Retailing has always had its tough periods but, in living memory at least, nothing as extended or as broadly based as the current period. The discussions and commentary these days all seem to focus on things like internet strategies, inventory strategies, Black Friday strategies, social media, CRM, new technologies - worthy topics all. The one thing that is not being discussed is the most fundamental element of retailing - the merchandise.
Take apparel for instance. Go into any regional mall; apparel and accessories are still the dominant category of merchandise in terms of square footage and inventory investment. But the merchandise offering is stale - same fabrics, same colors, same silhouettes, basically the same thing that's already in your closet.
One of the basic requirements in retail success is to offer the customer something that excites them enough to part with their money. It seems that today the answer is to put out lower quality merchandise and then promote it like crazy - coupons, interlocking one-day sales, early bird specials, and so on ad nauseum.
Merchandise assortments belong to the merchants. What makes a great merchant in today's environment and where are they?
To find the great merchants, you look for those having the most success without having to rely on POS price promotions. Is there anybody out there that fits this bill? Well, it's estimated that Amazon will sell 500,000 Kindles this year at $300+ apiece. No discount there. It's estimated that Apple will sell over 45 million iPhones this year. No discount there. The Apple 4-wall stores, from the day they opened, have completely reset sales per square foot standards, moving the bar from hundreds of dollars per foot to thousands. No Black Friday specials there. They're in the same malls as the apparel stores.
What about apparel. Any examples there? Well, Mickey Drexler has taken J. Crew from a moribund company to a thriving business. The folks at Buckle, American Eagle, and Urban Outfitters are doing fine.
What do Jeff Bezos and Steve Jobs have in common with Mickey Drexler? They understand that, in the end, it's all about the product. It's all about offering innovative products that excite their customers enough to part with their money.
Until the other apparel merchants figure this out, expect continued poor performance and disappointing sales.
Discussion Questions: Have merchandising skills eroded? If so, what's causing the decline? Where are the great merchants today and how has the merchandising role changed?