Summit 2011: The Story of DiVoga

The DiVoga private label may comprise such staid office supplies as laptop bags, file folders and clipboards, but OfficeMax treats it like a leading fashion brand.New brand collections of coordinated products are introduced virtually every season, sold in stores for up to six months, and never merchandised again. The retailer is betting that such trendy, limited assortments will inspire consumers to come get the product right now -- and so far, it's working.OfficeMax's Mike Kitz, vice president-brands and product development, and Chuck Luckenbill, vp-visual merchandising, detailed the brand's growth and how it reflects the broader evolution of the chain's visual merchandising strategy last month at the Shopper Marketing Summit.DiVoga's birth stemmed purely from shopper insights: Approximately five years ago OfficeMax conducted dozens of qualitative ethnographies (particularly in-store observations) as well as a quantitative study (involving more than 4,000 customers) that helped the chain pinpoint five shopper values in the office supply channel:ValueExpertise and TrustOrganization and EfficiencyStyle and DesignInspirationThe last two led the chain to conclude that consumers wanted stylish products, and the insights came at a time when there was a huge gap between the products that they desired and what was available. "Here's something that customers want, and no one is delivering it," Kitz said. That pointed to an opportunity.In response, OfficeMax began to move away from "boring" endcaps packed to capacity -- typical of its origins as a warehouse-like chain focused above-all on offering a broad selection at a low price -- to instead coordinate some of the bulk merchandise it offered by bringing together existing, disparate products that looked the same in hopes of infusing some emotion into the shopping experience.The company also studied successful competitors outside of its channel, leading it to further evolve endcap merchandising into what Luckenbill calls a "coordinated outfit" strategy inspired by department-store presentations of mannequins dressed head-to-toe and accessorized."You should be able to walk up to a 'Trendcap' (see "OfficeMax Field Report: May 10, 2010" in Related Articles) in our store and buy a whole 'outfit' and bring it back and redo the inside of your office or the top of your desk," Luckenbill said.At about the same time, OfficeMax decided to create a brand dedicated to these shopper values, hiring a trend company (that also worked with the likes of Target and Liz Claiborne) to develop colors and patterns that suitable for office supplies. The retailer picked designs it thought would sell well and stacked them high, then added coordinating creative elements to the endcap graphics that would stop the customer on her journey through the aisles.Yet fashion proved to be a bit tricky for a chain that was used to working in manila. "Some of the items sold really well, others didn't, and we had huge markdowns ... so at the end of six months, the margin on this was really poor," Kitz admitted.The company went back for more insights, following and filming shoppers and seeking customer feedback. The takeaways led to another endcap reinvention with a more polished "coordinated outfit" approach designed to attract the attention of list-driven shoppers.Feedback from additional in-store intercepts and an online panel of 600 to 800 customers led OfficeMax to hone in on product designs that were just trendy enough to still look professional. The chain also learned that, despite the improved endcap presentations, many shoppers were still unaware that these fashionable products were available.That led to the development of "nested" merchandise sets that greet shoppers as they enter the store and typically are stocked with products from DiVoga or another private label and rotated every season. "We literally just took what we would have on an endcap on a vertical surface and composed it into a horizontal surface," Luckenbill explained.The proper in-store execution is achieved by "legislating creativity" through a universal planogram that determines each product's exact placement on the table displays. The schematic is kept underneath the table so that the assortment can be refreshed every morning, keeping all the displays in all stores looking the same.With the addition of the up-front merchandising, sales performance finally caught up with the company's efforts. "We had a significant increase in sales" compared with the period when the collections were on endcaps, Kitz said.OfficeMax continues to work on new ways to showcase design in-line, where again tradition had it simply stacking products one on top of the other. One example is a slanted fixture that hooks into the metal gondola to let shoppers view the front of products.The company is also merchandising DiVoga and sister store brand Tul at other retailers such as Safeway, Food Lion and Best Buy. (See "OfficeMax Field Report: May 10, 2010.") "Right now, we're at five or six thousand locations other than our 912 stores, which is pretty nice exposure for any brand," Luckenbill said.Today, shoppers are starting to expect the chain to provide fashionable products. "We're beginning to change how they think about OfficeMax and the reasons for coming in," Kitz said.The latest DiVoga line rolled out in April, and sales for the first two weeks surpassed results from any of the chain's other collections."This has been a tremendous success for OfficeMax. The brand is very strong, we're making a lot of money, we're delighting a lot of customers," Kitz said. He also suggested that, while the chain might be selling is "just stuff," the offices it is helping to redesign might very well be leading to increased creativity and productivity.

Summit 2011: The Story of DiVoga

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