February 10, 2009
OfficeMax Tests Mini Marts
By Tom Ryan
OfficeMax has launched
a new smaller concept ranging from 1,500 to 2,000 square feet. While most
shopping trips to its full-line office supply stores (averaging 25,000
square feet) are planned, Ink Paper Scissors by OfficeMax is aimed to provide
convenient access for small businesses and home office customers shopping
on the go.
Three stores are being
tested in the Seattle area. Each contains about 2,000 of the chain’s most
popular items, including printer cartridges, pens and shipping supplies,
as well as basic technology items such as computer software and flash drives.
They also offer self-serve copy services.
The retailer told purchasing.com that
while 65 percent of purchasing professionals participating in the 2009
OfficeMax Procurement Performance and Best Practices Benchmark Study said
enterprise procurement is involved in the strategic sourcing process for
office supplies, another 50 percent said individuals do the actual ordering
or buying of office supplies.
"Convenient access
to the basic supplies and services that most people need is the name of
the game with Ink Paper Scissors," said Ryan Vero, executive vice
president and chief merchandizing officer for OfficeMax.
Because of expenses involved
in running larger retail space, "Everyone is looking at smaller footprints
now," Paul Leinwand, vice president of Booz &
Co, told Brandweek. "It’s a big theme right now because traffic
is down so dramatically that they can’t afford the inventory and labor for
a full store."
Mr. Leinwand also noted that many retail channels are following the fast-food
industry in rolling out kiosks to increase their presence in high traffic
areas where a larger restaurant would be cost prohibitive. Applying this
concept to office supplies is "a way to move forward to create a profitable
retail environment."
Discussion Questions:
What do you think of the potential for mini-marts in the office
supply space? Do you see this as a more potentially profitable format
than large stores?
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A “convenience store” approach to the office-supplies business is definitely worth a test. Within the wide assortment of products carried by Office Max and its competitors, there is surely a top tier of merchandise driving repeat visits. A tightly edited assortment of best-selling computer paper, organization products, ink, and so on can be very productive in a small-store format.
A lot of the real estate in office supply “category killers” is devoted to office furniture, computers and peripherals, and so forth–perhaps productive per square foot, perhaps not. In any case, these are not the kinds of categories that generate “recency and frequency” of store visits. Good luck to OfficeMax…there ought to be plenty of real estate available to test the concept.
I am a huge fan of conveniently located, top 20% assortment small format retailing. But I’m not so sure about this one. Maybe sole proprietor and under five employee enterprises will use these outlets in urban areas on their way to grab the Subway or Starbucks. But most OS stores offer free delivery on orders of $50 or more. I can’t see office personnel taking a hike of any length when they can order online and have it delivered.
A very timely and well-thought-out idea. What SOHO operator has time to search through a 25,000 square foot store looking for Post-It Notes? And, with the baby boomers getting older (sorry about that!), big boxes are just too big to walk around for many.
There is a Staples store about 3km from my office that we use. They run a good business. But, if someone opened an office supply store with the core product offering closer to our office, I’m fairly certain they’d get our dollars. Office supplies stores are much like pharmacies in that in many cases, the closest location wins!
This is a positive move on a few levels: 1) It appeals to the more “green-aware” consumer in terms of the footprint and convenience factor, because these stores are being launched in urban/walkable areas, it seems. 2) It appeals to the women’s market, which I know is key to OfficeMax’s current mission (wisely), because “Less Is More” and a pre-filtered selection based on specific local market demographics will be much appreciated, and 3) There’s a sense of this retailer being a bit more soft sell in hard times (in comparison to its competitors)–in that they aren’t forcing consumers to walk by printers and furniture and big ticket items but really appealing to what a LOT of customers will need on a daily basis.
Convenience and less to walk past to find pens is such a great concept! I think it will be successful and is positioned well.
With the right location, the small format has a solid potential for win in this category. Many trips are for a few items needed in the home office. Making it quick and easy is key. Small size will improve findability. Thoughtful layout, display merchandising for solutions, and clearly labeled packaging all will help speed us out the door. Hope the idea catches on!
This is a great idea to test. As OfficeMax tries this, it will be critical to measure the cannibalization impact on nearby full-line stores. Are they drawing traffic they would have gotten anyway? How does that vary by product? Does the concept work better in certain types of locations, both with respect to demographics/competition and characteristics of the existing nearby OfficeMax network? Fortunately, OMax has great testing capabilities, so I expect they’ll be able to get to the bottom of this! (Disclosure: OfficeMax licenses APT’s Test & Learn software)
This is not a new concept. This is to try and wipe out InkStop which is a three-year-old, 160 store chain based in Cleveland Ohio. The founders of InkStop came from OfficeMax. So, somebody has thought of it and Ink Paper Scissors sounds like a direct aim at stopping a smaller rival with less overhead before it can take significant market share away.
