Lawrence Merchandising expands into NWA

Do you wonder who refolds the graphic t-shirts so neatly stacked in perfect rows when consumers run roughshod over the table displays? And who picks up the mess and changes out the seasonal racks at a store open around the clock?

Chances are it could be Lawrence Merchandising, a Minneapolis-based third party service company that has reorganized and restocked retailer shelves for more than five decades.

Lawrence has an army of 2,000 in-store professionals who work on behalf of its supplier and retailer store management customers. Growing up in Target’s backyard, Lawrence hung a shingle in Bentonville last year to be closer to Wal-Mart, Sam’s Club and the local supplier community.
 
Dee Breazeale heads up the local sales office for Lawrence and has more than 20 years of insider retail experience as a buyer.
 
Perhaps the timing couldn’t be better for Breazeale and Lawrence to grow their client base given the on-the-shelf (OSA) challenges widely reported by national media over the past few months.

THE OSA ISSUE
Wal-Mart Stores is the master of low prices and broad assortment merchandising, but efficiently re-stocking more than 100,000 products in its more than 4,000 supercenters is an ongoing challenge that has garnered the retailer negative media publicity in the last few weeks.

Wal-Mart has defended its position by insisting the “empty shelf” media blitz is not a fair representation of what is occurring in its stores across the country. The retailer surveys more than half a million customers each month for feedback on check-out, store cleanliness and service issues, who report mostly positive shopping experiences.

That is not to say some shelves in specific areas from time to time might look sparse, a problem that service providers like Lawrence and others are hired to solve.

Duncan Mac Naughton, chief merchandising officer at Wal-Mart, said last year that he believed on-shelf-availability was a $15 billion opportunity.

Breazeale cited a recent case study in which Lawrence engaged with a nationwide manufacturer of salty/sweet snack foods who was not achieving projected sales within a mass merchandiser. Routine action included an inventory and restock service to ensure the product had ample qualities on the selling floor and in the stock room.

This would be followed up with a time-sensitive service call to coincide with the product’s advertised sale pricing.The service included an audit to gather competitive intelligence to ensure their product was best positioned relative to their competitors.

“The client is a newer company with recently launched product in the retailer. It was critical to maximize product placement for increased sales as successful product performance would result in expanded nationwide distribution,” Lawrence noted.

The audit found that a recent in-store demo had greatly diminished stock levels from low inventories to out-of-stock with no replenishment in the back room of the store.

“Lawrence discovered that in some stores, when the demo company ran out of product they used a competitive brand to sample, which we communicated to the client. This was crucial information that the client was unaware of,” the case study notes.

Lawrence merchandisers visited over 98% of the stores within the scheduled service dates to ensure the highest stock levels.

“Our ability to report real time issues and be the ‘eyes and ears in-store’ provided the client with critical retail intelligence they would not have been able to capture from their usual reporting,” the case study notes.

Lawrence officials said that between its first and second visits in the stores, sales rose 15%. (It is not known if this case study involved Wal-Mart, and experts say OSA challenges are felt throughout the industry.)

Wal-Mart reports on-shelf-availability at historically high levels between 90 to 95%, but says it is striving for more efficiency as store traffic increased by 23 million customers in the last year alone.

ACROSS THE AISLE
Unlike some of the other third party merchandising companies who focus mostly on consumer packaged goods, Breazeale says Lawrence does a lot of work on the other side of the store in apparel, home, toys and automotive.

Lawrence recently reset the intimate apparel department at Wal-Mart, and continually works with suppliers who have product on the retail giant’s shelves, such as Wrangler. Breazeale says Lawrence has working relationships with nearly every major brick and mortar retailer in the country, which can be advantageous for brands that sell across the sector.

For instance, Wrangler is found in Wal-Mart and Target as well as other department stores like J.P. Penney, Kohl’s and Macy’s. Specialty stores like Cabela’s and Tractor Supply also sell Wranger jeans.

Industry analysts and supply chain experts predict more consolidation of services in the future as wholesale margins remain compressed from inflationary commodity prices.

Leon Nicholsas, director retail insights for Kantar Retail, said suppliers are being asked to shoulder more responsibility for placing and keeping their products on Wal-Mart shelves.

This is inevitable given Wal-Mart’s vow to reduce overhead expenses as part of its $6 billion price investment over the next two to three years.

“We do a lot of work helping suppliers like toy companies set up modulars and in-store displays for things like Easter bunnies and of course Christmas items. The suppliers only have four weeks to sell the merchandise through and we help ensure all the product gets out of the backroom and onto the floor where it can be sold,” Breazeale said. “Then of course we change those out as the seasons progress.”

In 24-hour retail operations, Lawrence has to work around store traffic and the retailer’s own personnel. A Lawrence merchandiser can be identified as wearing a company shirt and a badge given out by the retailer.
 
“Our merchandisers work part-time, and can quickly be assembled to complete a job assignment. We can put more people on a job or scale back whichever is needed. We run a nimble business operation and pride ourselves on a strong 50-year track record,” Breazeale said.

MORE PRODUCTS
Nicholas and other analysts expect product assortment to broaden at Wal-Mart because of the retailers push to be a “house of brands.”
 
“Duncan (Mac Naughton) has four pillars for assortment density at Wal-Mart,” Nicholas said. “This will mean shelf space concerns for suppliers as Wal-Mart says it will be a destination for basics at low entry level prices in addition to offering choices for better and best comparable products.

A move by Wal-Mart to help add assortment through more localized buying could be an opportunity for Lawrence and others who have the ability to engage their army at a moment’s notice. Breazeale says Lawrence not only works with suppliers and manufacturers but also does routine contract work for the retailer.
 
Analysts say as shelf space becomes more crowded with more products – there are 50 different Oreo SKUs (stock keeping units) – it will become imperative for suppliers to ensure they are not crowded out.

It’s important to note, this product surge is happening across all channels, and not just with the big box mass merchandisers. The corner drug store, Walgreen’s offers some 109 soup items. The local grocer may have up to 620 soup units. Wal-Mart comes in at 717, and Amazon has a whopping 11,848 soup items for sale.

Therefore, added product, shrinking space and heavy shopping traffic create a perfect storm for empty-shelves. Supply chain analysts expect the problem will get worse before it improves.