April 17, 2024

Well, You Got Me Fired

I'd run what I now call a "Merchandise Dynamics" project for a brand. This brand was struggling, badly. When I looked at the data, it was obvious that the Merchandise Executive made two classic merchandising mistakes.

  1. The Executive discontinued items that customers enjoyed.
  2. The Executive failed to find new items that were compelling ... both under-utilizing new item and sourcing new items that performed worse than new items performed historically.

It's common for a brand to survive new item missteps.

It's uncommon for a brand to thrive when discontinuing items that customers enjoyed.

I presented my findings ... I got blowback from the merchandising team as I expected to, and then I went home.

A few months later, my phone rings. It's the Merchandising Executive from the brand I just studied. Here's how the call started.
  • "Well, you got me fired. Now you're going to help me get a new job."

I didn't get the guy fired. Discontinuing items that customers enjoyed while not replacing them with items that customers equally enjoy gets EVERY merchandising leader fired.

I'm seeing problems in 2024. I could have cared less about new merchandise problems in 2021/2022 when merchandise was sitting on a ship in Long Beach for a month. I care a lot about what I'm seeing now that most of the challenges have been resolved. There are decisions to kill items that shouldn't be made. There are new items that have no chance of success.

There's a reason I am revising Merchandise Dynamics in 2024 ... and there is a reason you are hiring me to perform the work. Something is broken when it comes to the merchandise you sell.

April 16, 2024

What Would You Do If You Owned A Gas Station?

The number of gas stations has been in decline for four decades, maybe longer.

Those that stayed in business did stuff like Casey's General Store did ... convenience grocery, pizza, fried chicken, you get the picture.

So yeah, those that stayed in business decided to siphon off some of the Twinkies and Fritos and Large Pepsi drinks sold by other folks.

Of course, if you run a gas station, there is a cliff that your business model is eventually going to plunge into.

  • Electric Vehicles.

What do you do when the customer charges his/her car at home instead of purchasing gas at a Casey's?

I get it, this transition isn't happening overnight.

And I get it, if your gas station is at the interchange of I-10 and I-8, you'll likely stay in business no matter what happens to cars ... you have too many cars whizzing by.

How about the gas station two blocks off of the Interstate Highway, a gas station that is nearly identical to the gas station two blocks off of the Interstate Highway one mile in either direction? This is the gas station that derives business from the individual running chores locally, needing gas a few times a month. Now this customer charges at home. And if a customer does charge at your gas station ... assuming you make the million dollar or more investment to put in charging stations that charge a car in 20-30 minutes, does the customer want to stare at $7 half-gallons of chocolate milk for a half-hour? No! Which means you need to remodel your store to potentially look more like the lounge at the local Toyota dealership where customers wait for their brake fluid to be drained and replaced (#highgrossmargins). That will also cost money, with no guarantee of a return on investment.

What do you do?

Almost every decision you are required to make is expensive ... and there is zero guarantee that your decisions will work. In other words ... you can't just sit there and do nothing, but doing something is awful.

This translates to your business. Amazon is mulching e-commerce brands, with paper/printing/postage vendors well on their way to causing an outcome where one cataloger mails a billion pieces per year that cost $27.00 each to produce.

What do you do?

You can't just sit there and do nothing.

Think carefully about gas stations, and how gas stations relate to your challenges, ok?

April 15, 2024

You're Not Doing It Right

Back in the 2001-2002 timeframe, I'd invite our list partners to a once-a-year summit. I'd line up some Executives to communicate the direction we were headed in as a brand, I'd share out department-level plans, and I'd ask each list partner to present how they thought our brand should evolve and how their brand could help us with that.

I recall in 2002 that the Executive from a co-op shared during her presentation that we needed, and I quote, to be "more Omnichannel". She wanted the same merchandise in all printed materials, and she wanted all customers to see the same merchandise. Same price, same merchandise, same customers. One brand. She wanted us to mail oodles of catalogs to retail customers (meaning she'd make more money for her brand).

There was one little problem with her thesis.