The problem here is customer traffic and competition with ink refillers. Why would most people need to shop at a store when they may only need ink every six months? You may just pick it up at Target or Staples if you haven’t dropped it off at Walgreens already for a refill. It’s not a destination….
This is a great idea which seems to fit this industry, if applied properly. Keeping just the best sellers in a small footprint should provide for a winning ROI for OfficeMax. This would minimize costs while maximizing take-away, just like in the c-store channel. An office store “c-store” is a concept that appears to be an idea whose time is certainly due, especially in these recessionary times.
Sorry, I can’t get very excited about this. Indeed, it feels a bit mediocre. Small format stores are definitely a viable industry trend, but I don’t see how launching a small format office supply store is going to do much for the brand or the bottom line. Office supplies are ubiquitous, and aside from the smaller store there appears to be no real differentiation strategy.
I think it’s an intriguing idea that definitely should be tested. I would be concerned about four-wall margins, as I suspect that the high-demand items that would make up much of a smaller store’s inventory would generate lower gross margins; as well as the impact of potentially higher payroll-to-sales ratios.
Not sure that it is strictly applicable to the office supply world, but assuming the 80/20 rule applies, then OfficeMax could generate significant sales in a smaller space.
At least two issues need to be considered. First, those 20% items are widely carried and under margin pressure. Can they sell enough of them at a large enough margin to cover costs? Second, given the proliferation of the larger-format office supply stores, theirs, Staples, and Office Depot, can they find locations where the convenience factor outweighs the variety factor for the consumer?
Great idea. People are busy, whether working for large enterprises or small businesses and other than online ordering and free delivery, this should be the next best thing for quick fixes.
This could actually put some pressure on Staples and Office Depot if people get in the habit of (and have a good experience) shopping at these smaller format stores, it could well carry over to other channels like online and larger-box locations.
How will this impact Dunder Mifflin?
I think it is a great idea! Why didn’t anybody think about it so far? Many times I have gone into these “big box” stores such as OfficeMax, Staples, and Office Depot to buy only one item such as a printer cartridge or a box of staples or paper clips and ended up spending some time finding those items. Our retailers have an obsession with rearranging everything so often that every time you go into one of those stores, things are not in the same place! Therefore, a mini mart will be a great time saver!
Think about it for a second and it totally makes sense: spend less on cap-ex for a build out, get into more places (that perhaps you’re not into already), use less labor, and send a positive brand message. What’s not to like/do?
The Europeans have been doing it successfully for years; Ahold, Tesco, Carrifour, etc. It’s called a ‘multi-format’ strategy. We’ve been so drunk with speed-growth here in the U.S. that a mono-box philosophy has been our mantra since 1978.
Perhaps this shrinking economy is a good time to make this happen finally (a recession is a terrible thing to waste).
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A “convenience store” approach to the office-supplies business is definitely worth a test. Within the wide assortment of products carried by Office Max and its competitors, there is surely a top tier of merchandise driving repeat visits. A tightly edited assortment of best-selling computer paper, organization products, ink, and so on can be very productive in a small-store format.
A lot of the real estate in office supply “category killers” is devoted to office furniture, computers and peripherals, and so forth–perhaps productive per square foot, perhaps not. In any case, these are not the kinds of categories that generate “recency and frequency” of store visits. Good luck to OfficeMax…there ought to be plenty of real estate available to test the concept.
I am a huge fan of conveniently located, top 20% assortment small format retailing. But I’m not so sure about this one. Maybe sole proprietor and under five employee enterprises will use these outlets in urban areas on their way to grab the Subway or Starbucks. But most OS stores offer free delivery on orders of $50 or more. I can’t see office personnel taking a hike of any length when they can order online and have it delivered.
A very timely and well-thought-out idea. What SOHO operator has time to search through a 25,000 square foot store looking for Post-It Notes? And, with the baby boomers getting older (sorry about that!), big boxes are just too big to walk around for many.
There is a Staples store about 3km from my office that we use. They run a good business. But, if someone opened an office supply store with the core product offering closer to our office, I’m fairly certain they’d get our dollars. Office supplies stores are much like pharmacies in that in many cases, the closest location wins!
