A Lifeline for Retailers
Insight Merchandising grows from “fairy tale” to respected partner
To a business whose very operation involves getting fixtures and equipment to clients with as many as 7,000 locations, having efficient and sophisticated in-house logistics capability is non-negotiable.
And in the view of Federico Filippone, that skill is precisely what sets Insight Merchandising apart.
“It requires a lot of coordination and a lot of training between the employees and the management to be able to complete these massive rollouts in a timely fashion,” says Filippone, systems director for the 18-year-old company, now based in the Dallas suburb of Grapevine, Texas. “There’s a high level of specialty that has really helped in our growth. That’s a great core skill that we have.”
The skill was developed as the company grew from what Filippone deemed “a fairy tale.”
Insight was established in 1996 by a retired CPA, Peter Rozes, who’d lived in Rhode Island before relocating to California. He’d owned a video store chain before making the move and was familiar with the vital retail need for display items like the small plastic strips that were attached to his store shelves to let customers know where particular movie genres and titles could be located.
Upon moving west, Rozes met someone in the store fixture business who told him of the great demand for his products and how well the industry was faring. Rozes established Insight in Manhattan Beach and stayed there five years before moving to Grapevine, Texas, where his business went from a four-employee entity with one retail client to its current roster of 115 employees and more than 100 clients.
Insight’s first client was Michigan-based Borders, an international book and music retailer that had more than 500 U.S. stores before gradually paring its footprint and going out of business in 2011. Once Borders began encountering problems, Filippone says, Insight decided to lessen corporate risk by diversifying its client base to include major nationwide retailers with more than 1,000 stores apiece.
That list now includes heavy hitters like Kohl’s, Target, Walmart, JCPenney and Pier 1, and the company’s services them out of an 80,000-square-foot facility in Grapevine that houses its office, production and distribution functions. It also has an assembly and procurement center in suburban Los Angeles and partners with two manufacturing facilities in China.
Approximately 60 percent of Insight’s products – mainly metal and wood – are made in China, while the other 40 percent is built domestically, including 90 percent of acrylic and plastics work in Texas.
All the work is custom, Filippone says, and emerges from a process that can began as informally as a sketch on a napkin before ultimately progressing to vector comps and full-color renderings.
Prototypes are shipped within 48 hours of initial phone or email contact with a customer, and, once a client gives the go-ahead and a purchase order is awarded, a stepladder of stages that include brainstorming, concept development, design and revision will climax with a store-ready end product.
Lead time for products coming from China is 12 weeks. For U.S.-made products, it’s four to six weeks.
“That is one of our strong competitive advantages,” Filippone says. “We are very quick and built so flexible.”
Insight’s busy season of March through October runs as a prelude to the retail sector’s make-or-break fourth quarter, which brings additional pressure to adhere to timelines as customers make plans to revamp for the annual holiday rush. An additional skill set that’s been developed, Filippone says, is helping those same entities maintain relevance in the face of increasing e-commerce options.
“Retailing is struggling because it’s facing the fierce competition of a beast called the Internet,” he says. “Online sales are going up and taking more margins and more customers off the retailers’ plate. There’s no way that we can help them lower their prices, but there are studies that indicate that a customer is retained by how a store is built and how a product is displayed.
“That’s where we try to position ourselves, to help our customers display their products in a way that leads to their customers being satisfied.”
Insight’s in-house success is also sprinkled with a generous helping of responsibility.
The company started a sustainability initiative in December 2012 and its success over the following year resulted in more than 90 percent of scrap material being recycled rather than brought to a landfill. Filippone says credit for the execution of the plan goes to the production-level workers who painstakingly differentiated recyclable materials from actual waste.
The mindset is the byproduct, he says, of the unique corporate culture that’s created by a leadership team comprised of a 61-year-old man, Rozes, and his 30-year-old partner, Jeff Jones, who began his career as a part-time designer making $9 per hour and ultimately became a 50-percent owner.
“It’s very atypical,” Filippone says.
“On one side you have a CPA, someone who’s very methodical and by the book; while on the other you have someone who’s very creative and against every scheme and standardization. It’s a very fast-paced environment, and we’re always on the lookout to hire leaders, not followers. Everyone who comes on board has an opportunity to come in and use his or her own experience to help the company grow.”
The five-year growth plan includes an expectation that revenues will double while the executives ponder an expansion toward the East Coast with a possible warehouse location in Georgia.
The sales force will be realigned territorially as well, Filippone says, and also on the agenda is a headquarters upgrade to a 200,000-square-foot building – though it’s not been determined if it’ll be a new structure or a customized existing one. Also on the table is maintaining the existing facility and using an alternate location to house only the company’s distribution functions.
“It’s an exciting time to be here,” Filippone says. “We have big plans and we feel we’re positioned for continuing success.”
AT A GLANCE
WHO: Insight Merchandising
WHAT: Designer and manufacturer of customer store fixtures for nationwide retailers
WHERE: Grapevine, Texas