FUNDAMENTALS OF MERCHANDISING

Product is the lifeblood of your business

So when was the last time you put any serious thought into the way you merchandise your catalog, Website, or stores? Many people in the industry think they understand what merchandising is all about, yet they continue to make the same mistakes over and over. Let’s start the new year right with a quick refresher course on the basics.

Understand the niche and the target customer

Before any item is brought in for review, it’s critical that the merchants and the marketers know who the target audience is. It is assumed that in the initial research, you selected a market that is unexploited, unexplored, or underserved, and that your niche is narrow or well defined.

The customer should always be a part of the mission statement. To make sure the merchandising department understands who she is, describe the customer in writing with as many details as possible, then revisit this description regularly and revise it when necessary.

Create a visual image of the customer, and make it available to everyone on the merchandising and creative teams. Does she drive a Mercedes or a Subaru? Is she a professional, a homemaker, retired? What does she read or watch on TV, what are her hobbies, is she traditional or a trend setter, is she a college graduate, what is her religious affiliation, etc.?

Consider where you have authority and apply this to individual items, to categories, and to price points, as well as to the overall merchandise mix. Never forget your niche and always follow your mission. Just because an item is a run-away best seller for one catalog or one vendor doesn’t mean it fits your niche — be discriminating and learn to edit.

Catalog/Internet customer vs. store customer

Catalog customers and store shoppers have different interests and buying patterns. A retail customer needs the entire shopping experience, browsing from one department to another, one store to another, interacting with other people.

Then she wants to be able to touch the products, to see every side and angle, and try them on. Sometimes her buying ritual is necessary to make a decision — at times it’s the approval or disapproval of a sales person or fellow shopper that encourages her response.

The catalog shopper, on the other hand, doesn’t need to feel the product. In fact, the idea of going from department to department or store to store, perhaps taking her clothes on and off or trying to visually place a decor item in her living room or kitchen, is daunting.

Catalogs and Websites can coordinate complementary products — for instance, showing a sweater, skirt, scarf, bag, and shoes on one model in motion, or including a table, lamp, chair, picture frame, throw pillow, and rug in one lifestyle shot. So the direct customer gets a good idea of how the product will look on her or how it will enhance her home. She prefers shopping on her own schedule, and she responds to the convenience. She relies on the copy to inform her of the products’ sizes and dimensions and their benefits and uses.

Core catalog product attributes

Just as the catalog and retail store customers are different, the products offered in brick-and-mortar establishments and catalogs and Websites are different. Here are some of the attributes to consider before including an item in a campaign:

• Uniqueness or exclusivity
• Appeal to the target audience
• Supports margin requirements
• Vendor reliability
• Inventory volume
• Realistic lead times
• Packaging that meets the warehouse requirements
• Utilitarian
• Trendiness or timeliness
• Product history
• Fit with the planned merchandise mix
• Gut reaction
• Quality
• Follows a theme
• Meets the mission statement and niche

You should also ask several questions about any product you’re considering, such as:

• Does it have the ability to sell from a photograph?
• Does it meet carrier shipping criteria?
• Does it have more than one use?
• Is sizing or fit easy or a challenge?
• Does it tell a story, can it be romanced?
• Does it meet its industry standards, such as U.L. approval, or building inspection codes, no lead in paints and glazes, flame retardant material, and so on?

And if assembly is required, make sure the product is easy to put together. Always have someone in the company do this before you make any final decision on the item.

The single most valuable venue for finding new items is trade shows, and you can find shows for almost every imaginable category. While the biggest trade fairs are in major metropolitan areas, many smaller towns are now hosting shows that specialize in regional products.

In addition to the sourcing potential, these markets can be a good place to spot new trends, meet new and existing vendors, and in some cases, learn what the competition is doing. On top of the intelligence gathered here, the cities hosting them and their retail establishments, residents, and cultures can be gold mines of ideas and opportunities.

