TOM INGRAM AND ASSOCIATES, INC.

Outsourcing of In-House Merchandising Teams

Success Stories*

(4)  Manufacturer Outsources Merchandising Work, Improves Execution from 90% to 98%, Saves $750,000 to $1,250,000*  Salary and benefits for 1,200 reps were reduced by 20%+  http://tomingraminc.sharepointsite.net/Public/MerchServiceCoIncreaseSalesReduceCosts.htm    [see item (4) for details]

(27)  Manufacturer Saves $10 Million, Compliance Improves 135% by Outsourcing In-House Merchandising Team.  Immediate Savings Of 32% Per Visit. Employees Reduced from 400 to 40*.  Associate led effort to reduce internal merchandising staff of 400, which called on 8,000 locations servicing high sku count products.  The in-house team was not performing for a number of reasons, including the rep’s inability to be effective in two different chains at the same time.  (E.g. Wal*mart and Macy’s.)  (JF)   http://tomingraminc.sharepointsite.net/Public/MerchServiceCoIncreaseSalesReduceCosts.htm   [see item (27) for details]

(28) Manufacturer Saves $2.5 Million over 5 Years, Improves Distribution 4%, Reduces  New Item Speed to Shelf by 30 Days, Increases Displays Sold by 17%, through Outsourcing of In-House Merchandising Team (estimated).*  Associate led effort that outsourced the work of 250 full-time people to a 3^rd party.  65% of the manufacturer’s employees accepted positions at the 3^rd party at a reduced salary.  Reporting capabilities for account management team also were improved.  (PL)   http://tomingraminc.sharepointsite.net/Public/MerchServiceCoIncreaseSalesReduceCosts.htm [see item (28) for details]

(29) Manufacturer Saves $20 Million, Increased Sales $225 Million (30%) Over Five Years by Outsourcing In-House Merchandising Team.  Associate led effort to outsource struggling in-house merchandising team, including disposing of fleet and using multiple external services.  In-house team was struggling due to rapid growth of brand and distribution.  (JF)  http://tomingraminc.sharepointsite.net/Public/MerchServiceCoIncreaseSalesReduceCosts.htm [see item (29) for details]

(21)  $125 Million in Additional Sales for Manufacturer by Reducing Out Of Stocks by 5% (estimated),  $1 Million Cost Savings through Outsourcing of In-House Merchandising Team.*  Associate managed the team and its P&L.  Achieved approximately 5% reduction in Out of Stocks (key goal of the effort) and saved manufacturer $1 million per year in merchandising costs at the same time.  (Manufacturer’s sales are about $4.5 Billion.  We are assuming that a 5% reduction in out of stocks will result in additional sales of approximately $125 million.)  (PL)   http://tomingraminc.sharepointsite.net/Public/MerchServiceCoIncreaseSalesReduceCosts.htm [see item (21) for details]

(59) Outsourcing In-house Merchandising Team:  Phase 1 Cost Savings of $1,700,000 Savings Per Year (Approx.)  Reduced Average Hourly Cost (including overhead) from $38 per hour to $26 per hour for 76 people.  RIGHT FIELD MERCHANDISER IN RIGHT PLACE, WHEN NEEDED:  Increased Store Visits by 25% for Same Budget Dollars (Approx.)  BIG BENEFITS FROM LONG TERM PROGRAM:  Manufacturer Was Acquired, but Director of Retail Merchandising Continued Running Program for Acquirer, Continuously Improving Results Over the Years.  Comprehensive Training Makes The Difference.  Ultimately Reduced Full Time Staff by 50%. Details  http://tomingraminc.sharepointsite.net/Public/OutsourcingInHouseMerchTeam1.pdf   Category:  General Merchandise  (DZ)

(60) Outsourcing In-house Merchandising Team:  Cost Savings of $7,000,000+ Per Year (Approx.)**  $38.5 Million Sales Increase Per Year from 5.5% Market Share Gain (Taken from #1 Competitor! – Approx.**)  New Product Cut-In Rate Raised from 70% to 99%+.  Fixed Costs Moved to Variable Costs, Shared With Other Manufacturers.  65% Full Time / 35% Part Time Work Force Changed to 30% Full Time / 70% Part Time  Details   http://tomingraminc.sharepointsite.net/Public/OutsourcingInHouseMerchTeam2.pdf  Category:  Music/Movies  (DZ).

(66.1)  Outsourcing Cost Savings – Where to Look:  “How We Found $7 Million In Annual Savings”.  Follow Up to Previous Outsourcing Success Story:  Outsourcing an In-House Merchandising Team:  Success Story* #2  Internal Cost Estimates Often Do Not Include Everything.  Details  http://tomingraminc.sharepointsite.net/Public/OutsourcingCostSavingsWhereToLook.pdf Category:  Music / Movies (DZ)

(77)  Waterheater Unit Sales At This Retailer Are 28% Greater Per Store Per Year than Its Larger Competitor.

