Staples, Inc. -  Office Supplies -  Category Main Page 

508-253-5000

Five Hundred Staples Drive

Framingham, MA 01702
www.staples.com

Business Description 

OfficeMax, Inc. ("OfficeMax" or the "Company"), which was incorporated
in Ohio in 1988, operates a chain of high-volume office products superstores. As
of January 25, 2003, OfficeMax owned and operated 970 superstores in 49 states,
Puerto Rico, the U.S. Virgin Islands and, through a majority-owned subsidiary,
in Mexico. In addition to offering office products, business-machines and
related items, OfficeMax superstores also feature CopyMax(R) and
FurnitureMax(R), in-store modules devoted exclusively to print-for-pay services
and office furniture. Additionally, the Company reaches customers with an
offering of over 40,000 items through its award winning e-Commerce site,
OfficeMax.com(R), its direct-mail catalogs and its outside sales force, all of
which are serviced by its three PowerMax distribution facilities, 18 delivery
centers and two national customer call and contact centers.

BUSINESS STRATEGY

Over the last two and a half years, OfficeMax has made major
investments in developing and implementing a multi-pronged strategy which
included the development and installation of a state-of-the-art supply chain
management network backed by a new integrated computer system, significant
enhancements to overall store-level execution and focused marketing tactics that
has enabled the Company to gain market share with its core business customer
while maximizing gross margin dollars. These investments significantly fueled
the Company's improved results in fiscal 2002. The Company also believes the
improvements are the catalyst for accelerated profitable growth in the future.
In fiscal 2003 and beyond, the Company plans to grow its business through
expansion opportunities in existing markets, product line extensions, strategic
partnerships and international growth with a focus on Latin America. OfficeMax
plans to expand the marketing of its products and services through its
commercial sales operations and target new customer sets in specialized markets
that are currently not served by the office products superstore industry. The
key elements of this strategy are as follows:

- Extensive Merchandise and Service Offering. OfficeMax has
become a productivity ally for small businesses, not only selling
office machines and supplies, but also expanding its line of business
services. Each OfficeMax superstore offers approximately 8,000 stock
keeping units ("SKUs") of quality, name-brand and OfficeMax
private-branded merchandise, which represents a breadth and depth of
in-stock items not available from traditional office products
retailers, mass merchandisers or wholesale clubs. The Company has also
increased the marketing emphasis of in-store business services
including CopyMax, its digital print-for-pay offering targeted at
serving the small business customer.

OfficeMax continues to introduce line extensions of products
that are aligned with its core customers, such as higher-end
electronics merchandise which includes all-in-one machines,
communications equipment and digital imaging technology. Additionally,
the Company is expanding its private branding of products which offers
compelling values with quality equal to or better than national brands.
This strategy provides increased gross margin opportunities. In fiscal
year 2002, OfficeMax superstores offered approximately 800 OfficeMax
private-branded and direct import products manufactured to our
specifications. The Company expects this offering to increase to over
1,000 products in fiscal year 2003. In the future, OfficeMax will
continue to position itself as a small business ally by expanding goods
and services that are aligned with this customer segment.

- New Store Prototype. The Company's merchandise presentation
is highlighted by wide aisles with open ceilings, bright lighting,
colorful signage and bold graphics. This easy-to-shop format is
designed to enhance customer convenience, create an enjoyable,
efficient shopping experience and promote impulse purchases. In fiscal
year 2002, the Company introduced its latest store iteration, a 20,000
square-foot footprint, which features improved sightlines, enhanced
lighting, and new graphic signage that significantly enhances the
shopping experience, assists the purchase decision process and
encourages add-on item sales. The new prototype is approximately 15%
smaller than existing stores, achieved as a result of the Company
needing less space, another derived benefit of its new supply-chain
management initiative. Upon entrance to this new prototype, customers
have immediate visibility of every product category offered, which the
Company has grouped into major "worlds" or categories. The worlds
include: supplies such as Office Organization; Presentation; Paper and
almost every imaginable type of office tool; Technology and Software;
CopyMax, our print-for-pay-business; and FurnitureMax, featuring
chairs, desks and everything in-between for the office. The new
prototype also features an enhanced navigational signing and
point-of-purchase package within the worlds, that helps make shopping
easier and more efficient and fosters add-on sales. Also during fiscal
year 2002, as a result of its successful completion of supply chain
management improvements, OfficeMax completed a fixture height reduction
program inside its stores, as there is no longer a need for "top-stock"
used for back-up inventory. This program enables the Company to
incorporate many of the enhancements of its latest prototype across the
entire chain and dramatically improve the esthetics and visibility in
its stores.

