October 16, 2019

Look For Balance

It's common to see this in my project work.

Existing Items:

  • 2019 = $24 average price.
  • 2018 = $25 average price.
  • 2017 = $26 average price.
  • 2016 = $28 average price.
  • 2015 = $27 average price.
New Items:
  • 2019 = $33 average price.
  • 2018 = $31 average price.
  • 2017 = $30 average price.
  • 2016 = $29 average price.
  • 2015 = $28 average price.
This is a classic case of "divergence" ... the items the merchandising team carries over are increasingly cheaper over time ... while the new items introduced are more expensive over time.

No balance.

Just divergence.

Divergence is bad because of how we typically deal with the issue. It's common for customers to not respond to new items that have diverged from the prices of existing items carried over from last year. This causes the merchandising team to freak out ... the inventory managers in particular. They put pressure on the marketing team (or the CFO puts pressure on the marketing team), and in kind we see emails for 40% off of everything ... yes, everything. This causes existing items at $24 to be sold at a real price of about $14, even though those items were selling acceptably. Price deflation kills the brand.

So please, look for balance in pricing between new items and existing items that are being carried over.

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