May 28, 2013

Some Items/Departments Don't Seem To Fit

This is St. Basil's Cathedral, next to the Kremlin in Moscow.  It kind of seems out of place, doesn't it?  And yet, it's amazing!  It's a must see on a trip to Moscow.

That's how great merchandise works.

And great merchandise can't always be measured directly.

Let's go old-school ... during the course of a twenty-five year career, I learned more at Eddie Bauer (1995 - 2000) than I learned at any other company, at any other time in my career.  I'm not saying the experience was fun, because it wasn't.  But I sure learned a lot.  The experience was important.  Important > Fun.

We had a department in our stores, called "Sport Shop".  All sorts of fishing gear.  Outdoor goodies.  Canoes.  You'd watch couples enter the store ... men paralyzed, mesmerized, practically compromised.  They'd just stand there and stare.  Smile.  Daydream.

Meanwhile, the young lady progressed into the store, purchasing $75 of female apparel and a $30 shirt for the hubby.

If I remember correctly, those old Sport Shops didn't sell much of anything.  A hundred or hundred-fifty dollars per square foot, maybe half to a third of the sales generated by the rest of the store.

Management decided to kill the Sport Shop.  Why not use the real estate to sell productive merchandise?  It's a common-sense, data-driven decision, one that might be applauded in 2013.

What do you think happened?

Remember the couple who spent $105 ... $75 on female merchandise, and a $30 mens shirt? Well, they kept entering the store for awhile - and then, that couple simply didn't enter the store anymore.  You could tell, because the $30 mens items simply evaporated.  Mens merchandise productivity dropped.  And that's a bad thing if you were a masculine brand like Eddie Bauer was.

Logically, of course, you de-emphasize mens when it isn't performing well, offering more womens merchandise.  It's a data-driven decision, right?  Maximize what is selling well, minimize the stuff that is not selling.

This series of events, of course, were counter productive, further weakening a masculine brand.

So, by the time 1998 rolls around, we're posting -20% comps and the mens business is terrible and decisions are made to "reinvigorate the brand".  A posse of brand marketers were hired to fix the problem.

Just like St. Basil's Cathedral doesn't look like it belongs, the Sport Shop didn't look like it belonged.  Regardless, Sport Shop provided a merchandising halo that benefited the rest of the business.

A simple comp-segment analysis, by merchandising department, will help you understand whether various merchandise departments have a "halo effect" on the rest of the business.

Halos are important, and are poorly understood.  They cannot be measured by traditional key performance indicators.

Click here to discuss your own Merchandise Forensics project with me.  Maybe your business has a key item that doesn't seem to fit, but drives the entire merchandise ecosystem?