Valuations & Acquisitions: The 5 Cs for Better Gross Margins
With Sharper Image and Lillian Vernon, Solomon believes once-great merchandisers grew stale by focusing on incremental optimization of SKU mix, maximizing contribution per square inch in the short-term. The method lost merchandising flair and excitement over time, however — thus, it became stale to consumers. “It reminds me of the old Figi’s gift food baskets,” Solomon recalls. “They’d replace the salami and cheese basket spread with the salami, cheese and nuts spread because it had a 2 percent increase in contribution per inch. But they completely missed the big trend: Salami and cheese were no longer a gourmet treat to send to your friends.”
Be a Responsive Merchant
Marketers need to differentiate and find a high-demand product mix. Stale, unresponsive merchandisers will suffer in this environment, but many startups with creative ideas will flourish. There’s going to be a dynamic, swirling competition where only the best marketers survive in an accelerating cycle of innovation. As Solomon says, “The Internet is at once a greenhouse of innovation and a ruthless, unforgiving wilderness.”
Make no mistake, the rules have changed. Lillian Vernon and The Sharper Image have taught us that you can’t do it the same old way anymore.
Freelance writer Mark Del Franco has covered multichannel mergers and valuations for a decade. You can reach him at email@example.com.