FedEx Kinko's takes aim at big-box suppliers

By Sandra Zaragoza
Dallas Business Journal
Updated: 8:00 p.m. ET Oct. 1, 2006
The shop that's built its business making copies is contemplating going pen-to-pen with big-box office suppliers nationwide.

In Florida and Missouri, FedEx Kinko's is testing a retail format that converts its traditional 6,000-square-foot stores into places where customers can make copies, get a sign made, send a package and shop for a wide array of office supplies. Since launching the expanded retail concept 10 months ago, Dallas-based FedEx Kinko's has overhauled 20 stores in Orlando and St. Louis.


The company also has put the idea to work in Indianapolis and Marina Del Rey, Calif. Next, it plans to build a new-style store from the ground up in Memphis, the hometown of its parent company, FedEx Corp.

At the test stores, existing FedEx Kinko's customers may be surprised to find a Wi-Fi Bar, purple shopping carts and retail sales employees fanned out across the sales floor. These stores also have upgraded shipping counters and installed features such as a conveyor belt that stretches from the store entrance to the shipping area to help customers with heavy loads. The 6,000-square-foot stores stock about 2,500 items, from presentation materials to mobile phone and computer accessories, that customers may need to pick up on the fly.

In the next few months, the company should have a better idea of whether it will continue to move forward with the new retail model, according to Tom Leverton, senior vice president for operations growth and development.

Miami, Seattle and Dallas are among the major metropolitan areas that may be in line for the latest retail format, Leverton said.

Different tacks
Meanwhile, FedEx Kinko's has been pushing into retailing with a small 1,800-square-foot format, which costs about 50% less to construct than its traditional 6,000-square-foot model, which offers a limited selection of items.

FedEx Kinko's built a business around office and print services. The first Kinko's store in Santa Barbara, Calif., opened in 1970 and offered a small selection of school supplies and greeting cards. This is the first time it has introduced retail concepts with a wide array of office supplies, as well as packing and shipping materials.

The office supply retail category is already dominated by giants like Staples, which has 1,800 big box and small stores, and Office Depot, which has more than 1,000 locations in the U.S. alone.

Alan Shore, co-founder and president of The Retail Connection, believes that FedEx Kinko's is well positioned to become a significant retail player.

"The advantage they have is size, which they can leverage, and quality of brand. Obviously, they have a wonderful distribution process," Shore said. "When FedEx bought Kinko's they brought in an established infrastructure; They can leverage that for greater store growth and greater profits."

On the flip side, Shore says, FedEx Kinko's is still relatively new to the retail arena.

"They have to be competitive in price, and they have to be able to compete on service and on offerings," Shore said. "They are not a retailer by trade, and retail is a tough business."

Small buildout first
Right now, convenience is at the core of FedEx Kinko's retail strategy.

The company will be bringing its compact, 1,800-square-foot format -- which stocks about 700 items -- to new markets, neighborhoods and downtown areas, Leverton said.

It plans to open 200 of these small stores across the country by June 2007, bringing the company's store count to 1,700 worldwide.

In the last few months, FedEx Kinko's has opened four small centers in Waxahachie, Dallas, Cedar Hill and Mansfield, giving it eight compact locations in D-FW.




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