Case Study: Customer Response to a Dying Category

We talked about Apparel Tops yesterday. We've previously mentioned that Fashion is a dying category, largely because the merchandising team appears to be killing the category. How does customer response change when a category is being killed off?

Similar to Apparel Tops, most demand comes from new/reactivated category buyers (80%). Again, the marketer has to know this, because the marketing plan has to include a lot of $$$ and attention in awareness (organic social) and search (product listing ads). If the marketer doesn't acknowledge this fact and act upon it, well, the marketer is equally culpable with the merchant at killing off the category.

This likely applies to your business as well. Most of your categories offer products that largely appeal to new/reactivated buyers and/or prospects. A marketing department that does not understand this dynamic is a marketing department that sub-optimizes the potential of the category/business.

Ok, what have the merchandising team done with their assortment-contraction initiative?

Rebuy Rates over time.

• 12-Month Fashion Buyers = 2.0% to 3.0% to 2.8% to 1.5%.
• All Other 12-Month Buyers = 1.6% to 2.5% to 2.2% to 1.2%.

What happened in the past year is telling ... 40% or greater decreases in rebuy rates (albeit very low rebuy rates). With less merchandise available, existing buyers become less likely to repurchase.

The astute reader should say "Hey, Goober, you just told us that almost all demand comes from new/reactivated buyers, please tell me how many new/reactivated buyers the category had over time".

I can do that.

• 36,236 to 54,438 to 52,418 to 27,308.

We see the same (ugly) trend with new/reactivated buyers ... counts are down nearly 50%.

This comes up repeatedly in my work ... if you trim the assortment, you harm demand/sales. If you grow the assortment, you increase demand/sales but introduce other challenges (inventory / liquidations / margin erosion).

I'm going to hold off on communicating this fact to Paisley Ingram (the owner) until have a few more data points. I need to find a simple way to tell a complicated story.