September 05, 2016

Healthy Business: Newness

I was in a meeting back in 2002 - the Chief Merchandising Officer of the online division was being beaten silly for not having enough new merchandise. At the time, I was a huge proponent of running winning items out there over and over and over and over and over and over and over and over again until they were dead tired. This thought process was drilled into my skull at Lands' End ... turtlenecks and mock turtlenecks in the first twenty pages of the catalog, no excuses ... same stuff, year after year after year.

Then I got to see what a "newness agenda" looked like at Nordstrom. Wow. I guess new merchandise works! Four straight years of healthy bonus payments will cause anybody to acquire an appreciation for new merchandise.

Back in 2013, I performed a Merchandise Forensics analysis for a company that was struggling financially. I noticed that this company had very few new items, and when they launched new items, the items typically failed.

Then you run fifty Merchandise Forensics projects, and the story repeats.
  1. Healthy Businesses have a committed investment in new merchandise.
  2. Healthy Businesses identify winning new items at rates far better than competing brands.
Businesses that fail to find successful new merchandise have to "cheat". There are many ways to cheat.
  • Discounts / Promotions.
  • Fake new items. For instance, moving a button around on a shirt does not make the shirt new - but the company will call this a new item and promote it as such to the customer.
  • Arbitrary focus on "winning" products as a way to mask new item issues ... "it's what our customers demand of us."
  • Blame ... "marketing can't find the right customers for where we want to take the brand."
The healthiest businesses increase the number of new/winning items, year-over-year.

The healthiest businesses increase the rate of new/winning items to new/average items.

The healthiest businesses have a marketing process in place to expose new items to large audiences at minimal cost.

Unhealthy businesses resort to discounts/promotions to sell stuff customers don't want. Yes, this includes free shipping promotions. Free shipping 24/7/365 does not fall into this category.