• Waterheater Manufacturer Sales Up More Than 300% Over Eight Years through a Single Retailer.
• Manufacturer Survives Industry Consolidation, Becomes the #1 Waterheater Manufacturer in U.S.
• Returns Down From Near 10% To 5%
• Provides Better Merchandising Work Than The Manufacturer's In-House Staff, At A Substantial Cost Savings.  
• Emergency Regulatory Recall Handled in 72 Hours While Some Competitor’s Waterheater Departments Were Shut Down for a Month.
• Helped Manufacturer And Retailer Conduct First Effective Line Reviews, Resulting In Not Stocking Gas Water Heaters In Electric Water Heater Markets.
• Sales Cycle Notes:  Work was commission based.  (Founder served as manufacturer’s rep for product.)
  

Details:  http://tomingraminc.sharepointsite.net/Public/WaterheaterSuccessStoryv2Redacted.pdf

(78)  $1.2 Billion Increase in Retail Sales of Major Appliances (estimated: 2003 to 2006)

• Retailer’s Market Share of Major Appliances Increased from 13.7% in 2003 to 17.7% in 2006, While Competitors Either Lost Share or Grew Slightly
• Four Week Test Increases Sales of Major Appliances by 11%, Increases Turns by 20%
• Second Test Confirms Initial Results
• Retailer’s Close Rate on Major Appliances 15% Higher Than Major Competitor
• Freed Up Approximately $30 Million of Non Performing Inventory In Six Months

• Sales Cycle Notes:  European / Asian company needed field sales force in US, difficult for them to hire and oversee.  Originally commission based, moved to flat fee.

     Details:  http://tomingraminc.sharepointsite.net/Public/MajorApplianceSuccessStoryv3Redacted.pdf

(178)  Sales Increase of 5 to 10% (est.) for Heavy Product - Auto Batteries.  Reduction in Returns Saves $100,000+, Pays for Entire Program.   Discovered and Rectified Significant Planogram and Out of Stock Problems in Stores.  Identified a Root Problem With Displays That Was Preventing Effective Rotation.  Completed Work Where Two Previous Merchandising Companies Had Failed.  Category:  Heavy Work, Auto

(179)  Closed Multi-Year Program at $36+/hour During Recession of 2008/2009*.  Manufacturer states "We Will Get Better Sales Productivity from the Merchandising Company's Staff Than Our Own.  We are good manufacturers.  They are good at running a field sales force.  They have the sales disciplines, methods, structure, and management.  We always have the problem of 'salary creep' and 'reps not where we need them'.  The merchandising company is good at dealing with this.  In addition, we estimate that a full time person, with overhead, costs about $100,000 per year.  The merchandising company charges us $75,000 to $80,000 per person - with better results."  Sales Cycle Notes:  Asian / European company.  Manufacturer chose to purchase only field reps and oversee with their own management.  Heard of merchandising company's work and called them.  Interviewed 3 competitors.  Sales cycle took 3.5 months, but merchandising company was confident they had the deal after only two weeks.  Beat large broker because it was too big to provide the dedicated team / attention desired plus did not have primarily male field force.  Beat smaller, regional competitor because they did not have the scope or retailer expertise needed.  Category:  Cannot Disclose  (CN)

(180)  Multi-Year Program at $35+/hour, Spring Work Only*.   See success (179).  Nearly identical program of reduced cost and improved field sales results.  Sales Cycle Notes:  Sister company of Major Appliance success story manufacturer #(78).  Knew reputation for good sales gains plus cost savings.  Category:  Cannot Disclose  (CN)    

(181)  Closed Another Multi-Year Program at $36+/hour During Recession of 2008/2009*.  Manufacturer needed field sales organization, very similar to success (179).   Complex New Product Required Skilled Field Sales Organization that Manufacturer had Never Needed Before.  Average full time person, with overhead, costs manufacturer about $100,000 per year.  The merchandising company charges $75,000 to $80,000 per person - with better results."  Sales Cycle Notes:  Started with small amounts of work recommended by the retailer.  Merchandising company's lead client had a cutback.  Merchandising company pursued this manufacturer based on "if you like what we've done for you, we need a multi-year commitment, otherwise it goes away."  Manufacturer chose to purchase field reps plus field management plus a back office staff.  The merchandising company oversees all field work.   Manufacturer really needed the help to meet cost cutting goals, revenue goals and to support the complex new product.  Category:  Cannot Disclose  (CN) 

*  Success stories and client quotes are provided as general illustrations of past performance, and are not intended to convey exact financial information, circumstances or dialog.  No representation is made that a particular prospective client will achieve a particular result.  Details on the specifics of each success story are available upon request.