Lifestage ... or LFS

In my Merchandise Dynamics projects, I tag every order with the Life Stage the customer is at on that order. If it is the 4th order for the customer, then LFS = 4.

Your items do not distribute equally across your customer base. Some items are preferred by first-time buyers. Some items are liked by Google/Facebook. Other items are time-tested, preferred by your best customers.

It is important to tag each item in your merchandising database ... you can make this easy for your merchandising team.

• Very Early in Customer Life Stage.
• Early in Customer Life Stage.
• Middle of Customer Life Stage.
• Late in Customer Life Stage.
• Very Late in Customer Life Stage.

Load this information for your merchandising team, so they can actually see "who" buys the products they work so hard to make available for customers.

Pushing a Rock Up a Hill

I once spoke with a CEO who suggested he was going to "reinvent the brand".

It's not easy to reinvent a brand. Sometimes, your customer won't let you reinvent the brand.

Before you make the decision to blow things up, look at the percentage of sales that come from winning items by customer life stage.

• 1x Buyers = 33% from winning items.
• 2x Buyers = 37% from winning items.
• 3x - 5x Buyers = 42% from winning items.
• 6x - 10x Buyers = 46% from winning items.
• 11x+ Buyers = 55% from winning items.

This analysis tells you that your best-selling items are preferred by your very best customers.

If your winning items are preferred by your very best customers AND your winning items tend to be items introduced 3+ years ago ... well ... your customers won't let you reinvent the brand.

Now, if half of your sales come from new buyers AND a below-average amount of sales come from winning items, then you have freedom to reinvent your brand. Your customer will let you change who you are.

The same issue holds true for discounting. If you use email marketing to convey the best discounts possible to your best customers, your best customers will rebel when 50% off becomes 20% off. You'll be pushing a rock up a hill.

Carryover of Winning Items

In general, a small number of high-performing items account for the top 20% of your sales. Then a small number of good-performing items account for the next 20% of your sales. Eventually, a large number of low-performing items account for the bottom 20% of your sales.

Using this segmentation strategy, you can produce a quick query that will help you understand if your merchandising team is killing off high-performing items.

Step 1:  Select last year's winning items (top 20% for sales).

Step 2:  Calculate the percentage of last year's winning items that are in the top 20% for sales this year or are in the next 20% of sales this year.

Step 3:  Repeat the analysis one year earlier.

Step 4:  Compare results.

For instance, this is a common outcome when the merchandising team is prematurely killing off items.

• This Year:  55% of winning items remain winning items, 20% of winning items are at the second level, 75% remain in the top 40% of item performance the following year.
• Last Year:  75% of winning items remain winning items, 15% of winning items are at the second level, 90% remain in the top 40% of item performance the following year.

We went from 90% of items "holding their own" to 75% of items "holding their own".

In other words, the merchandising team is doing something wrong.

From here, you dig in by category and price point to figure out what is going on. Sometimes it's an inventory situation. Sometimes the merchants have contempt for items from the prior regime. Regardless, they're harming the business.

Winner Stability

There are pros and cons to what I call "winner stability". This metric captures the rate that last year's winning items maintain winning status this year.

The "right" rate is different for everybody. If you sell the same products year-after-year, a drop in winner stability from 93% to 79% is a catastrophe. Fashion brands wouldn't even bother to measure the concept.

When winner stability declines and new item introductions suffer, your business will suffer.

Therefore, measure "winner stability" carefully ... once a month should be sufficient. Look for changes in the metric, and do some digging if you see rates drop suddenly.

No Context

Read this article and you'll be struck with a notable finding (click here).

• There is no context here. "Pureplay decreased by 51%". "Share of Ear?"

The article would have lead you to believe that people are listening to Spotify half as much as in the past. Actual company data from Spotify shows revenue growth that is essentially unfettered.

In order for survey data to be accurate, a few things "could" have happened.

1. The audience would have to grow about 4x as fast to compensate for a 51% reduction in "share of ear" whatever that metric means.
2. The data Spotify shares publicly (above) is misleading.

This link suggests that Spotify share of market is down about 3% over the past five years (click here).

