Rogers-based Retail Integrity is moving ahead on proprietary services it sells to Wal-Mart suppliers even though that won’t include in-store merchandising after the end of this year. The company did not make Wal-Mart’s in-store merchandising preferred list.
Mike Bynoe, founder and president of Retail Integrity Group, told Talk Business & Politics he was given a shot at keeping the Wal-Mart in-store merchandising business when he submitted his proposal a couple of months ago at the request of the retail giant.
Wal-Mart recently announced Anderson, Acosta, Crossmark, Premium and SAS Retail would be the only five companies allowed to do in-store merchandising beginning January. The other companies will transition out through the end of this year.
“Retail Integrity was not one of the five preferred service providers to make the cut, and while I would have liked to have been on the list, I respect Wal-Mart’s decision to reduce the number of providers in the stores,” Bynoe said.
He said Wal-Mart is simply following what other retailers have already done by limiting the number of approved service providers to the stores.
“The Dollar store channel used just one company for that work and Walgreens and CVS went to two providers in recent years as did Toys R Us. Wal-Mart is late on this move,” Bynoe said.
He said the new policy being spearheaded by Walmart U.S. Senior Director of Merchandising Strategy Paul Beahm III is good for the retailer, particularly at the store level. He said store managers will now know who is working in their stores and the merchandisers will only do work for Wal-Mart, as part of the new protocol.
Bynoe said he was a little surprised to see Advantage didn’t make the cut given their size, but like Retail Integrity he said the company will continue to do other work for the retailer and its suppliers.
THE PREFERRED FIVE
Bynoe said he was not surprised to see Anderson Merchandising on the list given its long history with Wal-Mart dating back to mid 1990s when Wal-Mart sold Western Merchandising to Charlie Anderson, CEO of Anderson Merchandisers. Western Merchandising, which Wal-Mart acquired in 1991, then consisted of magazine, music and book distribution. Anderson is a former chairman of the Country Music Association and for years Anderson remained the only music supplier to Wal-Mart.
Anderson Merchandising now performs in-store merchandising service in more than 4,000 of Wal-Mart’s stores. Plano, Texas-based Anderson Merchandisers has additional facilities across the United States and around the world and employs more than 3,000 merchandisers. The firm has an office in Bentonville.
Jacksonville, Fla.-based Acosta Sales & Marketing is one of the largest companies to provide in-store merchandising services on behalf of suppliers to retail with more than 50 U.S. locations, including Rogers, which serves Wal-Mart.
Acosta also said it represents more than 60% of the top brands in most stores. The company represents 57% of the branded, center-store volume that passes through warehouses; and covers 10 retail channels representing more than 90% of all CPG sales. Acosta also offers a wide range of other services to suppliers.
Plano, Texas-based Crossmark is another large company that made the Wal-Mart preferred list. Crossmark also provides headquarter sales support covering more than 1,000 retail locations across the U.S.
Crossmark said its in-store merchandising teams follow a four-pronged plan that focuses on product, promotion, placement and pricing. Crossmark said it offers suppliers a turnkey option that ensures on-shelf availability, proper displays, planogram design and resets as well as pricing audits. Crossmark merchandisers use proprietary technology to help them accomplish those metrics.
• Premium Retail Services
Based in Chesterfield, Mo., Premium does in-store merchandising for several retailers but remains a family run operation founded by Ron Travers in the early 1980s when he left Nabisco to launch Premium. The company notes on its website its merchandisers provide a range of services on everything from building and maintaining displays to audits and pack out. Premium also has worked with Best Buy and Rite Aid in addition to Wal-Mart.
• SAS Retail
Based in Orange, Calif., SAS Retail has provided merchandising services across retail since 1991. The company employs more than 15,000 full- and part-time merchandisers to staff up or down as need for its clients. SAS is part of Daymon Worldwide, a provider of global retail strategies and services at a very large scale.
SAS said it works with more than 100 retailers globally and more than 6,000 manufacturers. The company said its retailer program allows it to create customized procedures to ensure stores are getting everything they need.
WAL-MART’S ‘CAP’ PROGRAM
Bynoe said regardless of how the chosen five may have previously worked in the stores, it is his understanding the new protocol was handed down from Walmart U.S. CEO Greg Foran. He said the plan, dubbed CAP for Customer Availability Program, is about creating efficiencies in store operations and was rolled out about a year ago.
Foran called for CAP teams a year ago eliminating some jobs and creating others under a new full day schedule. Foran was specific that the same processes must be conducted every day and he also eliminated several reports from department and store managers freeing up more time for them to be out in the store, Bynoe said. Wal-Mart will work with the five preferred companies to ensure they follow the same protocol as directed by the retailer.
Bynoe said the supplier’s best advocates are Wal-Mart store employees. He said given the number of items in a supercenter it’s impossible for the store employees to perfectly manicure every display at all times given the high traffic counts in stores. That’s where a third party merchandiser comes in, and suppliers and retailers use the services to augment what they can’t do with do their own employees.
He said Wal-Mart is just trying to run a lean and efficient operation and the new in-store merchandising change is about having more continuity in its stores and less confusion in the backroom. He said $1 billion annually is spent on retail merchandising service at the store level. In recent years Wal-Mart has continued to push suppliers for their lowest possible cost of goods to deliver on their Everyday Low Price promise to customers.
With the retailer now also mandating a cost range the chosen providers can charge suppliers, it is essentially capping the costs. A supplier consultant recently told Talk Business & Politics the retail giant is seeking more visibility into what its suppliers pay for the services they hire to facilitate their Wal-Mart business, which takes away a bargaining chip during price negotiation.