Merchandise Planning : A Peek Behind the Curtain of Crafting a Successful Retail revenue stream (Part 1)

If you've ever selected products to go on a shelf for your customers, then congratulations – you've unknowingly taken your first step into the world of range building. The journey to a successful product line-up starts with a look back at where you've been...

STEP 1: Analysis – Making Sense of the Past

Before we put together your product offering we need to deep dive into your sales and profitability to truly grasp how your products are faring. Here’s are some examples of how you could be looking at your sales by:

• Item

• Product Type (or Category): Think shampoo, conditioner, etc.

• Brand: Only if it’s relevant for your business, if you sell more than one brand

• Collection: Again, only if relevant.

• Price Point: What’s selling for you? Is it your Entry Point, Mid price, Exit price?

Now, compare. How does this month fare against the last one? Or how does this week or month compare to the same period Last Year. How do your sales compare to your stock? Are you taking 15% of your sales from 12% of your stock? Is that 12% on value, which a proxy for your investment, or is it 12% of the products, a proxy for your space

This level of analysis should highlight:

• Rising Stars: Which categories or brands are on an upward trajectory?

• Fallen Heroes: What’s not doing as well as it once did?

• Customer Fatigue: Any signs that your customers are losing interest in certain products?

• Gaps in Your Range: Could more variety in a particular category boost your sales?

A crucial piece of the puzzle is understanding your stock. Without this context, your sales numbers can be misleading. For instance, let’s visit Dino’s Barber Shop. In January, the American Crew Tea Tree 3-in-1 sold 12 units, while the Thickening Shampoo sold 19. So which one's the bestseller?

Before you answer, consider:

1. Dino’s didn’t receive any new stock of American Crew products in January.

2. On New Year’s Day, Dino had 12 units of the Tea Tree variant and a whopping 100 of the Thickening Shampoo.

Makes you think, doesn't it?

Any analysis you produce will need to take context into account, and not just stock. If visits to your SPA are 30% down on the year, but your sales of a particular brand are up, 3%, I would consider that a strong performance. However, If you are visits are up 20% and the same brand's retails are up 5%, I may not be that certain.

Stay tuned for Part 2 where we’ll delve deeper into range building, and find out the answer about Dino's Barber shop, how to use Rate of Sale to compare different items.