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March 11, 2008
The Power Of Trending
Trends come and go and sometimes it’s hard to get a handle on how they apply to your business. You may feel disconnected from general market changes as you concentrate on day-to-day operations.
What you may not realize is that trends are at the very heart of your business. The trend cycles you see in your company are directly related to trends in your industry and in the overall market.
You can take advantage of these trends if you know how to interpret them. When you spot a major market trend, you need to determine how that trend will play out in the segment of the market that you live in. Then you look at your own business to see if and how you can benefit from the trend.
Let’s look at an example in the apparel sector. Last year, men’s wear vendors told us that shorts were going to be huge this year. That’s an overall market trend. If you owned a better men’s wear store, you might ask yourself, “How will the shorts trend affect my segment of the industry?”
Since the better men’s wear market is primed to pick up on high-priced shorts, you may determine that this is an opportunity for you. But first you need to look at your particular situation, including your position in the trend cycles. If you have a fashion store, you’d probably do well by picking up on the shorts trend. If it’s a more traditional store with older clientele, you may choose to sit this one out.
Information is King
Entrepreneurs often use intuition to detect and interpret trends. Most successful businesspeople have good intuition about what’s going on in their market. However, at a certain point, businesses grow beyond the capabilities of intuition. As the company gets larger and more complex, you need information and guidance to validate and support your natural instincts.
In trending, information is king. You need as much information as you can assimilate to make smart choices. You need highly refined data and data analysis to tell you exactly what’s going on in your business from month to month, and a system for accumulating information on external market trends.
Once you have pools of knowledge on external and internal trends, you can leverage this information to increase sales and improve margins. Intuition is still at play, but now it’s supported by a validation mechanism. And it’s easier to fund your intuition because you’ve acquired data that backs up what you ‘feel’ will happen in the market.
Knowing When You Need Help
It can be easy to feel overwhelmed by trending if you don’t have the right information at your disposal. If profits aren’t in line with expectations, you know you need help. It’s time to invest in resources that will help you track and interpret the trends. This could mean investment in a data system to allow you to extract and analyze information and the help of a trending expert who knows how to read the data.
First, you need a system that will structure your data in a way that mirrors how the market looks at information. In apparel, for example, the data should be structured by category so trends happening in womens’ knits match what’s going on in your own knit category. Once you have the data, you can look at trends that happened last year as well as this season. From that information you can begin to predict what will happen in the next 60 to 90 days and even further out.
Unless you are really market- and numbers-savvy, this may require the help of an expert data analyst who is trained to read the cycles. Your analyst should be able to interpret the trends from the overall market level down to your specific situation. With the right data analysis, profits should begin to align with expectations.
Every business is affected by trend cycles. One of the greatest mistakes we can make as businesspeople is not seizing the opportunities that trends offer us. It takes information, intuition and diligence to keep on top of the trends, but that’s part of what makes business fun.
Posted by Steve Pruitt at March 11, 2008 06:27 PM
