Let me count the ways.

By Phil Minix

To produce profits, you first must scrutinize overhead expenses. And since payroll often accounts for most overhead expenses, each staff position within your catalog must be justified and optimized.

With current trends focused on keeping employment as flat as possible, it may be tempting to either eliminate a merchandise manager’s position or to not add one as your company grows. But I argue that this should be one of the key positions in your company. Remember, you are, after all, a merchant. Your catalog exists to sell products. All the rest of the things you need to do are in support of your core competency of selling products.

Therefore, having the right kinds of products at the appropriate prices and times will be paramount to your success as a merchant.

There’s no better way to ensure this success than by focusing your company’s efforts on its products. Even more important than product selection is the overall merchandise direction, which includes:

- the product categories and sub-categories you offer;

- the amount of space given to each category in every catalog effort;

- the appropriate price point distribution;

- the total pages of each catalog;

- the way in which your catalog is organized; and

- the current trends that should be leveraged.

All of these issues should be addressed by a merchandise manager. I use the term “merchandise manager” figuratively. Given the size of your operation, the merchandise manager can take several forms. If you have a small operation, for example, you might have one chief merchant who also may be the president or a vice president of merchandising. Or your merchandise manager and buyer could be the same person. If that’s the case, such a person must play both roles distinctly.

As your company grows, this role will become more fractured and eventually will take the form of multiple merchandise managers overseeing buyers in single categories or groups of product categories.

The point is not what form the structure takes but that you have a person (or people) responsible for providing direction — not just making individual item selection or performing other buyer functions.

I have a very astute colleague who once said a merchandise manager doesn’t need to decide if the rake handle should be green or red — a buyer can do that based on his or her closeness to the marketplace and the customer. Rather, the merchandise manager must determine if the company should be in the business of selling rakes.

Ideal Duties of a Merchandise Manager

Let’s look at a few tasks your merchandise manager should be doing to provide appropriate direction to your buying staff.

1. Solidify and/or communicate the merchandise concept — either the overall book concept or adapting the overall concept to the categories for which he or she is responsible.

2. Provide direction as to what fits with the catalog brand. Since the world is full of product choices, a good buyer learns how to edit. But buyers can’t edit from available products or product ideas unless they understand the merchandise concept and what’s right — or sometimes more importantly, what’s wrong — for the catalog. A couple of tools that can help include:

- a merchandise concept statement, and

- visual cut-outs from your catalogs or others demonstrating products that are dead-on and those that are dead-wrong.

3. Once the product concepts are clear, your merchandise managers must consistently help buyers by, for example, working with marketing and circulation personnel regarding your customer base. Average customer demographics comprise a good starting point, but understanding the main two or three clusters of customers also is important. A buyer file usually isn’t made up of one homogeneous average customer. It’s usually comprised of three or more major pockets of customer groups.

4. Communicate the mailing plans of each catalog. For example, if you have mailings with higher percentages of rental names, merchants may select different items based on what works better for first-time buyers or for those on lists being tested.

5. Before each catalog is created, work with the buyers to determine how much space will be allocated to each product category or sub-category. As last year’s efforts are analyzed, it’ll become clear where changes are needed to maximize overall catalog performance. Your merchandise manager then can help facilitate this planning process as someone who is perhaps less vested in the outcome of the amount of space occupied by a specific product category. After all, buyers don’t usually want to give up space for their categories.

6. Review price points to discern if a shift is needed in your overall price-point distribution or the average price offered within certain product categories. Likewise, your merchandise manager may need to give some overall direction regarding the amount of copy block space devoted to certain price points or the target margin percentage for a price point range.

7. In addition to allocating the space by category, continually review the catalog’s overall page count. If pages must be added or cut, it’ll then take the appropriate planning to determine what to do with the new space or where to cut the existing space. The decision to add or cut pages should be a joint one between merchants and marketing personnel.

It takes planning and analysis to determine the appropriate count. Generally, if 70 percent or more of your pages meets your profit threshold, it’s time to add pages. Then you need to build a pro-forma P&L for the additional pages, with the appropriate costs noted to ensure the lift needed to pay for the extra pages. In general, you’ll see half of the increase come back to you in revenue (e.g., a 10- percent space increase will yield a 5-percent sales increase).

8. Determine the percentage of new products by category and overall for the catalog. This comes from understanding the success rate of new products and from managing the overall financial goals of the mailing. Obviously having more new products creates more risk and potential inventory issues. Once the percentage of new items is determined, your merchandise manager can establish a threshold for pick-up items.

9. Brainstorm new ideas and seek approval for new categories or sub-categories. Pushing the buying staff into new directions is important because finding new product categories (or sub-categories) can fuel growth to existing customers, as well as increase the potential universe for list rental.

However, new categories must fit your catalog’s overall merchandise concept, be financially viable and be able to be executed operationally. Your merchandise manager may need to work with your fulfillment group to ensure that new product types can be stored in your warehouse, are able to be shipped and don’t require capital investment to handle.

10. Vet the product selection of the buyers. I list this function last because I think it should become practically unnecessary if the other functions are properly performed. It still may be necessary to say “no” to a product now and then. However, if your merchandise manager follows the above nine steps, your buyers should have ample direction to know what is and isn’t appropriate for the catalog’s offering.

Conclusion

Good marketing and operations employees are critical to your success. If you were skeptical of whether you needed a merchandise manager in your company, I hope I’ve convinced you. Remember: Your catalog is about the products it offers, and it’s nearly impossible to be successful without getting that part right.

Phil Minix is vice president of catalog marketing for Reiman Publications. You can reach him via e-mail at pminix@reimanpub.com.