Wal-mart Changes Its Merchandise Mix -- What it Means For You
It seems all the news of late has been about Wal-Mart and Target and how they’re stealing market share from everyone - from groceries to electronics, no one is immune from extraordinarily low pricing. In fact, some analysts have predicted tough times ahead for Best Buy, the nation’s only national electronics retailer simply because Wal-Mart got into the game and undercut all their pricing, effectively stealing a ton of business and putting the longevity of Best Buy into question.
Now comes word that the electronics market is so soft that Wal-Mart is decreasing the amount of space it allocates to the category and moving in more fashion items instead.
According to the article about Wal-mart's Merchandising Strategy on Bloomberg.com, the electronics category has seen seven straight quarters of decline and the company is so dismayed by the lackluster results that they’re blaming the category for declines in the company’s overall same-store sales.
THE REAL WORLD RETAILING TAKEAWAY
Assess, analyze and change as necessary.
After a long stretch of success in the electronics category, Wal-Mart found that it no longer made sense to dedicate so much floor space to it since it was only offering declining returns. Yes, the online world of Amazon is taking a bite out of Wal-Mart. Interesting, right?
But the key here is that Wal-Mart didn’t just continue operating with business as usual. They knew they needed to make a change. And change they did, swapping fashion for electronics. Presumably, they’ll see better returns on the shift toward fashion.
And there’s the big point. How are you assessing and analyzing your merchandise mix? Are you looking at category sales each month? And brand sales? And item sales? Do you know where the shifts are occurring? And know which categories might be trending upward and which might be trending downward?
If not, then you’re not maximizing your business and that means you’re not maximizing sales and profits. So get started!
Conduct monthly merchandise assessments. They key is to look for trends and for change in how your merchandise is selling. Look at categories, at brands -- dive in and dive deep to find the shifts in how things are selling.
Make a plan. Once you see how things are trending and changing, it’s time to figure out how you’re going to proceed. Often, it means trading out one brand for another. Rarely does it mean that you move out an entire category of products. Even Wal-mart isn’t eliminating Electronics, they’re just minimizing the category while increasing fashion.
Move it out. Once you decide you’re going to do a trade out, or minimize a category, it’s time to rid yourself of the goods. See if the vendor will take them back. If not, then mark them down and get rid of them. they’re not selling anyway and are just a drag on your operating capital. Better to be rid of the merchandise and have the cash in hand to bring in the new products or brands.
Bring in the new. Enough said. Make sure you have your game plan so you leave don’t leave a whole in your store because you didn’t plan well.
How are you going to stay on top of your merchandise mix to maximize sales and profits?
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