The purpose of merchandising is to make more money.
Many may disagree. What about branding? What about communicating merchandise benefits? What about customer convenience?
My response is that all of the above are only valid to the extent that it ultimately, somehow helps you sell more stuff.
But there is an inherent paradox. If you focus on making money, then you won’t. To sell more stuff, don’t focus on selling more stuff but on how customers want to buy.
One agency (Dorothy Allan, svp-retail strategy for TracyLocke ) recently conducted a campaign where they redesigned the space based on how the shopper wanted to move through the store, not how the operator wanted to run his store. Results were a 25 percent lift in margin and 29 percent lift in sales, not to mention the savings the client gained on a 20 percent SKU reduction!
For instance, your primary trading area (platinum zone) is your most productive area and screams for your highest margin, best-sellers. But, paradoxically this also happens to be your customer’s landing zone and they need space (not stock) to relax, and switch from passerby to browser. So, having less stock in that area may paradoxically contribute more towards making money than crowding it with 17 different types of specials.
But this is also a principle of doing successful business, not just retailing.
The fundamental paradox of all business is this: if you want to satisfy your own need (optimal return) then you must, paradoxically focus on meeting customer needs and not on your own.
Don’t think about:
- what you have to sell – think about what they want to buy
- how you can make money – think about how they can save money
- what will make you happy – think about what will satisfy them
- whether they are right or wrong – think about how you can make them right
But this is not just a principle of business; it also applies to living a successful life.
- If you want to be loved, focus on loving someone more.
- The essence of strength is to turn the other cheek
- The essence of leadership is to serve
- If you want to be successful, help other people become successful.
- If you want to be held in high regard, be humble.
- The harder you work the less you will get done.
Some people get it and some people don’t. I wrote in my last newsletter (and a copy on the blog here) that success is mostly luck anyway, and should not be a source of arrogance.
Life is full of these paradoxes and recognising and managing them is a key to real and lasting success.