April 15, 2013

Merchandise: Self-Inflicted Wounds

"Marketing is the band aid that covers wounds created by poor merchandising decisions."

Kevin Hillstrom:  On Twitter, April 12, 2013.

Let's think about something for a moment.  In football and baseball, player development means everything.  Out here, our Seattle Mariners were wildly successful from 2000 - 2003, going 392-296, and coming a few games away from a World Series appearance in 2001.  But during that time, player development failed.  Eventually, the team aged.  Without a crop of young players to replace aging veterans, the team collapsed in 2004.

The Mariners tried to cover up the problem via free agency, signing players to flashy contracts.  Regardless, player development lagged.  In 2004, 2008, and 2010, the team was historically bad.

Since 2009, the team invested deeply in developing young players.  Today, the team still struggles, but at least you can see the future, with young talent on the field, and young talent playing in Tacoma at the AAA level.

The lesson:
  • In sports, players are merchandise.  If you do not develop young, talented players, you must over-invest in free agency to have a chance to succeed.  And since most teams don't have deep pockets to over-invest in free agency, the problem results in losing seasons, which lead to attendance problems, which make it even more difficult to invest in players, a tough death spiral to get out of.
  • In e-commerce / retail / cataloging, merchandise productivity means everything.  If you do not develop new, high-quality items, you must over-invest in marketing to have a chance to succeed.  And since most companies do not have deep pockets to over-invest in marketing, the problem results in systemic profit challenges, which lead to cutbacks and contraction, making it even more difficult to invest in new merchandise, a tough death spiral to get out of.
If I were CEO of a company today, especially one that is struggling, that's the first place I'd spend time ... Merchandise Forensics ... understanding what role merchandise development plays in creating self-inflicted wounds that harm the business today.  Pay close attention to tired products that have been offered one-too-many years.  Pay close attention to new product development ... both number of new items by year ... and quality of new items by year.  It's not hard to perform this style of analytics, go do it!!

Or contact me, and I'll do it for you! (click here).