How do you get from “Good to Great”?
In the best-selling book by Jim Collins titled Good to Great, the very first sentence is “Good is the enemy of Great”. This article is not a book review but a thoughtful reminder that there are elements that can be created in any business to help it make the leap from Good to GREAT!
One of the fundamentals that great companies have is a culture of self-discipline. Disciplined People. Discipline of Thought. Discipline of Action.
When I review the great retailers I have met, they share this culture. There is a duality principle that exists as well, where entrepreneurism is not at risk but encouraged in this culture.
An example of discipline of thought, people and action is evidenced in the execution of a solid and ongoing assortment planning. It takes discipline of work, the discipline of your people and implementing a discipline of action.
Here are 9 points on Assortment Planning if you go with a narrow and deep merchandising strategy.
Retailers in social media selling already understand this strategy. Similar principles are relevant for brick-and-mortar adjusted to different demand motivators. If you can deliver with a discipline of thought, people, and action, you will witness an improvement in your business.
Go deeper so key looks have a sustained life and generally get better sell-through as broken stocks occur. For example; selling 4 out of 6 is better than 1 out of 3.
Narrow vendors in a category, so each vendor is more important. At most two to three vendors per category/classification, 4 to 5 tops in a higher volume classification.
Start with safer categories/classes.
Check current or previous season sell-throughs. If you had 80% or better at full price in 4 to 5 weeks or less, what would have happened if you bought it deeper? Difficult to sell off broken sizes.
Does not conflict with scarcity as you can continue to land goods by changing up color and fabric.
Scarcity- keep flowing in new products… once it is gone, it is gone. Move on and teach your clients to buy now. Over-assortments will kill the scarcity strategy.
E-commerce and social media selling reduce risks of narrow and deep.
Narrow means you do not go wide and over assort. Instead, you limit the selection to key in on looks and items that you believe in.
If you buy 48 polos, do you buy them in 4, 6, or 8 colors? 8 colors is considered wide and once you sell 12 to 16 pieces or 25 to 30%, you risk broken stock. If you are going to buy 8 colors, increase the amounts, or reduce it to less colors and buy deeper in each color, with extra focus on your best one or two colors.
A disciplined focus on assortment planning will pay rich rewards for your revenue and margin growth. It can sound counterintuitive as wide assortments appear safer, but safety will not bring you results. Wide assortments are expensive, often lead to duplication or having similar items from different vendors and the assortment looks safe and not curated. Wide assortment leads to heavy markdowns as you have more broken sizes and thus left over goods. Monitoring deep and narrow and getting out of mistakes early will yield better results.
This activity takes discipline. If you want to get from good to great, this is a critical piece of the business to tackle and win.
Onwards, and Upwards,
Marc Weiss - Co-founder, Management One