The way it tends to work at the NRF BIG Show is that retailers walk the aisles searching out new and better solutions. For the first time this year, however, one major retailer, OfficeMax, tried out the view from the other side of the exhibitor desk, pitching its store-in-store program to retailers in a variety of verticals.
More than four years in development, OfficeMax's New Channels division currently provides 25 retail customers with a complement of services including office supplies category management, product analysis, merchandising and private brands. Among its clients are A&P and Safeway. The division, run by a staff of 40, claims to have delivered "double-digit growth in sales and profits in the office supply aisle for both retailers."
Matt Gruber, national account manager new business development for OfficeMax, told RetailWire that the new division first does analytics on the retailer's existing assortment, this assuming they stock office supplies; in some cases it's a first-time category for the client.
"We do a little research as to where they're at regionally," said Mr. Gruber, "what their price points are, what channels they're in, and then we come back to them with a customized solution to help optimize their sales and grow their margins as well."
OfficeMax packages the program as an "all-in category approach," informed by SKU analytics, case pack optimization and price point analysis.
"We might say, 'Hey, maybe XYZ retailer you had 120 feet. Based on our analysis we think you could shrink that space down to 60, thus optimizing your inventory, your productivity, your turns ... and by the way, if you decide to go this route, here's our pricing that would correspond to our recommendation.'"
Branding strategy is customized to the retailer and situation. Some New Channel customers see benefit in "screaming the OfficeMax name" whereas others "want to be a little more discreet about it," according to Mr. Gruber.
Pricing is also customized region-to-region, retailer-to-retailer, and channel-to-channel. "It's really localization to the utmost extreme," said Mr. Gruber, "and our retailers who are capable of doing that enjoy certain margin benefits in regions where price elasticity is more welcome."
In A&P's case, OfficeMax is currently servicing all the company's banners with office and school supplies assortments. The aisles are branded as OfficeMax in those stores.
OfficeMax's strategy in exhibiting at trade shows is to find new "test and learn environments." Surely there are new challenges and lessons to be learned with each channel they tackle, learning that can be undoubtedly folded back into other company initiatives.
What grade would you give OfficeMax's New Channel division concept in benefiting the overall company mission?