June 15, 2015

Mega-Trend #1: Merchandise Productivity

Here's somebody who is so passionate about J. Crew that she writes about the business. No mention of omnichannel, which is interesting. What is she writing about?


Frustration with merchandise ... check out this post (click here), and more importantly, check out the comments ... no mention of dissatisfaction with channel strategy ... but A TON of dissatisfaction with size, fit, style, quality.

You saw what happened with Gap (click here). Notice that Gap is not closing outlet stores. No merchandising problems there ... same company. There, the price/value proposition is appropriate for the customer being targeted. Notice that Old Navy is not closing stores. There, the price/value proposition is appropriate for the customer being targeted.

All of those brands are under the same umbrella (Gap, Gap Outlets, Old Navy) and are using the same systems and same omnichannel strategy. This tells us how important merchandise is. It's the number one mega-trend of the next few years. The customer only cares about merchandise. Do you sell something the customer wants to buy, at a price the customer wants to pay? It's that simple. And it's something we've ignored for the past five years, as we looked to align all of our channels around a mythical result that did not happen.

H&M focused on merchandise productivity, in the process reinventing fashion. Notice in the Gap article how their lead times cause them to not be able to react for maybe the rest of this year. Look what H&M did to their competition? That's what happens when you get merchandise productivity right.

Mega-Trend #1 is critical ... it's merchandise productivity.

You are a marketer. For the past decade, you've been trained to manage the transition from offline marketing to digital marketing. You've largely mastered this transition. The transition is over (though if you market to a customer < 35, the transition to mobile is just beginning). Now the second phase of the transition begins ... figuring out how to market the right merchandise to specific customer segments. Most of us do not possess this skill, heck, we haven't had to learn it. But those days are over. The companies that figure out how to merchandise to their customer audience, via marketing, via merchandising strategy, via an integration of the marketing/merchandising departments ... these are the companies that will enjoy gains in the next five years ... until the next mega-trend hits.

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