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FedEx Kinko’s to continue expansion in duel with UPS

The new FedEx Kinko's store model is smaller than a traditional center and features more than 700 office products. Business Wire (Business Wire / The Spokesman-Review)
David Koenig Associated Press
The new FedEx Kinko's store model is smaller than a traditional center and features more than 700 office products. Business Wire (Business Wire / The Spokesman-Review)

DALLAS – FedEx Kinko’s is building hundreds of new, smaller copying stores in a move designed to take shipping business from rival United Parcel Service Inc.

The Dallas-based unit of package-delivery giant FedEx Corp. said Monday it would open 300 new U.S. stores by next summer. That comes on top of 201 new locations in its last fiscal year.

The new stores will average 1,800 to 1,900 square feet, or one-third the average size of an existing Kinko’s. Most will be located near larger stores, including some that are open 24 hours, and will rely on the big stores to handle large jobs, company officials said.

FedEx Kinko’s also said it would redesign 110 current stores and open 20 new stores abroad, including 12 in China.

Companies such as Xerox Corp. and Ikon Office Solutions Inc. dominate the business of selling and leasing copiers and other office equipment to businesses.

FedEx Kinko’s and The UPS Store go after the lucrative market for smaller businesses that, unlike large companies, can’t negotiate volume discounts on parcel and freight shipments.

UPS has long dominated ground shipments, and it went after Kinko’s niche in overnight deliveries several years ago by buying its franchise network of local shipping stores, formerly called Mail Boxes Etc.

Now FedEx, which already does $840 million in shipping per year, sees a chance to cut into UPS’ core business by persuading its printing customers to use FedEx for shipping too.

Kenneth A. May, chief executive of the Kinko’s unit, said 200 stores that the company opened last year posted higher shipping volumes and revenues, although he declined to give figures.

Memphis-based FedEx bought Kinko’s in 2004. The stores account for less than 6 percent of FedEx revenue, and sales actually fell last year while the rest of FedEx grew.

FedEx Chairman and Chief Executive Fred Smith said recently the stores would “rock along at break-even, more or less” for at least another year until the expansion pays off.

FedEx tested several new concepts for Kinko’s before settling on the sub-2,000-square-foot layout. May said the new stores would be located in heavily trafficked, highly visible locations close to its small-business customers.

May said FedEx gained advantage by “spending a little more” on real estate than The UPS Store does.

UPS spokesman Rich Hallabrin said the Atlanta-based company was “continuing to explore our own appropriate opportunities for growth, both domestically and abroad.” He declined to comment on the FedEx moves.

UPS operates about 4,400 franchise stores, more than double the 1,700 U.S. Kinko’s locations.

Of the 20 overseas stores FedEx plans in the next 10 months, 19 are in Asia and Australia. Still, FedEx’s international expansion is likely to be slow over the next few years while it concentrates on expanding its domestic system, May said.