Retail SMART

The Art of Buying - Less Selection
 

By: Dennis A. Conforto
Chairman & CEO of A-Z Media Group, Inc.


So far this month, I have been writing about “The Art of Buying”. For a retailer buying the right product at the right time for the right price is everything. However, the mistake that most retailers make is having too much selection within a category. They believe that the more selection they have the more sales they will make. In truth, the greater the selection within a given product category the lower the sales will be.

Somehow the retail community has gotten the idea that greater selection means you will do more business. This is simply not the case. It’s not the retailer with the biggest selection that wins but rather the best selection.

Sameness of Look
The proper retailer profit model is quite simple if it is just implemented. Let’s start with a category like paper – the core product for a scrapbooker. Within that product category, as in others, you want to have good, better and best quality products. In other words, you want to create a category matrix that helps you buy not only by price point for your store but by color. Only through the use of a category matrix can you avoid duplication of your products within and between manufacturers. When this is not done, retailers end up with what I call “sameness of products”. It’s this sameness of products that makes it harder for the consumer to make a decision.

If you change your store’s matrix, how will the consumers react? A consumer will rate a store as having more selection where the products within that same category avoid that sameness of look when compared to a store that has more selection but doesn’t have that difference in product look. Sameness in look is a profit killer, it is a sales killer, and in the end it is a retail store killer.

Selection versus Duplication
To prove my point, look at how much volume a mass merchandiser does off such a small selection. In the case of a mass merchandiser, there is no duplication or sameness of products at all. However, the independent retailer’s advantage over a mass merchandiser is having a greater selection. The question is can that be done without a sameness in the look of the products? The answer is a resounding, “YES!”

The independent retailer is the most important channel of distribution within the scrapbooking industry today. It is the independent retailer that creates the buzz in the hearts of the consumer, not the mass merchandiser. It is the independent retailer that creates the breath of selection and the possibility of new product introductions. It is the independent retailer that allows 80% of the manufacturers to survive. It is the independent retailer that protects the industry from falling into the abyss of commodity pricing. It will, however, be the independent retailer’s bad buying habits that will destroy them.

Too many independent retailers look at the mass merchandisers as ruining the industry. Nothing could be further from the truth. Independents look at regional chains as being awful and again nothing could be further from the truth. They all have a place in the industry, and in a very real way, they serve each others needs.

However, the most important piece of all is the independent retailer.

What will kill the independent retailer?

Will it be mass merchandiser? No,

Will it be the regional or national chains? No.

In fact, the most serious threat to the independent retailer is the independent retailer that knows the hobby but doesn’t understand the rules of retail profitability.

The biggest rule of retail is having the right merchandise at the right time for the right price. Retail is about turning the inventory, moving the product, promoting the category, and creating new consumers.

How to put this into action:
If I were shopping the CHA Summer show in Chicago this week I would be shopping with my category matrix in hand. I would avoid at all cost the sameness in the look and feel of my product selection by category. And that is what being Business SMART is all about.