This company is taking the office supply business to the max. OfficeMax is the #3 office products retailer in North America (far behind Staples and Office Depot), with more than 900 superstores across the US, Puerto Rico, the Virgin Islands, and Mexico. The stores offer about 10,000 name-brand and OfficeMax-branded products, including paper, pens, forms, and organizers, as well as office furniture and a wide range of technology products. OfficeMax also provides printing and document services through its ImPress store-within-a-store. In addition to its retail outlets, the company's contract division (51% of sales) sells directly to business and government customers by phone, catalogs, and the Internet.
To align its revenue-generating US contract business with the retailer's broad target audience, OfficeMax in late 2012 rebranded the unit OfficeMax Workplace. The move was intended to mirror the company's commitment to businesses, hospitals, schools, local governments, and universities, among other customers.
Both the contract and retail divisions posted flat sales in 2011 vs. 2010 and fell relative to 2009. Still, OfficeMax's 2011 financial performance is a sign that the business may finally be stabilizing after three consecutive years of sales declines, during which the office products retailer suffered along with US consumers and businesses from the recession and its lingering effects. (The demise of Lehman Brothers led to a big write off by the office products retailer in 2008.)
To make a challenging business climate even tougher, OfficeMax is facing increased competition in Europe and the US as a result of rival Staples' acquisition of Corporate Express NV. Corporate Express is a major office products wholesaler, with more than half of its sales in the US through Corporate Express US.
OfficeMax's position as a distant third in the nearly saturated office products market in North America has put the company in a difficult position. (The firm is doing better overseas, where both the contract and retail divisions posted sales gains in 2011 and 2010.) Amid the hostile retail environment, OfficeMax has been closing stores in the US (about 30 over the past two years) and will continue to do so in 2012. Same-store sales (generally considered the best indicator or a retail chain's health) have been negative since 2007. In 2011 the company, led by CEO Ravi Saligram, announced a strategic plan for sustainable, profitable growth. Elements of the plan include: improving store and sales force productivity; acquiring more small- and medium-sized business customers; developing a digital growth engine; opening in-store departments in grocery and drugstore chains in the US; leveraging partners and alliances; and expanding further in Mexico.
In Mexico, where the retailer operates through a 51%-owned joint venture, OfficeMax operates more than 80 stores. To boost its international business, OfficeMax recently formed an alliance with the French stationery and office-supply giant Lyreco to supply customers in Europe and Asia through Lyreco and allowing Lyreco to supply customers in the US and Mexico through OfficeMax. The company's contract division also does business in Canada, Australia and New Zealand. – less