OfficeMax 2010 Annual Report Download - page 23

Competition
Domestic and international office products markets are highly and increasingly competitive. Customers
have many options when purchasing office supplies and paper, print and document services, technology products
and solutions and office furniture. We compete with contract stationers, office supply superstores, mass
merchandisers, wholesale clubs, computer and electronics superstores, Internet merchandisers, direct-mail
distributors, discount retailers, drugstores and supermarkets, as well as the direct marketing efforts of
manufacturers, including some of our suppliers. The other large office supply superstores have increased their
presence in close proximity to our stores in recent years and are expected to continue to do so in the future. In
addition, many of our competitors have expanded their office products assortment, and we expect they will
continue to do so. We anticipate increasing competition from our two domestic office supply superstore
competitors and various other competitors for print-for-pay and related services. Print-for-pay and related
services have historically been a key point of differentiation for OfficeMax stores. Increased competition in the
office products markets, together with increased advertising, has heightened price awareness among end-users.
Such heightened price awareness has led to margin pressure on office products and impacted the results of both
our Retail and Contract segments. In addition to price, competition is also based on customer service, the quality
and breadth of product selection and convenient locations. Some of our competitors are larger than us and have
greater financial resources, which affords them greater purchasing power, increased financial flexibility and more
capital resources for expansion and improvement, which may enable them to compete more effectively.
We believe our excellent customer service and the efficiency and convenience for our customers of our
combined contract and retail distribution channels gives our Contract segment a competitive advantage among
business-to-business office products distributors. Our ability to network our distribution centers into an integrated
system enables us to serve large national accounts that rely on us to deliver consistent products, prices and
services to multiple locations, and to meet the needs of medium and small businesses at a competitive cost.
We believe our Retail segment competes favorably based on the quality of our customer service, our
innovative store formats, the breadth and depth of our merchandise offering and our everyday low prices, along
with our specialized service offerings, including OfficeMax ImPress.
Seasonal Influences
The Company’s business is seasonal, with Retail showing a more pronounced seasonal trend than Contract.
Sales in the second quarter are historically the slowest of the year. Sales are stronger during the first, third and
fourth quarters that include the important new-year office supply restocking month of January, the
back-to-school period and the holiday selling season, respectively.
Environmental Matters
Our discussion of environmental matters is presented under the caption “Environmental” in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K. In
addition, certain environmental matters are discussed in Note 16, “Legal Proceedings and Contingencies,” of the
Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of this
Form 10-K.
Capital Investment
Information concerning our capital expenditures is presented under the caption “Investment Activities” in
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this
Form 10-K.
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