July 14, 2016

Over-Emphasis

Here's what happens.
  • The merchandising team is given incentives to grow the business, especially among high-margin items, and they are given inventory turnover goals that preclude expansion of new items that may not sell well.
  • High-margin items, especially winning high-margin items, are given all of the primary real estate.
  • The number of winning items grows over time.
  • The number of contending items shrinks over time.
  • The number of new/contending items shrinks over time.
  • Within three years, the business is contracting, but the merchandising team is earning healthy bonuses.
  • Marketing gets yelled at ... the CMO is fired for "not targeting the right customers in an omnichannel world".
There's nothing wrong with paying folks for promoting high-margin items that turn often.

There is something wrong with not giving incentives for the development of items that will be successful in three years.

Try to avoid the over-emphasis of key items that yield bonus payouts. Offer balanced bonus structures that include the marketing team and merchandising team and creative team, and see what happens.

In other words, be a leader!

We're short on leaders.

Use your Merchandise Forensics framework to lead your organization down a good path.