Kevin Hillstrom: MineThatData

Let's approach this discussion in bite-sized pieces.

This table reviews repurchase activity for Apparel Tops ... the best-selling category that Beans: The Internet's Only Variety Store sells.

Yes, there's a lot going on here.

An introductory tidbit ... in the past year, 79% of demand in Apparel Tops comes from customers who haven't bought in at least a year or are first-time buyers. Only 16% of demand came from last year's Apparel Tops customers and just 5% of demand came from other twelve-month buyers.

If you are the marketer trying to grow Apparel Tops (your best-selling category), what might your approach be?

• Awareness (organic social) and Search (product listing ads).

        

Remember our "Class Of" table for the Fashion category? I do.

There are "tells" in this table that help me understand how a merchant approaches the business. In this case, the merchant in charge of Fashion discontinued existing items. Yes, the merchant failed to introduce enough new items to grow the category. Acknowledged. But the merchant also decided to take the hatchet to existing items.

How do I know this?

Look at the Class from Three Years Ago. Demand went from $564k to $384k to $160k in Years 1/2/3. Demand trails off after the introduction year, then trails off faster.

Look at the Class from Two Years Ago. Here comes a "tell". Demand went from $860k to $276k to $75k. That doesn't happen because the items fall off faster ... that happens because a merchant says "I don't like those items". Not liking existing items and then not introducing enough new items is one of two things.

1. The merchant is killing the category on purpose (which happens all the time).
2. The merchant is committing professional malpractice.

        

Yesterday we talked about the fact that Fashion was being starved by a lack of new items. Because existing items either die off quickly or are discontinued quickly, new items must fill the gap if a category is going to thrive.

I summarized all categories - looking at new items by year, as well as demand across new items and existing items. Here we go.

What does the data tell us? A lot. Your category data will communicate to you as well.

Total Business = Starved of New Items.

Apparel Bottoms = Not Starved.

Apparel Tops = Not Starved.

Fashion = Starved.

Home = Starved 2 Years Ago, Lack of New Item Demand in the Past Year.

Jewelry = Starved.

Entertainment = Starved.

Workplace = Drastically Starved.

Outside = Not Starved.

Having Fun = Starved and a Lack of New Item Demand (might be a metaphor in this category).

Seasonal = Starved.

Decorations = Not Starved (many new items 1-2 years ago).

We have Apparel Bottoms, Apparel Tops, Outside, and Decorations that are being managed consistently. Everything else? Being cut to the bone.

Apparel Bottoms / Apparel Tops / Outside / Decorations?

• 1,099 new items three years ago, 1,055 new items today.
• $7.1 million existing demand three years ago, $7.1 million today.
• $6.7 million new item demand three years ago, $5.5 million today.

        

Last week I showed you category performance over time. The result was ... chaos.

When I see chaos, I dig into what might be causing chaos. Apparel Tops have performed reasonably well over time, certainly not exhibiting the dramatic declines observed elsewhere. I produce a "Class Of" report to understand how different merchandise classes are behaving. Here is the Class Of report for Apparel Tops.

Ah. This table has so much information in it. New item development is reasonably consistent over time ... 799 styles to 757 styles to just 637 new styles last year to 748 new styles in the year just ended.

Look at how much demand new items generate in year two. Three years ago, new items generated $4.6 million in year one and $2.0 million in year two. Two years ago, the relationship was $4.6 million / $2.3 million. A year ago the relationship was $3.7 million / $1.7 million. In other words, new items either die off quickly or are quickly discontinued. When this dynamic happens, it is critically important to constantly replenish the assortment with new items. "Beans" (The Internet's Only Variety Store) appears to replenish new items within Apparel Tops at a reasonable rate.

Of course, Apparel Tops is a category that is hanging in there.

Fashion, on the other hand, is struggling. What does the Fashion Class Of report look like?

Do you see the change in management of the category?

Look at new styles by year ... 120 to 175 to 167 to 97.

Look at demand by year ... $1.2 million to $1.5 million to $1.4 million to $0.8 million.

The category isn't dying.

The category is being killed by Management ... or more specifically, by the Merchant in charge of Fashion.

Obviously there are times when it is good to kill off a category ... customers don't like the merchandise, times are changing, gross margins are poor. I asked Paisley Ingram, the Owner of Beans (The Internet's Only Variety Store), her thoughts about Fashion.