When an industry struggles to keep their incumbent status, all sorts of interesting survey results are released. I spoke at a conference five years ago sharing data I'd observe across a trillion dollars in purchase transactions. The next speaker addressed the audience and informed the audience that he was about to reveal "the truth" because of a survey of 300 households. His version of "the truth"? Print was making a comeback.

Anytime your industry trade journalists publish articles loaded with percentages based on obscure metrics like "share of ear", run, don't walk from the "research".

I recall reading an article in a trade journal suggesting that "more and more brands are seeing the value of print". What does that mean? Use of print as a marketing tool is down about 80% since 2008, +/-. How could "more and more" possibly be true?

P.S.: This summarization of radio metrics could well be correct - and while optimistic, it isn't anywhere close to the survey results mentioned above (click here).

I Promise This Will Eventually Be A Business Post ... But First ...

On Monday night, a furious finish to the 76ers/Knicks game was captured by three announcing teams.

On TBS, legendary Milwaukee Brewers announcer Brian Anderson shows you what a professional, unbiased approach sounds like (click here and watch through the 5:26 mark).

Ok, here's the best NBA announcer ... Mike Breen ... calling the game on MSG for Knicks fans ... notice a difference in tone (click here)?

Yes, I saved the best for last. This is the camera that is set up to monitor the Knicks radio team. They have to paint a picture for their audience. Listen to the crowd noise, the tension created by old-school organ music, blood-curdling screams from the Knicks faithful, the detail from the play-by-play announcer ... and watch the color commentator go from depression to hope to delirium to having to calmly analyze the situation (click here) ... she just snaps into "professional mode". How blessed are Knicks fans to have her to listen to? Wow.

What does this have to do with your business?

Do you remember the J. Peterman character on Seinfeld? This was the "peak catalog" era of the mid-90s, when catalogs ... yes, catalogs ... were part of the plot of a TV show watched by 35,000,000 people each week.

Extra credit if you can tell me what line he's saying there ... hint, it is about J. Peterman employee "Zach".

Well, the character was an obvious parody of the actual founder of the J. Peterman catalog ... which went from zero to sixty in 3.9 seconds before fully imploding due to inventory management issues. However, the text associated with the creative aligned a lot more with the commentary of the Knicks radio announcers than the admittedly good national call by Brian Anderson on TBS.

Now it's about you.

Take a look at this Venture No-Pull Harness from In The Company of Dogs. Better yet, read the copy associated with the item.

As J. Peterman once said in an episode of Seinfeld ... "well, that's a lot of words".

Why in the name of Gary Comer does everything in the Omnichannel Thesis have to be so ... darn ... boring? 

Why?

I mean, you page down from that yawner and immediately you have a customer named "Halter" who talks about her three-legged chihuahua / terrier mix ... immediately the customer is doing a better job than the copywriter.

You have somebody in your company who has passion for what you sell ... somebody similar to the radio color commentator for the Knicks. Why not give that person some latitude to sell with a bit of passion?

Test it ... what do you have to lose?

Culture

Rate your company culture on a scale from 0-10. If your rating is below 8, what needs to happen to get it up to an eight? Discuss.

P.S.: Leadership ... in Sports and in Business ... is completely underrated, and is mostly missing.

Your Low-Cost Items

In most of my projects in the past nine months, the importance of having "something" at a low price repeats ... a recurring theme if you will. A low-cost item that customers love generates new customers, causes existing customers to move up the loyalty chain, and gives best customers something to purchase on auto-pilot.

You already know I'm well down the headphone rabbit hole. After settling on over-ear open-back headphones, I've dabbled in corded iems (in-ear monitors). My starting point? A $24.99 pair of 7Hz x Crinacle Zero:2 iems. They were the gateway drug that led me to a better pair of iems (click here). The low-priced item was of such spectacular (sound) quality that I spent more.

You have a low-cost item like the iems I mentioned above. Promote that thing from the rooftops. Make sure every customer and prospect knows WHY they MUST purchase that item.

Do the opposite of the "Macy's Strategy" of constantly playing games with prices. Offer something at a spectacular value and use that item as a key tactic in your marketing plan.

Make sense?