As a result of the Company's infrastructure improvements, the
Company is now developing and experimenting with smaller store format
tests. OfficeMax currently operates a small number of smaller
footprint stores called OfficeMax PDQ (Pretty Darn Quick). This
smaller format is 4,000 to 7,000 square feet and features the
Company's high-margin CopyMax print-for-pay offering. A second
generation of this smaller format is now in development and will be
tested later this year.

- Domestic Store Expansion and Remodels. The Company opened
five new domestic superstores during fiscal year 2002 and intends to
open approximately the same number in fiscal year 2003. In addition,
OfficeMax plans to remodel approximately 250 existing superstores in
fiscal year 2003 utilizing its new format and key features of its
latest store prototype. All remodels and new superstore openings will
occur in markets where OfficeMax already has a major presence, which
will enable it to better leverage advertising, distribution and
management and supervisory costs.

Prospective locations for new superstores are evaluated using
on-site surveys conducted by real estate specialists and field
operations personnel coupled with a proprietary real estate selection
model, which assesses potential store locations and incorporates
computer-generated mapping. The model analyzes a number of factors that
have contributed to the success of existing OfficeMax locations
including the location's size, visibility, accessibility and parking
capacity, potential sales transfer effects on existing OfficeMax
superstores and relevant demographic information, such as the number of
businesses and the income and education levels in the area.

- Guaranteed Everyday Low Prices. OfficeMax maintains an
everyday low price policy. The Company guarantees its low prices by
matching any advertised price or refunding the difference between a
lower advertised price and the price paid at OfficeMax within 14 days,
subject to certain exclusions. The Company also promotes a 115% low
price guarantee whereby if a customer finds a lower price at any office
products superstore on an identical item, OfficeMax will refund the
customer 115% of the difference (up to $55.00). In addition, for the
Company's CopyMax offerings, it provides an on-time guarantee ensuring
a customer's job is produced as promised.

- Customer Service. To develop and maintain customer loyalty,
OfficeMax fosters a customer-centric sales culture that focuses
associates on making customer service their number one priority. The
Company views the quality of its associates' interaction with its
customers as critical to its success. To this end, the Company
emphasizes training and personnel development and seeks to attract and
retain well-qualified, highly motivated associates. Additionally, the
Company has centralized most administrative functions at its corporate
office and customer call and contact centers and automated many
store-level tasks or shifted such tasks to off hours to enable in-store
associates to focus on effective customer service. In fiscal year 2002,
OfficeMax implemented "Boundless Selling," a program that, in part,
uses wireless technology and a sales leader in its stores to leverage
payroll while enhancing customer service capabilities. The wireless
technology used in the Boundless Selling program enables sales
associates in each store to communicate in real-time with each other
and members of the store management team who act as the sales leader.
This store management associate is responsible for generating sales and
providing direction and feedback to sales associates as they interact
with customers. OfficeMax believes each of these improvements gives
customers a quicker, more satisfying shopping experience and keeps them
returning to the Company's locations.

- Information Technology. In fiscal year 2002, OfficeMax began
the implementation of a chain-wide, new point-of-sale system in its
store locations. This new system includes a multitude of features
including Customer Relationship Management (CRM) tools that will
provide the Company insight into customer buying habits. OfficeMax
believes the CRM data that will be collected by the system will be
another valuable tool for its sales associates to make real-time
purchase recommendations to customers, as well as for improving
targeted marketing efforts. The new point-of-sale system also features
a benefit called "Line-Buster" technology that will allow its sales
associates to check out customers paying with credit cards anywhere in
the store using hand-held units, which is expected to result in a
better shopping experience, particularly during very busy selling
periods such as back-to-school, holiday and in January, a time many
businesses stock up on supplies for the new year. This new system
roll-out is expected to be completed during fiscal year 2003.

