A Brief Merchandise Attribution Example

Think about Merchandise Attribution this way.

Say your company has five merchandise divisions.

• Mens
• Womens
• Kids
• Home
• Gifts

In 2018 each division generated the following sales levels.

• Mens = $10 million.
• Womens = $20 million.
• Kids = $5 million.
• Home = $5 million.
• Gifts = $5 million.
• Total Brand = $45 million.

Your Management Team decides to shut down the Home division. Projected sales through mid-November look like this, forecasted through the end of 2019.

• Mens = $10 million.
• Womens = $22 million.
• Kids = $5 million.
• Home = $0 million.
• Gifts = $5 million.
• Total Brand = $42 million.

Two questions:

1. How much of the Home Division's $5 million in annual sales was truly incremental to the brand.
2. How would you measure the incremental amount prior to shutting down the Home division at the end of 2018??

Discuss.