Other resources for procuring new products and categories are trade publications and consumer periodicals. Not only are the articles and editorials informative, the ads are valuable as well. The merchandising department should subscribe to a plethora of magazines, both consumer and to the trade, and circulate and scrutinize them religiously.

You can also use trade magazines to learn about current cultural events that may influence the retail environment. It can be advantageous to attend some of these affairs; plus, events and attractions often have gift shops attached to them with related products and categories.

	Securing samples

A sample room is a critical component of the catalog merchandising process. With the exception of exclusive items, decisions to include product in a particular campaign are not usually made until the entire book is put together. For this reason, the samples under consideration need to be stored in a secure place and should be readily available to merchants and the creative team.

But don’t wait until a trade show comes around to find most of the new product for your next mailing. Build a bank of samples and constantly maintain it. When the samples arrive, have them tagged with vendor name, price, manufacturer’s number, and date. Pay attention to product packaging and shipping condition, and if the items were sent when promised. These products can then be organized by category, price, color, planned campaign, etc., and placed on shelves to be easily reviewed by the merchants.

	Vendor relations and pricing

Once you have solicited and checked the sample in, the merchant/vendor relationship moves forward. If a sourced sample never arrives and it has been called on, it’s a good bet the vendor is unreliable.

You should sent merchandise information forms out to the vendors now; these should be returned to your merchandising department before the campaign is finalized.

Use these forms not only to accumulate information about the product, but as an important step in determining if the vendor is acceptable. While forms should be fine-tuned to meet the cataloger’s needs, the basics to request are contacts and phone numbers, e-mail addresses, etc., as well as lead times, minimums, pricing, discounts, country of origin, inventory on hand and on order, product benefits and qualities, returns policies, and competition’s exposure.

To determine the retail price for an individual item, you must consider several factors. Of course the vendor’s base price is always a starting point. Often there are discounts not made available initially, so it’s essential to establish a dialog with the supplier and ferret those out right away. Sometimes just asking for a discount is all you need to do to receive one.

If competitors are offering the same or a similar product, pay attention to their price. Is the product an exclusive? If so, there’s more wiggle room in the pricing. And finally, what is the perceived value? Sometimes a few dollars, up or down, can make a difference in desired sales.

	Product selection and pagination

Once you have established the merchandise strategy and sourced and developed the products now in your sample room, it’s time to consider goods for inclusion in an upcoming campaign.

Aside from the niche of the catalog, each two-page spread or group of spreads may have a central focus, such as a particular color or season, a room in the house, or a new trend. More than likely, when the merchants were in the market or planning the upcoming book, they were considering these themes in soliciting samples.

Depending on the design format, most of the two-page spreads usually include one or two featured items chosen for their trendiness, price, margin, inventory requirements, uniqueness, seasonality, or exclusivity. Make sure you present these products larger than other items on the spread, or strategically place them.

These items might even require more copy space to romance them. You should also apply these selection elements to products for the front and back covers. Use this prime real estate for items that are special for one reason or another.

Coming off the heady holiday season and facing a new year’s challenges and opportunities, it’s a good time to review the way you source and develop products for your business. Now go forth, merchandise, and prosper.

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Leila T. Griffith is a catalog merchandising consultant based in Jacksonville, FL.

	What makes a master merchant?

In addition to living to shop, true merchants are “things” people. They love to talk about product and learn. They are visual and have an eye that can spot one or two winners in showrooms full of otherwise average or inappropriate product.

They are imaginative and creative, and while they understand the importance of analysis and product history, real merchants are constantly stalking the next new trend. They have developed strong guts and they trust them instinctively. Most of all, true merchants are matchmakers: They sincerely enjoy connecting products, themes, and categories with customers who will appreciate them.

Since many of the catalog and Internet companies today are being started or acquired by nonmerchants and people new to the industry, it can be challenging for merchants to exercise their talents. Because their employment is often contingent on bottom-line sales and short-term goals, rather than innovative ideas and products, they can be reticent about risk taking. As a result, sales may marginally improve when they could potentially soar if the merchant had the freedom to source and develop unproven but unique product.
— LTG