August 11, 2015

The Reason My Merchandise Productivity Stinks Is Because Of Amazon

You've heard this one, right? You've probably thought it, yourself. You've thought to yourself, "the reason business stinks isn't my fault, it is because Amazon is an unprofitable monster that steals my business via a cost structure that I cannot match."

This is the very definition of merchandise productivity.

Merchandise Productivity is meant to measure, after equalizing for marketing strategy as much as possible (you can never fully account for marketing strategy), what impact customer preference for your merchandise is having on your business.

So if you sell the same (or similar) stuff as Amazon, well, you've got problems, don't you? When Amazon steals your business, your merchandise productivity is going to decline, because, quite simply, your customer perceives Amazon to be a better value.

In other words, it is our fault when Amazon steals our business. It's no different than being Chicos and having Ann Taylor steal business, right?

The goal of any comp segment analysis within the Merchandise Forensics framework is to understand how customer love of merchandise impacts the business. If we see negatives, well, that means one of two things.

  1. We are struggling as merchant team.
  2. Somebody is stealing our business.
Either way, the end result is the same. We need to address merchandise productivity, first and foremost, because marketing productivity (and company survival) is 100% dependent upon having great merchandise.