We measured her idea ... we had pieces where we tested same merchandise to same customers regardless of channel. Guess what? THE TACTIC WAS LESS PROFITABLE ... in fact, it was much less profitable. The best thing for the p&l was to tailor the merchandise in various pieces to the customers who liked the merchandise ... and at that time, retail customers liked different merchandise than the rural customer who liked shopping via catalogs. In fact, one of our biggest learnings happened during the 2002 Anniversary Sale, when my team mistakenly mailed our prospect catalog to our best customers and our large catalog to our prospects/lapsed buyers. Sales were virtually unchanged (about a million dollars less on a plan of $16,000,000 if I remember correctly). The fact that about half of our catalog pages generated essentially $0 changed how I viewed the effectiveness of catalog marketing. To this day, I use that knowledge to determine how many pages to mail a customer on an annual basis (click here for pricing).

I shared our data. The vendor Executive looked me in the eyes and said "well, then you're not doing it right".

I was always amazed when vendors would criticize what we were doing, and we'd have data to demonstrate that what we were doing was the most profitable answer. I don't care that you worked with Norm Thompson or Lillian Vernon and they did something unique in 1993, we're doing "x" and we've tested "y" and "x works better than y".

I have a lot of clients who want to know the specific tactics ... A then B then C then D ... that will allow them to be successful. I don't tell them the tactics. It's fool's gold. I don't work for your company and I don't know your customers. 

Only you know the answers.

I relished telling this Executive that we were discontinuing our catalog (back in 2005) because Management wanted to implement an Omnichannel approach, and Management decided that the catalog was not a profitable strategy within an Omnichannel approach. Even though I was largely losing my job and more than half of my team was being let go or being reassigned (i.e. my days at Nordstrom were nearly over), I had run the numbers and knew that the catalog had no place in an omnichannel approach.

We were much more profitable the year after we discontinued the catalog ... and a catalog that we thought generated 40%ish of direct channel sales, it turned out, generated about 3% of direct channel sales. Which meant, of course, that all of our testing was right and all of the attribution logic shoved down our throats by vendors was ... wrong. Now, did we get things wrong? Absolutely! We knew the customers who would stop receiving catalogs would spend less ... a lot less. We didn't know that reallocating that money to paid search would bring in so many new customers who liked our new merchandising direction, causing the direct channel to thrive. Life is a highway.

Don't let outsiders tell you that "you're not doing it right". You know more about your customers and your brand than they do. You are the expert.

April 14, 2024

Who Is In Control?

At every company, there are the people who appear to be in control (Owner, Board of Directors, CEO, Executive Team). Then there are the people who are actually in control. The old-timer who "knows where the bodies are buried" and says "no" to things and nobody understands how she's able to get away with saying "no", for instance. Every company has one of those.

Merchants have disproportionate control, and rightly so.

Creative folks have minimal control within a company but are the face of the brand to the customer. As such, they control far more than they realize.

It's always dangerous to outsource control. I'll give you an example. When we shut down the catalog division at Nordstrom in 2005, we replaced it with a brand-centric monthly mailer where third parties (i.e. Coach) could pay us $29,000 a page to advertise their products. They lined up to do so. We'd have no problem stitching together 160 pages of products from all sorts of third parties. Of course, when you are paying $29,000 a page, you demand control over what that page looks like. You pay $116,000 for two spreads (four pages), and you demand who comes before/after your pages too. The resulting hodge-podge was an abomination, and it performed abysmally from a sales standpoint. Of course, with no ad cost, every one of those abominations was profitable. We didn't have control, but we had money.

It's one thing to have the old-timer who knows where the bodies are buried ... that person has control, but that person operates in the best interest of the brand in the vast majority of cases. Your merchants care deeply about your company. So does the IT Director. It's quite another thing to trade control for money. Maybe you are a sports team who takes gambling money ... you give up control of a whole bunch of issues in exchange for cash. Maybe you are a cataloger who lets somebody from your printing vendor be "in residence" at your brand ... why does that person get to sit in on strategy meetings?

I remember a haunting meeting I had in 2001 with a Circulation Director at a competing brand. My predecessor apparently didn't understand how business worked ... he exchanged control of our own customers for cash. He rented the Nordstrom customer list to anybody who bothered to ask (yes, I'm exaggerating for effect). In the case of the Circulation Director, my predecessor leveraged what was called an "exchange" ... instead of each party sending each other $0.13 for every name, each party exchanged names, paying a tiny fee to our third party list partners to facilitate the transaction. Well, the Circulation Director at the other company took about 3,000,000 Nordstrom customers. My predecessor took maybe 300,000 names in exchange. He literally ceded control of Nordstrom customers to a competing brand, with nothing gained whatsoever (because we were exchanging names). When I put a stop to this practice, the Circulation Director for the competing brand pleaded with me to rethink my logic. She argued that I would put her inventory team in a difficult situation (as she'd planned to take another 3,000,000 names from us the next year and the inventory team bought product assuming they were mailing 3,000,000 Nordstrom customers ... fun business if you can get it) and they'd have to liquidate product and have a much less profitable year. Unfortunately, that wasn't my problem. I had to take control back from a competitor. I recall our list vendors saying I was behaving in an unfair manner, pleading with me to ease the relationship back slowly and gracefully. That would have taken five years. Come on! The list vendor allowed the relationship to get out of line, the competitor took complete advantage of us ... it was time for me to take control for the best interests of Nordstrom.

