Merchandising Magic Bullet Syndrome
We’ve just recently released our annual Merchandising benchmark report, and with it, we’re starting to see a more focused picture of today’s merchant. There’s some good news in there, but when you dig beneath the surface, it’s not all sunshine and birds.
We’ve waited a long time for a “changing of the guard” in merchandising and it seems to be coming to fruition. Old-line merchants who relied on gut feel to decide how much product to buy and where and when to ship it have been replaced by merchants who’ve grown up in the digital age, and have a lot of respect for science.
When given a laundry list of tools and techniques they believe are critical to their retailing success, most identified all of them as at least “somewhat important.” The old-line merchant might have said “Meh.” (Note: “Meh” is a term I have learned from RSR partner Nikki Baird. It’s a 21stcentury written shrug.) He didn’t know and didn’t care. What he knew was product…and people…and so he (or she) would toss off most automated tools and techniques as irrelevant. Even inventory numbers were subject to the “Meh” rule. I actually worked for a couple of retailers who adjusted their inventory based on their gut feel. If you were in the retail shoe business in the 80’s, you’ll understand that “ironing” is something you don’t just do with your clothes, it’s a way “shoe dogs” recalculated their inventory position. But, I digress.
People like me, who came out of the IT side of the retail house, were endlessly frustrated by those merchants. So theoretically, we should be rejoicing at the new acknowledgement of the value of automated tools and techniques. But there’s a problem. On the one hand, as you’ll see in the report, (availablehere), retailers DO value those tools and techniques. The problem is, when asked how well they understand them, they are far less definitive. For virtually all modern tools and techniques with the exception of Forecasting, more retailers said they are “familiar with the concept” rather than their other choice, a “solid understanding.”Houston, we have a problem.
I call this phenomenon “Magic Bullet Syndrome” and we see it a lot in our benchmark studies, passion without understanding. The danger of placing a disproportionate belief in the value of technology without fully understanding it is two-fold:
- Dashed expectations when the tool doesn’t solve retailers’ problems
- The risk of losing touch with the art of merchandising. The art of merchandising is all about product selection. It has nothing to do with “how many” or “when” to buy. It’s all about the “what.”
We’ve got plenty of data to support the dashed expectations problem. Laggards often report new technologies have not delivered promised benefits. Of course, that leads us to always wonder whether they had inflated expectations in general. That’s why I call it “Magic Bullet Syndrome.” It is the belief that technology can turn around a failed product mix.
I don’t have a lot of hard data about the second part beyond the obvious – customers have cut their purchases of apparel and other Broadlines product. When the latest electronic gadget is sexier than the latest outfit arriving at a store near you, you know the industry has a problem. While designers like Michael Kors and Jimmy Choo are wowing customers with their products, the selection for the majority of customers is…”Meh.” Deborah Weinswig, Citi’s headline retail analyst believes that’s a big part of the reason Broadlines sales have been depressed. Consumers are spending on cars, homes and associated projects and electronics (her “C.H.E.A.P.” consumer concept) more than they are on things they will wear because there’s not a lot of freshness out there.
Fast fashion companies like H&M are an obvious exception. But they are in and out of product so quickly that a mistake is just a small bump in the road. Other retailers don’t have that luxury.
Obviously I’m a proponent of using the science of merchandising to support retailing success. I’ve got a thirty year career investment in technology, and most of RSR’s clients are technology vendors. Technology absolutely has its place. Still, if you ask our clients, they will tell you they know they’ll never supplant the art of picking the right product. The “eye.”
And to be really clear, this is not just a story about fashion. My once favorite grocer just did a remodel of its store near me. On the one hand, they made the aisles wider, which make it easier to get around the dollies they have on the floor so often (they restock during really odd hours). But they’ve also reduced the amount of inventory in the store by more than 15%. After all,somethingused to be in the space where those aisles are now. The merchants doing the planograms clearly are playing lifeboat within both categories and brands. I mean, where the heck did the mint chocolate chip ice cream go? What were you thinking?
Bottom line, I’m really glad to see merchants acknowledging the value of technologies to support their processes. I’m just hoping they remember there’s an art in there too. Take a look at the benchmark report at/2013/09/19/merchandising-today-benchmark-report-2013/and let us know if you come to the same conclusions. I think the REAL magic bullet is product selection. We scientists will take it from there.