LEXMARK PURSUES CUSTOMERS @ STAPLES,OFFICE DEPOT & OFFICEMAX

[Anonymous]

http://www.kentucky.com/211/story/728406.html
Lexmark to pursue superstore customers
Lexmark
International will announce Tuesday that it is dramatically expanding
its lineup of printers at office superstores Staples, Office Depot and
OfficeMax.The Lexington-based company will nearly triple the number of
printers for sale compared to six months ago at the three
chains.Lexmark says all three cater to exactly the type of customer it
wants: small businesses that print a lot.The announcement comes at a
critical time for the only Fortune 500 company, which has its
headquarters in Lexington, because it was recently dealt a blow by the
shutdown of Circuit City.It’s also a critical year for Lexmark in the
eyes of analysts, who have expressed skepticism about the long-term
viability of its inkjet printer division.Tom Carpenter, who follows the
company for Hilliard Lyons in Louisville, said that this year, “the
writing could be on the wall” for the company’s inkjet division without
a large increase in shelf space at major retailers, particularly office
superstores where small and medium-size businesses shop.

Getting
into those stores is another step in a turnaround plan begun after
Lexmark’s inkjet division began to struggle in the latter half of 2005.
The company found it was selling printers to consumers who didn’t print
enough. Since inkjet printers are often sold at a loss, printer makers
rely on sales of ink to make their profits.Since 2006, Lexmark has
walked away from 20 percent, and then 30 percent more, of its inkjet
printer sales, in an attempt to focus its new strategy on consumers,
such as small businesses, that use lots of ink.”As someone’s going
through their normal workday … they are having to print to
communicate, to generate reports, to share information and more,” said
Todd Hamblin, vice president of worldwide sales and marketing for the
inkjet division.

Carpenter has said that he would like to see
Lexmark offer at least three to five models in each office superstore
to give those consumers a good selection, a benchmark that Lexmark has
now achieved.On the added shelf space, Lexmark will be offering
higher-end products that offer features such as dual-sided printing and
wireless functionality, Hamblin said.For instance, at Staples the
printers will range in price from $150 to $400. Lexmark’s offerings at
that store used to cost anywhere from $79 to $250, he said.The company
will also sell more laser printers at those stores, where it previously
sold mainly inkjets.Lexmark is also expanding its presence at some
other stores nationally, including regional consumer electronics chains
Fry’s and Micro Center. Neither has locations in Kentucky.

Although
most small-business customers shop at office superstores — about twice
as many, on average, than at other types of stores, Hamblin said — the
electronics stores help build awareness of Lexmark and grab individual
consumers.The company has not yet been able to get back into Best Buy
after the chain took its printers off the shelves last year and decided
to sell them only on BestBuy.com. Hamblin said the company is
constantly working to expand its relationship with all retailers.He
noted that Best Buy has reduced the space it allots in stores for
printers after the economy contributed to a decline in sales for the
category.Lexmark has focused on smaller consumer-electronics chains
such as Fry’s, to expand distribution. This strategy has been in place
since last year, when it became apparent that Circuit City would close
some stores and might close completely.

Lexmark has
traditionally sold most of its inkjets at mass-marketers such as
Wal-Mart and Target, and those stores will continue to play a strong
role. Hamblin wouldn’t say the amount of sales that come from that type
of business, but he said it is higher than the industry average of 30
percent to 40 percent.

Those retailers will be shipped more
higher-end printers, too, Hamblin said, in hopes that Lexmark can sell
those to small business customers who might be in smaller towns where
there are fewer retail options.”Our goal is to attract that
small-business and home-office customer wherever they’re shopping,”
Hamblin said.Another key initiative, he added, is that Lexmark has
hired more regional sales teams to go to stores and educate employees
on the benefits of Lexmark printers.Analysts like Carpenter have long
said that Lexmark salespeople don’t visit stores enough.”The perception
among many salespeople is Lexmark is cheaper, but it costs way more to
print than an HP,” Carpenter said.Hamblin said Lexmark is finding
stores receptive to meeting with the salespeople.

Lexmark expansion
Lexmark
will announce Tuesday that it is dramatically increasing the number of
printer it sells at these retailers. (Comparison numbers are from six
months ago.)

Staples: Seven (four inkjets and three lasers), up from two.
OfficeMax: Nine (five inkjets and four lasers), up from six.
Office Depot: Six (four inkjets and two lasers), up from zero.
InkStop: Eight (seven inkjets and one laser), up from about five.
Micro Center: Five inkjets, up from zero.
Fry’s: Nine (five inkjets and four lasers), up from zero.

[Author]

March 17, 2009 at 11:18 AM