This is a positive move on a few levels: 1) It appeals to the more “green-aware” consumer in terms of the footprint and convenience factor, because these stores are being launched in urban/walkable areas, it seems. 2) It appeals to the women’s market, which I know is key to OfficeMax’s current mission (wisely), because “Less Is More” and a pre-filtered selection based on specific local market demographics will be much appreciated, and 3) There’s a sense of this retailer being a bit more soft sell in hard times (in comparison to its competitors)–in that they aren’t forcing consumers to walk by printers and furniture and big ticket items but really appealing to what a LOT of customers will need on a daily basis.
Convenience and less to walk past to find pens is such a great concept! I think it will be successful and is positioned well.
With the right location, the small format has a solid potential for win in this category. Many trips are for a few items needed in the home office. Making it quick and easy is key. Small size will improve findability. Thoughtful layout, display merchandising for solutions, and clearly labeled packaging all will help speed us out the door. Hope the idea catches on!
This is a great idea to test. As OfficeMax tries this, it will be critical to measure the cannibalization impact on nearby full-line stores. Are they drawing traffic they would have gotten anyway? How does that vary by product? Does the concept work better in certain types of locations, both with respect to demographics/competition and characteristics of the existing nearby OfficeMax network? Fortunately, OMax has great testing capabilities, so I expect they’ll be able to get to the bottom of this! (Disclosure: OfficeMax licenses APT’s Test & Learn software)
This is not a new concept. This is to try and wipe out InkStop which is a three-year-old, 160 store chain based in Cleveland Ohio. The founders of InkStop came from OfficeMax. So, somebody has thought of it and Ink Paper Scissors sounds like a direct aim at stopping a smaller rival with less overhead before it can take significant market share away.
The problem here is customer traffic and competition with ink refillers. Why would most people need to shop at a store when they may only need ink every six months? You may just pick it up at Target or Staples if you haven’t dropped it off at Walgreens already for a refill. It’s not a destination….
This is a great idea which seems to fit this industry, if applied properly. Keeping just the best sellers in a small footprint should provide for a winning ROI for OfficeMax. This would minimize costs while maximizing take-away, just like in the c-store channel. An office store “c-store” is a concept that appears to be an idea whose time is certainly due, especially in these recessionary times.
Sorry, I can’t get very excited about this. Indeed, it feels a bit mediocre. Small format stores are definitely a viable industry trend, but I don’t see how launching a small format office supply store is going to do much for the brand or the bottom line. Office supplies are ubiquitous, and aside from the smaller store there appears to be no real differentiation strategy.
I think it’s an intriguing idea that definitely should be tested. I would be concerned about four-wall margins, as I suspect that the high-demand items that would make up much of a smaller store’s inventory would generate lower gross margins; as well as the impact of potentially higher payroll-to-sales ratios.
Not sure that it is strictly applicable to the office supply world, but assuming the 80/20 rule applies, then OfficeMax could generate significant sales in a smaller space.
At least two issues need to be considered. First, those 20% items are widely carried and under margin pressure. Can they sell enough of them at a large enough margin to cover costs? Second, given the proliferation of the larger-format office supply stores, theirs, Staples, and Office Depot, can they find locations where the convenience factor outweighs the variety factor for the consumer?
Great idea. People are busy, whether working for large enterprises or small businesses and other than online ordering and free delivery, this should be the next best thing for quick fixes.
This could actually put some pressure on Staples and Office Depot if people get in the habit of (and have a good experience) shopping at these smaller format stores, it could well carry over to other channels like online and larger-box locations.
How will this impact Dunder Mifflin?
I think it is a great idea! Why didn’t anybody think about it so far? Many times I have gone into these “big box” stores such as OfficeMax, Staples, and Office Depot to buy only one item such as a printer cartridge or a box of staples or paper clips and ended up spending some time finding those items. Our retailers have an obsession with rearranging everything so often that every time you go into one of those stores, things are not in the same place! Therefore, a mini mart will be a great time saver!
Think about it for a second and it totally makes sense: spend less on cap-ex for a build out, get into more places (that perhaps you’re not into already), use less labor, and send a positive brand message. What’s not to like/do?
The Europeans have been doing it successfully for years; Ahold, Tesco, Carrifour, etc. It’s called a ‘multi-format’ strategy. We’ve been so drunk with speed-growth here in the U.S. that a mono-box philosophy has been our mantra since 1978.
Perhaps this shrinking economy is a good time to make this happen finally (a recession is a terrible thing to waste).