July 26, 2023

Consequences

The brand we are studying greatly reduced the number of new merchandise introductions in the year ending June 2021.


This actually caused at least a $3.0 million dollar demand hit in the year ending June 2021. The business should have been around $46.5 million. And I'm quite confident nobody cared. There were bigger problems and sales were up $4.4 million so the topic just didn't matter.

It mattered the next year.

In the year ending June 2022, demand fell by $6.1 million.

Look at new item introductions in the year ending June 2022. Just 1,729 new items, generating $5.7 million.

Look at the new item introductions from the year ending June 2021. These items generated just $6.2 million the following year (because there were so few of them) instead of the $8 million or $9 million or $10 million they might have otherwise generated.

Between the two years of meager merchandise introductions, the year ending June 2022 suffered by a likely $6 million to $7 million. Had new item introductions kept pace, the business likely generates $43 million or $44 million in the year ending June 2022.

In other words, there's no COVID-bump here, in reality. There's poor management of new item introductions.

By the year ending in June 2023, those two merchandise classes are costing the business maybe $5 million. The impact of older merchandise classes is starting to shrink.

Imagine being a marketer at this brand? You'd be badgered for two years about poor conversion rates and marketing inefficiencies. It would be your fault.

It is not your fault.

There are consequences for decisions made at a point in time. Often, those consequences are paid downstream from the decision. As a marketer, you'd likely want to know if your merchants have made your life more difficult with decisions they made 2-3 years ago. Maybe merchandise productivity is the reason your marketing dollars are "inefficient"?


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