From Home Furnishing Business
Publisher's Letter: Missing Merchants
In the furniture industry, we have a title that doesn’t appear on any organizational chart, but that title is understood in the daily course of business. That title is merchant. Everyone understands and respects that title. Often the success or failure of an organization is dependent upon the ability of this individual or team of individuals.
Just who is this person, and what do they do? Such a person exists at both retail and manufacturing and, simply put, this particular person sets the strategic direction of the company with regard to the product consumers expect from a company. Deviate from that expectation and declining sales creep in. Thus, merchandising not only drives the top line in terms of sales, but also impacts product discounts and markdowns. Current data shows our loss in markdowns and closeouts exceeds our industry profit by four times.
The question then becomes Where have all the merchants gone? When retailing was smaller, buyers actually envisioned who their customers were and bought goods to satisfy those tastes. It was a time when we saw merchant and customer more closely connected; much to the benefit of each side. Now, however, retailing is larger, and we’ve undergone an industrywide consolidation.
The consolidation has made it more difficult for merchants to stay in touch with consumers. In today’s business, management’s days are consumed with everything—except for knowing who their consumer is. Both merchant and customer may have felt some pain. A myriad of new technology and analytical tools are now available to allow us to connect with often-frustrated consumers. How do we use those new tools?
Why should we be concerned? Herein lies the strategic advantage non-traditional retailers are using to gain market share. It is not that the young product managers with fewer than five years of experience successfully selecting product are more talented. Rather it is that they have access to more analytical tools. In the future, the organization with the best data — or insight — wins.
While analytics will never replace interaction with consumers, it can provide valuable insight for the retailer and manufacturer. It can also be the first step to connecting or re-connecting with the shopper. The ability to segment your customer demographically and compare your information with the industry will provide insight into who you are selling, but more important those consumers you are not selling based on your merchandising price point. In addition, the ability to compare your sales to the industry in terms of product category and price points provides a benchmark against which to measure your product lineup.
Analytical tools will never make a person a merchant. However, if we give these tools to that person with talent, a great merchant is a possibility.