- Marketing Concepts. OfficeMax's store-within-a-store
concepts are designed to complement its core office supply merchandise
assortment by providing additional products and services to the
Company's customers and provide the Company with opportunities for
incremental store traffic and sales. These concepts include the
departments or in-store modules of CopyMax and FurnitureMax. CopyMax
offers customers a wide range of "print-for-pay" services from
self-service black and white copying to full-service digital printing
and publishing. FurnitureMax provides a full-line of office furniture
and related accessories and a variety of specialized services such as
office layout and design and professional set-up and installation. Both
CopyMax and FurnitureMax have a presence in every OfficeMax superstore.

In fiscal year 2002, OfficeMax increased the marketing
emphasis of its CopyMax print-for-pay services. Every CopyMax
store-within-a-store location is 100% digitally-connected, which allows
every location, and the Company's CopyMax specific e-Commerce site, to
act as a point of fulfillment. This connectivity creates a virtual
print-on-demand environment for OfficeMax's small business customers.
OfficeMax also established a CopyMax store-based outside sales
organization in fiscal year 2002, including the implementation of three
commercial sales territories with over 200 dedicated CopyMax sales
representatives to market print-for-pay services to medium- and
larger-size businesses. The Company believes CopyMax serves as a major
differentiator from it competitors in the office products industry and
a value-add for the small- and medium-size business customers.

- OfficeMax.com. The Company believes that the Internet is an
important channel for the sale of office products and the procurement
of business services. OfficeMax.com offers a vast selection of over
40,000 items, many through a "virtual" inventory, coupled with free,
fast delivery on orders over $50 for most locations. OfficeMax is
focused on further integrating the site with other OfficeMax channels
by means of features such as weekly sneak previews of in-store
specials, sent to preferred customers via the Internet several days
prior to the promotion appearing in local newspapers. Another feature
of the OfficeMax.com site and an example of integrating channels, is
the ability of users to order online using our catalogs as reference
and then submitting catalog item numbers when ordering electronically.
OfficeMax.com also offers an expanding array of integrated business
services targeted at small business and home office customers,
including communications, eBusiness utilities, marketing, travel,
virtual learning and financial services.

OfficeMax will also use the Internet and e-Commerce as a
foundation for expansion into new international markets. In the spring
of fiscal year 2003, OfficeMax is planning to launch an e-Commerce site
in Canada, allowing the Company to tap into the multi-billion dollar
Canadian office products market for a minimal capital investment.

- Catalog and Commercial Outside Sales. The Company's strategy
to serve medium and larger, non-retail store business customers is to
put a greater emphasis on its catalog and commercial sales force
operations. A full-assortment catalog containing more than 30,000 items
plus a variety of merchandise from a third party provider allows
customers the convenience of catalog ordering and fast delivery.
OfficeMax also employs a commissioned outside sales force to provide
personal service for more customized business needs, including the
integration of customer-specific online ordering for its larger
customers' special needs. These customers are served through the
Company's two national customer call and contact centers and 18
delivery centers. In fiscal year 2003, OfficeMax will expand its
commercial sales presence by aggressively targeting businesses in the
United States with 50 to 100 employees.

- International Expansion. During fiscal year 2002, the
Company opened three OfficeMax superstores in Mexico through its
majority-owned subsidiary, OfficeMax de Mexico, ending the year with 30
locations. OfficeMax stores operated by this subsidiary are virtually
identical to those operated by the Company domestically. In fiscal year
2003, the Company plans to open up to ten additional superstores in
Mexico and launch a redesign of the OfficeMax de Mexico e-Commerce
site. The new site will incorporate the Company's U.S. OfficeMax.com
technology platform, enabling OfficeMax de Mexico to take advantage of
the latest in customer relationship management and position it as a
premier office products site in Mexico.

The Company believes additional future international expansion
opportunities exist in Latin America. Ultimately, the Company's
international expansion will depend upon general economic and business
conditions affecting consumer spending in these markets, the
availability of desirable store locations, the negotiation of
acceptable terms and the availability of adequate capital.

- Other Growth Areas. OfficeMax believes there are other
growth opportunities for the Company including non-traditional formats
that could include new store-within-a-store concepts in conjunction
with retail partners outside of the office products industry, and the
opportunity for OfficeMax to align with vertical markets such as
education, real estate and healthcare.

