June 19, 2013

Seeing The Future - New Items

You can't see what is coming on this road, can you?

Thank goodness the yellow sign tells you curves are coming, and you'll have to slow down to negotiate the curves.

In Merchandise Forensics, we can see the future, in part, by performing what is called a "Class Of" report.

In other words, we identify all items introduced in, say, the "Class Of" 2006.  Then we measure how much demand these items generate going forward.

  • 2006 (Introduction Year) = $800,000.
  • 2007 (First Full Year) = $1,000,000.
  • 2008 = $850,000.
  • 2009 = $720,000.
  • 2010 = $600,000.
  • 2011 = $500,000.
  • 2012 = $420,000.
Now, let's say that your merchandising team does an outstanding job, harvesting a bumper crop of outstanding new items.  In 2012, these new items generated $1,400,000 demand.

Downstream, we'll apply the same relationship to these items.
  • 2012 (Introduction Year) = $1,400,000.
  • 2013 (First Full Year) = $1,750,000.
  • 2014 = $1,487,500.
  • 2015 = $1,260,000.
Let's say that the average year yields $800,000 in new item demand.  These items will generate $2.6 million in demand in the next three years.

Your bumper crop of $1,400,000 in new items, under similar circumstances, will generate $4.5 million in demand in the next three years.

In a Merchandise Forensics project, with appropriate customer history, we can identify how future demand is impacted by historical new item introductions.  We can easily see how merchandising successes/failures lead to marketing gains/challenges over time.  Run your own "Class Of" report, and identify the impact of new product introductions on your business.

Contact me (kevinh@minethatdata.com) for your own, customized, Merchandise Forensics project.