Trend Merchandising: Knowing What’s Next, How Much to Invest—and When to Pivot

Retailers have more data at their fingertips than ever before. We can see what sold, what didn’t, what’s turning, what’s aging and where our inventory dollars are sitting.

But data has an inherent limitation: it tells you what happened.

A merchant also has to decide what happens next, how much inventory to put behind the opportunity, and when it’s time to change course.

A forward-looking inventory plan provides the financial framework for making those decisions without losing sight of the rest of the business.

That’s where trend merchandising comes in.

A Trend Is More Than a Hot Product

One of the mistakes retailers make is thinking about trends only at the item level.

A trend can begin with a product, but the larger opportunity is often a classification, silhouette, ingredient, color, fabrication, lifestyle shift or change in customer behavior.

Take apparel.

Maybe you’re seeing increasing demand for mock necks. Or matching sets. Or slouchier denim silhouettes.

The question isn’t simply:

Did this style sell?

The merchant’s questions are:

Is something changing? How broad is the opportunity? Which classifications are being affected? How much inventory should I commit? And where is this trend in its lifecycle?

The same thinking applies to jewelry and accessories. Trends can emerge through scale, color, materials and silhouettes—and they often connect directly to what’s happening in apparel. A change in necklines can affect necklace demand. Changes in sleeve proportions can influence bracelets. Clothing color trends create opportunities in jewelry, handbags and accessories.

The merchant’s job is to connect those dots.

Your Data Helps You See the Trend Developing

This is where good retail data becomes incredibly powerful.

Instead of looking only at total sales, look deeper into your classifications.

What’s accelerating?

What’s selling through faster?

Where are you repeatedly running out?

Which classifications are gaining share of your business?

Are customers buying something differently than they were six months ago?

Sometimes the first indication of an emerging trend isn’t dramatic sales growth. It’s a smaller classification consistently outperforming its inventory investment.

That’s a signal worth investigating.

Consider the popularity of squishies in toys and gift. A retailer who sees one SKU selling well may simply reorder it.

A merchant asks a different question:

Is this an item opportunity—or a category opportunity?

That distinction can determine whether you reorder six pieces or reconsider the space and inventory investment you’re giving the entire classification.

Some Trends Require More Than Inventory

Pet retail provides a great example.

Frozen food has been growing for years, but the opportunity has continued to evolve. Raw expanded into lightly cooked and sous-vide products, bulk raw, raw bones, meatballs, cat formulas and other formats.

For an independent pet retailer, recognizing that trend can create a significant competitive advantage.

But maximizing the opportunity requires more than buying additional food.

You may need more freezer capacity, additional selling space, higher operating expenses, staff education and customer education.

That makes trend merchandising a business decision, not simply a buying decision.

There’s another strategic consideration: frozen products are difficult and expensive to ship. That can give an independent brick-and-mortar pet retailer a meaningful advantage against large e-commerce competitors.

A good merchant sees the entire opportunity—not just the sales report.

How Much Should You Invest?

Recognizing an opportunity is one thing.

Determining how much of your inventory investment to put behind it is another.

This is where an inventory plan becomes essential.

The inventory plan tells you how much you can spend. The merchant’s eye helps you decide where to spend it.

Early in a trend, you may want to test.

As customer response becomes clearer, you build.

When the opportunity is accelerating, you may need to invest aggressively enough to maximize it. And because inventory dollars aren’t unlimited, that can mean shifting dollars away from classifications that are slowing or becoming less relevant.

The objective isn’t simply to buy more.

It’s to allocate your inventory investment to where you see the greatest opportunity.

When Is It Time to Pivot?

Some trends can remain strong for years.

The opportunity may continue expanding as new products, classifications, price points or customer segments emerge. That’s why it’s important to keep evaluating a trend rather than assuming it has a predetermined lifespan.

Frozen pet food is a good example. The larger movement has continued while the products and formats within it have evolved.

Eventually, growth may slow—or the trend itself may begin to change.

That doesn’t necessarily mean abandoning it.

A pivot might mean increasing your investment. Decreasing it. Moving dollars into a newer classification. Expanding into an adjacent category. Changing price points. Or, eventually, exiting.

The discipline isn’t simply recognizing a trend early.

It’s continually evaluating where the opportunity is now and adjusting your investment accordingly.

Don’t Let Last Year’s Success Dictate Next Year’s Buy

One of the most dangerous sentences in retail is:

“But we sold so much of it last year.”

That’s valuable information.

It isn’t necessarily a buying strategy.

Historical performance tells you where you’ve been. The merchant still needs to understand what’s happening now.

What is the customer responding to?

What’s becoming more important?

What’s losing relevance?

Where is inventory becoming stale?

Where are you missing sales because you haven’t invested enough?

Those questions require both data and judgment.

The Merchant’s Eye

I’ve spent more than four decades in retail—as a buyer, merchandise leader, brand developer, business owner and consultant—and the tools available to retailers have changed enormously.

One thing hasn’t.

Great merchandising requires knowing your customer, understanding your numbers and developing an instinct for when something is changing.

Technology can show us patterns faster than ever.

But someone still has to decide what those patterns mean, how much to invest and what to do next.

That’s the merchant’s eye.

Wendi Tanner
Founder & Principal, Insight Merchant Strategies
Certified Management One Retail Expert