February 20, 2017

Identifying Merchandise Categories That Act Like Foxes

Every merchandise category plays a role in the health of your business. There are categories that act like "food" for other categories ... take the category away, and you lose the sales from the category you removed and you lose sales because other categories depend upon the category.

In my projects, I typically find that marketing is not the problem. Most companies do a semi-competent job of applying basic marketing tactics ... their tactics represent a "C-" on a grading scale. Could they do better? Sure. Are the tactics the reason the business is struggling? Usually not.

Often, the problem is a merchandising problem ... and more specifically, the problem is one of taking rabbit food away from the rest of the business.

Recall yesterday's query? No? I asked you to calculate the share of last year's demand for each merchandise category  - where did the demand come from?

Categories That Act Like Rabbits:
  • They have above-average appeal to new-to-file customers.
  • They rank in the top third of share of demand from prior twelve-month category buyers.
  • Customers cross-over and buy from other merchandise categories.
Categories That Act Like Foxes:
  • They have below-average appeal to new-to-file customers.
  • They rank in the bottom third of share of demand from prior twelve-month category buyers.
  • They rank in the top-third of share of demand from non-category buyers crossing over and buying from the category in question.
Tomorrow, I'll talk about why this distinction is important.