Well, You Got Me Fired

I'd run what I now call a "Merchandise Dynamics" project for a brand. This brand was struggling, badly. When I looked at the data, it was obvious that the Merchandise Executive made two classic merchandising mistakes.

1. The Executive discontinued items that customers enjoyed.
2. The Executive failed to find new items that were compelling ... both under-utilizing new item and sourcing new items that performed worse than new items performed historically.

It's common for a brand to survive new item missteps.

It's uncommon for a brand to thrive when discontinuing items that customers enjoyed.

I presented my findings ... I got blowback from the merchandising team as I expected to, and then I went home.

A few months later, my phone rings. It's the Merchandising Executive from the brand I just studied. Here's how the call started.

• "Well, you got me fired. Now you're going to help me get a new job."

I didn't get the guy fired. Discontinuing items that customers enjoyed while not replacing them with items that customers equally enjoy gets EVERY merchandising leader fired.

I'm seeing problems in 2024. I could have cared less about new merchandise problems in 2021/2022 when merchandise was sitting on a ship in Long Beach for a month. I care a lot about what I'm seeing now that most of the challenges have been resolved. There are decisions to kill items that shouldn't be made. There are new items that have no chance of success.

There's a reason I am revising Merchandise Dynamics in 2024 ... and there is a reason you are hiring me to perform the work. Something is broken when it comes to the merchandise you sell.

What Would You Do If You Owned A Gas Station?

The number of gas stations has been in decline for four decades, maybe longer.

Those that stayed in business did stuff like Casey's General Store did ... convenience grocery, pizza, fried chicken, you get the picture.

So yeah, those that stayed in business decided to siphon off some of the Twinkies and Fritos and Large Pepsi drinks sold by other folks.

Of course, if you run a gas station, there is a cliff that your business model is eventually going to plunge into.

• Electric Vehicles.

What do you do when the customer charges his/her car at home instead of purchasing gas at a Casey's?

I get it, this transition isn't happening overnight.

And I get it, if your gas station is at the interchange of I-10 and I-8, you'll likely stay in business no matter what happens to cars ... you have too many cars whizzing by.

How about the gas station two blocks off of the Interstate Highway, a gas station that is nearly identical to the gas station two blocks off of the Interstate Highway one mile in either direction? This is the gas station that derives business from the individual running chores locally, needing gas a few times a month. Now this customer charges at home. And if a customer does charge at your gas station ... assuming you make the million dollar or more investment to put in charging stations that charge a car in 20-30 minutes, does the customer want to stare at $7 half-gallons of chocolate milk for a half-hour? No! Which means you need to remodel your store to potentially look more like the lounge at the local Toyota dealership where customers wait for their brake fluid to be drained and replaced (#highgrossmargins). That will also cost money, with no guarantee of a return on investment.

What do you do?

Almost every decision you are required to make is expensive ... and there is zero guarantee that your decisions will work. In other words ... you can't just sit there and do nothing, but doing something is awful.

This translates to your business. Amazon is mulching e-commerce brands, with paper/printing/postage vendors well on their way to causing an outcome where one cataloger mails a billion pieces per year that cost $27.00 each to produce.

What do you do?

You can't just sit there and do nothing.

Think carefully about gas stations, and how gas stations relate to your challenges, ok?

You're Not Doing It Right

Back in the 2001-2002 timeframe, I'd invite our list partners to a once-a-year summit. I'd line up some Executives to communicate the direction we were headed in as a brand, I'd share out department-level plans, and I'd ask each list partner to present how they thought our brand should evolve and how their brand could help us with that.

I recall in 2002 that the Executive from a co-op shared during her presentation that we needed, and I quote, to be "more Omnichannel". She wanted the same merchandise in all printed materials, and she wanted all customers to see the same merchandise. Same price, same merchandise, same customers. One brand. She wanted us to mail oodles of catalogs to retail customers (meaning she'd make more money for her brand).

There was one little problem with her thesis.

