Retail Svengali

By Hannah Wallace March 31, 2005

That shiny GE light bulb display at Wal-Mart catches your eye, and even though you came in to buy a pair of socks, you're standing in the check-out line with cartons of brand-new bulbs. Or maybe you walked into CVS to pick up a prescription but ended up watching a striking young woman demonstrate Puredigital Technologies' new single-use digital camera. At Wendy's you accepted the suggestion of that cheerful young man behind the counter to supersize your Pepsi for just a few cents more.

In each instance Sarasota's National In-Store helped ensure that a particular product caught your attention and enticed you to open your wallet.

The brainchild of founder and CEO Tom Dowdy, NIS fulfills its corporate promise that NIS "gets it done at retail." With an impressive list of customers that includes a slew of Fortune 500 companies, the retail service provider's thumbprint can be found at just about every major retailer in the country from Wal-Mart to Walgreens, Publix to PETCO, and Staples to Sears. About 75 percent of NIS customers are product manufacturers who sell their wares to retail outlets. NIS helps ensure that their products are prominently displayed at the retail level, that inventory is tracked and maintained, and that any problems that might interfere with the goal of getting the item in front of the customer are resolved.

NIS helped Mrs. Smith's market its pies over the pre-Thanksgiving peak season by deploying employees to 670 grocery stores to move the pies from backroom freezers to front room frozen dessert displays. NIS was instrumental in resolving Mead Johnson's labeling snafu with one of its major product lines, Enfamil baby formula. After discovering a typographical error on original packaging labels, Mead Johnson asked NIS to take on the task of over-labeling the packaging of products already in 40,000 stores. The mammoth effort was completed in just one month, the first re-labeling of its type ever sanctioned by the Food and Drug Administration. NIS also helped ensure that Wal-Mart stocked enough M&M's, that consumers around the country found Chex cereals in their local grocery stores, and that FLOORgraphics, Inc., got its colorful floor advertising distributed to more than 12,000 grocery and drug stores in major markets.

The remaining 25 percent of NIS customers are the retail outlets themselves, which call upon the company to help them display their wares to greatest advantage. NIS set up a new Victoria's Secret store in just 48 hours. They constructed all the fixtures and made sure garments and other items were displayed according to the lingerie retailer's specifications, transforming an empty space into a fully functioning store ready for business. NIS also revamped the men's fragrance departments at 600 Sears stores, installing the fixtures necessary to convert them to self service.

According to Dowdy, NIS's core business is merchandising, a catch-all term that covers everything from display and fixture set up to store remodels, inventory management, handling recall issues and trouble-shooting. NIS also employs "mystery shoppers," people who check up on stores and sales staff to make sure they are pitching the company party line and running "retailtainment" promotions.

"Retailtainment combines great products with useful information in an entertaining fashion," Dowdy explains. "It can be as simple as sponsoring a contest to see how high you can stack your Oreos to a campaign to combat osteoporosis." The key, Dowdy says, is to tie the product in with the promotion by educating or entertaining the public.

To make three million store visits a year for major retailers across the country takes thousands of workers-NIS cut 8,000 tax returns in 2004-and tremendous coordination. NIS has six other office locations, and uses a proprietary software system called RetailStream, which collects data on products and displays. NIS workers with hand-held computers visit stores in their territory and download all the information, on the latest Gillette razor, for example. NIS data analysts read this information daily from thousands of stores and can tell how products are performing in certain regions and which are the best-performing stores.

Not too shabby an operation considering that just 10 years ago Dowdy was running the business by himself from a one-room office in the Miramar, a small office complex above Caragiulo's restaurant on Palm Avenue in downtown Sarasota. NIS is the No. 4 player in the merchandising industry today, with an annualized growth rate of 50 percent for the last seven years, according to Dowdy. The company is a division of the international marketing conglomerate Omnicom Group (NYSE:OMC), and Dowdy's Sarasota-based staff of 100 has outgrown the ninth floor of One Sarasota Tower and the distribution center it uses to store point-of-purchase materials (the branded in-store advertising and fixtures you see every time you walk into a retail store). At press time the company was just moving to its new distribution center at the Sarasota Commerce Center on 16th Street and was looking into taking on more square footage at the Tower.

The entrepreneurial Dowdy came up the old-fashioned way-starting at the bottom and climbing the corporate ladder until finally deciding to go out on his own. Actually, the impetus to start NIS had a lot to do with his affinity for the Sarasota lifestyle. When faced with the choice of moving to Chicago to further his career or staying put in Sarasota, he opted for independence and the sea and sunshine found in Southwest Florida.

Dowdy's retail career began in the '70s with a part-time college job delivering Pepsi products to grocery stores in his hometown of Cleveland. Dowdy quickly learned there was more to being a Pepsi deliveryman than unloading trucks. He found himself building and arranging displays and learning what retail merchandising was all about.

"I didn't know it at the time, but the job with Pepsi was giving me a great education in merchandising and retail sales," Dowdy says. "It was a great college job and, as it turned out, a great career-building experience."

