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Jennifer Marks

All Together Now

Take four pieces of paper and a fat, black felt marker. On each piece of paper write one of the following words: Innovation. Consolidation. Freshness. GMROI.

Now, tack them up on the bulletin board. These words are going to dominate 2005.

The “I” word was heavily in rotation during the National Retail Federation conference as well as last week's Apparel and Footwear Association's “Ideas” seminar.

Regardless of subject matter — store design, merchandising, operations, supply chain management — whether it's product or process, if you can name it, you can innovate it.

Consolidation was the overarching theme of the Ideas panel discussion — in assertions from suppliers that they will consolidate their overseas resources and predictions that retailers plan to do the same.

It also came up at Heimtextil, where exhibitors inquired about potential joint venture partners.

It came up in the Linens 'n Things conference call, as executives promised to shift their heaviest spending to key suppliers.

And it came up in the news: the acceleration of Kmart conversions to Sears as the pair streak toward their merger; and in yet another attempt by Federated and May Co. to form a more perfect union.

Freshness is this year's merchandising mantra and the challenge that will bedevil any supplier that's not fast on its feet.

There's Federated's 20/20 program (jump on the top-selling 20 percent of skus quickly, ditch the bottom-selling 20 percent ASAP). There's Target's Global Bazaar, a six-week event program that's a scaled-up version of the quick-hit niche programs it's been rolling through the home department in recent months.

Finally, there's the new slang: “chase the trend.” The idea here is that even if Supplier A comes up with the magic, on-point item that blows off the shelves, if it can't hop on replenishment right away, that program is going to be quickly handed off to a supplier that can.

All of these things tie back to the big focus on GMROI (gross margin return on investment). It's not about the top line this year, kiddies; it's about building up margin. It's about suppliers walking away from volume programs that deliver feeble profits. It's about sourcers paring down their partner base and funneling the savings back into product development. It's about retailers delivering better returns to their shareholders.

Now let's practice using them in a sentence …

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