As a buyer, how do you know what types of products to offer your customers (merchandising mix) and what brands to choose (product lines)? Retailers need to think about the overall image they would like to have for a specific target market in a certain location. Does your store want to have a fashion image (one that is offering new and unique products in the marketplace)? Customers wants, needs and behaviour is constantly changing, but identifying trends make is easier for a retailer to identify the future demand.
Before you can identify trends, you need to figure out your target market and your customers profile. Are they fashion forward? Impulse shoppers? Do they rely heavily on reviews or recommendations? Are they willing to pay more for a 'green' product? Are they a shopper looking for a classic look or to be a trendsetter? Let's discuss some of the key areas to look for when profiling your customers.
Purchases Based on Availability:
Availability is the amount of effort customers are willing to put into buying a new or particular product. Are their substitutes for the product? For example, is a customer is shopping for a white t-shirt or a gift for their boyfriend, can they substitute what they were looking for easily? Sometimes yes, a girl can find a different gift but sometimes there are no substitutes for a product or brand. Can you think of any products you are loyal to? What about your toothpaste choice, do you go someplace else if Crest isn't available?
The availability of products can be broken down into four categories:
- Convenience Products: products customers are not willing to invest time, money or effort in evaluating or searching for the product. Businesses that win are those that have superior location for lower cost items. Toothpaste is one of these products, but loyalty comes into play here too.
- Impulse Products: these are purchases based on an irresistible urge, and are sudden and spontaneous. Impulse products are usually located near the cash register, and are usually small knick knacks, candy and magazines. At Costco, these are products that are actively being sold or given out as samples and this is a strategy that is extremely successful.
- Shopping Products: these products customers think more about and are willing to spend more time and resources to shop around to find the perfect mix of price, quality, suitability and style. These are not everyday purchases, and are things like furniture, clothing, automotive or appliances. It could even been flights, depending on the customer.
- Speciality Products: customers will buy these products regardless of how long or how much effort is needed in obtaining it and no substitute will do. Products in this category would be disruptive technology (think Pebble), new product releases from brands (think Apple) and exclusive collections (i.e. Versace for H&M).
Purchases Based on Durability and Quality:
When talking about quality, you would assume that all customers want the highest quality, but this is not true. Customers want what they can afford, not the best. I have seen this with ULLO. Even though we have top quality raw materials, that is not a feature that makes the sale.
The majority of customers may not want the top of the line quality, but they do want durability in their products so that they can use it time and time again. Some products are nondurable, like food. How do you figure out what to offer your customer? ASK!
Products Based on Fashion Apparel:
Style is a way to differentiate a product, whether is be eye-catching or gathers no attention, and accepted as a popular style. Style is not fashion, style are different attributes that make it look different from other products. What is in fashion often changes with time and seasons, and what is currently in demand can have an effect on complementary products (i.e. socks, tights, hair accessories). The question is finding the right looks and merchandise to please your customers. There are some iconic moments in fashion that inspired trends for generations, the following are some examples.
How do these trends translate from fads to sustainable products? Products, and fashion products are no exception, move through a life cycle. There are four stages in the product lifecycle, introduction, growth, maturity and decline and every product has their own velocity that they move through the cycle. What should you expect at each phase? See below for more.
- Introductory Stage:
- Low Sales and Losses
- High Price Strategy and Promotions
- Innovator target market
- Growth Stage:
- Most Desirable products are in this stage
- Accelerating Sales and Highest-Profit Levels
- Product variations begin to appear
- Increased number of suppliers
- Early Adopters Target Market
- Maturity Stage
- Sales Increase at a Slower Rate
- Highly Competitive Market
- Falling Prices and Profits
- Available at places like Walmart and Target (Toms shoes is here)
- Late Adopters Target Market
- Decline Stage
- Laggards are the only one buying as the Target Market
- Target Market shrinks and there are heavy markdowns
Above are the stages fashion products goes through, but there are also theories that fashion products goes through.
There is the downward flow theory, which states that fashion flows down from royalty to wealthy and being picked up by lower social levels. There are three ways fashion is passed from the upper to the lover social classes 1) distinctive, original and custom - made designs worn by high society, 2) emulations - where original designs are modified and carried by finer department stores, and appeal to the middle class and 3) economic emulation - the original design is mass-produced and mass marketed.
High end products are not necessarily money makers, it is the licensed products such as fragrances and accessories that generate profits.
Horizontal Flow Theory is when fashion adoption moved horizontally and it is the innovators who are willing to try the new product. It does not matter what the upper classes are wearing or purchasing in this theory, as within each social class there are innovators who are known as opinion leaders and influence their friends.
Upward flow theory is the opposite of downward flow and maintains that the fashion innovators are young and pieces trickle up. T-shirts are a great example of this.
So now we know what type of products we need to make, and their features, but how does a company differentiate? Through brands, by licensing an existing brand, or through mass customization.
It is a hard job to be a retailer or wholesaler, building a brand that meets your target market needs and wants requires businesses to listen and understand the market. By knowing what is currently in fashion, major upcoming world or national events and have an awareness of products that are moving from the introduction to growth stage, buyers can make the best decisions on behalf of their customers.
Thanks for reading!
Love & Light,
(Ps - this material was taken from the book Retail Buying, from Basics to Fashion, 4th edition, by Richard Clodfelter)