Everyone in the world of retail, e-commerce, omni-channel selling, or whatever you want to call “selling products and services to consumers”, are on a wild goose chase trying to “personalize” the experience and provide the customer what they want. Technology, artificial technology to a large extent, is often considered the holy grail in achieving this result.

In this race for the ultimate personalized experience, Marketing dominates the stage and Merchandising is playing second fiddle. But that’s proving to be a backwards approach, like putting the cart before the horse; many times, putting an empty cart before the horse when expectations fail to meet the reality.

What most are missing is how this hyper focused attempt to reinvent one skill set is diluting and hurting another. More specifically, how marketing is forgetting the role merchandising plays; and how retailers are not focusing enough on their brand and the products and/or services that drive their brand. More often they are over populating their sites with disconnected products, trying to be everything to everyone, assuming “personalization” will parse and present the relevant products as needed. It’s like going on a date with someone and they are trying to impress you by saying they do or like everything you do as you share your personal story. Somehow the sincerity gets lost.

As businesses focus on developing tools providing a more customized and/or personalized experiences, what is happening is the equivalent of putting the cart before the horse. And even if some manage to get the horse out in front, they forgot how to train the horse and it doesn’t know which way to go. In this case, “marketing” is the horse and “merchandising” is the cart. Every retailer needs product, or a cart to pull; and marketing usually does the pulling. But merchandising is quickly being diminished and diluted to where there’s just too much in the cart to pull and little motivation for people to even look inside. All the carts are looking the same and instead of designing a cart that is actually appealing from the outside based on what’s inside, the drive for personalization and providing the right product, at the right time, to the right customer, is creating a homogenized view…everyone is turning right and marching in a vicious circle.

Merchandising is not a science; rather, it’s an art and developed skill that uses science to augment and enrich a presentation.

But personalization, and technology in general, are driving merchants to rely too much on analytics and reactionary planning, over insightful and visionary presentations. Too many retailers are taking the approach, tell me who my customer is and what they want and I’ll go find or make the product for them. Instead of more boldly stating, this is who we are, what we represent, and here is the product within that vision; with that, tell me who you are and we’ll help you build a relationship with our products. True merchandisers, buyers, and visual artists in retail understand how to assemble and paint a picture through a carefully crafted and orchestrated presentation of products; relying on a combination of historical analysis for context, but focusing more on visionary development aligned with the brand message or personality of the business. Customers are then able to understand why they came there in the first place, searching as much for a connection to the brand as to the defining products.

An excellent example of what I mean is found with Patagonia. Customers are more than customers, they are family, they are related, they embrace the brand because it is so very clear what Patagonia represents; the product is just a direct extension of their brand, so customers are searching for ways to enrich their personal story or journey through an array of products over searching for some random one off or unrelated products that happen to fit a in the moment. REI is another good example, and expansion of what a retailer can do versus a wholesaler; with Patagonia being more representative of the later. REI built its business on the personalization of their assortment and presentation over time, across brands, and not in the immediacy of a moment or single online search experience. It took years of relationship building between customer and company, to where the merchants could understand the needs and wants of their customers in a broader sense; and then aggressively build new products and new avenues for customers to engage without a single minded attention on the right product, at the right price, and the right time. It’s more about the right brand experience providing an opportunity for the customer to discover more products in context of their brand experience, over a single product based on a hyper focused personalization algorithm and response.

The fallacy of personalization is too many believe with the right technology and ability to see what the customer is doing and understand their intent at any given moment, they can serve up the right product without first setting the stage with the overall presentation and brand experience. Personalization should be more about building the relationship of the brand with customers so products are a function of the brand identity in context of the customers’ expectations. In too many sites, where the brand message is more about price, value, free shipping, or some other loyalty lacking attribute; customers are searching blindly across sites based on a single motivation, because retailers are striving for immediacy in gratification over sustainability in relationships. We see less companies like Patagonia or REI, where their focus is more about building a relationship with the customer over selling a single product; where they build sustainable sales over the sporadic and disconnected purchases filling too many online shopping baskets.

Retail is just one big block, lined with too many stores and too many doors for any person to reasonably shop; so the emphasis should be on merchandising the products to fit the brand and tell a clear and compelling story. And not on carrying the largest selection or most diverse assortment where price is the primary motivator.

Instead of putting the cart before the horse and discovering the cart is either empty or not filled to a customer’s expectations; invest more time in finding the horse, or the product that will pull the cart. Don’t ask the customer what they want, tell them who you are, what you carry, and why; then work on personalization that builds a story with the brand so customers discover products in context of more general desires over impulsive price driven purchases.

