Back in 2008, five years after selling his OfficeMax chain for $1.5 billion, Michael Feuer got the itch to return to the retail game.
Since selling OfficeMax—which he’d built into a 1,000-store, $5 billion empire—Feuer had started Max Ventures, a firm that furnished seed money to a variety of specialty retailers, along with the entrepreneur’s considerable experience. But brand creators like creating brands, and Feuer was no exception. His only trouble was choosing a category he had a feel for and one that hadn’t been tapped out.
Initially, Feuer had his eye on, of all things, dogs and cats. “But I didn’t have any pets,” he says, “or there would have been a PetMax.” So, Feuer, who had noticed that Americans—sore from the swelling cost of going to the doctor—were gravitating toward prevention, and ways of treating themselves, took the road to wellness instead. “I could see this [trend] coming a number of years ago,” Feuer says.
Now, 16 months into his business plan, Feuer’s company, Max Wellness, is slowly but steadily hatching a diversified scheme to create (and, Feuer hopes, dominate) what he sees as a new retail category: A brand that sells every imaginable item related to healthy living—or, at least, better living—from vitamins to yoga mats, blood-pressure monitors to herbal remedies, along with everyday staples such as toothpaste and shampoo. To date, Feuer has opened four anchor stores (two in greater Cleveland, and one each in Naples and Sarasota, Fla.), and an e-commerce site, and is preparing to unveil a 600-square-foot, scaled-down prototype called Mini-Max that’s designed to fit into hospitals. Still on the drawing board: a vending machine called Wellness-in-a-Box that pops out stuff like bandages and ointments instead of soda and gum.
Max Wellness is aimed at a demographic that Feuer, 65, knows intimately: baby boomers. But beyond his kinship with the customer, Feuer sees an obvious financial incentive in focusing on these consumers as well: the postwar generation makes up 60 percent of all healthcare spending in this country and represents $1.5 trillion in buying power overall, per the company’s own research. “We’re selling hope,” he says—and given the current state of the American healthcare system, hope is in short supply. “One thing that scares me, but helps us,” he adds, “is what the government is going to do with healthcare in this country.”
But if the OfficeMax titan plans to build another category killer, it’ll be quite a prescription to fill. “No matter where he strikes, he’s going to hit a giant, so he can’t take anyone down,” observes retail-industry analyst Marshal Cohen of NPD Group. “He also might be perceived as too complex or too different from the traditional [health and beauty products] experience we’re accustomed to. His biggest challenge is to have people grow comfortable with his concept.”
No kidding. Max Wellness is a retail crossbreed, combining product categories that haven’t shared the same store shelves previously. (Defibrillators? On your left. Erection-producing herbal supplements? Two aisles down.) With this kind of mix, Feuer’s essentially picking a fight with every retail chain from vitamin shops to the pharmacy behemoths. (Max Wellness is privately held, and Feuer declined to discuss its financial performance.)
Another challenge is the elusiveness of the category. OfficeMax was easy to understand: It sold stuff for your office. But vending “Wellness”—the term’s new-agey trappings alone will surely raise a few gray-flecked eyebrows—is more nuanced than selling sticky notes. “When you create a new category,” says an unruffled Feuer, “you take bits and pieces away from a bunch of different [retailers]. We’ll take some people away from the pharmacy chains. We’ll take from sporting-goods stores, a little from the vitamin and nutritional supplement stores,” and so on.
Could it really be that easy? Of course not—and Feuer knows it. Which is probably why he balances the rah-rah talk with two other ingredients: A diversified business plan, and a shot of humility.
Feuer turned plenty of heads when he opened the four, 5,000-square-foot locations in the first half of 2010. “Brick-and-mortar stores add brand credibility,” the CEO says, and he has more planned. But Feuer’s clearly done playing the expansion game he did in the late 1990s with OfficeMax, opening 57 locations in a single quarter—a tactic that saturated the segment and ended with “a lot of blood in the streets,” as he puts it.
