Tips for More Effective Merchandising
In a session yesterday at the NEMOA directXchange conference in Boston, Frank Oliver, product design and development manager at Gardener's Supply Co., an omnichannel retailer of gardening tools, presented his three rings for merchandising survival.
1. Innovate ... or else. Retailers need to develop products that provide meaningful benefits to their customers. There are several ways they can accomplish that, Oliver said, including the following:
- Ask your suppliers for their help. Remember, their success is dependent on your success; the more products you're selling, the more products you're buying from them.
- Fail forward. Be willing to test new products and ideas. Failing just means learning, Oliver said. There are no 100 percent certainties in our business, he added.
- Leverage technology transfer. Find what works or is obvious in another industry or product category and apply it to your business. For example, Oliver saw push-top milk containers and applied it to Gardener's Supply's business for its fertilizer spray containers.
- Use observation to drive product innovation. While touring one of Gardener's Supply's supplier's warehouses in the U.K., Oliver noted that pallet covers were being thrown out. What was considered waste to the supplier was recognized as a product opportunity by Oliver. When turned inside out, the pallet covers become perfect grow beds for plants. Gardener's Supply now sells the former pallet covers as merchandise.
- Network with your customers. Oliver cited a conversation he had with one of his customers — he called her "Mary" — in which she said couldn't find a product that would keep her melons and vegetables off the ground so they wouldn't rot. After an exhaustive search, Oliver couldn't find the type of product Mary was looking for, so he designed it himself. The cradle kit, which consists of a plastic spear that goes into the ground and a basket to place the vegetable or fruit, has become one of Gardener's Supply's best-sellers. All of which came as a result of a conversation with a customer.
- Any retail merchandiser needs to read these two books to improve at their job, Oliver said: "The Innovator's DNA," by Jeff Dyer, Hal Gregersen and Clayton Christensen; and "Little Bets: How Breakthrough Ideas Emerge From Small Discoveries," by Peter Sims. In addition to those two books, Oliver cited a quote from famous innovator Enzo Ferrari, he of the Italian sports car fame, that merchandisers should keep in mind: "When you're in the lead, what's in the mirror is of no consequence to you."
2. CEO near-sighted disease. Oliver explained this as constant worry about the present without focusing on what's going to make you successful in the future. "Have you seen the numbers from the last hour?" he deadpanned, mimicking what's often heard from those suffering from CEO near-sighted disease. The numbers in the last hour shouldn't matter if you know that you've correctly prioritized what's most important to your business.
You do this through dashboards, which are going to have to be built internally. These dashboards should be databases, not spreadsheets, Oliver said. He showed the audience one of his dashboards — it tells him all he needs to know about a certain product (e.g., units sold, at what price, when it was sold) in one page — as an example of how simple a database can be. If we figured out spreadsheets, we can figure out databases, Oliver said, noting that they're nothing more than flat spreadsheets.
3. Develop web merchants. While your marketing team may want to automate all of your company's web merchandising, an algorithm can't listen to a customer, Oliver said, again citing the melon cradle kit that was developed as a direct result of customer interaction. In that same vein, online product reviews are a key tool enabling web merchants to listen to their customers. Web merchants should be passing along the insights gained from these reviews to their product suppliers.
Furthermore, just because you have catalog merchants doesn't mean they'll be effective web merchants, Oliver said. He questions the logic of using catalog methodologies to drive web-based decisions. Taxonomy, the science of classification, for example, is one skill that a web merchant is likely to possess that a merchandiser working with catalogs all their career won't have.
Oliver closed his presentation by giving attendees his golden rule to merchandising: There are no bad products, only bad prices. Pricing should not be based on the cost of a product, but on the customer's perceived value of that product.