We measured her idea ... we had pieces where we tested same merchandise to same customers regardless of channel. Guess what? THE TACTIC WAS LESS PROFITABLE ... in fact, it was much less profitable. The best thing for the p&l was to tailor the merchandise in various pieces to the customers who liked the merchandise ... and at that time, retail customers liked different merchandise than the rural customer who liked shopping via catalogs. In fact, one of our biggest learnings happened during the 2002 Anniversary Sale, when my team mistakenly mailed our prospect catalog to our best customers and our large catalog to our prospects/lapsed buyers. Sales were virtually unchanged (about a million dollars less on a plan of $16,000,000 if I remember correctly). The fact that about half of our catalog pages generated essentially $0 changed how I viewed the effectiveness of catalog marketing. To this day, I use that knowledge to determine how many pages to mail a customer on an annual basis (click here for pricing).

I shared our data. The vendor Executive looked me in the eyes and said "well, then you're not doing it right".

I was always amazed when vendors would criticize what we were doing, and we'd have data to demonstrate that what we were doing was the most profitable answer. I don't care that you worked with Norm Thompson or Lillian Vernon and they did something unique in 1993, we're doing "x" and we've tested "y" and "x works better than y".

I have a lot of clients who want to know the specific tactics ... A then B then C then D ... that will allow them to be successful. I don't tell them the tactics. It's fool's gold. I don't work for your company and I don't know your customers. 

Only you know the answers.

I relished telling this Executive that we were discontinuing our catalog (back in 2005) because Management wanted to implement an Omnichannel approach, and Management decided that the catalog was not a profitable strategy within an Omnichannel approach. Even though I was largely losing my job and more than half of my team was being let go or being reassigned (i.e. my days at Nordstrom were nearly over), I had run the numbers and knew that the catalog had no place in an omnichannel approach.

We were much more profitable the year after we discontinued the catalog ... and a catalog that we thought generated 40%ish of direct channel sales, it turned out, generated about 3% of direct channel sales. Which meant, of course, that all of our testing was right and all of the attribution logic shoved down our throats by vendors was ... wrong. Now, did we get things wrong? Absolutely! We knew the customers who would stop receiving catalogs would spend less ... a lot less. We didn't know that reallocating that money to paid search would bring in so many new customers who liked our new merchandising direction, causing the direct channel to thrive. Life is a highway.

Don't let outsiders tell you that "you're not doing it right". You know more about your customers and your brand than they do. You are the expert.

Who Is In Control?

At every company, there are the people who appear to be in control (Owner, Board of Directors, CEO, Executive Team). Then there are the people who are actually in control. The old-timer who "knows where the bodies are buried" and says "no" to things and nobody understands how she's able to get away with saying "no", for instance. Every company has one of those.

Merchants have disproportionate control, and rightly so.

Creative folks have minimal control within a company but are the face of the brand to the customer. As such, they control far more than they realize.

It's always dangerous to outsource control. I'll give you an example. When we shut down the catalog division at Nordstrom in 2005, we replaced it with a brand-centric monthly mailer where third parties (i.e. Coach) could pay us $29,000 a page to advertise their products. They lined up to do so. We'd have no problem stitching together 160 pages of products from all sorts of third parties. Of course, when you are paying $29,000 a page, you demand control over what that page looks like. You pay $116,000 for two spreads (four pages), and you demand who comes before/after your pages too. The resulting hodge-podge was an abomination, and it performed abysmally from a sales standpoint. Of course, with no ad cost, every one of those abominations was profitable. We didn't have control, but we had money.

It's one thing to have the old-timer who knows where the bodies are buried ... that person has control, but that person operates in the best interest of the brand in the vast majority of cases. Your merchants care deeply about your company. So does the IT Director. It's quite another thing to trade control for money. Maybe you are a sports team who takes gambling money ... you give up control of a whole bunch of issues in exchange for cash. Maybe you are a cataloger who lets somebody from your printing vendor be "in residence" at your brand ... why does that person get to sit in on strategy meetings?

