80/20 Merchandise assortment rule

Musings from Dennis #18: 80/20. This 'rule' seems to be applicable in any situation and when it comes to merchandise assortment at retail, it is also true. I learnt this from our master toy licensee Hasbro for the first Disney/Pixar Monsters Inc movie way back. The complete range needs to be displayed at retail and one can expect that generally 20% of the range will generate 80% of the overall sales – but they need to be on display for the customers’ viewing . When it came to convincing our Indonesian retailer however, the toy buyer insisted that he only wanted to order and stock the top performing 20% SKUs because he projected that these will give him his volume of sales and ‘why bother about the other less performing lines’. When we returned to meet him a few months after the movie ended, while other markets reported good pickup from shelf, he told us the entire line flopped – sales was poor. I went to the point of sales at one of his key stores and almost could not find the toys. The display was not noticeable due to the very limited offering. Another similar situation happened with a Singapore department store who insisted that the open display Mickey mall event popup shop should only feature the top licensees (why bother to deal with so many people the buyer declared). The result? Poor sales. One look saw customers peering in as they passed by, noticing how restricted the selection was and not bothering to even enter to browse. We need that 80 even if it gives us our 20 because only then can the 20 deliver us our 80!