MARKETING, PROMOTIONS AND ADVERTISING

The Company's marketing efforts are directed at small-and medium-size
businesses, home office customers, and individual consumers. By extending and
integrating its marketing channels to include e-Commerce, direct-mail catalog
and an outside sales force, OfficeMax also serves the medium and larger
corporate customer. A multimedia approach is used to attract customers by
emphasizing the Company's "Max Means More" marketing theme which is designed to
position OfficeMax as the retailer that gives SOHO business customers (also
known as small office home office customers), more of what they need to run
their businesses in the form of selection, service and value. The Company's
advertising campaigns utilize network, local and cable television commercials,
newspaper ads, seasonal spot television and radio commercials, direct mail
promotions, circulars, outdoor billboards, mass transit cards, sports arena and
online advertising as well as other promotional and public/community relation
vehicles. OfficeMax also utilizes special marketing programs developed to target
the small business customer and support seasonal events such as the
back-to-school selling period, the Christmas holiday season, and the January
"re-stocking" back-to-business period. The Company also implements
"micro-marketing" campaigns, or market specific advertising, to leverage its
advertising spend and to target certain key markets in a cost-effective manner.

In fiscal year 2003, OfficeMax will take its "Max Means More" marketing
program to the next level using a multi-media approach, showcased in broadcast
advertising as well as targeted direct mail. OfficeMax will also use focused
promotional tactics aimed at gaining market share with the core business
customer while maintaining gross margin dollars. The Company's marketing
objective is to create awareness and carry its brand promise of more service,
more value, and more selection to the business and SOHO customer. OfficeMax
believes its Max Means More campaign will be long-lived and will help continue
to differentiate it from competitors in the office supply superstore industry.

MERCHANDISING

The Company's merchandising strategy focuses on offering an extensive
selection of quality, name-brand and OfficeMax private-branded products.

The Company offers a wide selection of name-brand office products,
packaged and sold in multi-unit packages for the business customer and in single
units for the individual consumer. The Company also offers private-branded
products under the OfficeMax(R) label in order to provide customers additional
savings on a wide variety of commodity products for which management believes
national brand recognition is not a key determinant of customer selection and
satisfaction. These commodity items include various paper products such as
computer and copy paper, legal pads, notebooks, envelopes and similar items.
Despite lower selling prices, these items typically carry higher gross margins
than comparable branded items and help build consumer recognition for the
OfficeMax family of Max-brand products. In fiscal year 2002, OfficeMax
superstores offered approximately 800 OfficeMax private-branded and direct
import products manufactured to our specifications. The Company expects this
offering to increase to over 1,000 products in fiscal year 2003.

COMPETITION

The domestic and international office products industries, which
include superstore chains, "e-tailers" and numerous other competitors, are
highly competitive. Businesses in the office products industry compete on the
basis of pricing, product selection, convenience, customer service and ancillary
business offerings.

As a result of consolidation in the office products superstore
industry, OfficeMax currently only has two direct domestic superstore-type
competitors, Office Depot and Staples, which are similar to the Company in terms
of store format, pricing strategy and product selection. The Company's other
competitors include traditional office products retailers and direct mail
operators. During recent years, OfficeMax has experienced increased competition
from computer and electronics superstore retailers, mass merchandisers, Internet
merchandisers and wholesale clubs. In particular, mass merchandisers and
wholesale clubs have increased their assortment of office products in order to
attract home office customers and individual consumers. Further, various other
retailers that have not historically competed with OfficeMax, such as drug
stores and grocery chains, have begun carrying at least a limited assortment of
paper products and other basic office supplies. Management expects this trend
towards a proliferation of retailers offering a limited assortment of office
supplies to continue.

The Company believes it competes favorably with its competitors and
differentiates itself based on the breadth and depth of its in-stock merchandise
offering along with specialized services offerings, its everyday low prices, the
quality of its customer service and the efficiencies and convenience of its
integrated channels. OfficeMax does not compete in the contract commercial
business; however, it utilizes an outside sales force to support growth in sales
to medium and larger size corporate and institutional type customers.

Some of OfficeMax's competitors may have greater financial resources
than the Company. There can be no assurance that increased competition will not
have an adverse effect on the Company's business.
 

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