Can FedEx Kinko's Get the Kinks Out?

FedEx Kinko's is carefully watched in quick print franchise circles. Critics clamor that the Kinko's merger with FedEx had little to do with FedEx's core business or strengths. FedEx Kinko's CEO Ken May, who comes from the FedEx side of the business, tells Fortune that the merger has been a disappointment.  Explains Mr. May:

 "We were focused on the high-end commercial print business, but that was not a sustainable business model. We were competing against Xerox and Ikon, and they are trying to provide copy services to sell machines. We don't sell machines. They could use copying as a loss leader."

So what's the new quick printing strategy that will resolve their competition with Xerox and Ikon, to turn around the sinking $2 billion FedEx Kinko's division? Apparently, better trained sales staff that can target higher-margin market segments and to spend money on a massive expansion of smaller stores.

"The new strategy focuses on three customer segments - small and medium-sized business, mobile professionals, and convention centers and hotels. We took our sales force off the street and retrained them on [those segments]. In early December we got them back out on the street, and our contract flow has picked back up... We're also expanding.. Our plan is to open 200 stores this year, 300 the next, and 400 the year after. The traditional FedEx Kinko's was 6,000 square feet, but the new ones are 2,000. It's more intimate, but we still provide the same breadth of services."

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Photo originally uploaded by rob.purdie