OfficeMax Incorporated (OMX) Is Suffering From a Herd Mentality

Sending its very best
But OfficeMax isn’t just trying one thing. It’s heaving all sorts of ideas at the wall to see what will stick. One of its key initiatives is to become the Hallmark cards of office supplies.

You know how you go into a store and there’s a whole aisle devoted to greeting cards? That’s what OfficeMax envisions for its office supplies, with pens, paper, and paper clips being a dedicated design concept within a retail partner’s store.

Once upon a time, office supplies were only bought at office-supply stores, but now customers can get what they need at their local Wal-Mart and Target, not to mention at Amazon.com. While many supermarkets already have a small selection of office necessities, OfficeMax’s plan is to supply them with both private-label goods (meaning higher margins for Office Max) and brand-name supplies. Because it has extensive reach and experience, it believes it can do the marketing better than the partner can by itself, but the question is whether retailers want to give up valuable real estate to office supplies.

Who’s your daddy?
Other ideas OfficeMax is launching include in-store pickup for items ordered online, an increasingly popular choice among retailers, and it’s partnering with domain host GoDaddy.com to hawk website setup packages and support services to small businesses (though after GoDaddy’s excruciating Super Bowl ad, perhaps they’ll rethink the pairing of smart and sexy).

There are a lot of good ideas OfficeMax is willing to try, even if it’s following a well-worn trail blazed by others, as it shows the upheaval retailers everywhere are facing, and not just from the Internet. But if I had to choose an office-supplies retailer to invest in, I’d be going with Staples.

As the largest, most financially sound of the three, it has the wherewithal to continue succeeding in this sideways economy, even if there was a pairing between its two rivals. Its recent decision to offer 3-D printing services to customers shows Staples is willing to lead the herd, not merely follow it. The only problem is I don’t see a catalyst that will make stocks of office-supply retailers stampede higher anytime soon, so I’d just as soon avoid them altogether until we get some firm direction on the economy.

The article OfficeMax Is Suffering From a Herd Mentality originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Bed Bath & Beyond, and Home Depot; owns shares of Amazon.com, RadioShack, and Staples; and is also short RadioShack.

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