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Is a Merchandise Program Right for Your Client?

Things to consider when contemplating a program

1/12/2023 | Gregg Emmer, Marketing Matters

It is always exciting when a client (customer) announces to you that they want you to build a merchandise program with a great website platform and pretty much want all the features of Amazon! 

Recently I was asked to help a talented industry consultant (salesperson) structure a program for a regional restaurant chain. The ad agency that represents the client provided a list of the merchandise they wanted in the program. There were 42 items including a sports car and motor scooter! You can’t make this up. The agency had basically asked for the Neiman Marcus or Macy’s holiday catalog as the model for their program.

Conservatively a program of this magnitude would need a solid half million in inventory without including the motor vehicles! The most critical factor however was that the potential market for transactions on a merchandise site were not even close to justifying this program - or any program. 

 What to consider when contemplating a program.

The first thing is why. What is the objective of the program? Some are primarily in-house and provide a way for employees to purchase or redeem value they have received from the employer. One such program for a large West Coast power company had merchandise ranging from water bottles to grandfather clocks and about 35 items in between. They also had thousands of employees. 

Many merchandise programs are connected to the advertising and marketing of a business. There are many well known companies with a brand that has significant marketplace recognition and a desire by many people to display that brand. Automotive, jewelry, fashion, institutions, charities and lots more fit this category. The motivation is solid brand support and profits.

There is a growing number of “personalities” with or building merchandise programs. Politicians and political parties, online influencers, recording artists and others. Their reasons for operating merchandise programs are both for increased public exposure and for profit. Not too long ago a recording artist might have a CD or two available but now have a selection of items and provide directions to their online store at every opportunity.

Next, an honest evaluation of the size and scope of the marketplace is essential. Is the brand a national, regional or local one? Is their public awareness and interest in purchasing merchandise with the sponsor’s brand? This restaurant chain does have a loyal customer base and a catchy and unusual appeal but fewer than 60 stores. Even following all the suggestions we proposed, the limits of the marketplace could likely reach a saturation point far too fast to make any program feasible.

What was suggested was an in store merchandise program that has a reasonable selection of apparel, food related items and beverage related tankards and mugs. All were to be displayed in the restaurant and available for immediate purchase. This would contribute to impulse purchases, lower prices without fulfillment and shipping and instant marketing that continued after the patron left the establishment. The agency and client are considering these recommendations. 

The Hard Rock Hard Shop started exactly the same way. Obviously the public awareness of the hotel chain and restaurants allowed them to expand their merchandise offering quickly, but it was not an instant automatic thing. 

Financial necessities are often not considered by clients. The normal arrangement in today’s market (except for large programs for the best known sponsors) is for the sponsor to own the merchandise. This can be thousands of dollars up front. Then there are fulfillment costs, shipping, warehousing, insurance and security to consider. The platform will likely be sourced from a third party and have subscription fees that are ongoing and have initial setup costs as well.  As a result many programs are not looked at as profit centers but rather as a boost to the overall marketing of the company.

To say that even simple programs have a lot of moving parts is an understatement. The significant investment in time that a salesperson puts into coordinating the service providers for a program is not normally something that gets billed to the client. Rather it is the profits over the life of the program that is the goal. 

It is also important to have all the necessary documents created and properly signed. They should describe in detail what each entity (salesperson/distributor, commerce platform, fulfillment center) is responsible for. The agreements also have to specify how a program ends, what obligations the sponsor has regarding current expenses, inventory and all the aspects of the program that might continue (such as NDAs).

To sum this up, programs can be a valuable part of your client base if all the variables favor the success of the program. Don’t let the “Field of Dreams' ' belief that “...if you build it they will come' ' obscure your objective analysis. Programs need to be promoted continually with a good plan on how customers will be driven to the site. Just be sure your efforts in developing a program for your client is rewarded in the ongoing success of the program.

Gregg Emmer is chief marketing officer and vice president at Kaeser & Blair, Inc. He has more than 40 years experience in marketing and the promotional products industry. His outside consultancy provides marketing, public relations and business planning consulting to a wide range of other businesses and has been a useful knowledge base for K&B Dealers. Contact Gregg at
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