October 30, 2023

You'll Never Make It Up

When I perform my Merchandise Forensics work, there are two common mistakes that are very hard to come back from.

  1. Discontinuing items that were "winners".
  2. Not introducing enough new items.

We've all been part of merchandising regimes that kill off winners. It typically happens when a new team replaces a team ... those times when the previous management team is thrown out, the new CEO comes in, brings in a new lead merchant, and s/he has utter contempt for what used to sell well. "It's ugly!" Come fall, the "ugly" item that used to generate $794,000 in annual sales is gone. It's replaced by something that is "trend right" and generated $194,000 in annual sales. "Give it time!" we're told. No matter how much time you give the clunker, you never make up the $600,000 you lost.

Not enough new items ... there are logistical reasons why not enough new items were introduced, like the 2021 - early 2022 COVID period. That's mostly not your fault. But there are all the other times where the merchant just loses track of what is important. If the marketer needs enough new customers to fuel the future success of the business, then the merchant needs enough new items to fuel the future success of the business.

Say you generated $10,000,000 via new items two years ago, and those items produced $8,000,000 the year after. Now say this year you generated $6,000,000 via new items. What are you going to get next year from these items? Probably +/- $4,800,000. You give up another $3,200,000. No bueno. You'll never make up the loss.

If you don't work with me on a Merchandise Forensics project, be sure to have your analytics team focus effort on new customers and new items, ok?

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