Contributing Member of the Consumer Goods & Services Councils

GLG News by this Author

GLG News is now G+ Insights

G+ is a community for professionals, academics and entrepreneurs to connect through online discussions and in-person meetings. You will continue to see G+ Insights (formerly GLG News) here as well as on the G+ website, where you can share and discuss the G+ Insights you read.

OfficeMax “Re-brands” to Further Build its Brand

June 14, 2007

Analysis of:OfficeMax ctrl-ing Its Own Merchandising Destiny | tinyurl.com

After a very disappointing Q1 2007, OfficeMax seeks additional ways to gain back momentum and capture share from chief rivals, Staples and Office Depot by appealing to the highly sought prize within the sector, the small and midsize business customer. --Unlike similar tech support programs offered through the Geek Squad at Best Buy and EasyTech at Staples, the OfficeMax ctrlcenter launch offers a remote service that does not require a pre-scheduled tech visit. Tech support from ctrlcenter is 24/7 and relies on the premise that over 90% of customer issues can be fixed without the customer bringing the tech item back to the retail store or sending a technician to the customers home or office. --OfficeMax is "betting on the come" that today's small business has neither the time nor resources to handle technical issues alone, thus driving the need for a service oriented program like ctrlcenter, heavily differentiated from competition.

Is it the Margin, the Brand Image, the Profitability or the Consumer Driving the Increased Penetration?

May 25, 2007

Analysis of:Store brands still growing at office supers | www.accessmylibrary.com

1)Gross Margin elevation/Brand image-private label store brands constitute "blended" gross margins of 40-70% vs blended gross margins of 31-34% when selling supplies from suppliers such as ACCO, Avery, Newell-Rubbermaid, Mead-Westvaco. Putting your own name on a product means that you stand behind both the quality and value of the products sold. 2)Profit/Consumer acceptance--the profit is easy to figure out given the figures above. Store brands have become entrenched and readily accepted by today's consumer and have grown steadily over the past 2 years.

After a Successful Turnaround Year in 2006, OfficeMax Misses Earnings Expectations in Q1 2007

May 25, 2007

Analysis of:OfficeMax Reports First Quarter 2007 Financial Results | biz.yahoo.com

1)The short-lived sustaining of growth lasted only 4 quarters which further highlights that OMX does not play in the same league as its rivals; shareholder confidence has already been shaken with the steep decline in share price shortly after the announcement and speculation has begun on whether or not the company could/should be sold. 2)The Contract Division is in trouble based on the unprofitable renewed contracts with large businesses and the President of the Division, Mike Rowsey, left the company last week amid speculation that Contract revenue and profitability might get worse, before it gets better.

Has the Bubble Burst for the Office Supply Sector and US Economy?

May 25, 2007

Analysis of:OfficeMax Reports First Quarter 2007 Financial Results | biz.yahoo.com

1)Office Depot's earnings announcement came with a mixed bag of results. Within the text of the financial press release, there are signs that overall foot traffic into stores and E-commerce website usage decreased in a business model built largely on attracting more small and midsize businesses. 2)A softening in overall business spending was cited 4 different times in their press release along with the announcement of a (3%) decline in same store sales year over year.

A "Target-ed" Focus on Increasing Brand Image and Profitability

May 25, 2007

Analysis of:Target outlines plans for private label push | www.accessmylibrary.com

1)Market share gain from the grocery, club and big box sectors. Much of this gain could conceivably come at the expense of WalMart as the upper middle class and upscale demographic gravitates to Target's disciplined approach to fashion soft goods and current housewares/home furnishings strategies and success stories 2)Like Staples(SPLS), Target already posesses superlative brand/value recognition. With only a 15% penetration in the overall food assortment, private label growth at Target is yet another way to entrench loyalty and repeat business with the consumer through differentiation of product offerings.

