May 16, 2012

Planning Merchandise

How we plan merchandise dictates the audience that buys our merchandise.

Think of the classic catalog marketer.  You're planning a December catalog, right now.  You guess how many housefile customers you'll have.  You project how many new customers you'll need.  You ask Abacus for 1,500,000 names, you fork over $100,000 to have access to names that you know will perform at $1.05 per catalog.  Then you allocate space in the catalog for each item.  You know what many of the items will be, you source new items as well.  By December, you know how that catalog will perform, +/- 10%.  Your strategy for planning merchandise yields a predictable result.  It also yields a predictable customer file, rural 55+ customers sourced from Abacus.

Two years ago, I met with the founder of a business in Europe.  This person communicated a planning process that was completely opposite of what catalogers execute.
  • 8:00am:  Read blogs, Facebook, Twitter, and understand what is "hot" this morning (yes, this morning).
  • 9:00am:  Have a staff meeting with merchants and social media experts.  Discuss the products that folks are talking about.
  • 10:00am - 6:00pm:  New products are designed.
  • Next Two Weeks:  Products are created, in China.
  • Two Weeks Later:  Proprietary products are available for sale on the website.
Not surprisingly, this process yields a very different customer, with very different merchandise preferences.

Both approaches "work".  One attracts a 55+ rural audience, one attracts a younger, fashion-oriented audience.

We need to understand that we play a huge role in determining who buys merchandise.  When we have a nine month merchandise planning process that is built around the assembly of a catalog, well, we end up with a customer who prefers the outcome of this strategy.  When we have a two week planning process, well, we end up with a customer who prefers the hottest and most relevant merchandise.

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