Data-Driven Merchandising: How CMOs Can Influence Product Assortment for Better Margins
The gap between what marketing promotes and what merchandising buys costs fashion brands millions. Here's how CMOs can use data to bridge that gap and improve both sell-through and margins.
The Marketing-Merchandising Disconnect
In most fashion brands, marketing and merchandising operate in silos. Marketing promotes what merchandising buys. Merchandising buys based on trend forecasts and buyer intuition. The result:
- •Products that perform well in ads but have thin margins
- •High-margin products that never get marketing support
- •Inventory buildup on products that don't resonate with acquired audiences
- •Markdown pressure from misaligned assortments
How CMOs Can Influence Assortment Decisions
1. Share Acquisition Data With Merchandising Marketing knows which products attract new customers, which products retain customers, and which products drive the highest lifetime value. This data should inform buying decisions.
Key data points to share: - Top 20 products by new customer acquisition - Products with highest repeat purchase rates - Products with highest CLTV among first-time buyers - Products with lowest return rates by channel
2. Build a Product Performance Matrix
| Quadrant | High Marketing ROI | Low Marketing ROI |
|---|---|---|
| High Margin | Scale aggressively | Fix marketing or reposition |
| Low Margin | Reduce ad spend, use organic | Phase out or reprice |
Products in the top-left quadrant should get maximum investment. Products in the bottom-right should be reconsidered.
3. Demand Signal Analysis Marketing generates demand signals before purchases happen: - Search query trends (what customers are looking for) - Browse-to-purchase ratios (what converts vs. what just attracts) - Waitlist and back-in-stock requests (unmet demand) - Social engagement patterns (what resonates emotionally)
These signals should feed into assortment planning 6-12 months ahead.
4. Price Elasticity Testing Marketing can test price sensitivity through A/B testing and promotional strategies. This data tells merchandising which products can command premium pricing and which need repositioning.
5. Content Performance as Product Signal Which products generate the most engaging content? Products that perform well in organic social, email, and editorial content often have broader appeal than their sales data alone suggests.
The Integrated Planning Process
Quarterly Assortment Review CMO and Head of Merchandising should co-own a quarterly review: - Marketing performance by product category - Margin analysis by product and channel - Inventory health (overstock, stockout rates) - Demand signals for upcoming seasons
Pre-Season Planning Input Marketing should have a formal input into pre-season buying: - Customer segment growth targets - Channel expansion plans - Content and campaign themes - Competitive positioning shifts
In-Season Optimization Real-time collaboration during the season: - Shift marketing spend toward high-performing, high-margin products - Reduce spend on slow movers before markdown pressure builds - Identify emerging trends for quick reorder decisions
The Financial Impact
| Metric | Before Integration | After Integration |
|---|---|---|
| Full-price sell-through | 55% | 70% |
| Average gross margin | 52% | 58% |
| Markdown rate | 28% | 18% |
| Inventory turn | 3.2x | 4.5x |
| Marketing ROI | 3.5x | 5.2x |
The Bottom Line
The most profitable fashion brands don't separate marketing from merchandising. They use data to bridge the gap, ensuring that what they buy is what their customers want—and what their customers want is what drives the best margins.
Ready to Turn These Insights Into P&L Results?
PMC doesn't just write about growth—we contract it. See what KPI-contracted growth looks like for your brand.
Get Your Quote