8 Keys to Choosing the Best Merchandise for Your Retail Store
How do you determine what merchandise is right for your store? How do you know if the vendor you've chosen will prove to be beneficial in the long run? What standards have you put in place to judge whether the merchandise you buy will be what customers want?
Retailers must consider so many factors when buying new merchandise. To get on the right track, the following eight keys will help you understand which decisions are good and which ones are "not so good" when it comes to buying new merchandise.
Your Merchandise Philosophy
A retailer may have a “deep and narrow” merchandise philosophy. They carry a couple popular items in about seventeen colors and in every size imaginable. They decide the one product customers like and carry it to its death.
On the opposite end of the spectrum, a retailer may have a “broad and shallow” merchandise philosophy. They have a little bit of this, a little bit of that. They like to try new products and test them to discover which resonate most with customers.
Most chain stores have a deep and narrow philosophy; most specialty retailers have a broad and shallow philosophy. Do not merchandise like the chain stores. This is not a strategy to compete, it is a strategy to lose. It requires intense inventory management skills and software to help you keep up. Plus when you merchandise like your competition, you lose your competitive advantage.
Vendor- or Style-Oriented
Certain brands are so powerful that retailers stock merchandise because of the brand. For example, consider Best Buy. They have a Samsung store and an Apple store within the Best Buy store. The merchandise changes, but it’s selected based on the brands they merchandise for. And these brands drive natural traffic into its stores. If you are an independent retailer, vendor-oriented is not the best strategy. It limits your selection and appeal. Plus, your ability to cover multiple price bands is compromised.
Brand Name Acceptance
Some brands that you’re inclined to carry, even if popular, may hurt your store. Customers may not accept the brands, so determine if the brand will fit with the others that customers do like. Don’t put all the power in the hands of the customers, though. Sometimes customers may be asking for it, but the brand may not be good for your store for other reasons, and carrying it will hurt you. Plus, many brands are fads - meaning their popularity is short lived. Making your store about this brand means you have a shelf life as well.
Easy to Reorder
Has the vendor made the reordering process easy? Or is it to difficult to navigate? Do you have to order everything you need in the first order you place? Thoroughly understand the availability and operational processes of the vendor so you can prepare for future orders and set yourself up for success. Consider vendors who have "at once" merchandise available. These are goods that the vendor guarantees to keep in stock for you and replenish quickly. By focusing on these products, you can have a broader assortment with less on-hand inventory.
Vendor Deliver & Partner
A vendor may offer a great brand or great product, but what good is it if they don’t deliver in a timely manner? Do they support you and your store through co-op funds or return authorizations? The best vendors are ones that will partner with your store for success. They have systems and programs in place to help you sell the merchandise once you have bought it.
Maintain a Markup
How well can you make a profit off of the merchandise you want to carry? This may seem obvious, but many retailers stock their store with merchandise they’ve chosen for reasons other than price, like customer acceptance and personal preference. Factors other than money do go into selecting merchandise but don’t ignore price altogether. Determine whether the product will, in fact, generate a profit. Pay attention to your proforma model and the margins you need to be successful.
A good buyer always looks at 1) which products sell and 2) who their favorite vendors are. Do the same, and make a comparison. Is the vendor right for you? So many times a retailer will continue to buy products because they like the vendor, not because the products are good for the store. It’s human nature, but it’s not a good thing. Evaluate which products are your consistent performers, and choose new merchandise based on those criteria, not the likability of the vendor.
What do your customers find valuable? Figure it out, and learn how to increase that value. Customers are usually willing to pay more for a product in which they easily see the value. Create a customer "council" to help you buy. When I had my shoe stores, I would bring in my best customers to give me feedback on the next season's line before I bought it. This practice helps me avoid many poor buying decisions for sure.