Private Label Offerings Continue to Pressure Domestic Suppliers

April 16, 2007

Analysis of:Staples Builds a Better Binder! Durable Binder is Built for Life and Makes Organization EASY | investor.staples.com

Analysts who have closely watched the Office Supply superstores over the past 1-5 years are keenly aware of the positive impact that private label assortments have made to gross margins and overall profitability within the sector. Those who have watched the revenue and unit growth declines at companies such as ACCO, Avery Dennison and Newell Rubbermaid are also keenly aware of the past and future impact that the development and penetration of private label and proprietary store brands will continue to have on these companies. On April 9th, Staples announced the launch of a better binder that is built for life, a claim that has not been made by the giants of the industry, Avery and Wilson-Jones(a division of ACCO). The positive implications of this announcement for Staples consists of the following:
1)Continued fortification of an already exemplary Brand image/status
2)Gross margins that will escalate from 32% blended in sales of Avery product to gross margins that will be in the estimated 40-50% range in the private label version.
3)Reduction of product returns of binders that did not stand the test of time(returns are negative sales in POS).
4)A solid assortment of sizes--1", 1.5", 2" as well as 6 colors to chose from within each style.
5)Differentiation from national brands with the addition of pink, teal and orange.
6)The potential for increased sales of binders through the student demographic due to the "trendy" colors and desirable price point.

OfficeMax Builds Brand Image Through Proprietary Licensing Agreement

April 16, 2007

Analysis of:Sharper Image and OfficeMax Announce Licensing Partnership | officemax.mediaroom.com

As the race for private, proprietary and licensed brands heats up in the Office Supply sector, OfficeMax has partnered in a muti-year agreement with Sharper Image for an exclusive line of products that will be featured in all store locations throughout 2007 and beyond. The obvious and most compelling benefits to OMAX will include:
1)Differentiation of assortment from competition-under this agreement, OMAX will offer Sharper Image product categories such as desks, chairs, desk sets, desk accessories and shredders.
2)Elevated gross margins-Unlike deals made with traditional suppliers like Bush and O'Sullivan that produce "blended" gross margins of 30-35%, exclusives and proprietary brands will often range in the 40-45% realm.
3)Enhanced Brand image-In a similar vein to what Kohl's has successfully done with exclusives from the Food Network and designers like Vera Wang, OMAX stands to gain increased footsteps, sales and profits by borrowing on name, product and quality recognition of Sharper Image.

Of course, Sharper Image has much to gain from the presence of its dedicated assortments in close to 900 retail stores across the US. With an estimated 80-90 million POS transactions/year chainwide at OMAX, Sharper Image also stands to gain significantly from the large and loyal customer base.

HP's Printer Strategy is All About Ink Sales and Not About Web Printing

April 16, 2007

Analysis of:HP Tries to Create Printers That Love the Web | www.nytimes.com

You've ceratinly got to hand it to HP in terms of Marketing prowess and continually appealing to its extremely loyal base of customers---they truly epitomize their time-tested Brand moniker, INVENT. Although they deserve all the credit in the world for applying the word INVENT to the continual release of new and innovative technologies in CPU, printers, A-I-O's, calculators and just about  everything they make that comes with a cord, they are also shrewd and INVENT-ive in marketing at a time when they see threat to their market share in ink and consumables. Consider the following events that have had impact on market share in the recent past and near future:
1)Kodak has launched its own brand of printers and extremely low cost ink cartridges this year. Kodak has interestingly reversed the razor/blade marketing strategy with its "maiden voyage" launch of printers and ink at Best Buy.
2)Retailers like Staples, OfficeMax and Walgreen's have installed ink refill stations in their stores, a program that directly competes with sales of new HP ink cartridges.
3)Office supply superstores, OD, OMX and SPLS continue to build assortments of private label ink cartridges from third party re-manufacturers(not HP) that directly compete with HP cartridges.
4)Consumer habits are changing rapidly-private label growth has caught on and is exploding with annual sku growth projected at 3-4% annually within the sector.
5)Laser print technology is growing-as retails continue to erode in CE, laser print, once unaffordable to consumers and small businesses, is now within price range and ultimately more cost efficient--although the initial expense outlay for the printer is higher than inkjet, yield and overall cost per copy is significantly less. 