Who is in control where you work?

One of the lower moments in my career came at Nordstrom when my database marketing team needed to execute a strategy and needed a table built in a database. I worked with an IT Director to get these things done. He ticked me off. When I asked him to perform this task for my team he said, and I quote, "We need to pass your idea past our stakeholders and if they approve we'll consider it."



The mistake I made was telling the IT Director that real humans don't say words like "stakeholders". I demeaned the person, and I still feel bad about it 20 years later.

However ...

... I needed to take back control. I didn't need somebody in Finance or the Credit Division or Corporate IT to approve or disapprove of something that I could pay for out of my budget.

We got the table we needed.

Who is in control where you work?

Are the right people in control?

If the wrong people are in control, how do you work around these individuals to get things done?

April 11, 2024

Sameness: Tell Me Which Companies Are Selling The Products Here

You want to see a completely tepid, bland, homogenized shopping experience? Yes! Ok! Tell me the brands that are represented here. Good luck!

I'm not going to tell you the answer. It's the same darn presentation. This is awful. Same web development tools, same analytics packages yielding the same conversion rates, all praised by digital gurus who love it when brands adhere to "best practices".

It's not a best practice if everything looks this ... the same. 

It's tepid.

It's horribly boring.

It's time for a change.

Yes, I'm ready for your complaints.

April 10, 2024

Equal Does Not Result In Better

I'll show how this relates to commerce in a moment.

Ok - NASCAR - last Sunday, they raced at Martinsville. A fun track. A half mile. Too many cars for the track. Normally cars are passing, and more importantly, cars are being lapped all over the place. Action. But on Sunday, nobody wrecked, nobody passed, and consequently nothing happened. Fans are fed up. NASCAR created a new car a few years ago where most of the car cannot be adjusted and the parts are the same for every car. In other words, the cars are the same. And if the cars are the same, they go the same speed, which means nobody can pass. Boring.

An analytics person simulated where the 15 fastest cars would have finished if they all ran their median lap time over the final 50 laps.

Yeah, they're all running the same speed.

Three years ago the spring race was loved by the fans. Here's where the fastest 15 cars would have finished if they all ran their median lap over the final 50 laps.

See what you can do when you simulate results? It's a shame that the e-commerce world chooses to not embrace simulation environments.

Anyway, if everything is the same, then everything is boring. Nothing happens.

Which brings us to e-commerce.

Is there anything more boring than the mis-guided vendor-fueled thought-leader-promoted consultant-driven research-endorsed omnichannel thesis? Same price / same experience / same promos / same merchandise / same presentation / same everything in all channels.


When things got really boring (mid-2010s), customers revolted ... they walked away from retail, killing malls ... they migrated from e-commerce to Amazon and have not looked back.


Sameness plagues my industry. You use PLAs and Paid Social to find new customers, paying third parties for the same handful of customers who are gullible when reached by those platforms. When I ask you to think outside of PLAs / Search / Paid Social, you look at me like I am an alien. Then you go back to the same analytics tools and look at the data the same way and wonder why you can't break out of the muck?

You're all the same. It's an industry-wide plague.

Results are tepid.

Customers are bored.

Amazon / Target / Walmart / Apple benefit as a consequence.

There's a reason Kaitlyn Clark was so compelling in Women's College Basketball this season. She was different. She played the game like an NBA point guard, she shot like Steph Curry.


Different is good!

April 09, 2024

Merchandise Dynamics Video 002: The "Class Of" Table

It will only take ten minutes out of your day - enjoy this video about Merchandise Dynamics and the "Class Of" Table that you've seen me discuss often over the past eleven years (click here).

For those of you who want a larger image of the table in the video, here you go (click on the image).

Well, You Got Me Fired

I'd run what I now call a "Merchandise Dynamics" project for a brand. This brand was struggling, badly. When I looked at the d...