Tuesday, January 26, 2010

The Rules of Stuff

All of these concepts defy rational inventory analysis, especially if you're hooked on stats like turn rates and sales per square foot.

Critical Mass. The number that ye shall have is seven. Seven shall be the number. Alright, it's arbitrary and more likely retail folk wisdom, but this old woman in a walking hut taught me that you need a certain number of items of a particular type to have a kind of "mind share" with the customer. Any fewer than this number, and the product is overlooked. This has proven true and when I order a new product line, I always try to obtain that critical mass. If I can't get that critical mass, I don't order it (unless it's really new and that's all there is).

Less is More. You can have too much of a good thing.  By getting rid of the mediocre product, you can boost visibility of the good. Turn rate analysis will tell us that more inventory equals more sales. Less is more defies that. Too much inventory of too little quality will actually bring sales down. This is true regardless of how product is displayed. Even solid product "faced" or otherwise displayed well, will be brought low by  interlaced mediocrity.

Variety is the Spice of Life. Say you've got 100 pretty items. 30 of those pretty items sell really, really well. 70 of those pretty items sell only so-so. Your analysis will tell you to drop the 70 so-so sellers (as would Less is More). That would be a mistake as people want to see a big selection of pretty things, even if they all eventually buy the same ones. This is especially true with inexpensive items like dice. We have about 100 sets of dice, with only about 30  selling really well. If you were to cut out the 70 slow selling items, sales of the other 30 would plummet. This is only important with large varieties of low cost (or even free) items. You want to dump those bottom 70 expensive board games, and if you go shopping for a Mercedes Benz, you'll likely be offered a small selection of silvery blue colors..

More is More. The "power display" is the retail equivalent of dropping your pants and saying "Look at me world! I defy you to question my size!" Power displays are large stacks, towers, pyramids, or other visual displays of products. People psychologically associate a power display with good. Why else would we have all those things?  It also grabs attention, something that's phenomenally hard to do in retail.

Muggles Hate Loners. My own mother is hesitant to pick a game off the shelf if there's only one. Gamers understand that one is normal in a boutique-like game store, but muggles assume that there's something wrong with the one. Why is it there? Is it discontinued? Is it damaged? Does nobody like it? Call me when you get more in. It's exasperating, but muggles will hesitate if you only have one of an item. I'm not saying never stock individual items (550 of our 625 board games are individuals). Stock up for muggles accordingly during the holidays.

The Completist. Sometimes you want to be able to say yes, we have it, before the customer specifies exactly what it is they're looking for. Perhaps you want every Dungeons & Dragons book (we do) or every Warhammer 40K model (we do). Think of it as a vertical power display, spanning the breadth of a product line. Again, this defies analysis. There will be slow sellers in that lot. Chalk it up to marketing and budget accordingly. In the mind of your customer, you want that "top of mind" exposure. Wherever will I find that D&D book? Black Diamond Games will absolutely always have it. The key is to not be a completist with either a) everything, b) only stuff you like, or c) mediocre performers. I have failed at all of these at one time.

Now go out and sell some stuff.  ;)