Staples testing re-entry into mobile phone market

Staples Inc., the world’s largest retailer of office supplies, is testing the sale of mobile phones and calling plans, a market it exited about eight years ago, as it seeks more profitable sources of revenue growth.
Phones and contracts are being sold at about 10 stores, including one in Natick, Mass., near its Framingham headquarters, Chief Operating Officer Mike Miles said in a July 13 interview. The tests started earlier this year and the retailer will evaluate the results this fall, he said.
“There isn’t much question around here about whether we’d like to sell cell phone plans if we can,” Miles said. “The challenge is, can we make a business out of it? Will people think of Staples as a place to buy them? Can we develop the level of expertise we need to sell the plans?”
Re-entering the mobile phone market would mean competing with the more than 4,200 locations run by AT&T Inc. and Verizon Wireless, which dominate the market. It also would be behind Best Buy Co., the largest electronics retailer, which expanded its share of that market in recent years by revamping its mobile phone selection.
Carrying mobile phones offers retailers the chance to sell higher-margin accessories like cases, headsets, batteries and chargers, Ross Rubin, director of industry analysis for research firm NPD Group Inc., said in a telephone interview. NPD is based in Port Washington, N.Y.
Staples already sells prepaid phones that don’t require contracts. The company, which operates more than 1,500 stores in the U.S., is trying to balance more profitable products with its international expansion, highlighted by last year’s acquisition of Corporate Express NV. Staples’s international unit had an operating margin of 1.7 percent in the three months that ended May 2, compared with 5.3 percent for the overall company.
Mobile phone sales have advanced, even in the recession. AT&T’s wireless service revenue rose 9.8 percent in the three months through March 31. Staples reported a 9.1 percent dip in retail sales in North America in the quarter that ended May 2. &#8226