I remember a haunting meeting I had in 2001 with a Circulation Director at a competing brand. My predecessor apparently didn't understand how business worked ... he exchanged control of our own customers for cash. He rented the Nordstrom customer list to anybody who bothered to ask (yes, I'm exaggerating for effect). In the case of the Circulation Director, my predecessor leveraged what was called an "exchange" ... instead of each party sending each other $0.13 for every name, each party exchanged names, paying a tiny fee to our third party list partners to facilitate the transaction. Well, the Circulation Director at the other company took about 3,000,000 Nordstrom customers. My predecessor took maybe 300,000 names in exchange. He literally ceded control of Nordstrom customers to a competing brand, with nothing gained whatsoever (because we were exchanging names). When I put a stop to this practice, the Circulation Director for the competing brand pleaded with me to rethink my logic. She argued that I would put her inventory team in a difficult situation (as she'd planned to take another 3,000,000 names from us the next year and the inventory team bought product assuming they were mailing 3,000,000 Nordstrom customers ... fun business if you can get it) and they'd have to liquidate product and have a much less profitable year. Unfortunately, that wasn't my problem. I had to take control back from a competitor. I recall our list vendors saying I was behaving in an unfair manner, pleading with me to ease the relationship back slowly and gracefully. That would have taken five years. Come on! The list vendor allowed the relationship to get out of line, the competitor took complete advantage of us ... it was time for me to take control for the best interests of Nordstrom.

Who is in control where you work?

One of the lower moments in my career came at Nordstrom when my database marketing team needed to execute a strategy and needed a table built in a database. I worked with an IT Director to get these things done. He ticked me off. When I asked him to perform this task for my team he said, and I quote, "We need to pass your idea past our stakeholders and if they approve we'll consider it."

NO!

Stakeholders?

The mistake I made was telling the IT Director that real humans don't say words like "stakeholders". I demeaned the person, and I still feel bad about it 20 years later.

However ...

... I needed to take back control. I didn't need somebody in Finance or the Credit Division or Corporate IT to approve or disapprove of something that I could pay for out of my budget.

We got the table we needed.

Who is in control where you work?

Are the right people in control?

If the wrong people are in control, how do you work around these individuals to get things done?

Sameness: Tell Me Which Companies Are Selling The Products Here

You want to see a completely tepid, bland, homogenized shopping experience? Yes! Ok! Tell me the brands that are represented here. Good luck!

I'm not going to tell you the answer. It's the same darn presentation. This is awful. Same web development tools, same analytics packages yielding the same conversion rates, all praised by digital gurus who love it when brands adhere to "best practices".

It's not a best practice if everything looks this ... the same. 

It's tepid.

It's horribly boring.

It's time for a change.

Yes, I'm ready for your complaints.

Equal Does Not Result In Better

I'll show how this relates to commerce in a moment.

Ok - NASCAR - last Sunday, they raced at Martinsville. A fun track. A half mile. Too many cars for the track. Normally cars are passing, and more importantly, cars are being lapped all over the place. Action. But on Sunday, nobody wrecked, nobody passed, and consequently nothing happened. Fans are fed up. NASCAR created a new car a few years ago where most of the car cannot be adjusted and the parts are the same for every car. In other words, the cars are the same. And if the cars are the same, they go the same speed, which means nobody can pass. Boring.

An analytics person simulated where the 15 fastest cars would have finished if they all ran their median lap time over the final 50 laps.

Yeah, they're all running the same speed.

Three years ago the spring race was loved by the fans. Here's where the fastest 15 cars would have finished if they all ran their median lap over the final 50 laps.

See what you can do when you simulate results? It's a shame that the e-commerce world chooses to not embrace simulation environments.

Anyway, if everything is the same, then everything is boring. Nothing happens.

Which brings us to e-commerce.

Is there anything more boring than the mis-guided vendor-fueled thought-leader-promoted consultant-driven research-endorsed omnichannel thesis? Same price / same experience / same promos / same merchandise / same presentation / same everything in all channels.

BORING!

When things got really boring (mid-2010s), customers revolted ... they walked away from retail, killing malls ... they migrated from e-commerce to Amazon and have not looked back.

Omnichannel!

Sameness plagues my industry. You use PLAs and Paid Social to find new customers, paying third parties for the same handful of customers who are gullible when reached by those platforms. When I ask you to think outside of PLAs / Search / Paid Social, you look at me like I am an alien. Then you go back to the same analytics tools and look at the data the same way and wonder why you can't break out of the muck?

You're all the same. It's an industry-wide plague.

Results are tepid.

Customers are bored.

Amazon / Target / Walmart / Apple benefit as a consequence.

