February 21, 2017

How To Deal With Merchandise Categories That Act Like Foxes

Here's a common mistake identified in many of my projects.

A business is struggling, so a new Management Team is hired. The new Management Team is full of new ideas, untested ideas. And because the existing business is not healthy, there is a "mandate" to do something different.

Within a few months, the Management Team shuts down a series of merchandise categories ... suggesting that the categories do not "reflect the future of the brand". Then, the Management Team brings in a fresh batch of new items. Two things happen.
  1. Customers generally reject the new merchandise assortment.
  2. Sales drop because the customer misses the discontinued merchandise assortment and wishes they could buy from the product line.
Sometimes the Management Team becomes pig-headed. Their time is limited.

Sometimes the Management Team listens to the customer and backtracks.

What did the Management Team miss?

The new product line represent Foxes.

The existing product line represent Rabbits.

Marketing represents Rabbit Food.

In other words, the Management Team fails to understand the role that Rabbit Food and Rabbits play in the health of the Fox population. By removing Rabbits (old product categories), Foxes have less to eat and consequently Foxes do not achieve their potential.

In my project work, it is typical to grow the Fox population (new product line) by having a healthy Rabbit population (existing product line). You grow the new product line by getting customers to cross-over from old product lines and purchase from the new product line ... you need both to be successful.

What we typically do (instead) is we kill off the Rabbits and then we try to build a healthy population of Foxes.

Tomorrow, I'll talk a bit about growing a new product line.

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