The Merchant Life - Volume 37
Working The Frame
Welcome to The Merchant Life, where founders, VPs, and C-Suite executives come to seek out valuable merchandising insights.
As this hits your inbox, we are at the tail end of The Running Event in Austin, TX and running in The Indie 5K race to close off the conference.
Leading up to the event, we created several process visuals and frameworks to share in our presentations. We brought them into meetings with executives over the past month and they proved to be highly valuable.
Our bet is that you will find them valuable too.
In this edition of the newsletter, we share three of these frameworks that you can use to spark discussion with colleagues.
Let’s go work the frame.
1 - Consumer Insights Inform Product Creation
How effective are retailers at incorporating consumer insights into product creation?
Brands tell us that they know this is important, but they can do a better job.
For large brands, although they can pull in a ton of data, the challenge is extracting insights and converting them into action.
For smaller brands, they may not be engaged in enough data sources to help validate customer feedback.
In Volume 36, we introduced the concept of a multi-track calendar for product creation.One component of the multi-track is the “Innovation Loop.”
To recap: innovation is not an event, but rather a process with no start or end date.
Innovation enters and exits the main product creation process continuously, introducing the newness customers are looking for.
Similarly, incorporating consumer insights into product creation is a continuous process and has its own loop.
It would look like this:
The process follows five broad steps:
Pulling in insights at key alignment moments; this assists in setting product creation strategy.
Collaboration with customers during the design and development process.
Seek continuous feedback, iterate on product up until assortment lock.
Internal stakeholders (including regional merchants, brand ambassadors and sales teams) provide their feedback.
Product hits the shop floor.
Now, there are any number of places where brands can pull in data and extract insights.
Data sources range from:
The informal - chatting with consumers or receiving unsolicited feedback.
The formal - focus groups, collecting information with every return, store traffic levels.
The underrated - search on Google Trends, economic data, talking to wholesale partners.
The intent is to build a complete enough picture to understand what consumers are looking for. Then, make an educated guess as to what the consumer would resonate with.
Questions for you to reflect on:
What does your consumer feedback/product creation loop look like?
How many data sources are you engaged in?
To what extent are you pulling insights from the data?
2 - Retail Tech | Charting Your Best Accounts
Retail tech vendors are at the forefront of digital transformation for retailers.
There is no shortage of tech solutions available for merchandising, managing inventory and digital product creation.
Vendors tell us that there are varying degrees of adoption amongst their retail customers.
Some fully embrace the technology while others just scratch the surface of what technology can do.
Experience tells us that a surface level of integration means the technology is either under-utilized or is at risk of being removed altogether.
Of course, if the integration is deep enough and value to the account is high, then the most value is delivered.
With that said, we created a double-axis chart for retail tech companies to chart out where their best accounts reside:
In the bottom left, both the penetration into the account and the utility of the solution are low. Clearly, there is no value provided here.
If the utility of the solution is low but the solution is deeply embedded, there is a risk of losing the account.
Conversely, if the utility is high but the solution is not deeply integrated, we have a transactional relationship at best.
Ideally, accounts reside in the upper right where the value to the account is high and the solution is deeply integrated.
For our retail tech readers, consider using this chart and plotting out where your accounts reside.
Viscerally, leadership knows the spread of their accounts - this creates a powerful visual that the organization can clearly understand.
3 - Product Creation Resources | Internal vs. External Focus
Market leading brands seek to raise the bar for performance.
They want material impact on preventing excess inventory, increasing full-price sales and accelerating speed to market.
That starts with an understanding of how teams function right now.
In working with global brands, we see that product creation teams exert extensive energy on internal matters.
These include: redundant tasks, chasing deadlines (which end up being moved), meeting overload, employee burnout/attrition and more.
Ideally, product creation teams devote a healthy percentage of their resources to external matters.
For example: gathering insights from customers, walking the shop floor, creating partnerships with wholesalers and factories, evaluating new technology and more.
The diagram is simple and designed to spark reflection as to how your teams are working today.
More questions for you:
What is the percentage of internal versus external application of resources in your organization?
How does that spread affect your process efficiency, and consequently, your profitability?
First, The Interline just released their 2022 Digital Product Creation Year End Report.
There are 15 exclusive editorials in this extensive work - one of them is authored by us.
We talk about the cultural barriers that impede digital transformation within retailers.
The report is available for free by following this link - no sign up or personal information required.
Second, we penned a thought leadership piece for Sourcing Journal titled: Why Retail’s Inventory Issues Are a Good Thing.
There is something deeply flawed within the business model of the industry and process innovation is urgently needed - excess inventories provide the opening to engage accordingly.
Thank You For Reading
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We learned this through direct conversation and via recent results from a merchandising survey we conducted.