Office Depot Joins the "Hunt" with OfficeMax and Staples in the Print Services Segment

April 16, 2007

Analysis of:Office Depot's Design, Print and Ship Depot Offers Wide Range of Services Geared to Helping Small Busineses | mediarelations.officedepot.com

In a retail store segment long considered as a convenience vs a revenue/footstep/repeat traffic/profit generating area, Office Depot has recently joined its sector competitors in announcing the benefits of its Design, Print and Ship Depot. Coming off a stellar 2006 with two of four fiscal Quarters showing record earnings, OD has now become the final player to recognize the upside growth potential of its "store within a store" print services segment. Joining the "CLUB" through chasing the highly sought small and midsize business customer, OD will stand to gain the following benefits:
1)Gross margins of 70%+ in all facets of print, design and ship.
2)Opportunity to build total penetration of small and midsize businesses who shop the OSS channel twice as often as the single consumer and spend on average, 3.5x more/visit on an average transaction size of roughly $150 vs $41 at consumer average.
3)Loyalty of customer through more intimate contact and one on one service levels. Customers of print centers often establish an emotional connection with the associates in the print centers due to the hands on nature of the transaction involving dialogue, suggestion and customization of requested service.
4)Brand building-when services are done right and delivered on time(price generally doesn't matter--speed and quality do), customers begin to see the retailer producing the work as an extension of their business, a partner more than just a provider.

Can Kodak Grab Share in an Already Crowded(but lucrative) Inkjet/Ink Market?

March 12, 2007

Analysis of:Best Buy and Kodak "ink" Exclusive Hardware Deal | www.retailingtoday.com

In what could be an ultimate "life saving" venture for Kodak, the company recently announced its entry into the printer and consumable business in partnership with the nation's largest CE chain, Best Buy. As the exclusive retailer for the launch, Best Buy will carry two-thirds of the line for 3 months as well as being the exclusive retailer for Kodak's top-of-the-line printer for 1 month. There are significant advantages for both companies in this partnership including:

For Kodak
1)Exclusivity with Best Buy for the launch offers maximum hype/exposure to their line of printers and economy priced ink.
2)Future revenue opportunity to bundle its own Digital cameras with printers creating value proposition for consumers.
3)Assuming a successful launch, the significant upside of "tapping in" to the highly profitable and repeat traffic ink cartridge business.
4)Gaining share in the ever growing inkjet printer market which last year, according to InfoTrends, produced the following statistics:
--30 million new inkjet printers were sold, about half belonging to HP
--14 billion digital photos generated by consumers
--Home printing volume off the 14 billion photos generated increased 45% over the previous year.

For Best Buy
1)A 3 month jump start over competition via the exclusive.
2)In store promotion of the Kodak line on endcaps with working displays of the printers linked to Kodak digital cameras for consumers to test the features/benefits.
3)Increased footstep activity by being the early, exclusive destination for the Kodak line.

Can Fedex Kinko's Become the 4th Office Supply Superstore?

March 12, 2007

Analysis of:Fedex Kinko's Thinks Small | www.chainstoreage.com

Coming on the heels of last year's successful rollout in Orlando, FL which tested merchandizing of 350 core office supply sku's within its traditional 6,000 sq.ft. print/package shipping stores, FDX has recently announced opening 200 additional stores by summer '07. These new units will feature a much smaller footprint(1600-1800 sq.ft.) against the traditional large format stores, but will have the added advantage of an additional 350 core supply sku's blended into the assortment allowing the customer to choose from 700 of the best selling items. Despite the small size of the stores, FDX will reap the following benefits:
1)Reduced operating costs of overhead expenses such as rent, utilities, equipment/equipment leases, payroll and construction.
2)More effective leveraging of hub and spoke concept on the print side. Smaller stores with less copy capability(equipment) can digitally transmit large jobs to the Hub while smaller jobs can be tackled on sight.
3)The added sku assortment features expansion of hot categories such as better business paper, writing instruments and new technology products for the mobile professional such as cell phone accessories, laptop accessories and DVD media.
4)Expansion of pack and ship offerings and an on site notary service at each of the locations, a significant differentiator from any other print for pay provider including the 3 principals in the office supply sector.
5)Real Estate locations can be opened in sites that previously could not be chosen due to the large footprint stores not fitting the business model in smaller markets. The small stores will be opened in suburban areas that position them closer to the sought after customer base of small and midsize businesses.

