OfficeMax 2014 Annual Report Download - page 8

Table of Contents
We buy substantially all of our merchandise directly from manufacturers, industry wholesalers, and other primary suppliers, including direct sourcing of our
own brands products from domestic and offshore sources. We also enter into arrangements with vendors that can lower our unit product costs if certain
volume thresholds or other criteria are met. For additional discussion regarding these arrangements, refer to “Critical Accounting Policies” in Part II — Item 7.
“MD&A”.
We operate separate merchandising functions in North America, Europe and Asia/Pacific. Each group is responsible for selecting, purchasing and pricing
merchandise as well as managing the product life cycle of our inventory. In recent years, we have increasingly used global offerings across all regions to
further reduce our product cost while maintaining product quality.
We operate a converged global sourcing office in Shenzhen, China, which allows us to better manage our product sourcing, logistics and quality assurance.
This office consolidates our purchasing power with Asian factories and, in turn, help us to increase the scope of our own branded offerings.
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As part of bringing Office Depot and OfficeMax together and setting a foundation for growth, the Company invested significant effort during 2014 to
identify our customers, understand their preferences and develop strategies to meet their needs. This includes assessing consumer shopping desires and
tendencies which will help refine our strategy to identify and offer desired product assortment, shopping environment and purchasing methods. This effort
will help shape our business in future periods and may impact store and website design, product offerings and placement, promotional activity and customer
contact methods. Identifying the most desirable and effective way to reach our customers and allowing them to shop through whichever channel they prefer
will continue to be a priority in 2015 and the future.
Our marketing programs are designed to attract new customers and to drive frequency of customer visits to our stores and websites. We regularly advertise in
major newspapers in most of our North American markets. We also advertise through local and national radio, network and cable television advertising
campaigns, and direct marketing efforts, such as the Internet and social networking. Our North American marketing programs are now prepared on a combined
banner basis.
In early 2015, we combined the previously existing separate Office Depot and OfficeMax loyalty programs. Our customer loyalty program provides
customers with rewards that can be applied to future purchases or other incentives. These programs enable us to market more effectively to our customers.
Loyalty programs may change in popularity in the future, and we may make alterations to them from time to time.
We perform periodic competitive pricing analyses to monitor each market, and prices are adjusted as necessary to further our competitive positioning. We
generally target our everyday pricing to be competitive with other resellers of office products.
We acquire new customers by selectively mailing specially designed catalogs and by making on-premises sales calls to prospective customers. We also make
outbound sales calls using dedicated agents through our telephone account management program. We obtain the names of prospective customers in new and
existing markets through the purchase of selected lists from outside marketing information services and other sources as well as through the use of a
proprietary mailing list system. We also acquire customers through e-mail marketing campaigns and online affiliates. No single customer in any of our
Divisions accounts for more than 10% of our total sales or accounts receivable.
Our business is somewhat seasonal, with sales generally trending lower in the second quarter, following the “back-to-business” sales cycle in the first quarter
and preceding the “back-to-school” sales cycle in the third
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