[WorldMaker]

For Word documents I had some luck storing the unzipped contents of the file (since a DOCX is mostly XML files in a ZIP container). My approach was automating the zip/unzip process (and some cleanup steps) pre-commit and post-checkout. https://github.com/WorldMaker/musdex

Though also specifically for Word files your best bet might be to launch Word's own compare-files GUI tools as a merge engine, but I had several reasons at the time to explore a "container destructuring tool" for source control.