Listening to Customers and Market Analysis Pay Dividends to Kohl's Shareholders

March 12, 2007

Analysis of:Kohl's ceo 'very pleased' with results | www.retailingtoday.com

Kohl's has delivered a rock-solid earnings year in 2006 and has proven beyond a shadow of a doubt that today's retailers must differentiate, and provide value to customers every day in order to sustain profitability, growth and future momentum. Kohl's is truly a "poster child" of all that is right in retail regarding innovation, Brand awareness and value, very fundamental ingredients of companies who aspire to successfully compete in the already crowded field of fashion merchandizing. What were these key ingredients that led them down the path of stellar results? They include the following:
1)Updating and expansion penetration of exclusivity of both national and private label brands.
2)Successful penetration of the age 18-25 single, female demographic and share growth against competitors JCPenney, Mervyn's, Macy's and other specialty retailers in doing so.
3)Upgraded storefronts featuring softer earth tones, accents and glass display windows that are much more visually appealing than the institutional looking brick exteriors of the early Kohl's prototypes as well as those of current competition.
4)Revamped store interiors that feature wider(10ft.)aisles, enhanced lifestyle graphics that "scream" seasonality, strong value messages, and upscale environment at less than upscale department store prices. Leather seats in fitting rooms were the icing on the cake.
Kohl's has simply put it all together, kept their commitment to their core customer(mom) and successfully appealed and landed its newly sought, youthful, single woman demographic. At the expense of sounding cliched', Kohl's business model in 2006 was very much "in fashion" with the female consumer.

OfficeMax 2006-Defense Can Win Ball Games, But When Will the Offense Take the Field?

March 1, 2007

Analysis of:OfficeMax Has Profit on Lower Store Operating Costs (Update6) | www.bloomberg.com

After successfully consuming a very "full plate" of initiatives in their 2006 Turnaround plan, OfficeMax has delivered results in excess of analyst expectations. Shareholders too had something to celebrate as OMX shares soared to over $50+ at FY year end. Defensive posturing delivered through warehouse and DC consolidation, savings accumulated through leaner marketing and advertising budgets as well as significant payroll and benefit reductions at retail store level culminated in OMX doubling operating income to $42.3 million in Q4 alone. Stealing no thunder from their successful accomplishments while giving credit for promises kept, OMX faces new challenges with revenue and store growth in 2007 inclusive of the following:
1)Cost cutting, consolidation and overall expense reduction, although prime accelerators of profitability in 2006 are difficult to sustain when comp growth and revenues don't grow proportionately. Retail store growth was (.4%) year over year, while revenue declined for Q2,Q3, and Q4. Contract sales grew at a paltry 1.9% for the full year.
2)Brand awareness, a combination of store,/corporate execution, operating efficiency, pricing, marketing, customer centricity and value, pales by comparison against SPLS(EASY) and ODP(Taking Care of Business). A negative by-product of the positive effect of trimming advertising costs to the extent OMX did in 2006 is that the customer simply does not relate as well to OMX in terms of footsteps as they do ODP and SPLS.
3)Market share-Both SPLS and ODP opened and remodeled over 100 stores; by comparison, OMX opened 39 with far fewer new prototype, customer friendly remodels. OMX operated 970 stores at the end of FY 2005 and 911 at the close of FY 2006.

FedEx Kinko's Heats up it's Engines With Small Footprint Stores

February 20, 2007

Analysis of:"Compact Car" Format to Take FedEx Kinko's for a Long Ride | www.retailingtoday.com

Following on the heels of the rollout of smaller format stores last year in the Orlando, FL market, FedEx Kinko's is poised to open 200 additional units by the end of May 2007, taking the total to over 300 and allowing them to compete in more markets with the three principal players in the OSS for sales and market share within office supplies. FedEx Kinko's can effectively leverage this business decision and gain momentum in the heavily sought after small and midsize business customer segment. Key implications for FedEx Kinko's include the following:

1) Smaller footprint stores(1800 sq.ft.) translate into significantly lower operating costs vs the traditional 6000 sq.ft. large stores which focus mainly on copy, print and document services with less reliance on core supplies assortments.

2) Despite the 75% reduction in space and rent cost, the smaller stores will feature an expanded assortment of office products, roughly 700 sku's.

3) FedEx Kinko's will be able to function as more of an office supply supertore vs a print-for-pay only business and compete more effectively against Staples new rollout of print only stores in Boston as well as OfficeMax's launch of ImPress that features a wider array of digital offerings targeting the small and midsize business customer.

4) Smaller store formats allow for a much greater degree of of customer-associate interaction/intimacy which serves not only as a differentiator from the bigger box players, but also provides significant upside to relationship(brand) build while providing incremental market basket increases built on qualifying the true needs of the customer. This generates repeat traffic through loyalty.

