ECMOD wrap-up: building a better merch plan

As consultant Meg Macmillan sees it, merchants face a conundrum: They can keep their merchandise range relatively tight, which helps define the brand and simplifies stock keeping but also limits their potential audience, or they can broaden their range, which gains them “long tail” sales but can dilute the brand and lead to increased backorders and other inventory problems.

To help multichannel marketers find an acceptable compromise, Macmillan-who’d previously worked for Charles Tyrwhitt and Past Times-outlined her range-planning process during the session 21st-Century Buying and Merchandising at ECMOD earlier this month. She advised analysing your merchandise performance and selection from the top down, starting with the core product categories before proceeding to secondary categories, drilling down to the SKU level category by category. Then you should drill down to the channel level. Typically, she said, a cataloguer/retailer will see a 70-percent product overlap between its bricks-and-mortar offering and its web offering, the latter of which should encompass the entire product line.

When it comes to determining which products are best promoted in which channel, price is a key factor, Macmillan said. The average order value from a brand’s catalogue or website is apt to be higher than the average transaction value from its brick-and-mortar store because people are less likely to pay postage and packaging for lower-ticket items. While a consumer may not think twice before spending £8 for a trinket in a shop, he may well balk at spending £8 plus £5.95 P&P to order the same item online. That’s not to say you shouldn’t sell lower-price items via catalogue or the web-if nothing else, they’re great for boosting order sizes and the number of lines per order. But high-ticket, slow-moving items are best promoted via your direct channels, whereas what Macmillan called the entry price point is critical for retail merchandising.

The web and, to a lesser degree, the print catalogue are effective in promoting products whose benefits and uses need to be explained in some detail. The direct channels are also ideal for offering engraving, monogramming and other forms of product personalisation.

It can be effective to use your website to elaborate on certain product ranges that can’t practically be fully offered in a store or even in a catalogue-for instance, to offer sizes 6-16 in-store but sizes 6-24 online-you don’t want to stray too far afield in any one channel. “Remember that you’re one brand, one business,” Macmillan said. “Start at the top with the best range to support the business as a whole.”

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