I recently entered a store and saw a little device casually propped up in the corner of a showcase. It was just four of the bright yellow items stacked one atop each other among the chains and bracelets also sold. As a clothing and accessories store, I expected the chains, earrings and other wide assortments of jewelry to be displayed. But to sell fidget spinners? I pondered on what the owner was thinking selling a fidget spinner in such a store. Profits would be anyone's first guess, but this is Trinidad and Tobago, so while fads in the U.S are obvious, the owner, even before buying must have wondered, "Is there a demand here"? I think that there isn't a huge demand because weeks later upon returning to the store, I saw the same fidgets spinners fixed against the glass case. In my movements across the East-West corridor, I saw these same spinners being stacked idly in corners and baskets, not 1 sold upon my return to the stores. I knew the situation of store salespersons and owners too well, there is a fad in the United States, surely locals would be interested in purchasing such items! The problem is, while there may be a demand, there are so many questions that must be answered before purchasing any fad. This blog, as always, seeks to address a question through the skill and habit of research. The question:" How to turn a fad into a profit?"
A fad is an item that is in high demand for a life cycle of a year or less. Fads develop suddenly and are usually restricted to one industry and one demographic group. For example, I loved hula hoops as a child. It was indeed a fad. It was limited to the toy industry (one industry) and people like me, girls (one demographic profile). Seldom did you see a boy hula hooping in the street? Let's take another example, Crocs. How many of us remember the bright rubber footwear? Eventually, however, the demand for Crocs faded as cheaper alternatives came unto the market. Fads do have the potential to turn into trends. Trends have more longevity than fads. A great example is the slew of health fads that turned into trends from the 1990s. From juicing to teas, at some point, these were just fads.
So as merchandisers who are always seeking new opportunities, how do we maximize profits through fads? Research is a great tool (as I will always say). But what will you research?
1) Where in the lifecycle did you learn about the fad? This is crucial. You must discover when the fad started to take up speed and at what stage in the life cycle you learned about the fad. Also, determine the life cycle stage at which you will actually receive the stock of the fad good. By doing this you can estimate what the potential demand for the fad may be. If you are at the end stages of the fad, where the demand is starting to fade, it will be unprofitable to buy a large stock of product. Note that the lifecycle locally may not be the life cycle internationally.
2) Why the fad started. By knowing the core reason for the short-term demanded good, you can estimate when stocks will be needed, and for how long. So let us take the vuvuzelas that became popular during World Cup 2010 in South Africa. Businesses in South Africa may have used estimated tourists arrivals and the number of days of matches to determine exactly how many to buy. Similarly in Trinidad and Tobago, if there is a holiday or significant international event, buying and selling relevant fads can be planned around those periods. Some fads occur out of a need or current societal issue. For example, the fidget spinner is intended for stress relief. With anxiety and depression being a growing discussion topic in the Americas, a quick fix such as the fidget spinner has been in high demand. In this core need, the flaw of the sale of the fidget spinner may be found. As a local community that does not view mental health issues in an accepting way, purchasing a fidget spinner may just be seen by those who may benefit from it as a source of weakness.
3) Who potential clients are. This is where the in-depth research comes in. You need to know who would buy, where they would buy and why they would even purchase a fad. Using quantitative research in a quick way and surveying past and incoming customers, one can assess the demand for the fad. From this study, the amount of good to import can be estimated.
4) Keep track of the fad, it may turn into a trend. Make time and invest resources into continually following any international fads in which your business invests. By using desk research and following the previously mentioned steps, you can position your business to be the leading provider of this new trend.
Data Minders Business Research encourages businesses in making solid and profitable choices. Use research so that baskets of products will not become prop items at the cashiers counter and instead become money in your business' accounts. Reseach can make any decision clearer and prevent loss of income.