Quality over quantity. New Staples CEO has been focusing on improving existing stores instead of opening new stores:

At times during the 1990s, Stemberg's Staples was opening a new store every 48 hours. Sargent is slowing down that pace and working to nurture existing markets.

The old Staples overwhelmed customers with massive selection -- from 10 kinds of paper shredders to pens shaped like vegetables. Now stores are smaller and feature fewer items. The reasoning: Too much selection slows down the supply chain and doesn't please customers, it just stresses them out.

"When I joined the company, opening another new store was a big deal," Sargent said. "But when you're opening another one every other day, it becomes more of a machine. We entered a bunch of new markets, and we didn't do the TLC I think we should have done in those bottom 20 percent of our stores."

"There's a lot more opportunity to make our existing store network operate 5 percent better than it is to open another 100 stores," he said.

The new store formats, the targeted merchandise selection and the emphasis on customer service have vaulted Staples over Office Max and Office Depot. As with any successful retail venture, there has been one other key ingredient to succcess -- knowing exactly who your customers are and focusing on their needs:

Average customers may not be able to tell office supply stores apart, but Staples isn't targeting the average customer. Small businesses and individuals who spend more than $500 per year on office supplies account for 70 percent of sales and 90 percent of profits. Staples thinks it knows what those customers want: in-stock guarantees, solid service and short lines.