April 04, 2024

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).

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