Office Max Case Study

Challenge
While OfficeMax achieved substantial growth, the real estate team knew that a more strategic approach was required to support future expansion plans in an increasingly competitive environment.


Solution
With an aggressive growth strategy, OfficeMax enlisted Pitney Bowes MapInfo to provide the data, software and expertise needed to identify potential locations for new stores and conduct accurate sales performance forecasting to uncover the most profitable sites.


Summary
As a leader in both business-to-business office products, solutions and retail office products, OfficeMax, Incorporated serves enterprise-level, mid-size and small businesses, as well as individual consumers. The company was founded in July 1988 with the opening of its first retail store in Cleveland, Ohio, expanding to three superstores by year’s end. OfficeMax offers a wide variety of office supplies, paper, technology products and services and furniture through a multichannel approach consisting of direct sales, catalogs, the Internet and more than 900 superstores.

In May 2006 the Office Max real estate team decided a more sophisticated site selection process was needed to support faster, successful future growth. The retailer wanted to accurately identify the most profitable locations the first time around so it could avoid costly brick and mortar mistakes and stay ahead of its competition. The real estate team also wanted to have the detailed market and customer insight required to make more informed site optimization decisions. For instance, when a lease comes up on expiration, OfficeMax wants to better evaluate which stores to close, renovate or expand.

Members of the OfficeMax real estate team first met with Pitney Bowes MapInfo at the International Council of Shopping Centers annual convention where they learned more about the location intelligence company’s work helping leading retail brands make successful real estate, marketing, merchandising and operational decisions. OfficeMax decided Pitney Bowes MapInfo had the tools and experience that it needed to meet the retailer’s aggressive expansion goals.

Chad Krause, manager of real estate strategy & research, joined OfficeMax shortly after the company began working with Pitney Bowes MapInfo and was tasked with getting the site modeling system up and running. Krause was familiar with Pitney Bowes MapInfo location intelligence solutions, having used the technology to identify new locations for hospitals and other healthcare institutions in his previous role at a hospital system in Chicago.


Result
Using MapInfo AnySite®, an essential decision support tool for the retail, restaurant, real estate and financial services industries, Krause began examining site and trade-area attributes for new OfficeMax stores. Initially, AnySite helped guide the real estate team in prioritizing the core markets to primarily focus on based on sales potential. This helped OfficeMax develop a more systematic approach to opening new stores, enabling the real estate team to more quickly move onto new markets once one market is close to saturation.

MapInfo AnySite is specifically designed to provide retailers and restaurants with insight into their location, customer and market research, which becomes critical when analyzing the relationship between store performance and market trade area demographic characteristics. With the help of location intelligence solutions, OfficeMax was able to more accurately outline the characteristics of a target trade area, which generally includes a large concentration of white collar small businesses and mid- to high-income households.

While Krause and a real estate analyst at OfficeMax are the primary AnySite users, the research and analysis they perform using Pitney Bowes MapInfo software is shared across several other departments. After a new store is approved, the real estate team partners with the marketing department to generate a proposed trade area to purchase the direct mail that will go out to potential new customers. As a result, the marketing department can more precisely determine where to concentrate efforts, which helps cut costs and eliminate unnecessary mailings. Krause also works with the finance and store operations groups to help them forecast sales for the next year. Additionally, if a competitor is building in the same trade area, they can predict the impact the new store will have on the current OfficeMax location.


With 908 current locations, OfficeMax has devised a consistent expansion plan for the next several years. OfficeMax opened 60 new locations in 2007, compared to 30 stores in 2005, which Krause credits in large part to his work with Pitney Bowes MapInfo advisory services. “In addition to excellent customer service, we are confident that operating stores identified using AnySite will mature to be in line with the forecasting models’ predictions,” says Krause.

30-Sep-2008