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Chapter 24. Product Performance

Every item in every store you’ve ever been in has been strategically placed right where it is so that you’ll see the item in a certain light or at a certain time in your visit. It’s called product merchandising, and companies spend millions of dollars each year ensuring that product placement is just perfect because it really does matter when it comes to sales and revenue.

Several years ago there was a large craft company with several dozen sizable stores scattered around the southern United States. The company generated several billion dollars in revenue each year and spent millions on ensuring that products were placed within the stores in a way that was intuitive for customers. A large part of every employee’s job was to make sure each department conformed to company standards for product placement.

Then a new CEO took over. One of his first orders of business was to change the layout of every store. The problem was that the CEO didn’t understand how customers shopped in the stores, and customers were not happy with the new layout. They began shopping elsewhere, and within three years the company went belly-up. It probably wasn’t only because the merchandising in the store was off, but that played a part in the overall demise of the stores.

If that CEO had looked at some of the measurements indicating how product merchandising affects revenue, he might have corrected his mistake before it was too late. Measurements like the ones in this chapter are ...