Build an environment to buy, encourage a relationship, not a sale.

It seems to me, for all the benefits to building business, e-commerce has created a more reactive instead of proactive business environment; marketing often over shadows merchandising, and more and more businesses seem to be abandoning the foundation of building a strong merchandising plan.

I know, some will immediate argue the amount of information available in real time is providing better quantitative data driving more informed decisions; yet, from what I've seen, both looking from the inside and outside, is a general reluctance to map out a merchandising direction based on applying more subjective reasoning to analysis. Instead, I see a reliance on analysis and dependency on numbers without enough creative and proactive thinking. Of course, this is not true for "everyone", but it seems the ability to subjectively review a merchandise plan and understand how to adjust based on realistic variables is fading.

There are core steps everyone should take when building a merchandising plan, and helping buyers become more proactive in their planning process.

  1. History is important, but repeating it doesn't guarantee success. Don't minimize the importance of pulling historical data to understand how products performed over a defined period of time, and make sure you focus on the core elements of this data you control when planning for the future. Once you have the numbers in a controlled format, look behind them for subjective elements that may have impacted performance so you don't blindly follow the numbers.
  2. Plan - this is where I see so many drop the ball; instead of building a plan using the history and making subjective adjustments based on market conditions and trends, too often businesses use the historical data verbatim without any or minimal adjustments, creating a self-fulfilling prophecy. Don't be scared to be a merchandiser and think proactively, apply what you know about the market and trends and build a plan to uses history as a reference, not a road map.
  3. Field a Team - what I mean by this is step up and do what you planned. I've witnessed many plans fail because of an overly cautious approach and not making enough of a commitment to building a balanced full presentation necessary to driving results. A comparison would be building a football team consisting of a balanced roster of players, but only fielding the quarterback, a receiver, and maybe one or two linemen; making it almost impossible to succeed for all the wrong reasons.
  4. Adapt and Adjust - finally, don't think a plan is written in stone; rather, maintain flexibility in the process and evaluate your plan based on actual performance. A plan is critical to heading in the right direction, but when a detour pops up, work around it and adjust to the conditions driving change.

Reactive or Proactive? Actually, you need to be both, but the speed at which we operate now often creates a more reactive environment where people forget to plan; which from my perspective, limits creative thinking and analysis. You can be a buyer and just react to what you need, or you can be a merchandiser and build a plan, a road map to a more creative and proactive presentation. Think about it.

Early in my career I met someone who contributed to my professional development, and was somewhat of a mentor to me in the world of product design and development. Sadly, he passed away not that long ago, well before his time; but his insights remain with me and have impacted my actions across many areas of business development and management, and not just products.

He once said during a product review meeting, "Price, Quality, Delivery...Pick Two," and exuding the child in me, I replied, "What do you mean?" I mean, I was young, naive, and thought, why can't I have all three?

Rick (my friend) looked at me, smiled, and proceeded to explain how the world was not always as it seemed. Specifically, when producing apparel products (which is what we were doing), he taught me to consider everyone is trying to achieve the same end goal, that is, make a profit. So if we pushed the factory too hard for the absolute best price, something else had to give; either quality or delivery.

But how?

Consider a factory working to supply multiple customers, evaluating the costs and returns for each one; they may accept a low cost initially, but continue to work on adding new business and looking for ways to improve their performance and bottom line. So in the course of doing business, if they find another customer willing to pay a higher price, don't be surprised to discover your production has mysteriously moved out a few weeks or more and now past your anticipated delivery date. You may have secured the best price, but it's not going to do you much good if the product doesn't show up, will it? The story continues, you except the delay, calculating the cost and potential loss of sales due to a later delivery, but feel the margins are good enough and you'll be fine. But the factory doesn't stop there; it continues to look for ways to improve it's bottom line and finds even more customers to replace your business at higher margins. But they don't want to give up your business, so out source the production to another smaller factory you don't know about. Now the quality takes a hit, as the new factory didn't quote the same specs and they also need to make a profit; so they look for cheaper materials or short cuts in production to cut costs and push out a product you receive late, and at a lessor quality...but, hey, you got the lowest price. So if you're an optimist, you'll be using all the profit you thought you were going to achieve to pay for the markdowns just to get rid of the product you actually received.

