How many new items do I need to kick-start my business?
This issue is easily addressed. Think back to the Multichannel Forensics days of 2007 ... we forecast sales five years into the future, didn't we? Well, we can do the same thing with merchandise. Each item has a probability of being carried over, and if it is carried over, has a probability of being a winner/loser. Here's an example from the booklet (click here to order via Amazon).
This business is toast. The number of "A" items is forecast to drop from 35 last year and 32 today all the way down to 26 in five years. The business is forecast to implode ... from $22.8 million to $18.5 million in five years.
Our instinct is to prop the business up via marketing ... spend a fortune on new customers, email marketing, search, affiliate, mobile, you name it ... we'll chase the business, seeking to find a mythical omnichannel customer. We'll spend money, lots and lots of money. And we'll toss in 30% off plus free shipping, why not?
We'll just ignore the core issue. It's marketing's fault. They aren't targeting the right customer.
Why the heck wouldn't we solve the core problem - merchandise?
Isn't merchandise what the customer actually purchases?
Look at this instance - we'll ramp up new item development by 80% - yes, 80%. Now take a look at what happens:
Oh, the business is growing again!
Notice that I'm not asking for a miracle - I just want 80% new item growth across the board - poorly performing new items, winning new items, it doesn't matter. Just get some growth going! Now, your merchandising team might balk at 80% more new items, per year, for five years - but you have data on your side.
Look in year five - we have 41 "A" existing items, compared to 26 existing "A" items in our base scenario.
Do you understand how important new items are? New items mean everything!
And yet, we try to find some magical omnichannel answer.
Focus your efforts on merchandise, and truly make a difference within your company.
Contact me (email@example.com) for your own, customized Merchandise Forensics project.