Chief Merchandising Officer In a Box

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7. Channel Merchandising Director. It is possible to have more than one channel product manager. As an example, QVC might have a channel product manager for jewelry and one for cosmetics, as well as one for women’s clothing and another for cooking products. At some point, these businesses get to the size where a channel merchandising director is needed to herd all of the various merchandising cats and get them into one efficient corral. For the multi-channel direct marketing company of the largest size, it is likely that there will be three or more channel merchandising directors and, of course, they all hope to be the next Vice President of Merchandising and Chief Merchandising Officer, replete with equity, large bonuses and a shot at the Big One.

While I’ve never understood what the term ‘Director’ involves, I have been one several times and I know it’s better than manager or developer. From what I can figure out, it means that you have to communicate with the accountants and probably tell them the truth, at least sixty percent of the time. And the parking is better.

A director of merchandising, regardless of channel or the size of the organization, is seemingly out of touch with the actual customer doing the buying. This is unfortunate, but almost always true. Other people are relied upon to get that part of the equation right, and sometimes they do and sometimes they don’t. At the level of a departmental ‘director,’ no matter the size of the company, politics and personalities tend to move center stage. That being said, however, this is a senior management position and deserves the talents and skills of a true Master Merchant. Here are the abilities and experience levels I believe a qualified director of merchandising should possess, and these are what I search for when recruiting senior managers for my clients:

1. Fifteen years or more direct merchandising experience beginning in product development and extending through product management, line management, and channel management, at the minimum.
2. A demonstrable history of product development and product management successes, not one or two products, but lines of products; and not once, but numerous times, preferably at different companies and in different channels. We are looking for rainmakers here not tap dancers.
3. A fully furnished understanding of the product lifecycle and the ability to apply it to hundreds of individual products, dozens of product groups, multiple lines, in multiple channels. I like it when a person can draw each of those tactical lifecycles on a flip chart and talk about how each is managed while drawing. Sort of warms my heart to see people in action who actually know what they are talking about.
4. A fully furnished and experienced track record with product merchandising finance. The ability to dissect the Income Statement and the Balance Sheet and to explain how they change based on all the potential product-related variables.
5. A demonstrated and consistent, verified history of impeccable people skills, team building and personal and business ethics. No politicians need apply; no theoreticians need submit; no ‘closed door isolationists’ need bother.
6. A history of selling substantial amounts of a large variety of different products.
7. A complete knowledge of merchandising in the catalog and online channels; others are applicable (retail, wholesale, dealer, affiliate, telemarketing).
8. Experience sufficient to thoroughly and intelligently discuss the following merchandising topics at the strategic and the tactical levels, at the minimum.
   
   

   The Customer and Products Business-to-Business Products Business-to-Consumer Products Product Life Cycle Old Products New Products Mature Products Declining Products Product Ideation Product Research Product Forecasting Product Management Product Sourcing Product Selection Product Mix

   Product Testing Product Branding Product Positioning Product Pricing Strategy Product Life Cycle Pricing Product Price and Mix Price Testing Quantity Pricing Price Techniques Price Increases and Decreases Evergreen Products Price Analyses Product Performance Analyses Margin Performance Analyses Product and RFM Analyses

   
   
9. Experience sufficient to define, describe and discuss, minimally, fifty of the more than two-hundred-fifty known types of offers; in short, a working mastery of product and sales offers and the ability to differentiate them by channel efficacy.
10. A working knowledge of and experience with product sourcing from the following:
    
    

    Customers Competition Niche Experts

    Trade Shows Media Coverage Product Research

    Domestic Suppliers Offshore Suppliers Original Ideation

11. A working knowledge and demonstrated experience with the following product strategies:



Adaptation Extension Reintroduction Close-out

Adoption Revision Resting Exclusivity

Knock-Off New & Improved Retirement Scarcity



12. A fully furnished understanding and experience with product procurement, including:
    
    

Product Forecasting Purchase Orders Overstocks Demand Curves

Buy Plans Quality Control Liquidations Response Curves

Product Specifications Rebuying Returns Management Cancellation analyses

If these twelve qualification areas can be successfully navigated, a candidate likely possesses the necessary experience and knowledge for consideration as a merchandising director. However, I cannot stress enough the importance of eliciting proof of actual experience and success in each of these areas and more than just a facile textbook knowledge. At this point, the individual is in-training for the top position in the merchandising discipline and this is where only the most talented are allowed to proceed.

8 & 9. Vice President of Merchandising and Chief Merchandising Officer. I will combine these two since they are almost always combined in actual practice. We are now at the highest level of merchandising management. Chief Merchants can be expected to have over fifteen, often over twenty, years of relevant experience, all proven and increasingly successful. These are positions that command $175,000 to over $300,000 in the small to middle market and $500,000 and considerably more in the highest segment of the multi-channel direct marketing space. There are Chief Merchandising Officers in the very largest organizations making well over $1 million annually plus substantial bonuses and other emoluments.

Every one of the experiential qualifications listed in the discussion of merchandising directors can be applied at this level, as well. However, there are several additional qualifications and requirements that are normally addressed. First, CMOs have a substantial financial background, often the MBA. They know their numbers cold and they know them as they relate to product merchandising, as well as to earnings. In fact, they know circulation, creative cost ratios, warehouse fill rates, inventory turns, and all the other numbers necessary to function successfully as a CEO. Yet, there is the need for the insoluble link to the customer and the promise of the product. A CMO must be able to actually develop a product; still be able to conceive a product; unerringly find a product solution to a significant customer need; and—perhaps most important—be able to see holes and know how to fill them. That is the art of merchandising that should never be compromised by position and power. As long as this person has that ennobling talent, there is hope for success. Coupled with financial strength, analytic ability, and tempered with leadership, a great Chief Merchandising Officer should result. And, the CMO today simply must be a total, proven expert in online marketing, search engine optimization and all things ‘web-related.’ The web is the store and we are all still peddlers. Perhaps that is the first realization a good CMO should possess: we are still peddlers selling stuff to customers.

Copyright © 2005 by Donald R. Libey. All rights reserved. May not be reproduced by any means without permission of the author. Contact Libey LLC; www.libey.com or call 877-903-9448.

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