Got Hot Stuff? Jump On Early But Closely Manage The Risk!

Larry Galler

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Got hot stuff? Jump on early but manage the risk!

It never fails, something new comes along. It’s a “widget, " a new shape, a new color, or a slightly different take on an old theme. For some reason the new item sells. All of a sudden it sells faster and faster as momentum builds and more people hear the “buzz, " become aware of it, like it, buy it, show it to their friends and associates and then, for no apparent reason something else captures the imagination of the marketplace.

This is not a new phenomenon. Fortunes were made and lost during Holland’s “Tulip Mania" back in the 1630’s and continues through today. Think about it. In the past few years fads like Crocs shoes, The Adkins Diet, blogging, stainless steel kitchen appliances, Tickle Me Elmo Dolls, Adjustable Rate Mortgages, innumerable TV shows and entertainers have captured outsized portions of their marketplace. Some become part of the permanent commercial landscape, others crash and burn in a season (some in just part of a season) never again to see the light of day.

Those who are aware of the ebbing and flowing of fashion in their industry are able to take advantage of trends and fads that affect them by jumping on the merchandising merry-go-round early and then manage to get off as the fickle winds of fashion change. Those who are late to be aware of a trend often find themselves owning excess inventory that ends up on “sidewalk sale" bins (and sometimes even dumped in the trash) to get rid of.

Managing the risk inherent in trends and fads is crucial. It takes skill, experience, and luck to be successful at it. Forecasting sales, planning the advertising, charting purchases on order, and managing inventory levels can be a daily task with fast-spiking items. The biggest problems occur when one believes (or is convinced) that the rate-of-sale of this prized “widget" or tulip or “harvest-gold" item will either continue to accelerate or be maintained. Those who are successful at managing this risk learn how to keep an eagle eye on every aspect of critical inventory management and won’t often get caught holding large levels of last year’s fads.

Larry Galler coaches and consults with high-performance executives, professionals, and small businesses since 1993. He is the writer of the long-running (every Sunday since November 2001) business column, “Front Lines with Larry Galler" For a free coaching session, email Larry for an appointment - . Sign up for his free newsletter at


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