This happens in other areas of business as well, and not limited to factories. For example, during my time selecting store locations and negotiating leases, I found the same idea held true; and all too often, people on one end of a lease thought they were getting a great deal without carefully considering how. My dad taught me this too, as he invested his life in the management of commercial real estate, but I was able experience first hand when negotiating leases for stores around the country. I would find myself being hit from both sides; the management or owner I worked for would pound me to get a better price, as if the price were the ultimate victory in negotiating the deal, and the developer or landlord would be fighting to maintain their goals while carefully disguising how they buried the costs in the lease, creating a perception of a price that didn't exist. Same idea, price, quality, delivery; pick two.

If you look in the market today, you see this with many of the larger retailers as well; they wield a great deal of leverage and push for the absolute best margins, forcing factories or businesses to trim every possible corner to meet their demands. These companies profess to driving better values for their customers, but ultimately, they are only degrading the production, lowering the quality, and creating false perceptions of value. I could probably draw a similar comparison if I looked at how our government runs, but I'll save that for another post.

The real tragedy in not recognizing this reality is missing out on "good business deals" over a quest for the best deal. Most people I've met or worked with over the years bragging about how great a negotiator they were, more often we're just throwing up the warning flag letting me know to watch out for delays and missed opportunities at a cost of satisfying their egos. The real lesson should be focus on what you want to accomplish and understand the costs; then decide, do you really want to succeed at business, or just in attempting based on false expectations. If the deal is a good one, everyone should be happy in the end and looking to for more.

Price, quality, delivery...pick two.

I took a class in college in communications and the professor introduced the course with an opening statement that hit home with me, and has impacted my communication over the years; he said, "You spend the majority of your educational life learning how to read, write, and speak...but, did anyone ever focus on listening?"

Odds are if you're like me, listening was not the focus of your educational experience, but the most critical component of communication too often overlooked and not performed effectively.

For example, how many times do you say, "What did you say?" over "What did you mean?" There's a big difference, and the second question is essential to the process of active listening. If you are really listening, you're not necessarily accepting what was spoken (or written) as the intent; rather, you are reflective and exploring the content in order to capture affirmation. Listening is a process, not a single action, and doing it well will often help avoid conflicts and unnecessary actions; both in your professional and personal life.

Active listening involves a few key steps, interestingly enough, steps I used as a parent often when trying to assure my kids (when they were younger) understood what I was saying:

The same is true if you're speaking, in other words, don't assume people understood what you said; make sure by following the same process above, just start with asking the person to repeat back to you their understanding.

Communication is not just an exchange of words, and if someone says to you, "I heard what you said," make sure they understood what you said - the impact and consequences could be significantly different from the original intent.

Words don't have meaning, people do...listen, it's not a secret.

In today’s market, growth is no longer the measure of success, profitability is; not sure why it takes so long for some companies to figure this out, but just like athletes on steroids, there comes a point where the body can no longer grow, and maintaining a healthy weight is a better approach.

Sure, there will be companies that experience growth, but I think in order to survive and be a sustainable business, the practical approach needs to shift from “getting bigger” to “finding a healthy size” and trying to maintain it. So instead of constantly stepping on the scale, consider evaluating your business health as follows:

If you first evaluate your business based on profitability goals, that is, finding the point at which you function most efficiently given your current size; than plan your sales accordingly, you may discover you focus your efforts more on the content and quality of your presentations over just driving growth or more sales volume.

In other words, understand your “sustainability” level, than plan around it, exploring how you can more naturally grow without forcing percentages or expectations based more on external market factors. Know who you are first and stick to your strengths without letting your weaknesses get in the way, and don’t succumb to peer (market or investor) pressure. When I was a buyer many years ago, we did this with our category reviews, always looking at the value of driving sales growth and the impact on profitability; we would find the point where volume really made a difference, and avoid pushing sales volume if were not achieving some level of bottom line gross profit increases – businesses need to practice the same approach.

Sustained growth is not a realistic expectation over time; just like people, companies mature and experience more rapid growth early in their lifecycle, but over time, this flattens out and the focus shifts to remaining healthy and living a longer more productive life. Explore the benefits of stability and sustainability over growth; understand the impact your company has on people, both internally and externally, and carefully consider your profit goals over your growth goals. Just looking to get bigger can lead to false expectations and an unhealthy business…just like the athlete using steroids, it can yield quick results, but the long term impact can be disastrous.

Run your business like you take care of your body, feed it with a healthy diet of careful planning based on profitability and sustainability over processed sales growth with no nutritional value. Everyone will benefit over the long term.

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