubbed "Staples Invention Quest."

"It gave us a chance to talk about the Easy brand challenge in so many ways," Capelli says of the contest.

More than 8,300 people entered and 147,000 online votes were cast for a winner. When the top 12 were selected, media in those entrants' local markets were pitched for stories about them.

The six-month effort ended last March at a final judging at Nasdaq's New York office with such renowned judges as Today's tech editor Corey Greenberg and Staples' founder Tom Stemberg. The winner got $25,000. Staples will start selling the product, the WordLock, under its brand name this year, paying the inventor royalties. WordLock is a combination lock that uses letters instead of numbers.

The company received widespread coverage for the contest, including an appearance for the product on Live with Regis & Kelly.

"For PR to propose this program - it just wasn't something the company would have done in the past," Capelli says. "Now we've created this pipeline of new and creative products that we can sell under the Staples brand." Staples Invention Quest will become an annual event.

Such differentiation will be key to Staples' continued success, notes Russ Meyer, executive director of strategic services at Landor Associates, a brand consultancy.

Research that Landor conducted before Staples started its Easy campaign showed the company has some brand differentiation already, while competitors Office Depot and Office Max tended to be lumped together in consumers' minds. And Staples has made a wise choice by tailoring its messages to its core customer of small-business owners and home-office workers, Meyer says.

The PR team's efforts this year will center on getting the brand established in the Chicago market, trying to get more attention from the national business press, and finding ways to use entertainment marketing opportunities, Capelli says.

Chicago media outreach began last August when the company announced its plans for the market. Outreach to community groups and local thought leaders were also under way prior to the first store opening in March. "By the time we arrive, we will have spoken with and met with key influencers," Capelli says.

Agency partnerships

Staples works with a variety of agencies to further boost its PR efforts. MS&L, Weber Shandwick, Ketchum, Alan Taylor Communications, Tilson Communications in Florida, and Dotted Line Communications in Boston all work on the account.

"If someone has a great idea, I want to hear it," Capelli says of his decision to use multiple agencies rather than one AOR.

When it comes to the national press, the PR team has been seeking opportunities for Staples' CEO to speak to the media. Sargent doesn't want to be a celebrity CEO, however.

"It's less about him and more about using your CEO as the embodiment of what Staples is," Capelli says. "I think it's important to build awareness of the leadership team."

Staples PR is also trying to solidify ties on the local level, training local Staples managers to be media spokespeople for key periods during the year, such as the back-to-school season.

Additionally, Capelli continues to stress the social responsibility message. "In the long run," he says, "it really will help differentiate Staples. It will help develop an emotional relationship between the customers and the brand."

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PR contacts

VP of PR Paul Capelli

PR managers Owen Davis, Deb Hohler, Karen O'Neil

Community relations supervisor Joy Errico

PR firms Alan Taylor Communications, Dotted Line Communications, Ketchum, MS&L, Tilson Communications, Weber Shandwick

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