Today, Feuer speaks of targeting before ribbon cutting. He’s taken a shine to e-commerce, too: Max-Wellness.com stocks the same 7,000+ items the stores do. As for Mini-Max, which targets outpatients who need stuff like dressings and alcohol swabs on their way home, it so far has a four-location deal with Lake Health, an Ohio hospital operator.
“This new concept will assist patients” by “further[ing] their recovery after discharge,” says Lake Health CEO Cynthia Moore-Hardy. Chain wonks used to call this sort of thing co-branding; Feuer prefers his own term: “captive-needs marketing.”
While Feuer is comfortably past the point of worrying about his own bank account, he’s far from assuming that siphoning market share from the major chains will be simple. “I spend 99 percent of my time scared to death,” Feuer allows. “I’m 5-foot 9. I realized early on to never pick on anyone your own size or bigger—unless you have a twist they don’t. You have to provide something unique.”
More to the point, you have to tell the world you’re providing something unique, and that means marketing. Some of Max Wellness’ outreach is traditional: direct mail, TV (local only, at least so far), and targeted email. But Feuer’s primary tool is what he terms “intimate marketing,” an idea he developed while building in Max Wellness’ two existing turfs, Florida (an obvious choice for its retiree population) and Ohio (where Feuer opened his first OfficeMax store 23 years ago). First, the company compiles a list of “anybody who has a base of clients who could use our stuff”—physicians, physical therapists, yoga instructors, etc. To encourage them to send their clients over to Max Wellness, the providers receive a personal letter from Feuer along with an “incentive.” For personal trainers and chiropractors, that’s a $25 gift certificate.
And doctors? Because the law prohibits Feuer from plying MDs with free swag, he instead sends them gift certificates they can give to patients. “Doctors love that because it doesn’t cost them anything and it’s within the regulations,” Feuer says. (This is actually tame compared to the practice of big pharma companies that literally pay doctors—some of them six figures apiece—to say nice things about their drugs on the lecture circuit.)
The second half of Feuer’s marketing kicks in when customers enter the store. Staffers move to consecrate the relationship with what he terms “high touch” (a marketing euphemism that roughly translates to: We’re going to make a fuss over you). Max Wellness stores are highly participatory, including blood-pressure stations and even a test-drive track for motorized wheelchairs. “Wellness Advocates” sporting white lab coats roam the aisles listening, advising, smiling. Don’t want to talk about your hemorrhoids in earshot of others? Max Wellness offers private consultation zones for such matters (inspired by a confessional Feuer saw on a recent tour of the Vatican).
Feuer puts his employees through extensive classroom training, which goes so far as to include CPR. Then he arms them with iPads programmed to recommend remedies for 275 of the most common maladies. The tablets are called Max Answers, but Feuer likes to call them “WebMD on steroids.”
It sure sounds nice, this harkening back to the days when the corner druggist knew your name and what ailed you—but will Feuer’s stripe of branding be enough to make him a threat to the national chains?
Don’t try posing that question to them. Asked to comment on Max Wellness and its prospects, The Vitamin Shoppe, General Nutrition Center, CVS, and the Medicine Shoppe all either declined to comment or failed to reply to requests for same. But Adam J. Fein, whose Pembroke Consulting serves national pharmaceutical manufacturers, opines that Max Wellness is, if nothing else, well positioned.
“Consumers today are very confused,” he says. “Pharmacy chains have been evolving into convenience stores that sell everything from snacks to cigarettes to beer. . . . Meanwhile, health stores bombard them with messages that may or may not be accurate. If Max Wellness can bring together the different elements of these businesses into one place, I think it’ll find a niche with consumers.”
Cohen, of NPD Group, cautiously agrees. “If you’re going to convert me, change my wellness habits, that’s a hard thing to do because I’m comfortable with where I already shop,” he says. Still, the analyst lauds Feuer’s shrewdness for using personalized service as “the great differentiator,” and for “taking the field of wellness to a whole other level.”
And that is exactly what Feuer claims he’s doing. The retail world, he says, “doesn’t need another same thing.” And Max Wellness, where high-protein energy bars commingle with wheelchairs, at the very least isn’t that.