There's a reason Kaitlyn Clark was so compelling in Women's College Basketball this season. She was different. She played the game like an NBA point guard, she shot like Steph Curry.

Different.

Different is good!

Merchandise Dynamics Video 002: The "Class Of" Table

It will only take ten minutes out of your day - enjoy this video about Merchandise Dynamics and the "Class Of" Table that you've seen me discuss often over the past eleven years (click here).

For those of you who want a larger image of the table in the video, here you go (click on the image).

Drilling Down A Bit On The Problem

Yesterday we talked about a brand that had stalled ... from about $57 million four years ago to $53 million today.

And yet, our 30,000 foot view of the Class Of Report didn't really illustrate a glaring problem. Sure, prices had increased, but there wasn't a merchandise class where new items appeared to be failing and there didn't seem to be a huge issue with existing items being discontinued.

Let's drill down a bit. Now we're at around 18,000 feet ... that's where the jet stream does a lot of work. Can we see anything by looking at new/existing items and items selling at/above vs. below their historical average price point? Click on the image to enlarge it.

Ok, we're starting to get somewhere. Remember, this is still at a total-brand level. Individual categories will reveal more mysteries.

Let's go to the bottom of the table, to the section titled "New vs. Existing". Here we compare new/existing items selling at/above their historical average, or below their historical average price point. When items are selling below their historical average price point, items are being discounted ... either via lower prices, or via marketing promotions that destroy pricing integrity and margins in one fell swoop.

New Items Selling At/Above Their Historical Average Price Point:

• 37-48 Months Ago =   $9.1 million.
• 25-36 Months Ago = $10.4 million.
• 13-24 Months Ago =   $8.8 million.
• 00-12 Months Ago =   $7.9 million.

Well, that's no bueno. After peaking two years ago, demand is on a straight downward trajectory.

How about new items selling below their historical average price point? 

• 37-48 Months Ago =   $2.3 million.
• 25-36 Months Ago =   $2.1 million.
• 13-24 Months Ago =   $2.3 million.
• 00-12 Months Ago =   $3.1 million.

Ah ... HA!  We have a story.

New items are not meeting expectations, so the brand is discounting and/or liquidating to move stuff.

The problem is worse with new items ... but the problem happens with existing items as well, just at a slightly different cadence.

Existing Items Selling At/Above Their Average Historical Price Point:

• 37-48 Months Ago = $32.8 million.
• 25-36 Months Ago = $31.9 million.
• 13-24 Months Ago = $31.7 million.
• 00-12 Months Ago = $28.8 million.

The problem starts 25-36 months ago (when new items performed best), but was stable the year after ... only in the past year did the problem really manifest itself.

Existing Items Selling Below Their Average Historical Price Point:

• 37-48 Months Ago = $12.6 million.
• 25-36 Months Ago = $10.6 million.
• 13-24 Months Ago = $11.5 million.
• 00-12 Months Ago = $13.0 million.

25-36 months ago there was minimal discounting/promotions. 13-24 months ago there was a modest increase. In the past year, yup, here we go!

It's been my experience that these issues are typically merchandise-centric, but when I see both new/existing items being discounted I at least have to research new customer issues and measure comp segment performance.

It's also been my experience that the problems are not "global" ... several merchandise categories are causing a problem, and it is common for the marketer to slap on a 40% off promotion across-the-board as a global response to a local problem, further amplifying the problem.

The 30,000 Foot View

Here's a "Class Of" Report for a Brand I studied ... it's for the total brand, looking at a high level ... 30,000 feet high. And yet, the stories begin to speak to us. Click on the image to make it bigger.

The top portion of the table shows us what top-line demand looks like by annual merchandise class. This brand is contracting ... from $54.6 million to $56.8 million three years ago ... then problems begin, down to $55.0 million, then $54.2 million, then $52.8 million. This is the point where people usually decide to hire me (you might be in that boat ... here's project pricing as an FYI ... so you know, your problems are usually merchandise-related, not marketing-related).

I include units sold, because it is common for the old adage "units = customers" to appear in these projects. Units sold are in decline as well, so let's page down to the bottom portion of the table, where I evaluate price per item sold by merchandise class. Here we go.

