August 03, 2014

Peak Merchandise

This booklet (5 star rating across two reviews on Amazon - you can't beat that) has been responsible for two big outcomes.

  1. It's the second-most popular consulting project I've ever offered.
  2. Companies actually implement the results!
One of the things I don't talk about in the book, but have identified through performing a lot of these projects, is the concept of "peak merchandise".

Most items follow a traditional sales curve. The curve looks something like this.
  • Intro Year = $50,000.
  • 1st Full Year = $100,000.
  • 2nd Full Year = $110,000.
  • 3rd Full Year = $80,000.
  • 4th Full Year = $55,000.
  • 5th Full Year = $25,000.
  • 6th Year = Discontinued.
So "peak merchandise" is defined as the first year where an item experiences year-over-year declines. Once that item passes peak, it's on the way down.

Take a look at your A/B/C items. What percentage of them are past "peak merchandise"? If this percentage is growing over time, and you are not introducing enough new items, you've got a problem.