OfficeMax Pinning Future On Nontraditional Selling Approach

Brighter colors, fashionable presentations and better layouts all designed to attract women. Women who buy office products.

According to OfficeMax Inc. (OMX), 70% of office-supplies buying decisions are made by women, and it's redesigning its marketing to better attract them.

"This isn't an autoparts magazine," Chief Operating Officer Sam Martin said of the company's redesigned catalog.

The shift in marketing is part of OfficeMax's five-year plan to increase sales without opening new stores. The plan also includes changing packaging and selling through non-traditional outlets like grocery and convenience stores.

The No. 3 office products supplier by sales behind Staples Inc. (SPLS) and Office Depot Inc. (ODP), aims to at least become larger than Office Depot as it mines what it says is the 90% of the $300 billion office products industry that the three companies don't already serve.

"Not only do we have greater financial strength than at least one of our competitors, but I am convinced we have the right business model," said OfficeMax Chief Financial Officer Bruce Besanko in an interview.

Staples spokesman Paul Capelli said, "There is absolutely room for all of us to grow."

An Office Depot spokesman didn't respond to a request for comment.

OfficeMax reported $1.92 billion in sales in the first quarter, up 0.3% from a year earlier. Office Depot, which is in the midst of turnaround efforts, posted $3.07 billion in sales, a 4.8% drop from the same period a year earlier.

All the office product retailers have been affected by the recession, especially the high unemployment rate for white-collar workers.

Besanko sees a slow recovery for U.S. employment and said OfficeMax is taking a different tack than rivals as it pushes through.

"Our biggest challenge is whether the economy continues its recovery," Besanko said.

There are no U.S. store openings in the five-year plan OfficeMax recently put in place, nor are there any plans for overseas acquisitions for the cash-rich company, which has $1.1 billion in capital and liquidity. Instead, OfficeMax wants to innovate in ways that include changing the kind of customer it focuses on, bringing out new products and positioning itself in non-traditional places like the aisles of supermarkets and other retail shops. OfficeMax's goal, Besanko said, is to return to peak operating margins of 3.87%, a level not seen in three years.

OfficeMax is designing its efforts around "style, functionality and value," COO Martin said.

Making women chief target customers is one of the most dramatic shifts OfficeMax is taking. The move is logical, Martin said, because women are often the purchasing managers and administrative assistants that make office-product buying decisions.

In marketing to women, OfficeMax is making its catalogues less ponderous and more attractive by using designs that feature bright colors and layouts.

Efforts to become more of a partner with companies include evaluating their printing and looking for ways to save money, whether it be through different kinds of copiers or paper or taking over the printing services altogether and charging a per-use fee. Martin said the company underwent the exercise itself and saved a couple of million dollars.

OfficeMax is also taking nuanced steps, like using the opportunity when customers order over the web to highlight items that cost them less but carry higher margins for the retailer. Higher margins are also behind the company's push to do more with private-label products.

OfficeMax does continue to run about 900 of its own stores in the U.S., and that figure isn't likely to fluctuate a lot in coming years. But the company's fate right now lies with successfully dealing with businesses and finding new ways of distribution--and a better employment situation.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

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