• 49 - 60 Months Ago = $46.15 per item.
• 37 - 48 Months Ago = $46.57 per item.
• 25 - 36 Months Ago = $49.43 per item.
• 13 - 24 Months Ago = $50.66 per item.
• 00 - 12 Months Ago = $51.89 per item.

Yeah, the brand is walking prices up higher and higher. If demand is down and prices are higher, it means that units sold are down even more (which means customer counts are down even more - but that is a topic for another day).

Let's look at the average price of a new item by merchandise class.

• 37 - 48 Months Ago = $48.05 per item.
• 25 - 36 Months Ago = $47.60 per item.
• 13 - 24 Months Ago = $53.56 per item.
• 00 - 12 Months Ago = $50.50 per item.

Ew. Results are all over the board, aren't they? This tells me there are myriad stories to be told at a category level.

Here's the average price point of an existing item by year.

• 37 - 48 Months Ago = $46.57 per item.
• 25 - 36 Months Ago = $49.43 per item.
• 13 - 24 Months Ago = $50.66 per item.
• 00 - 12 Months Ago = $51.89 per item.

Existing products being sold are more expensive over time. It suggests that the brand is either raising prices or are discontinuing older items that are cheaper.

At 30,000 feet, there is a problem, but we're too far away from the problem. We need to drill down a bit. We'll do that tomorrow ... and Wednesday I'll publish another video for those of you who enjoyed that style of diversion from your daily routine.

This Is An Example Of Merchandising Yourself Into Oblivion

Let's look at a "Class Of" merchandising report for a brand. Tell me what you see (hint - look at the colored cells in the table).

Somebody messed up.

The class of merchandise from two years ago generated only $2.6 million in demand. That year, the brand contracted from $35.6 million to $34.2 million.

That's where the overreaction happened.

Somebody decided to discontinue a whole bunch of existing items (look at the old class of items from 4+ years ago), and the results were predictably awful ... those items dropped from $27.1 million to $15.5 million, tanking the brand. However, a bunch of new items were introduced, and they generated $8.6 million, making up some of the difference. Still, the brand contracted again ... from $34.3 million to $29.6 million.

Three things happened last year.

• Once those old items are discontinued, they're gone. You don't get the $12,000,000 you gave up back. You have to live with that catastrophe for years.
• The class from two years ago was meager ... you have to live with that catastrophe for years as well.
• The bumper crop of new items from a year ago are paying this brand back, with more than $8 million in the second year (compare that to the new items from the year prior, which only generated $2.1 million in their second year).

This stuff happens all the time.

The marketer takes the fall too often for these issues.

Here we have a merchandising team (or multiple generations of teams who are progressively hired/fired) who spun the product roulette wheel without bothering to understand how customers might respond to the changes.

Yeah, this happens all the time.

P.S.:  I have a mini-project ($5,000) that combines my Elite Program runs with a Class Of Analysis by category ... if you think you might have a new customer problem, a customer retention problem, or a merchandising problem, this is a good starting point. Email me for details (kevinh@minethatdata.com).

Yeah, I've Been Busy

Plenty of work right now, and the Southwest Regional Pickleball Championships are happening in Mesa this week ... win your bracket and you earn a trip to Nationals. It's an event here in Arizona / New Mexico that you can't miss if you are a pickleball player ... more than 1,250 players are striving this week for an opportunity to advance to Nationals.

I ask this frequently ... but do you have an event (no, Cyber Monday is a confection, not an event that benefits you in any tangible way) that is all yours, that is so important that your customer must participate or feel significant FOMO?

If the answer to that question "no" or "well, Christmas is a big deal", then you know what your job is for the rest of the year ... it's time to create an event worthy of FOMO.

Tied To The Past vs. Not Tied To The Past

When there is a severe weather outbreak, this is what The Weather Channel looks like (pardon the glare on the picture).

And this is what it looks like when you are not encumbered by the past ... where you don't have to please shareholders ... where you don't necessarily need a background in weather to present a severe weather outbreak.

Here you have two sets of live chat, six storm chasers, Ryan narrating the event, and a live radar.

There's no way that the brand tethered to the legacy platform can compete.