Lean, mean merch machine

What does this mean to you? It’s time to create a leaner, meaner merchandise machine that will not only allow you to make wiser product choices, but also help you develop a more desirable brand. The following four suggestions will help you do both:

Tighten your concept

Your number one goal is for customers to think of you first, right? While a catalog is an intrusive medium, tapping customers on the shoulder, it does not always arrive in the mail exactly when customers have a need for it. The Website by its nature is passive, and there is no guarantee that shoppers will look for you online.

So how can you remain top of mind so customers will seek you out first? Your merchandise concept is your first line of defense:The tighter your concept, the better chance that you will be known for something. Many merchandisers constantly push the envelope by trying new categories, brand extensions, and out-of-the-box products without taking the time to tighten up what they already own.

Consider the following ways in which some companies create a sustainable, memorable merchandise mix:

  • Understand your brand and the higher order benefit that your products deliver. What is it you are really selling? It’s never just a product; a higher order benefit is what your products do for your customers. Do your products deliver peace of mind, indulgence, confidence? What need do you fill? By understanding this, merchandise that does not fit within the scope of your brand will become immediately evident.

  • Create a product-fit chart. Some companies will literally create a chart that merchandisers use when choosing products. If a new idea does not fall within the “fit,” they are discarded. A fit chart can be a 3″ × 5“ index card, five words on a piece of paper, a memorized sentence, one defining word — anything that can act as a filter when selecting products.

  • Make sure the entire creative, marketing, and merchandise team understand your merchandise concept. It’s one thing to pick the right products, it’s quite another to deliver merchandise in such a way that consumers get it.

Put your best stuff forward

Show off your best merchandise at every point of entry. Too often, marketers place new and unproven products on a catalog cover or on the home page of a Website. This is dangerous.

Lead with your product and category winners, lead with what you are known for, lead with what you own! This includes all of your marketing efforts — your storefront, landing page, catalog covers, e-mails, promotions, and any promotions in your shipping box. Don’t take these critical areas of real estate and waste them on what you are not known for.

Conduct grass roots research

Why leave anything to chance when your best research option is your own customer? Technology provides instant access to customers, and you’ll probably find that most are willing to offer you instant and valuable insights to help you shape your next offering. Some marketers have created customer “think tanks” in which they regularly send an e-mail asking the consumer to spend five minutes choosing her favorite merchandise.

E-mail testing is quick, affordable, and effective, and works best when you have prequalified customers who have given you permission to communicate with them. But respect their time by asking no more than a handful of important specific questions that will make an impact and are actionable. Always show your appreciation by giving your customer a reward of value, not an offer that looks like a trick to get them to purchase.

Squeeze your squinch

Getting the most out of your square-inch analysis, or “squinch,” is one of the quickest ways to make your merchandise machine run more efficiently. Here are quick tactics for maximizing squinch.

  • Monitor IPTO. Items per thousand orders, or IPTO, is a simple metric you can add to any square-inch analysis. IPTO is calculated just as it sounds: number of items divided by thousand orders.

    The metric is applied to each item in the assortment as a gauge of popularity within a season and from one season to the next. It can tell you the strength of the assortment over time and accounts for changes in order totals from season to season.

    For example, let’s say you sold 2,500 widgets this year with 150,000 orders and you sold 2,900 widgets last year with 200,000 orders. If you looked only at units sold, you may decide that the widget in question is losing its luster because of the 14% decline in units sold from last season to this season.

    But if you look at IPTO, you find that the widget actually sold 15% more items per thousand orders than it did last season — it’s become more popular. By applying and monitoring IPTO, you ensure that you carry over the right products from season to season.

  • Evaluate items by channel. When running the squinch, don’t just look at total units. Break out the units per item by channel sold for cues on how prevalently you should feature items by channel. The assumption is that your split of items sold online to items sold offline would mirror your Web sales trends. If 40% of orders are coming online, you should expect that 40% of units sold for a given item would be coming online as well.

    Your goal should be to identify the outliers and understand why they are selling as they are. With the additional data, consider altering the creative presentation to promote those outliers in the channels where they show the greatest propensity and start to analyze and manipulate similar items accordingly.

  • Make old favorites new favorites. A high ratio of successful new product introductions is critical. One way to improve your winner ratio is to combine the power of the squinch with customer input. By introducing new items to the assortment based on the characteristics of your most successful historical items, you greatly improve your chances for winners.

Another approach is to introduce “new” items that are combinations of proven winners with new and updated components. For the small marketers in particular, tightening merchandise with known winners can save a significant amount of time and money.

Lois Boyle is president and Steve Trollinger is executive vice president of J. Schmid & Associates, a Mission, KS-based consultancy.

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