ACCO's Adjusted Outlook--Short Term Setback or Long Term Concern?

February 9, 2007

Analysis of:ACCO Brands Corporation Updates Fiscal 2006 Outlook | biz.yahoo.com

Coming off the heels of a year that has seen plant closures and consolidations in Mexico, North America and Europe coupled with declining incomes from sales of office supplies creating further consolidation of brands, ACCO has announced on 1/17/07 an adjusted EBITDA for the full year ending 12/31/06, a significant drop of $14-16.5 million. Struggling with 4th Quarter sales in the office products segment, ACCO faces current and continued challenges created by the following market factors:
1)Growth of private label and proprietary brands within the OSS sector. Penetration growth of private brands is projected at 3-4% per year at OfficeMax, Staples and Office Depot.
2)Business model priority in the OSS sector is growth in small to midsize businesses who spend at 70% of total purchase on store vs national brands.
3)CE technology has placed tremendous pressure on storage and organization(Wilson Jones), Time Management(DayTimer) and Visual presentation(Quartet) category assortments.
4)European sales are at greater risk for ACCO as the overseas consumer purchases private label product on a ratio of 2 of every 5 item purchases vs a ratio of 1 of every 5 in the US.
5)The risk of further alienation from the OSS sector players exists as ACCO continues to pass along price increases that may truly be more of an attempt to recoup revenue from declining unit sales base rather than the stated rationale of raw material, labor and transportation costs.

OfficeMax Turns to Offense to Drive Growth of Business Customers, Store Traffic and Topline Sales

February 6, 2007

Analysis of:OfficeMax ImPress Copy Equipment Goes High-Tech to Provide Customers Speed, High Quality and Convenience | officemax.mediaroom.com

Coming off three solid quarters of earnings in FY 2006 with Q4 and year end not yet announced, it appears that OfficeMax will go on the offensive to drive store traffic, loyalty and market share through its print-for-pay venue, ImPress. At the close of 2006, OMX announced that it would change the name of its in-store print area from CopyMax to ImPress thus, creating a brand associated with quality, value and cost savings for small and midsize business customers through direct sales, online digital services and inside stores. In partnership with Xerox, OMX will replace its entire fleet of self-serve copiers and replace them with state-of-the-art high speed monochrome copiers. Advantages for OMX include the following:

1) Appeal to time compressed customers---equipment upgrades allows customers to produce their work faster and with enhanced quality.

2) Customers now have access to the newest and best technology in the sector.

3) The new equipment has embedded technology that can be upgraded vs replaced for a more lucrative ROI against the large capital expenditure to fund the upgrade.

4) Differentiation created through this futuristic technology offering that will allow scan to E-mail, fax and mailbox printing options allows customer the opportunity to do high quality, self serve work that represents them at their best.

5) The sweet spot for OMX is that if the initiative goes as well as planned, they will be able to attract more new business customers, one of the top priorities for growth shared by OMX and its rivals.

Staples Tweeks and "Geeks" Towards New Levels of Tech Services

February 5, 2007

Analysis of:Staples Expands and Re-brands Technology Services With Staples Easy Tech | biz.yahoo.com

In a highly competitive sector, Staples has once again stepped out of the box and is delivering yet another dose of differentiation to distance themselves from their rivals in both the OSS and CE sectors. With the skyrocketing growth of technology hardware tools fueling business and consumer home office needs alike, Staples will again fortify its EASY brand message by offering full time installation, data protection, and security services as well as repair and troubleshooting at all store locations beginning January 30th, 2007. The positive implications for Staples include the following:
1) Re-fortification of the EASY brand vision and values, already, a world-class customer identifier.
2) Opportunity for incremental technology sales as well as repeat traffic when services are needed.
3) Enhanced competitive positioning against rivals OfficeMax and Office Depot as well as CE leaders, Best Buy and Circuit City.
4) Opportunistic strategy to lure more small and midsize business customers into the stores. This customer spends roughly 3x that of the individual consumer, shops twice as often and tends to purchase store brands at 70% of the total market basket--all huge upside for Staples in terms of comps, gross margins and profitability.

....But, When Will Retail Store, Comp Growth Occur?