After completing his degree at Kent State University, Dowdy applied for his first job at Chesebrough-Ponds, maker of Ponds cold cream and Vaseline petroleum jelly, among other products.

"I remember in the interview they asked me what was the most important thing about selling products in a store. I answered, 'Reduce out-of-stocks and achieve off-shelf display.' That answer really blew them away. They had really drilled that into my head at Pepsi," Dowdy says.

Dowdy started at the bottom at Chesebrough. "I built displays. I made sure that there were Q-tips on the shelves and that stores had plenty of Ponds cold cream in stock."

After a couple of years he moved to Pittsburgh and took a job with Johnson & Johnson in the company's baby products division. Dowdy's next move was to Combe, Inc., maker of health and beauty care products like Lanacane cream, Odor-Eaters and Just For Men hair products. He quickly moved from regional manager for the mid-Atlantic region to New York City where he joined the company's marketing department and eventually became the vice president of consumer promotion. In 1990 he was recruited by Comark Merchandising, a sales promotion agency, to oversee its Southeast operations.

"Comark was doing a lot of business in the Southeast. We had Tropicana in Bradenton, Sara Lee Knit Products in North Carolina, Coca-Cola in Atlanta. The company wanted a Southeast presence and basically told me I could live anywhere in the region. I flew into Tampa and started driving down the coast. When I hit St. Armands Circle I knew this was the place I wanted to live. I had longed for the Midwest feel that I had left behind in Cleveland. And I liked Florida but felt like the east coast was really just New York with palm trees."

From 1990 to 1994, Dowdy traveled around the Southeast from his home base on Siesta Key, selling to Sara Lee, Coca-Cola, Bacardi Rum and Reynolds Metals. He had been thinking of branching out on his own and developed the business plan that would eventually form the basis for NIS. He offered the plan to Comark and they accepted it, but with a catch. Dowdy would be given latitude to run the operation, but it would have to be from the company's home base in Chicago. Dowdy, who had settled into a lifestyle on Siesta Key that he knew couldn't be replicated in the Windy City, turned them down.

"I started the business with three contracts," Dowdy says. "I was able to keep Sara Lee, Revlon and Philips Electronics. It was a Jerry Maguire type of thing. These companies came with me. I took a second mortgage on my house and set up my one-room office and I was in business."

Dowdy set up what he calls a "virtual company."

"It was like patchwork with a national footprint," Dowdy says. "We outsourced everything. Retail services were outsourced to companies in the region. Production and printing were outsourced."

NIS grew and in 2002 Dowdy sold the company he had started for $20,000 to Omnicom for an amount that he acknowledges was "in the millions." Now a division of the international conglomerate, Dowdy still runs the show from Sarasota. "Sarasota is a great place to live and raise a family. But it has been a challenge finding a talented pool of employees with retail experience," he says. "Almost everyone we recruit here has to come from somewhere else. Sarasota can be a hard sell. If you live in Chicago you can change jobs five times and not move. Here, if you change jobs you probably have to move."

Dowdy says a plus to staying in the area is that clients like the location. "The good news is that our clients love to come here. We have a corporate rate over at the Ritz-Carlton and we have a beautiful view from our conference room. You can sit down to do business and look out over the water."

Dowdy was able to tap into some local talent. He recruited Pat Grant from Eckerd to sell retail intelligence services and Mark Flannery, the company's vice president of retail intelligence, was formerly with Tropicana.

One of the company's vice presidents, John Orr, comes to NIS from Kmart where, according to Dowdy, things "started to implode." (Orr is fighting a lawsuit leveled by the Securities and Exchange Commission having to do with alleged accounting irregularities at Kmart. Dowdy and the company are supportive. "John has chosen to fight the charges that have been leveled against him. Omnicom is standing behind him and hopefully it will all be concluded shortly," Dowdy says.)

The company continues to grow and embrace new challenges. XM Satellite Radio has hired NIS to promote its products in Wal-Mart stores and General Motors automobile dealers.

The company's latest venture, appropriately called WalStreet, is designed to take advantage of the retailing opportunities at the world's largest company, Wal-Mart. NIS is leasing a 5,000-square-foot space in Bentonville, Ark., across the street from the mammoth retailer's corporate headquarters.

"We're setting up a space where Wal-Mart vendors can hang out, have a cappuccino, and get high-speed internet access," Dowdy says, "It's kind of like a cross between a Delta lounge and a Kinko's copy center. You can plug in your laptop, have an offsite meeting, and we'll even help you get your samples across the street to the Wal-Mart showrooms. It's a way for us to serve our customers more and, of course, they can engage NIS for any service to help them sell their products."


Seventy-four percent of all purchase decisions are made in the store.

The first step in getting a product purchased is getting it on the shelf, which most retailers do not do well.

Retailers tend to do their own merchandising only 60 percent of the time.

Manufacturers will assume more of the merchandising role in the future.

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