The Merchant’s Lament and Legacy – 2022

Bill LaPierre,  Datamann USA
By Bill LaPierre, Datamann USA

If you are a long-time reader, you know I believe the most important part of any catalogue or eCommerce company’s business is its merchandise. Sadly, merchants never get the credit they deserve for the role they play in keeping the company afloat.

Product development is hard work. Good product development is exhausting and never-ending. Though the skills of a marketer may have changed and shifted from their ability to read a source code report to creating videos on YouTube, for merchants in a digital age, new product success is not a matter of new selling techniques.  It still requires hard work studying your customers’ behaviour (sales analysis /product reviews /customer surveys), assessing your vendors’ unique capabilities, and presenting solutions to your customer’s hopes, fears, or aspirations.

Developing good selling exclusive products is not “shopping” trade shows.  Anyone can be a shopper. The merchant’s job is to understand your business and guide your customers to discover new solutions they never thought existed. This applies to all product classes – apparel, gifts, home furnishings, and hard goods.

What I just described in the above two paragraphs is pretty much a textbook explanation of what a merchant should do. However, now you need to add on the extra layers of complexity brought on by global sourcing, Amazon, the ubiquity of products on the internet, embargos, inflation, and supply chain issues. You would think that mastering all those conflicting issues would make the merchant a hero, or at least omnipotent. But there is a silent stalker always lurking below the surface – gross margin.

Upper management looks at all the costs that go into running a company and the cost of goods sold is always right on top. Plus, many in upper management – none of whom are as intimate with the nuances of the products as the merchant that developed them – always think they know what’s best when it comes to pricing. This becomes the merchant’s lament.

Good selling products are usually very competitive, requiring aggressive pricing.  But to upper management, brand new exclusive products have the allure of price “blindness”, meaning the consumer doesn’t yet have an idea in their mind what the product is worth. Consequently, management loves to over-price these new products to improve the overall margin of the mix. And what happens? The new products die young because they are over-priced.

All the merchant’s efforts to develop a new, exclusive product are defeated by an effort to improve overall company performance instead of letting individual products shine.

The correct path is once the product has proven it can be a best-seller, then focus efforts on getting efficient with cost control/redesign for better margins. But of course, that’s hard work, and the merchant is under constant pressure to find/develop more new products.

It becomes a vicious cycle where competition requires you to constantly cut costs and be vulnerable to other market forces. As one reader recently lamented “Most of the current retail disasters started 40 years ago with outsourcing offshore. If you buy or manufacture your goods locally, then you don’t need to order a year in advance, and you can manage quantities better. Once you have long supply chains you are very vulnerable. Napoleon found this out, and see what happened to him.”

How does a merchant stay motivated? What can overcome the lament? One merchant recently shared with me that during his career, his ultimate goal was to develop “Legendary Products”. His criteria for a legendary product were simple – it defines the brand, nobody else has it, customers simply love it and it sells year after year after year after year.

Oh, and it has a fantastic margin while selling for less than half the company’s average order. As my friend Frank Oliver used to refer to them, they become a “Shameless Mail Order Runner” – meaning a product that goes in every book because it is so good.

Legendary products are the result of hard work, not ego driven or vendor induced introductions. They involve knowing the customer and the customer’s needs. The merchant that shared this information with me developed many such products during their career.

As most of you know, I’m a history buff. When the historian David McCullough died in August, I watched several interviews with him on YouTube. One of his laments was that the average American high school and college student don’t know basic American history. He did not blame the students, but the teachers. Instead of studying “education”, he felt it was more important for them to study a specific subject – such as math, history or biology. Learning how to teach would come later.

His point was that only by being a master of these – and other – subjects could the teacher have the love for and the enthusiasm for teaching it to students.

I believe the same logic applies to being a merchant. You must know your customer – why does she buy her shoes from you, but not a handbag? In which pocket would a guy working outside all day find most convenient to keep his phone? Those merchants that know the answers to these questions are the ones whose products generate glowing – and not fake – product reviews, with customers gushing about how you knew what they wanted.

But that is only half the story. You must communicate to the customer that you know them, and speak to their hopes, fears, and aspirations. “Need a little extra room in your plaid shirt? Our shirt has hidden side panels under the arm that stretch when you do”.

As a marketer, my lament is that the merchants often develop great products based on their knowledge of the customer, and those that survive the gauntlet of price adjustments by upper management, often die an early death because no one told the customer how great the product was. The creative department went off on one of their cyclical lifestyle themes, focusing on palette colours instead of the features and benefits of the products. (Sorry if that seems like an overly cynical view of the creative process, but I’ve seen that scenario play out too many times!). If you are not going to do it – provide the customer with the argument as to why they need this product – someone else will.

That argument doesn’t have to be a rationale delivered through long copy – it could be through fantastic photography. It could be a video. It’s whatever it takes to tell the customer your story.

About a year ago, I saw a webinar in which the speaker praised Warby-Parker, Casper, and Wayfair as being “brand disrupters” that were the “cool companies” that everyone wanted to emulate. There’s just one problem with that – those companies are all struggling to make money and be profitable.

Being the cool company doesn’t mean being one that some webinar host thinks is a “disrupter”. It means being a company with long-term profitability potential. That comes from unique, exclusive products, priced competitively. That’s what a good merchant knows how to deliver.


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