Merchandise Forensics: Age of Item Purchased

Not everything in life has to be hard.


Go run a simple query.  Calculate the average age of each item purchased in the past year by twelve-month buyers.  It's called "Average Item Age", or "AIA".


Look at this company.


Customers who purchased just one time purchased items that were about two years old.


Customers who purchased five or more times in the past year purchased items that were between 1.00 and 1.25 years old.


First-time buyers purchased items that were "older" than those purchased by existing customers.


What does this tell you?


First, it tells us that infrequent buyers purchase safe items.  This business can respond to this fact ... personalize email messages to infrequent buyers, recommending popular old-school favorites.  Recognize website visitors ... a first-time visitor is presented with safe favorites.


Second, it tells us that new buyers purchase safer items than do existing customers.  This business can respond to this fact.  If it is a catalog brand, you create a prospect catalog loaded with "winners" ... make it easy and risk-free for the customer.


Third, it tells us that the best customers become bored, purchasing new items.  This business can respond to this fact.  Email campaigns should continually advertise newness to best customers.  If you have a catalog channel, create a small, targeted version of the catalog, loaded only with new products, sold to best customers (yes, I understand that this strategy "doesn't scale" and doesn't capitalize on the efficiencies of your typical 96 page catalog ... so what, try it).  Create versions of the home page for your best customers, loaded with "what's new".


It's not 1983 any more, folks!  Analyze the merchandise customers purchase, and react to the reality that different customers have different needs.  Make Merchandise Forensics work for you!

Average Item Age

... or, as the kids call it, AIA.


Average Item Age is simply the average age (years, months, your choice) of the items your customer purchased.


Look at this example:

	AIA	Annual Sales
2012	3.8	$37,493,028
2011	4.3	$33,968,940
2010	4.5	$33,403,884
2009	4.3	$34,504,847
2008	4.1	$37,448,221
2007	3.9	$38,428,122
2006	4.3	$36,483,028
2005	4.7	$33,548,831

Do you notice a correlation?


When sales are up, the average age of the items a customer purchases is between 3.8 and 4.1 years old.


When sales are down, the average age of the items a customer purchases is between 4.3 and 4.7 years old.


This is a business where customers appear to prefer newer products.  When products become stale, sales suffer.


Of course, there are businesses where the opposite relationship holds ... customers trust existing product, and when you throw new product at the customer, the customer rejects it.


What matters, of course, is that you track this metric.


Show of hands ... how many of you know the relationship between Average Item Age and Annual Net Sales?