January 10, 2007

Analysis of:OfficeMax Marketing Strategy Breaks All the Rules | www.retailingtoday.com

Soon completing a difficult turnaround year fought with great success and reversal of fortune on the P/L side through numerous cost-cutting, austerity, and operational improvements, OfficeMax is poised to continue profitability increases in FY 2007. On the plus side, they have compiled 3 successive quarters of accelerated earnings, a bolstered stock price, and a boost in confidence from investors and Wall Street alike. On the negative side, there is little evidence to support that momentum in building topline sales as evidenced by the following:
1)Q1 ended with a +1.2% same store comp; Q2 ended with (1%); Q3 was flat.
2)New store openings pale by comparison to its rivals, OD and SPLS who will each open 100 stores by fiscal year end as compared to 40 at OfficeMax.
3)Brand identity continues to be an elusive butterfly-"EASY and Taking Care of Business" can be readily identified with Staples and Office Depot. Does anyone out there know the tagline associated with OfficeMax's brand? Does the potential customer know what OfficeMax stands for and how it differentiates itself from competition?

OfficeMax ran their Back to School campaign on one fourth of the budget and boasted it in the above captioned original article. On the surface, there is nothing incredibly wrong with saving money to increase profitability; however, there is something wrong with saving money when a company is in a survival(Turnaround) mode with formidable adversaries like OD and SPLS. Is saving money the correct business model to follow when the ultimate goal of any company is to grow and sustain growth; to grow customer base/customer loyalty, brand image, and topline, year over year sales?

Staples Adds Another "Weapon" to its Powerful Brand/Marketing Strategy

January 10, 2007

Analysis of:Staples Chairman Returns to Roots on Kroger Board | www.retailingtoday.com

Being the CEO/Chairman of one company and joining the Board of Directors of another is neither rare nor uncommon in the landscape of America's businesses. However, what makes this event truly unique for me is that when I thought Staples had just about nailed down every opportunity to grow and continue to sustain its unprecedented rise to the apex of the OSS sector, along comes yet another opportunity for them to tap a $50 billion business segment, grocery stores. The Key Implications of Sargent's recent appointment to Kroger's Board plays very well on several fronts for Staples as well as their grocery partners including but not limited to:
1)Increased market share through "tapping" a customer base that typically, does not shop their stores
2)Countering share gains made this year by Office Depot in acquiring/partnering with four contract stationers, 1 domestic and 3 abroad
3)Additional fortification and strength of the Staples Brand by selling private label products outside the traditional multi-channel environment
4)Further bolstering of consolidated profitability and EPS fueled by the accelerated gross margins in private brands
5)Synergies created through merchandising an iconic brand name, Staples, within the 4 wall grocery environment. Good for grocer/good for Staples
6)A "proving ground" of sorts to test the viability of the program in grocery and the future potential rollouts to other retail channels such as convenience, drug and even apparel merchants looking to expand assortments and increase per square ft.profitability.

Don't Forget About Store Comp Growth as Online Success is Examined

January 5, 2007

Analysis of:Traditional Retailer Gain Online | www.globest.com

The figures are in and online shopping grew an amazing 26% year over year. Early analyst figures were fairly accurate in predicting 25% growth estimates based mainly on gas prices, housing and the economy. Winners in the multi channel sector included Sears, JC Penney, Best Buy, Old Navy, and Target, all posting increases in customer satisfaction from 5.7-7.5% over LY. Non-retail sites, Netflix and Amazon.com posted the highest online satisfaction scores overall, but the multi channel retailers are starting to figure out how to better leverage their website venues to meet and exceed customer expectations.

Despite the positivism in the numbers above, several thought provoking questions/challenges arise regarding potential implications for traditional retailers who have done well online. They include:
1)Are revenues from online sales incremental or perhaps "bled off" retail store sales?
2)If, in the final analysis, online sales grew year over year, but same store sales are flat or negative, could the customer be subliminally saying something is going south regarding store locations, store layout, assortment, price, cleanliness, service levels?
3)Is the opportunity for a larger dollar ring at store level via associate/customer encounter, product knowledge, working demo displays, suggestive selling of high gross margin add-ons being lost with the cold, unattended webste visit?
4)If websites continue to grow revenues and be so popular with today's time-compressed consumer, why then, even bother to expend capital dollars into new stores, remodels and weekly advertising flyers?

Previous Page : 123456Next21 to 40 of 106