March 06, 2013

Merchandise Survival - Productivity Bands

When you're evaluating the success of your merchandising team, be sure to create what I call "productivity bands".

For instance, you might band items as follows:
  1. Annual Sales of $100,000 or Greater.
  2. Annual Sales of $10,000 to $99,999.
  3. Annual Sales of less than $10,000.
Then, measure the survival of items within each band.
  1. $100,000+ Survival Probability = 88%.
  2. $10,000 - $99,999 Survival Probability = 46%.
  3. $1 - $9,999 Survival Probability = 23%.
You've got interesting information, now.

Ask your merchandising team why 12% of high-selling items were discontinued.

Ask your merchandising team why 23% of low-selling items were carried forward.